Valent Biosciences Corp.. v. Kim–c1 Llc

Decision Date01 June 2011
Docket NumberNo. 1–10–2073.,1–10–2073.
Citation952 N.E.2d 657,2011 IL App (1st) 102073,351 Ill.Dec. 865
PartiesVALENT BIOSCIENCES CORPORATION, Plaintiff–Appellant,v.KIM–C1, LLC, Defendant–Appellee.
CourtUnited States Appellate Court of Illinois


Schopf & Weiss LLP, Chicago (Arthur J. Howe and Joseph J. Siprut, of counsel), for appellant.Neal, Gerber & Eisenberg LLP, Chicago (Tonya G. Newman, Meredith D. Schacht, Andrew G. May, of counsel), for appellee.


Justice STEELE delivered the judgment of the court, with opinion.

¶ 1 Plaintiff, Valent BioSciences Corporation (VBS), appeals an order entered by the circuit court granting the motion filed by defendant Kim–C1, LLC (KIM), pursuant to section 2–619 of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/2–619(a)(1) (West 2008)) dismissing VBS's amended complaint. The circuit court concluded it lacked subject matter jurisdiction over VBS's action seeking to vacate an award issued following the parties' arbitration in California under the Illinois Uniform Arbitration Act (Act) (710 ILCS 5/1 et seq. (West 2008)).

¶ 2 On appeal, VBS contends: (1) justiciability was the actual issue before the circuit court, which possessed subject matter jurisdiction over the action; (2) KIM waived any objection to subject matter jurisdiction in the parties' agreement and in its answer to the amended complaint; and (3) the circuit court erred in dismissing the declaratory judgment count. For the reasons set forth herein, we affirm the circuit court's judgment dismissing VBS's amended complaint in its entirety.


¶ 4 VBS is an agricultural products company and an Illinois corporation with its principal place of business in Illinois. KIM is a California limited liability company and has registered offices in California. On July 9, 1999, VBS (by its predecessor in interest, Abbott Laboratories) 1 entered into an agreement, entitled “Revised Commercial License, Development and Supply Agreement” (License Agreement). The License Agreement involved VBS's use of and right to market a plant growth regulator commonly known as CPPU, which is applied to crops, including certain fruit, to yield a higher crop for consumer use.

¶ 5 Section 21.3 of the License Agreement provided:

Governing Law. This Agreement shall be construed, interpreted and governed in accordance with the laws of the United States of America and the State of Illinois, except for choice of law rules. Subject to the terms of Section 21.4, the Parties consent to the jurisdiction of the competent courts of the State of Illinois which shall have exclusive jurisdiction over all disputes that may arise under or in connection with this Agreement.” (Emphasis added.)

¶ 6 Section 21.4 of the License Agreement,2 entitled “Dispute Resolution,” outlined the procedures for the parties to resolve any disputes arising under the contract. The provision provided:

“Any dispute or claim arising out of or in connection with this Agreement shall be resolved as follows: (i) for a period of thirty (30) days after a dispute arises the respective appropriate officer of the Parties shall negotiate in good faith in an effort to resolve the dispute, and (ii) if the dispute has not been resolved at the close of such thirty (30) day[ ] period the matter shall be submitted by the Parties to arbitration in accordance with the rules of the CPR Institute for Dispute Resolution (‘CPR’) as identified in Exhibit 5.0.”

¶ 7 Additionally, the License Agreement provided [t]he Parties hereby agree to be bound by and fully perform the terms * * * contained in the Exhibits, attached hereto and made part hereof, as if the same were fully set forth in this Agreement.”

¶ 8 Exhibit 5.0 provided in pertinent part:

“The [alternative dispute resolution] proceeding shall take place at a location agreed upon by the parties. If the parties cannot agree, the neutral [arbitrator] shall designate a location other than the principle [ sic ] place of business of either party or any of their subsidiaries or affiliates.”

The License Agreement did not identify a specific location where the dispute resolution proceedings would occur.

¶ 9 In 2007, a dispute under the License Agreement arose between VBS and KIM. Pursuant to the alternative dispute resolution clause in the License Agreement, the parties submitted the dispute to arbitration. The arbitration was held in California and resulted in a final arbitration award entered on March 28, 2008. Subsequent to the 2008 award, the parties had another dispute regarding the License Agreement and certain provisions of the 2008 award, which led to arbitration. The second arbitration was also held in California. An interim arbitration award was issued on January 29, 2010.

¶ 10 On March 22, 2010, VBS filed a two-count complaint in the circuit court of Cook County in Chicago, Illinois. Count I sought to vacate the interim arbitration award pursuant to section 12 of the Act (710 ILCS 5/12 (West 2008)). Specifically, VBS challenged four of the rulings (rulings 2, 3, 4 and 5) issued against VBS as exceeding the arbitrator's powers. VBS also asserted the parties consented to Illinois courts having exclusive jurisdiction over any disputes under the License Agreement. Count II requested a declaratory judgment regarding the parties' controversy about whether Illinois courts possessed exclusive jurisdiction to enforce or vacate the arbitration award.

