Axion RMS, Ltd. v. Booth
Citation | 434 Ill.Dec. 847,2019 IL App (1st) 180724,138 N.E.3d 6 |
Decision Date | 29 March 2019 |
Docket Number | No. 1-18-0724,1-18-0724 |
Parties | AXION RMS, LTD., an Illinois Corporation, Plaintiff-Appellant, v. Michael BOOTH, Defendant-Appellee. |
Court | United States Appellate Court of Illinois |
Figliulo & Silverman, P.C., of Chicago (Michael K. Desmond and Thomas D. Warman, of counsel), for appellant.
Levenfeld Pearlstein, LLC, of Chicago (Peter F. Donati and Jason B. Hirsh, of counsel), for appellee.
¶ 1 The plaintiff-appellant, Axion RMS, Ltd. (Axion), appeals from a judgment of the circuit court of Cook County, dismissing its complaint against the defendant-appellee, Michael Booth (Booth), and denying it leave to file an amended complaint. For the following reasons, we affirm the judgment of the circuit court of Cook County.
¶ 3 Axion,1 an Illinois corporation engaged in the business of insurance brokerage and employee benefits consulting, filed a verified complaint2 against Booth, its former president (the verified complaint). The verified complaint contained four claims: counts I and II were breach of contract claims, count III was a tortious interference claim, and count IV was an accounting claim. Counts I, II, and IV were based on alleged violations of a noncompete clause in a five-year employment agreement between Axion and Booth (the employment agreement).
¶ 4 Paragraphs 5 and 6 of the verified complaint stated:
The verified complaint attached the employment agreement, which was signed by Booth and the chief executive officer of Axion. The employment agreement stated that it was entered into on January 1, 2015. The verified complaint cited a noncompete clause in the employment agreement that restricted Booth from soliciting Axion's clients or employees during his employment and for a period of two years following termination of his employment.3
¶ 5 The verified complaint further alleged the following, in part:
¶ 6 Booth filed a motion to dismiss the verified complaint pursuant to section 2-615 of the Code of Civil Procedure (Code) ( 735 ILCS 5/2-615 (West 2016) ). His motion cited numerous cases from this court holding that, where the only consideration given to an employee in exchange for signing a noncompete covenant is continued employment, the employee must work for at least two years after signing the noncompete covenant in order for there to be adequate consideration and to render the noncompete covenant enforceable. Booth's motion argued, inter alia , that the noncompete clause in the employment agreement he signed lacked adequate consideration because he resigned from Axion less than a year after signing it and, therefore, the verified complaint was defective on its face.
¶ 7 Axion responded to Booth's motion to dismiss by arguing that the court should not apply a "bright-line test" of two years of employment, but instead a "totality of the circumstances test" to determine adequate consideration. Axion claimed that Booth's promotion to president and shareholder should be considered in determining whether there was adequate consideration given to Booth in exchange for signing the noncompete clause in the employment agreement.
¶ 8 Following a hearing on Booth's motion to dismiss, the trial court granted the motion, in part. In its written memorandum and order, the trial court stated:
The trial court acknowledged that there were predictions from several federal district court cases that our supreme court would adopt a totality of the circumstances approach to determine adequate consideration for restrictive covenants. Nonetheless, the trial court recognized that our supreme court has not yet adopted that approach. Therefore, the trial court was bound to follow the decisions from this court, holding that where restrictive covenants are supported by adequate consideration based exclusively on continued employment, the employee's employment must continue for at least two years after execution of the restrictive covenant. The court therefore found that Booth's employment for less than a year after he entered into the employment agreement at issue was insufficient to constitute adequate consideration.
¶ 9 The court concluded that due to the lack of adequate consideration, the noncompete clause between Axion and Booth was unenforceable. It consequently found that Axion could not sufficiently plead counts I, II, and IV (breach of contract and accounting claims) of its verified complaint and dismissed those counts with prejudice. The court also dismissed count III, the tortious interference claim, without prejudice and granted Axion leave to file an amended complaint for that count.4
¶ 10 Axion subsequently filed a first amended verified complaint, which contained a single count for tortious interference. At the same time, Axion also filed a combined motion to reconsider the court's order dismissing counts I, II, and IV and for leave to file a second amended complaint (the combined motion). The combined motion argued that the court should reconsider its order and instead dismiss counts I, II, and IV without prejudice , so that Axion could amend its complaint to cure the pleading defects regarding adequate consideration. The combined motion attached a proposed second amended complaint (the proposed amended complaint), which sought to plead adequate consideration in order to render the noncompete clause enforceable. The proposed amended complaint stated, in relevant part:
To continue reading
Request your trial-
Cahnman v. Timber Court LLC
...discretion of the trial court, and we will not reverse the trial court's decision absent an abuse of that discretion. Axion RMS, Ltd. v. Booth , 2019 IL App (1st) 180724, ¶ 26, 434 Ill.Dec. 847, 138 N.E.3d 6. "A trial court abuses its discretion when no reasonable person would take the view......
-
Flynn v. Maschmeyer
...discretion of the trial court, and we will not reverse the trial court's decision absent an abuse of that discretion. Axion RMS, Ltd. v. Booth , 2019 IL App (1st) 180724, ¶ 26, 434 Ill.Dec. 847, 138 N.E.3d 6. "A trial court abuses its discretion when no reasonable person would take the view......
-
A.B. Pratt & Co. v. BridgePort Grp.
...two years after executing the restrictive covenant, the consideration is inadequate and the restrictive covenant is unenforceable.” Axion, 138 N.E.3d at 15. Thus, when there are no allegations that there has been any consideration other than the continued at will employment, Illinois courts......
-
Tekway Inc. v. AT&T Servs., Inc.
...consideration for a non-compete provision, the employee must have been employed for at least two years. See Axion RMS, Ltd. v. Booth, 138 N.E.3d 6, 15 (Ill. App. Ct. 1st Dist. 2019) ("[I]t is well-established by this court that a promise of continued employment for an at-will employee is ad......