Profile Products v. Soil Management Technologies

Decision Date01 August 2001
Docket NumberNo. 99 C 5870.,99 C 5870.
Citation155 F.Supp.2d 880
PartiesPROFILE PRODUCTS, LLC f/k/a Aimcor Consumer Products LLC., Plaintiff, v. SOIL MANAGEMENT TECHNOLOGIES, INC., Defendant.
CourtU.S. District Court — Northern District of Illinois

Theodore John Low, Mark A. Flessner, Gregory Edward Ostfeld, Altheimner & Gray, Chicago, IL, for plaintiff.

Steven Dale Pearson, Joseph D. O'Brien, Jr., Meckler, Bulger & Tilson, Chicago, IL, for defendant.

MEMORANDUM OPINION AND ORDER

BUCKLO, District Judge.

Profile Products ("Profile") manufactures inorganic soil "amendments" used in the construction and maintenance of golf greens. In 1998, Profile (then known as AIMCOR) entered into an agreement (the "Agreement") with Soil Management Technologies ("SMT"). Under the agreement, SMT was to act as a sales representative for Profile for soil amendments in the new construction market. Some of these soil amendments were used in the "Soi2lAire™ System," which was designed to "create new performance driven specifications for the construction of new golf greens." Under the Agreement, the mark and name "Soi2lAire™ System" was jointly owned, and the parties had certain obligations in relation to marketing the Soi2 lAire™ System, which are in dispute here.

On August 15, 1999, Profile wrote to SMT to terminate the Agreement under its "just cause" provision. Profile then filed this diversity lawsuit,1 seeking a declaration that its termination of the Agreement was valid, and monetary damages for several breaches of contract. SMT counterclaimed, seeking declaratory judgment that the contract was wrongly terminated, and asserting several tort and contract claims. Profile moves for summary judgment on some of SMT's counterclaims, as well as on its own declaratory judgment claim, and to limit evidence of damages. SMT moves to exclude evidence of its performance in prior contracts. I grant these motions, as explained in the following, and I grant Profile's motion for reimbursement of expert witness preparation fees, but not at the unreasonable rate requested.

I.

Summary judgment is appropriate when no genuine issue of material fact exists, and the moving party is entitled to summary judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Fed. R. Civ. P 56(c). All inferences are taken in the light most favorable to the nonmoving party. Id. To survive the motion, the party opposing it "must produce sufficient evidence that would reasonably permit the finder of fact to find in [its] favor on [a] material question of fact." Hillman v. Resolution Trust Corp., 66 F.3d 141, 144 (7th Cir.1995). This is a diversity case to be decided under Illinois substantive law.

First, the declaratory judgment counts (Profile's Count I, SMT's Counterclaim I) address whether Profile validly terminated the Agreement. This issue raises a question about whether the Agreement can possibly be, as it purports, terminable only for cause. Section 2(a) provides that the period of the Agreement shall continue to September 30, 2000, and be automatically renewed for one year, but that "either party shall have the right to terminate this agreement at any time, for Just Cause (as defined below)." Section 2(b) says that "Just Cause" means "material failure or breach, ... after written notice providing not less than ... 60 days opportunity to cure." Profile claims that this language meant the contract was terminable at will because it was a contract of indefinite duration, so terminable at will under Illinois law. See Duldulao v. St. Mary of Nazareth Hosp. Ctr., 115 Ill.2d 482, 106 Ill.Dec. 8, 505 N.E.2d 314, 318 (1987). Because "[f]orever is a long time," Jespersen v. Minnesota Mining and Mfg. Co., 183 Ill.2d 290, 233 Ill.Dec. 306, 700 N.E.2d 1014, 1015 (1998), "[p]erpetual contracts are `not favored.'" Adkisson v. Ozment, 55 Ill.App.3d 108, 12 Ill.Dec. 790, 370 N.E.2d 594, 597 (1977); 1 R. Lord, Williston on Contracts § 4:19, at 442-44 (4th ed.1990).

Normally, a contract terminable for cause is the opposite of one that is terminable at will, see, e.g., Nat'l Material Trading v. Emilian, No. 92 C 2213, 1993 WL 22697, at *1 (N.D.Ill. Jan.29, 1993) (employment context). "[A]n agreement without a fixed duration but which provides that it is terminable only for cause ... is in one sense of indefinite duration, but is nonetheless terminable only upon the occurrence of the specified event and not at will." Jespersen, 233 Ill.Dec. 306, 700 N.E.2d at 1016 (emphasis added). The Agreement says on its face that it is terminable by either party "for Just Cause," but defines "just cause" as a material breach uncured after 60 days. Jespersen holds that "the delineation of instances of material breach in the context of a permissive and nonexclusive termination provision will not create a contract terminable for cause." Id. An "exclusive" termination provision gives a limited set of conditions that uniquely define when a contract is terminable. Id. The Agreement is exclusive: just cause is defined in one particular manner (breach uncured after 60 days), and there is no suggestion in this case that "those grounds are not the sole or exclusive basis for termination." Id.

However, Illinois law is clear that "permissiveness" rules out termination for cause. This is because material breach cannot be the sort of specified event that will support a just cause rather than an at will termination. First, it adds nothing to "specify" that the contract is terminable for material breach, because "any contract is terminable upon the occurrence of a material breach. [A]n agreement which is otherwise indefinite in duration and terminable at will cannot be converted into an agreement of definite duration by the mere transcription of such universals within the text of the contract." Id. at 1016-1017 (citing Trient Partners I Ltd. v. Blockbuster Entertainment Corp., 83 F.3d 704, 709 (5th Cir.1996) (applying Texas law)).