¶ 11 On March 31, 2010, KIM filed an action in a California federal district court seeking to confirm the final 2010 arbitration award, which was issued on March 30, 2010. On March 31, 2010, VBS filed a motion for leave to file an “Amended Complaint to Vacate Arbitration Award and for Other Equitable Relief” instanter, which the circuit court granted in an order entered on April 8, 2010. The amended complaint contained the same two counts. On the same day, the circuit court entered and continued VBS's additional motion to vacate the arbitration award filed separately on March 31, 2010.

¶ 12 On April 27, 2010, KIM filed an answer to the amended complaint. While denying the License Agreement conferred exclusive jurisdiction to Illinois, KIM admitted the circuit court possessed subject matter jurisdiction. Additionally, KIM requested the circuit court to confirm the 2010 arbitration award in its prayer for relief. However, in KIM's written memorandum in opposition to VBS's motion to vacate filed on May 24, 2010, KIM noted that it was not waiving its objection to Illinois courts lacking jurisdiction under the Act. On June 14, 2010, the circuit court scheduled a hearing on VBS's motion to vacate the award for September 14, 2010.

¶ 13 On May 19, 2010, KIM filed a motion to dismiss VBS's amended complaint 3 pursuant to section 2–619(a)(1) of the Code ( 735 ILCS 5/2–619(a)(1) (West 2008)) asserting the License Agreement's “silence” to the location of the arbitration failed to confer subject matter jurisdiction to the Illinois courts under the Act. VBS filed a response in opposition to KIM's motion claiming that certain provisions in the License Agreement provided for Illinois to have exclusive jurisdiction over any disputes, including whether to vacate the arbitration award. VBS also contended KIM waived its objection to subject matter jurisdiction under section 21.3 of the License Agreement and by admission in its answer and prayer for relief.

¶ 14 After briefing and a hearing, the circuit court entered a written ruling on June 24, 2010, granting KIM's motion to dismiss VBS's amended complaint for lack of subject matter jurisdiction. On July 19, 2010, VBS filed a timely notice of appeal with this court.


¶ 16 On appeal, VBS contends the circuit court erred in granting KIM's motion to dismiss for lack of subject matter jurisdiction for several reasons. First, the amended complaint presented a justiciable claim, which was confused with the issue of subject matter jurisdiction, under the Act (710 ILCS 5/1 et seq. (West 2008)) and enabled the circuit court to hear the matter. Second, KIM waived any objection to subject matter jurisdiction by the parties' written agreement and in its answer to the amended complaint filed prior to its motion under section 2–619 of the Code. Third, the circuit court erred in dismissing the declaratory judgment count, because a controversy existed about whether Illinois had exclusive jurisdiction to adjudicate disputes about the arbitration award. We address each of VBS's contentions in turn.

¶ 17 Standards of Review

¶ 18 When a party files a motion to dismiss under section 2–619 of the Code, the motion admits the legal sufficiency of the complaint, but asserts certain defenses and defects outside of the pleading defeat the plaintiff's claim. Solaia Technology, LLC v. Specialty Publishing Co., 221 Ill.2d 558, 579, 304 Ill.Dec. 369, 852 N.E.2d 825 (2006). A motion to dismiss under section 2–619 of the Code affords litigants a means to dispose of issues of law and easily proved issues of fact early in litigation. Kedzie & 103rd Currency Exchange, Inc. v. Hodge, 156 Ill.2d 112, 115, 189 Ill.Dec. 31, 619 N.E.2d 732 (1993). We review dismissals granted pursuant to section 2–619 of the Code de novo. Solaia Technology, 221 Ill.2d at 579, 304 Ill.Dec. 369, 852 N.E.2d 825.

¶ 19 Additionally, this appeal involves the interpretation of the Act. Interpretation of a statute is a question of law, which is reviewed de novo. People v. Lewis, 223 Ill.2d 393, 402, 307 Ill.Dec. 645, 860 N.E.2d 299 (2006). The primary objective of statutory construction is to ascertain and give effect to the legislative intent. People ex rel. Birkett v. Jorgensen, 216 Ill.2d 358, 363, 297 Ill.Dec. 289, 837 N.E.2d 69 (2005). We effect legislative intent by viewing and “not depart[ing] from the statute's plain language by reading into it exceptions, limitations, or conditions the legislature did not express.” People v. Ellis, 199 Ill.2d 28, 39, 262 Ill.Dec. 383, 765 N.E.2d 991...

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