Southern Illinois Medical Business Associates v. Camillo

• Decision Date: 30 October 1989
• Docket Number: No. 5-87-0764,5-87-0764
• Citation: Southern Illinois Medical Business Associates v. Camillo, 546 N.E.2d 1059, 190 Ill.App.3d 664, 138 Ill.Dec. 4 (Ill. App. 1989)
• Parties: , 138 Ill.Dec. 4 SOUTHERN ILLINOIS MEDICAL BUSINESS ASSOCIATES, Plaintiff-Appellee, v. Tony CAMILLO, Defendant-Appellant.
• Court: Appellate Court of Illinois

Page 1059

546 N.E.2d 1059

190 Ill.App.3d 664, 138 Ill.Dec. 4

SOUTHERN ILLINOIS MEDICAL BUSINESS ASSOCIATES, Plaintiff-Appellee, v.Tony CAMILLO, Defendant-Appellant.

No. 5-87-0764.

Appellate Court of Illinois Fifth District.

Oct. 30, 1989.

Churchill & McDonnell, Belleville (Allen D. Churchill, Daniel G. Donahue, of counsel), for defendant-appellant.

Farrell & Long, P.C., Godfrey, Salivar, Benson, Guest & Harms, St. Louis, Mo. (J. Thomas Long & David C. Salivar, of counsel), for plaintiff-appellee.

Justice GOLDENHERSHdelivered the opinion of the court:

Defendant, Tony Camillo, appeals from the interlocutory order of the circuit court of Madison County pursuant to Supreme Court Rule 307(a)( 107 Ill.2d R. 307(a)), which issued a preliminary injunction for plaintiff, Southern Illinois Medical Business Associates(SIMBA), a partnership.The injunction restrained defendant from violating certain non-competition and non-solicitation clauses contained in an employment agreement between plaintiff and defendant.In this cause, the sole issue presented for appeal is whether the trial court was correct in granting the preliminary injunction to restrain defendant from violating the restrictive covenants in his employment contract.We reverse and remand.

Plaintiff is a partnership of four pathologists, namely, Drs. Parks, Tsai, Nanduri, and Nuernberger, that provides clinical and anatomical laboratory services for hospitals, physicians, and nursing homes in southern Illinois.Plaintiff has two offices, one in Collinsville and one in Centralia.Defendant was an employee of plaintiff hired on February 1, 1983, to develop primarily nursing home clients.Defendant had previous experience in soliciting business from nursing homes for laboratories.He began this career in 1976 by working for Appleton Laboratory in East St. Louis, where he received training in phlebotomy.In 1977, Appleton and SIMBA merged into Allied Medical Laboratory (Allied).The Allied partners were Steven Bickel, Dr. Parks, and Dr. Nuernberger.In 1980, Allied split and Dr. Parks and Dr. Nuernberger left Allied and reestablished SIMBA.After this split, defendant remained an employee of Allied under the direction of Steven Bickel.Defendant stayed with Allied for approximately six or seven months, and then terminated his employment with Allied and left this field to work for an industrial laboratory in Sauget.

Approximately one year later, defendant returned to Allied where he remained employed until 1983.At that time, defendant terminated his employment with Allied because Steven Bickel was indicted for Public Aid vendor fraud.Prior to defendant's quitting, several of Allied's clients became uneasy about employing a laboratory whose director was accused of illegal activity, and on their own initiative, switched to other laboratories.A few of Allied's clients switched to SIMBA.Defendant then talked to Dr. Parks about employment with SIMBA.It was agreed that if defendant could bring enough of Allied's clients over to SIMBA to justify his salary, he could have a job with SIMBA.Defendant went to work on February 1, 1983, without a written contract.There was testimony that defendant was hired to develop nursing home and non-nursing home clients, to go to nursing homes to draw patients' blood and to schedule other phlebotomists to perform this service, as well as to service the four nursing homes that were already plaintiff's clients and had been since 1977.In return for this work, plaintiff provided defendant with a salary, an automobile, membership in a nursing home association, and an expense account.Within six months of starting his job with plaintiff, defendant had brought 20 nursing home clients that were previously Allied's clients under contract with SIMBA.The contracts between SIMBA and the nursing homes were renewable annually but were subject to termination with 30 days' notice to plaintiff if a nursing home desired to discontinue the service supplied by plaintiff.In addition to these 24 clients, defendant also developed 15 other nursing home clients by using a cold calling method which consisted of soliciting potential clients through the yellow pages and a list of nursing homes defendant had obtained from the Illinois Health Care Association.Prior to defendant's leaving plaintiff's employ, only three of the original four nursing homes, and 11 of the 15 new homes were still under contract with plaintiff.All nursing homes that defendant had brought with him from Allied remained under contract with plaintiff while defendant remained at SIMBA.

