786 F.3d 582 (7th Cir. 2015), 14-2692, Burford v. Accounting Practice Sales, Inc.

Docket Nº:14-2692
Citation:786 F.3d 582, 114 U.S.P.Q.2d 1734
Opinion Judge:Hamilton, Circuit Judge.
Party Name:WILLIAM J. BURFORD, Plaintiff-Appellant, v. ACCOUNTING PRACTICE SALES, INC. and GARY HOLMES, Defendants-Appellees
Attorney:For William J. Burford, Plaintiff - Appellant: David Patrick Hall, Attorney, Springfield, IL. For ACCOUNTING PRACTICE SALES, INCORPORATED, a Texas Corporation, Gary Holmes, Defendants - Appellees: John F. Grady, Attorney, Grady Bell Llp, Chicago, IL.
Judge Panel:Before BAUER and HAMILTON, Circuit Judges, and ELLIS, District Judge.[*]
Case Date:May 13, 2015
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
SUMMARY

Burford agreed to facilitate the purchase and sale of accounting practices for APS. The parties initially signed a contract assigning Louisiana to Burford. They later orally agreed that Burford should also cover Alabama, Mississippi, Tennessee, and Kentucky. APS terminated the contract. Burford sued for breach of contract; APS filed a counterclaim under the Lanham Act, 15 U.S.C. 1051, claiming... (see full summary)

 
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Page 582

786 F.3d 582 (7th Cir. 2015)

114 U.S.P.Q.2d 1734

WILLIAM J. BURFORD, Plaintiff-Appellant,

v.

ACCOUNTING PRACTICE SALES, INC. and GARY HOLMES, Defendants-Appellees

No. 14-2692

United States Court of Appeals, Seventh Circuit

May 13, 2015

Argued December 8, 2014.

Page 583

Appeal from the United States District Court for the Southern District of Illinois. No. 3:12-cv-1212-JPG-SCW -- J. Phil Gilbert, Judge.

For William J. Burford, Plaintiff - Appellant: David Patrick Hall, Attorney, Springfield, IL.

For ACCOUNTING PRACTICE SALES, INCORPORATED, a Texas Corporation, Gary Holmes, Defendants - Appellees: John F. Grady, Attorney, Grady Bell Llp, Chicago, IL.

Before BAUER and HAMILTON, Circuit Judges, and ELLIS, District Judge.[*]

OPINION

Page 584

Hamilton, Circuit Judge.

Plaintiff William J. Burford agreed to market and facilitate the purchase and sale of accounting practices on behalf of defendant Accounting Practice Sales, Inc. (APS) in various territories from Kentucky to Louisiana. The parties initially signed one written contract assigning Louisiana to Burford. They later modified this agreement

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by orally agreeing that Burford should also cover Alabama, Mississippi, Tennessee, and Kentucky. There is some dispute about the precise terms of the oral agreements and/or modifications, but for purposes of this appeal, we treat the parties' entire relationship as being governed by the terms of the written contract.

APS terminated its contract with Burford. He brought suit in an Illinois state court claiming that APS breached the terms of the contract. He also sought to pierce the corporate veil to hold Gary Holmes, the owner of APS, personally liable for any judgment against APS.

APS removed the case to federal court and moved to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. After Burford's complaint survived the motion to dismiss, APS filed a four-count counterclaim. Relevant here is the count of the counterclaim alleging that Burford misappropriated APS's trade name in violation of the Lanham Act, 15 U.S.C. § 1051 et seq. Shortly after APS terminated his contract, Burford started a rival business named " American Accounting Practice Sales." Both sides moved for summary judgment on the opposing side's claims.

APS prevailed on the contract claim on the theory that its contract with Burford was of indefinite duration and was therefore terminable at will. After APS's motion on the conNo. tract claim was granted, but before the district court could consider the counterclaim, APS voluntarily dismissed its counterclaim with prejudice. As the prevailing party on the Lanham Act claim, Burford then sought attorney fees under 15 U.S.C. § 1117(a), arguing that APS's pursuit of a meritless Lanham Act claim until right before trial amounted to the sort of abuse of process that entitled Burford to fees. The district court denied this motion, reasoning that APS's Lanham Act claim could have been pursued by a rational party seeking to protect its trademark.

Burford appeals the grant of summary judgment on the contract claim and the denial of his request for attorney fees under the Lanham Act. We reverse the grant of summary judgment but affirm the denial of attorney fees. The contract provided that it could be terminated by APS only if Burford violated the terms of the agreement. Thus, even if the contract was indefinite in duration, the parties contracted around the default rule making such contracts terminable at will by either party. On the Lanham Act issue, the district court did not abuse its discretion by denying Burford's request for fees.

I. Contract Interpretation

We review de novo the district court's interpretation of a written contract, including its conclusion that the contract was terminable at will. See BKCAP, LLC v. CAPTEC Franchise Trust 2000-1, 572 F.3d 353, 358 (7th Cir. 2009). Illinois law governs the contract in this diversity jurisdiction case. See A.T.N., Inc. v. McAirlaid's Vliesstoffe GmbH & Co. KG, 557 F.3d 483, 485 (7th Cir. 2009). Under Illinois law, our primary task is " to determine and give effect to the intent of the parties as expressed in the language" of the contract. Id., quoting Clayton v. Millers First Ins. Cos., 384 Ill.App.3d 429, 892 N.E.2d 613, 615, 322 Ill.Dec. 976 (Ill. App. 2008); see also Jespersen v. Minn. Mining & Manufacturing Co., 183 Ill.2d 290, 700 N.E.2d 1014, 1017, 233 Ill.Dec. 306 (Ill. 1998) (" in general, individuals should be free to order their affairs subject to important qualifications for instances of fraud, duress, or undue influence" ). As an interpretive guide, we rely on background principles of contract law to fill in the details when the parties were silent. See, e.g., Jespersen, 700 N.E.2d at 1017 (relying

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on default presumption that indefinite contracts are terminable at will when contract is silent on issue).

We agree with the district court that the contract here was of indefinite duration. The agreement provided that after it went into effect, " it renews automatically on each anniversary date of this agreement for another period of twelve months." The fact that the initial contract was for a twelvemonth period did not make it for a definite period. By its terms, the agreement would renew itself without the need for either party to take action, and there appears to have been no way for the parties to prevent automatic renewal. Because the parties...

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