McCormick v. Empire Accounts Service, Inc.

• Court: Appellate Court of Illinois
• Writing for the Court: SIMON
• Citation: McCormick v. Empire Accounts Service, Inc., 49 Ill.App.3d 415, 364 N.E.2d 420, 7 Ill.Dec. 259 (Ill. App. 1977)
• Decision Date: 25 May 1977
• Docket Number: No. 76-1080,76-1080
• Parties: , 7 Ill.Dec. 259 John T. McCORMICK, Plaintiff-Appellee, v. EMPIRE ACCOUNTS SERVICE, INC., a corporation, Defendant-Appellant.

Page 420

364 N.E.2d 420

49 Ill.App.3d 415, 7 Ill.Dec. 259

John T. McCORMICK, Plaintiff-Appellee, v. EMPIRE ACCOUNTS SERVICE, INC., a corporation, Defendant-Appellant.

No. 76-1080.

Appellate Court of Illinois, First District, Third Division.

May 25, 1977.

Donald L. Johnson, Chicago (Marks, Katz, Walker & Blatt, Chicago, of counsel), for defendant-appellant.

John V. Ryan III, Chicago (Rooks, Pitts, Fullager & Poust, Chicago, of counsel), for plaintiff-appellee.

SIMON, Presiding Justice:

John McCormick, the counterdefendant, was one of two co-founders in 1960 of Empire Accounts Service, Inc., a Chicago-based collection agency. He owned half of the company's stock, and on March 31, 1973 he and the owner of the other half sold their stock to Daisy Corporation. By an agreement of the same date entitled "Employment Agreement," Empire employed McCormick as a sales representative for a period ending March 31, 1978. On May 10, 1974 the term of the employment agreement was extended to March 31, 1982. McCormick worked as a salesman until June 1975 when he was elected Empire's president and chief operating officer. Empire discharged him on March 19, 1976.

McCormick filed suit against Empire in June 1976 to recover for wrongful termination of his employment contract. Empire counter-claimed and moved for a preliminary injunction, alleging that by accepting employment with one of its competitors, Diversified Accounts, McCormick had violated a non-competition clause in the employment agreement. That anti-competition provision precluded McCormick from working for any business providing a service similar to that offered by Empire within 100 miles of the city limits of Chicago for 2 years after his involuntary termination, but for only 6 months if McCormick resigned. After an evidentiary hearing, the trial court denied Empire's motion for a preliminary injunction, and Empire is appealing that ruling. The sole issue before this court is whether the trial judge abused his discretion in refusing to grant a preliminary injunction.

For a preliminary injunction to issue, the party seeking the injunction must carry the burden of persuasion on four issues: (i) that he has no adequate remedy at law and will be irreparably injured if the injunction is not granted; (ii) that the threatened injury to him will be immediate, certain and great if the injunction is denied while the loss or inconvenience to the opposing party will be comparatively small and insignificant if it is granted; (iii) that he has a reasonable likelihood of prevailing on the merits of the case; and (iv) that granting the preliminary injunction will not have an injurious effect upon the general public. (Fox Valley Harvestore, Inc. v. A. O. Smith Harvestore Products, Inc. (7 Cir. 1976), 545 F.2d 1096, 1097; Professional Business Management, Inc. v. Clark (1967), 83 Ill.App.2d 236, 241, 227 N.E.2d 371; Miollis v. Schneider (1966), 77 Ill.App.2d 420, 425, 222 N.E.2d 715; O'Brien v. Barney Matual (1957), 14 Ill.App.2d 173, 188, 144 N.E.2d 446.) Empire failed in two respects to carry the burden entitling it to a preliminary injunction. It did not establish that it required the protection of a preliminary injunction to avoid immediate, certain and ascertainable injury and that the resultant harm to McCormick from such an injunction would be comparatively small and insignificant. Empire also failed to show a reasonable likelihood of prevailing on the merits. Consequently, the trial judge did not abuse his discretion in denying the preliminary injunction.

Evidence was offered indicating that approximately 250 collection agencies compete with Empire in the Chicago area for many of the same customers, and that about 700 collection agencies are located within the 100-mile radius of Chicago covered by the non-competion provision in question. The average time that Empire retains an account is 16 to 24 months. Empire experiences a 50 to 75 percent customer turnover rate annually, and this is standard for the industry. Creditors seeking to collect accounts frequently move from one credit agency to another and it is not unusual for one company to use the services of several collection agencies simultaneously. It is in this veritable maelstrom of competitive activity that McCormick worked for Empire, and briefly for Diversified, as a salesman, soliciting new accounts and servicing old ones.

When McCormick joined Diversified in June 1976, he sent letters to some of the people he knew and handled business for at Empire, advising them of his change of employers, and soliciting their business. Yet, no evidence was presented that McCormick was successful in taking away any of Empire's customers in the month he was employed by Diversified after he sent these letters and prior to the hearing on the preliminary injunction motion. There was no evidence that any Empire customers stopped listing accounts with Empire because of McCormick's efforts on behalf of Diversified. Even if, as Empire suggests and McCormick denies, a salesman's personality or relationship with a particular customer were crucial to attracting and retaining accounts in the collection agency business, the evidence failed to establish that McCormick would be likely to draw any significant amount of business away from his former employer in the...