Plaintiff did not spend money training defendant nor did plaintiff provide defendant with any skills defendant did not already possess.Plaintiff did hire additional staff and expand its facilities in order to be able to service the new clients brought in by defendant.Plaintiff also took out a 20-year industrial bond to finance the expanding operation.

The services provided to nursing homes consisted of sending a phlebotomist to draw a patient's blood and take the sample back for laboratory testing.Not all of plaintiff's services were performed in its own lab.Some work was too specialized and had to be sent to a reference laboratory while sometimes it was more cost effective for plaintiff to refer the work to another laboratory.Moreover, the services defendant provided did not involve a skill or technique known only to defendant.However, defendant stated that he was the quintessential phlebotomist and was requested by name by several homes to be the phlebotomist sent to draw blood.Plaintiff's representatives did not acknowledge any favoritism toward defendant by their clients.All parties agreed that the type of business in which they were involved was highly competitive and clients were known to switch providers frequently.

On November 21, 1985, defendant gave written notice to terminate his employment with plaintiff, effective June 1, 1986, in order to pursue his own business interests.This resignation was given at a time when other employees' salaries were being cut 5% to 10% due to plaintiff's financial difficulties.After defendant submitted his resignation, plaintiff and defendant worked out a written one-year employment contract to begin January 1, 1986, at which time defendant's salary increased from $25,000 to $33,000.He was also guaranteed his salary would not be reduced.Prior to signing the employment contract, defendant read the contract and negotiated changes.Defendant made no objection to the non-competition and non-solicitation clauses which provide:

"15.NON-COMPETITION AFTER TERMINATION.Employee agrees that in addition to any other limitation, for a period of two (2) years after the termination of his employment hereunder, except after termination caused by Employer in violation of the terms hereof, and unless otherwise specified herein, he will not directly or indirectly engage in or in any manner be connected with or employed by any person, firm or corporation in competition with Employer or engaged in providing pathological, laboratory or other similar kinds of services within a radius of fifty (50) miles of any office of Employer, its affiliates or subsidiaries.

In the event of a breach by Employee of the above described 'non-competition' provisions, it is agreed that actual costs, injuries or damages sustained by Employer would be difficult if not impossible to ascertain, estimate or determine, and, therefore, liquidated damages to Employer in such event are hereby agreed to be the sum of Twenty-Five Thousand Dollars ($25,000.00) which sum shall forthwith become due and owing from Employee to Employer upon the occurrence of any such breach, and said sum is further agreed on as compensation for the damages suffered by Employer and not as a penalty.

16.SOLICITATION AFTER TERMINATION.Employee agrees that in addition to any other limitation, for a period of two (2) years after the termination of his employment hereunder, except after termination caused by Employer in violation of the terms hereof, and unless otherwise specified herein, he will not, on behalf of himself or on behalf of any other person, firm, or corporation, call on any of the customers, clients, or patients of Employer, or of any of its affiliates or subsidiaries for the purpose of soliciting and/or providing to any one or more of them any pathological, laboratory or other similar kinds of services, nor will he, in any way, directly or indirectly, for himself, or on behalf of any other person, firm or corporation, solicit, divert, or take away any customer of Employer, its affiliates or its subsidiaries."

The parties worked under this agreement until November 4, 1986, when defendant was notified by a letter signed by all partners, except Dr. Parks, that his services would be terminated on February 4, 1987.Dr. Nuernberger testified that the termination notice was sent because defendant was often unlocatable between 8 a.m. and 5 p.m., his normal working hours.There was a question of whether he was actually working the hours he said he was working and whether he was providing the services he was supposed to be providing.Defendant was further informed that the termination had not been finalized, but had been given to defendant in order to get his attention.Should defendant's performance improve, the partners would renegotiate with defendant.

Defendant rejected the opportunity to correct the alleged deficiencies and stated in a letter dated November 21, 1986, both his intention to quit and his desire to go into his own business which would be a competitor of plaintiff.Defendant further stated in the letter that out of respect for Dr. Parks, he was "willing to pay fair market value for either the nursing home business or the entire clinical lab."Defendant explained that he must have a firm promise to negotiate the details by December 1, 1986.

Plaintiff did not exercise...