Court of Appeals of Illinois, First District, First Division
ERIC D. FIFIELD and ENTERPRISE FINANCIAL GROUP, INC., Plaintiffs and Counter defendants-Appellees,
PREMIER DEALER SERVICES, INC., Defendant and Counter plaintiff-Appellant.
Appeal from the Circuit Court of Cook County. No. 10 CH 9204 Honorable Mary Anne Mason, Judge Presiding.
Presiding Justice Hoffman and Justice Delort concurred in the judgment and opinion.
¶ 1 This appeal arises from a December 20, 2010 order entered by the circuit court of Cook County which granted a motion for declaratory relief filed by plaintiffs and counter defendants-appellees Eric D. Fifield (Fifield) and Enterprise Financial Group, Inc. (EFG) (collectively, Fifield and EFG); and a January 18, 2012 agreed order entered by the circuit court which dismissed with prejudice, all claims not affected by the court's December 20, 2010 order. On appeal, defendant and counter plaintiff-appellant Premier Dealer Services, Inc. (Premier), argues that the trial court erred in granting Fifield and EFG's motion for declaratory relief because the nonsolicitation and noncompetition provisions in Fifield's employment agreement were enforceable under Illinois law. For the following reasons, we affirm the judgment of the circuit court of Cook County.
¶ 2 BACKGROUND
¶ 3 Prior to October 2009, Fifield was employed by Great American Insurance Company (Great American). As an employee of Great American, Fifield was assigned to work exclusively for Premier Dealership Services (PDS), a subsidiary of Great American. PDS was an insurance administrator that marketed finance and insurance products to the automotive industry. In October 2009, Great American sold PDS to Premier. Premier is an Illinois corporation engaged in the business of developing, marketing and administering a variety of vehicle after-market products and programs. As a result of the sale, Great American informed Fifield that his employment would end on October 31, 2009. However, in late October 2009, Premier made an offer of employment to Fifield. As a condition of his employment, Premier required Fifield to sign an "Employee Confidentiality and Inventions Agreement" (the agreement) which included nonsolicitation and noncompetition provisions. The agreement states in pertinent part:
"Employee agrees that for a period of two (2) years from the date Employee's employment terminates for any reason, Employee will not, directly or indirectly, within any of the 50 states of the United States, for the purposes of providing products or services in competition with the Company (i) solicit any customers, dealers, agents, reinsurers, PARCs, and/or producers to cease their relationship with the Company or (ii) interfere with or damage any relationship between the Company and customers, dealers, agents, reinsurers, PARCs, and/or producers or (iii) accept business of any former customers, dealers, agents, reinsurers, PARCs, and/or producers with whom the Company had a business relationship within the previous twelve (12) months prior to Employee's termination."
¶ 4 Before signing the agreement, Fifield negotiated with Premier and the parties agreed to add to the agreement a provision which stated that the nonsolicitation and noncompetition provisions would not apply if Fifield was terminated without cause during the first year of his employment (the first-year provision). Fifield accepted Premier's offer of employment, and signed the agreement on October 30, 2009. Fifield began his employment at Premier on November 1, 2009. On February 1, 2010, Fifield informed Premier that he was resigning and that his employment would end in two weeks. On February 12, 2010, Fifield resigned from his position with Premier. Shortly thereafter, Fifield began working for EFG.
¶ 5 On March 5, 2010, Fifield and EFG filed a complaint in the circuit court of Cook County for declaratory relief pursuant to section 2-701 of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/2-701 (West 2010)). The complaint for declaratory relief requested that the trial court declare that Fifield at no time had access to confidential and proprietary information while employed at Premier and that certain provisions of the agreement are invalid and unenforceable. On August 6, 2010, Premier filed an answer and affirmative defenses to Fifield and EFG's complaint, and a counterclaim for injunctive relief. Premier's counterclaim, in pertinent part, sought to enforce the nonsolicitation and noncompetition provisions in the agreement, and requested that the trial court enter a permanent injunction preventing Fifield from using Premier's proprietary information.
¶ 6 On September 20, 2010, Premier filed a "Motion for Judgment" against Fifield and EFG. On September 22, 2010, Fifield and EFG filed a motion for declaratory relief pursuant to section 2-701(b) of the Code (735 ILCS 5/2-701(b) (West 2010)). On December 16, 2010, the trial court heard oral arguments on Fifield and EFG's motion for declaratory relief. On December 20, 2010, the trial court entered an order which granted Fifield and EFG's motion for declaratory relief. The trial court's order stated that "the non-solicitation and non-interference provisions found within [the agreement] are unenforceable as a matter of law for lack of adequate consideration." The parties continued to litigate claims that are not at issue in this appeal. On January 18, 2012, the trial court entered an agreed order which dismissed with prejudice all claims that were not affected by the trial court's December 20, 2010 order. The trial court's January 18, 2012 order stated that it was final and appealable pursuant to Illinois Supreme Court Rule 303 (eff. May 30, 2008). On February 1, 2012, Premier filed a timely notice of appeal. Therefore, this court has jurisdiction to consider Premier's arguments on appeal pursuant to Rule 303.
¶ 7 ANALYSIS
¶ 8 On appeal, we determine whether the trial court erred in granting Fifield and EFG's motion for declaratory relief.
¶ 9 Premier argues that the trial court erred in granting Fifield and EFG's motion for declaratory relief. Specifically, Premier argues that the nonsolicitation and noncompetition provisions in the agreement are enforceable because there was adequate consideration to support the provisions. Premier argues that unlike in other Illinois cases relied on by Fifield & EFG, Fifield was not employed when he was asked to sign the agreement. Thus, the consideration offered to Fifield in this case was employment itself. Premier asserts that it gave Fifield ample consideration in exchange for his promise to abide by the nonsolicitation and noncompetition provisions because Fifield was able to avoid unemployment by accepting Premier's offer. Additionally, Premier argues that although the nonsolicitation and noncompetition agreements are restrictive covenants, they are not postemployment restrictive covenants because Fifield signed the agreement before he became an employee of Premier. Furthermore, Premier points out that the purpose of Illinois law regarding restrictive covenants is to protect against the illusory benefit of at-will employment. However, Premier contends that the illusory benefit of at-will employment is not at issue in this case because it was nullified by the inclusion of the first-year provision in the agreement. Therefore, Premier argues that the nonsolicitation and noncompetition provisions in the agreement are enforceable.
¶ 10 In response, Fifield and EFG argue that the trial court did not err in granting their motion for declaratory relief. Specifically, Fifield and EFG argue that the nonsolicitation and noncompetition provisions in the agreement are unenforceable because there was not adequate consideration to support the provisions. Fifield and EFG contend that under Illinois law, in order for a restrictive covenant to be enforceable, employment must continue for a substantial period of time. Fifield and EFG point out that Illinois courts have repeatedly held that two years of continued employment is adequate consideration to support a restrictive covenant. Illinois courts have also stated that the length of time required for adequate consideration is the same regardless of whether an employee is terminated or decides to resign ...