I am not sure what termination "for cause" would have to be to avoid this problem, except that it would have to be more specific than the broad generic classification of material breach. Perhaps a listing of specific terminating events, or kinds of terminating events would be required. See, e.g. Stein v. Isse Koch and Co., 350 Ill.App. 171, 112 N.E.2d 491, 493 (1953) (terminable event was plaintiff's discharge from the army); Donahue v. Rockford Showcase & Fixture Co., 87 Ill.App.2d 47, 230 N.E.2d 278, 281 (1967) (terminable event was drop below a certain level in value of shipments generated by salesman's orders in any one year); In the Matter of Commodity Merchants, Inc., 538 F.2d 1260, 1263 (7th Cir.1976) (termination point was "unsatisfactory financial condition" of a trader's customer). Be that as it may, the Illinois Supreme Court could not be clearer that "material breach" is not "cause" that will avoid construing a contract as terminable at will.

Second, for a contract to be of definite duration, "[t]he event upon which [it] will terminate must be an `objective event,'" R.J.N. Corp. v. Connelly Food Prods., 175 Ill.App.3d 655, 125 Ill.Dec. 108, 529 N.E.2d 1184, 1187 (1988), independent of the will of the parties. If a party was in "complete control" or "could institute a termination-triggering event, then the contract should be considered terminable at will." Yale Security, Inc. v. Freedman Sales, Ltd., No. 96 C 6501, 1997 WL 51428, at *3 (N.D.Ill. Feb.3, 1997) (Coar, J.). Here, each party was in complete control and could institute a termination-triggering event by causing a material breach. In contrast, the events in Stein, Donahue, and Commodity Merchants above were at least partially "objective." See Peters v. Health and Hospitals Governing Comm'n, 91 Ill.App.3d 1104, 47 Ill.Dec. 648, 415 N.E.2d 653, 656 (1980), rev'd on other grounds by 88 Ill.2d 316, 58 Ill.Dec. 877, 430 N.E.2d 1128 (1981).

SMT argues, first, that the "complete language" of the termination agreement provides the necessary definiteness, because section 2(b) states that the terminating event is a material breach that is uncured after 60 days. However, the specification of a 60 day period adds nothing substantive, and does not make the material breach an "objective event." SMT was still in complete control and could trigger the terminating breach at will.

Second, SMT contends that the agreement is ambiguous, and its meaning is therefore to be determined by the trier of fact. But for a court to find ambiguity, "the express language of the contract itself [must be] fairly susceptible to more than one reasonable reading." Bourke v. Dun & Bradstreet, 159 F.3d 1032, 1037 (7th Cir.1998). SMT remarks on the parties' substantial difference of opinion about the meaning of the termination clause, but "`a contract is not rendered ambiguous simply because the parties do not agree on the meaning of its terms.'" Id. (citation omitted). Here, SMT does not show that there is a reading supporting its preferred outcome to which the contract is fairly susceptible. The contract is inartfully drafted, but this provision is not ambiguous. The agreement was terminable at will by operation of the law; no material breach was required; and it was properly terminated by Profile's letter of August 15, 1999. SMT is not entitled to any contract damages accruing after that date.

II.

SMT's Third Counterclaim avers that, by the terms of the Agreement, Profile was to "financially support SMT's marketing of Soi2lAire™ System," but failed to do so. SMT relies on Section 4(d) of the Agreement, which says that Profile "shall continue to support the sales of Products through literature, advertising, and trade shows in accord with past practices." The "Products" are described in the contract as Profile's golf course products. SMT argues that this obligated Profile to pay for SMT's marketing the Soi2lAire™ System.

Profile contends that the "in accordance with past practices" clause...

To continue reading

Request your trial
20 cases
  • In re Raymond Professional Group, Inc.
    • United States
    • U.S. Bankruptcy Court — Northern District of Illinois
    • November 25, 2009
    ...time attending the deposition. See Waters v. City of Chicago, 526 F.Supp.2d 899, 900-01 (N.D.Ill.2007); Profile Prod. v. Soil Mgmt. Tech., Inc., 155 F.Supp.2d 880, 886 (N.D.Ill.2001). The following factors are used to assess the reasonableness of expert's fees under Rule 26(b)(4)(c)(i) Fed.......
  • Rdo Foods Co. v. United Brands Intern., Inc.
    • United States
    • U.S. District Court — District of North Dakota
    • March 19, 2002
    ...Lombard v. Booz-Allen & Hamilton, Inc., 280 F.3d 209, 214 (2d Cir. 2002) (applying New York law); Profile Prods., LLC v. Soil Mgmt. Techs., Inc., 155 F.Supp.2d 880, 885-86 (N.D.Ill.2001) (applying Illinois law); Rotec Indus. Inc v. Mitsubishi Corp., 181 F.Supp.2d 1173, 1178 (D.Or.2002) (app......
  • Brown v. City of Chi.
    • United States
    • U.S. District Court — Northern District of Illinois
    • April 30, 2019
    ...2010) (same); Waters v. City of Chicago, 526 F. Supp. 2d 899, 901 (N.D. Ill. 2007) (Rule 26(b)(4)); Profile Prods., LLC v. Soil Mgmt. Techs., Inc., 155 F. Supp. 2d 880, 886 (N.D. Ill. 2001) (same). However, because the officers' brief relies solely on Rule 54(d)(1) and § 1920 to recover May......
  • Se–Kure Controls, Inc. v. Vanguard Prods. Grp., Inc.
    • United States
    • U.S. District Court — Northern District of Illinois
    • July 5, 2012
    ...in securities class action case where party offered little evidence in support of rate sought); Profile Prods., LLC v. Soil Mgmt. Techs., Inc., 155 F.Supp.2d 880, 886–87 (N.D.Ill.2001) (reducing forensic accountant's rate from $475.00 to $250.00 per hour as more reasonable in breach of cont......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT