## I L L I N O I S 

## O F F I C I A L 

## R E P O R T S
A p p e l l a t e C o u r t

Diederic h In suran ce Age ncy, LLC v. Sm ith , 2011 IL App (5th) 100048

Appellate Court Caption DIEDERI CH I NSURANCE AGENCY, L L C, Plaintiff-Appellant, v. CHAD SMI TH, De fendant-Appellee

.

District & N o. Fifth District Docke t No. 5–10–0048

Filed Filed June, 7, 2011

Held ( Note : Thi s syl lab us
con s t it ute s no par t of the opi nio n of the cour t but has bee n pre

par ed b y the Repo rt er of D e c i s i o n s f

o r t h e
c o n v e n i e n c e o

f t h e
rea der

. ) I n an action seeking money d am ages for defe ndant’s brea ch of a restric tive covenant prohibiting defe ndant from soliciting insurance b u s i n es s from plaintiff’s customers for two y ear s afte r he stoppe d working for plaintiff, the t rial court proper ly dismiss ed the cl ai m based

on its finding , as a matter of law, that there was insufficient consideration g iven for defe ndant’s ag ree ment, notwithstanding plaintiff’s contentions that the job defe ndant obtained and co n tinued for three months afte r signing the agr ee m ent was sufficie nt consideration and that the subsequent re duction of the time period from two y ear s to one y ear was
an actua l benef

it to defe ndant, since defe ndant’s continued employ ment afte r signing the ag ree ment was an illusory benef it in view of the fac t that he was an at-will employ ee who was alre ady o b l i gat ed not to compete ag ainst plaintiff’s business and he could be fired immediately , and his continued employment afte r reduc ing the time pe riod from two y ear s to
one y ear did not provide adequate consider at i o n, espec ially when there g ener ally must be at least two y ear s or more of continued employment to constitute adequate consider ation for suc h an ag ree ment.Dec ision Under

Review Appea l from the Circuit Court of J ackson County , No. 09–L –57; the Hon. W. C harle s Grac e, Judge, pr esiding

T h o mas F. Crosby , of Wint ers, Br ewster , Crosby & Schafe r, LL C, of Marion, for

appellee

. J udg ment Affirmed.

Counsel on Appea l Edwar d Renshaw, of Fe irich/Mag er/Gr een/Ry an, of Car bondale, f

or appellant.

Panel J U S T I C E G O L D E N H E R S H d e l i v e r e d t h e j u d g m e n t o f t h e c o u r t , w i t h o p i n i o n

. P r e s i d i n g J u s t i c e C h a p m a n a n d J u s t i c e D o n o v a n c o n c u r r e d i n t h e j u d g m e n t a n d o p i n i o n

.

OP INION

¶ 1 Plaintiff, Diederich Insuranc e Ag ency , LL C, filed a two-coun t co m p l ai n t aga inst defe ndant, Chad Smit h, a former employ ee of plaintiff. Count I soug ht money damag es for brea ching the terms of a restric tive covenant, and count I I soug ht money damag es for failing to repay commissions advanc ed to d ef en d ant by plaintiff. The circ uit court of J ackson County g rante d defe ndant’s motion to dismiss count I pursuant to section 2–619(a) (9) of the Code of Civil Procedur e (Code) (735 I L CS 5/2–619(a)( 9) (West 2008)). Plain t i ff l at er voluntarily dismiss ed count I I

. That count is not a part of this appea l. The issues raised in this appea l are as follows: (1) whether the circ uit court err ed in finding as a matter of law that there was insufficient consideration g iven by plaintiff for defe ndant’s nonso l i ci tation ag ree ment and (2) in the alternative, whether d efe ndant’s continued employ ment for three months afte r signing the nonsolicitation ag ree ment provided sufficie nt considera tion for that ag ree ment. We affirm.

¶ 2 FACTS ¶ 3 Def

endant wor

ked as an insurance broker /ag ent for plaintiff from October 1, 2007, throug h J une 16, 2008. At t h e time defe ndant beg an working for plaintiff, he signe d an employ ment ag ree ment in which he ag ree d not to solicit insurance business from plaintiff’s customers for a period of two y ear s afte r he stopped working for plaintiff. The employ ment

-2-ag ree ment specific ally stated the following : “[Defe ndant] also covenants that in the event of termination of this Ag ree ment , as provided here in, for whatsoeve r rea son, he/she shall not, either direc tly or indirectly

on his/her own acc ount, or for or on behalf of any person, company , or ag ency , other than [pl aintiff], record, solicit, or otherwise procur e insurance from individuals, par tnerships, corpor ations or other entities who have done business with or in any way been associate d with [plaintiff], f or a period of 2 y ear s after the termination of this Ag r e e me n t. Fu r

th e r , [d e f e n d an t] a g ree s during the continuance of this Ag ree ment and afte r its termination for the period specifie d[ ] that h e/ she will not direc tly or indirectly divert or take away or attempt to divert or take away any of the customers, business, or patrona g e of suc h customers a s are serve d by [pl aintiff].” ¶ 4 On Marc h 14, 2008, defe n d an t signe d an employ ee confide ntiality ag ree ment that reduc ed the terms of the nonsolicitation ag ree ment from 2 y ear s to 12 months. ¶ 5 On J une 16, 2008, defe ndant stopped workin g fo r p l ai n t i ff

. On May 15, 2009, plaintiff rec eived notification from L og an Primary Care Service Corporation (hereinafter L og an), one of plaintiff’s long- standing clients, that L og an would no l o n ger be utiliz ing plaintiff as its medic al malprac tice profe ssional liability insurance broker

. L og an informed plaintiff that it was appointing Arthur J

. Gallag her & Co. (her einaf ter Gallag her) as its medical malprac tice profe ssional liability broker

. Def endant arr ang ed the transfe r o f L o g a n ’ s medical malp ra ct i ce profe ssional liability insurance car rier service s from plaintiff to Gallag her. ¶ 6 On J une 8, 2009, plaintiff filed its two-count complaint ag ainst defe ndant. Def endant filed a motion to dismiss both counts of the complaint with prejudi ce p ursuant to section 2–619(a) (9) of

the Code. On Aug ust 27, 2009, the circ uit court dism issed count I , finding , “[T] here is insufficient considera tion as a matter of law and there is no gen u i n e i s s u e of materia l fac t, and pursuant to Fuller [ Fuller Family Holdings, LLC v. N orthern Trust Co. , 371 I ll. App. 3d 605, 863 N. E

. 2d 743 (2007)] and W oodfield [ W

oodfield Group, Inc. v. DeLisle , 295 I ll. App. 3d 935, 693 N.E.2d 464 (1998)], Count I here in is dismiss ed pursuant to 2– 619.” On Dec ember 14, 2009, plaintiff fil ed a motion to voluntarily dismiss count I I , which the c ircuit court g rante d. Plaintiff filed a timely notice of a

ppeal.

¶ 7 ANAL YSI S ¶ 8 The first issue we are asked to addre ss is whether the circ uit court err ed in finding as
a matter of law t h at there was insufficient consideration g iven by plaintiff for defe ndant’s nonsolicitation ag ree ment. Plaintiff c ontends the two-y ear covenant not to c ompete, which defe ndant enter ed into whe n he started his employ ment with plaintiff, was enfor cea ble and supported by sufficie nt consideration, namely , t h e job he obtained. Furthermore , plaintiff arg ues, the reduc tion of the leng th of the covenant not to compete from two y ear s to one y ear
was an actua l benef

it to defe ndant, and th u s n o addit ional considera tion was neede d to support the nonsolicitation ag ree ment. Alternatively , plaintiff arg ues that it s agr eement to

-3-reduc e the duration of defe ndant’s covenant not to compet e p rovi ded the nece ssary

consideration or defe ndant’s conti n u ed employ ment for three months afte r signing the nonsolicitation ag ree ment provided sufficie nt consideration. Def endant re s p o nds that the

n o n s o li c it ati o n a g r e e me n t w a s a modification of the previous contra ct and require d additio n al consideration to be valid and enfor cea ble and that beca

use no additional consideration wa s g iven, the circ uit court did not err in finding that the nonsolicitation ag ree ment was not valid and enf orce able. We ag reewith defe ndant. ¶ 9 A sec tion 2–619 moti on is simi lar to a motion for a summary judgme nt and allows a complaint to be dis m i s sed on the basis of i ssues of l aw or easily proven facts. Carroll v. Paddock , 199 I ll. 2d 16, 22, 764 N.E.2d 1118, 1122 (2 002). An action will be dismiss ed under section 2–619 if, afte r construing the pleading s and supporting documents in the light most favor able to the nonmoving party , the circ uit court finds there is no set of fac ts that can be proven u p o n which relief could be g rante d. Fuller Family Holdings, LLC v. Northern Trust Co. , 371 I ll. App. 3d 605, 613, 863 N.E.2d 743, 752 (2007). A revie wing court applies

a de novo standard to the dismiss al of a complaint under section 2–619. Carroll , 199 I ll. 2d at 22, 764 N.E.2d at 1122. ¶ 10 Def

endant orig inally s i gn ed a two-y ear nonsolicitation ag ree ment as a part of his orig inal employ ment ag ree ment. The terms of the ag ree ment wer e change d on Marc h 14, 2008, when defe ndant signe d a new nonsolicitation ag ree ment, which reduc ed the period of time from 2 y ear s to 12 months that defe ndant would not be allowed to solicit plaintiff’s customers afte r he was no longe r employ ed by plaintiff. Whil e plaintiff arg ues that this new nonsolicitation agre ement require d no additional consideration beca use it decr ease d the obligation, it cites no authority in support of this c ontention. Moreover , as the circ uit c ourt
corr ectly pointed out, plaintiff broug ht count I as an action under the subsequent noncompete ag ree ment signe d on Marc h 14, 2008, not under the orig inal 2007 employ ment ag ree ment, there by making this a case conce rning a postemploy ment restric tive covenant. ¶ 11 I n d et er m i n ing whether a restric tive covenant is enfor cea ble, our colleag ues in the First District succ inctly

set forth the f

ollowing:
“The determination of whether a restric tive covenant is enfor cea ble is a question of law. [C itation.] A postemploy ment restric tive covenant is unenfor cea ble when ‘its sole purpose is to restric t competition.’ [C itation.] ‘[O] rdinarily an employ er has no proprieta ry interest in its customers.’ [C itation.] An individual has a fundame ntal rig ht to pursue a particula

r occupation and ‘[o] ne who has worke d in a particula r field cannot be compelled to era se from his mind all of the g ener al skills, knowledg e and expertise acquir ed throug h his ex perie nce.’ [C itation.]
A postemploy ment restric tive covenant wi l l b e enforced if its terms are
rea sonable. [C itation.] I t must be rea sonable in g eog raphic al and temporal scope and

nece ssary to pr otect a leg itimate busine ss interest of the employ er. [Citation.] Prior to analy zing the re asonable ness of a covenant not to compete, the court must m ake two determinations: (1) the covenant must be ancillary to a valid contra ct, that is, it must be subordinate to the contra ct’s main purpose; and (2) there must be adequate

-4-consideration to support the covenant. [C itation.] ” W oodfield Group, Inc. v. DeLisle , 295 I ll. App. 3d 935, 938, 693 N.E.2d 464, 466-67 (1998)

. I n the instant case , the circ uit court found that there was insufficient consideration to support the postemploy ment covenant not to compete, and there fore , the court dismiss ed count I

. We ag ree

. ¶ 12 Plaintiff’s contention is that the re d u ct i o n i n leng th from two y ear s to one y ear constituted sufficie nt consideration. As defe ndant points out, this a rg ument is based on the underlying assumption that the orig inal nonsoli citation clause was valid and enfor cea ble. Assuming, arguendo , that it was valid, no new consideration was g iven by reduc ing the leng th of the ag ree ment, due to the pre exis ting duty rule, de scribed a s follows:
“Va luable consideration for a contract consists either of some rig ht, interest, prof it

or benef it acc ruing to one p a

r ty , o r some forbe arance, detriment, loss of responsibility g iven, suffe red or undertaken by the other. [C itation.] The pree x isting duty rule provides that wher e a party does what it is alre ady leg ally obligated to do, there is no consideration as there is no detriment.” W hite v. Village of Homewood , 256 I ll. App. 3d 354, 356-57, 628 N.E.2d 616, 618 ( 1993).
I f defe ndant was alre ady obligated not to compete agai n s t plaintiff, we fail to see how his promise not to co m pete for 12 months could be new, valid consideration. We are unconvince d by

plaintiff’s ar g uments to the contrary

. ¶ 13 When a defe ndant is an em p l o y ee at will, such as he was in the instant case , his continued employ ment is an illusory benef it beca use the minute afte r h e s i g ned the nonsolicitation ag ree ment, plaintiff could have f ired him and then hewould have rec eived nothing in exchang e for his fre sh promise repr esente d by the signing of the second ag ree ment
on Marc h 14, 2008. See Curtis 1000, Inc. v. Suess , 24 F.3d 941, 946 (7th Cir. 1994)

. Her e,
as in C u r t i s 1000, Inc. , the new covenant was a modification of an exis ting contra ct and, there fore , require d consideration in order to be e nforc eable

. ¶ 14 T h e s ec o n d i s s u e we are asked to consider is whether defe ndant’s co n t i n u ed employ ment for three months afte r signing the nonsolicitation ag ree ment provided sufficie nt consideration. Plaintiff arg ues that defe ndant’s continued employ ment for three months afte r signing the second nonsolicitation ag ree ment provided sufficie nt consi dera tion for that ag ree ment. We disag ree

. ¶ 15 “[C] o n t i n u ed em p l o y m en t for a substantial period is sufficie nt consideration to support an employ ment ag ree ment.” Corroon & B l ack of Illinois, Inc. v. Magner , 145 I ll. App. 3d 151, 163, 494 N.E.2d 785, 791 (1986). In Corroon & Black of Illin o i s , In c. , the plaintiff signe d a postemploy ment covenant not to compete and worke d for the defe ndant for four more y ear s, and four y ear s was found to be a substantial perio d

. C o r r o o n & Black of Illinois, Inc. , 145 I ll. App. 3d at 163, 494 N.E.2d at 791-92. Howeve r, in g ener al, there must be at least two y ear s or more of continued employ ment to constitute adequa te consideration. See Lawrence & Allen, Inc

. v. Cambridge Human Resource Group, Inc. , 292 I ll. App. 3d 131, 138, 685 N.E.2d 434, 441 (1997). I n both Brown & Brown, Inc. v. Mu d r o n , 3 7 9 I ll.

-5-Ap p

. 3 d 724, 729, 887 N.E.2d 437, 441 (2008), and Mid-Town Petroleum, Inc. v. Gowen ,

243 I ll. App. 3d 63, 70-71, 611 N.E.2d 1221, 1227 (199 3 ), seven months of continued employ ment was found to be n o t l o n g enoug h to constitute sufficie nt consideration. Acc ording ly , here , the circ uit court did not err in finding that three months of continued employ ment did not constitute sufficie nt considera tion. The fac t that defe ndant quit does not chang e the analy sis. See Mid-Town Petroleum, Inc

. , 243 I ll. App. 3d at 69-71, 611 N.E.2d at 1226-27. Be cause there was insufficient consideration g iven, the restric tive covenant is unenfor cea

ble as a matter of la w ag ainst defe ndant. ¶ 16 Fo r t h e fo reg oing rea sons, the judgme nt of the circ uit court of J ackson Countyis here by aff irmed. ¶ 17 Affirmed.

-6-