genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 312, 325,
106 S.Ct. 2548 (1986). The burden then shifts to the nonmoving party to show
through specific evidence that a triable issue of fact remains on issues on which the
nonmovant bears the burden of proof at trial. Id. The nonmovant may not rest
upon mere allegations in the pleadings or upon conclusory statements in affidavits;
it must go beyond the pleadings and support its contentions with proper
documentary evidence. Id. The court considers the record as a whole and draws
all reasonable inferences in the light most favorable to the party opposing the

motion. Bay v. Cassens Transport Co., 212 F.3d 969, 972 (7th Cir. 2000). A

genuine issue of material fact exists when "the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.” Insolia v. Philip Morris, Inc.,
216 F.3d 596, 599 (7th Cir. 2000); Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986).
DISCUSSION

To begin, the court addresses Volvo CE’s request that all defendants except
Volvo CE be dismissed because as parent companies and corporate executives, they
were not involved in the events or decisions that gave rise to this dispute. The
Dealers agree to their dismissal. We therefore dismiss without prejudice AB Volvo;

Volvo Excavators, AB; and Volvo Construction Equipment, NV, from this action.


(holding that Illinois legislature did not intend IFDA to reach extraterritorially);
Wright-Moore v. Ricoh, 908 F.3d 128 (7th Cir. 1990) (allowing Indiana franchisee
to be protected by Indiana franchise statute even though parties had chosen New
York law); Highway Equip ment, 908 F.2d at 62-64 (applying all of Tlinois law
except IFDA to non-Illinois franchisee); McDonald’s Corp. v. C.B. Mgmt. Co., 13
F.Supp.2d 705, 713-714 (N.D.IIl. 1998) (same); In re Montgomery Ward Catalog

Sales Litigation, 680 F.Supp. 182 (E.D. Pa. 1987) (same); Hengel, Inc., v. Hot ’n

Now, Inc., 825 F.Supp. 1311 (N.D. Ill. 1993) (applying IFDA protections to Illinois

franchisee even though parties chose Michigan law); Flynn Beverage, Inc., v.
Seagram & Sons, Inc., 815 F.Supp. 1174 (C.D. Ill. 1993) (applying IFDA
protections to Illinois franchisee even though parties chose New York law). As
such, we decline to apply the antiwaiver provision of the IFDA to invalidate
portions of the Dealers’ agreements, as they are all located outside of the state of
Tilinois.

The Dealers raise the additional argument that the implied covenant of good
faith and fair dealing forbids Volvo to exercise its contractual termination rights.
We find this argument unconvincing. As the name states, the implied covenant of
good faith and fair dealing is not a condition that appears on the face of a
contractual agreement. Rather, an implied provision is one that is read in when no

express language addresses a given issue. That is not the case here. The Dealer

-9-


Arkansas choice-of-law rules allow contracting parties to choose the law that
will apply to their relationship as long as the choice bears a reasonable relationship
to the transaction and does not run afoul of Arkansas public policy. Arkansas

Appliance Distributing Co. v. Tandy Electronics, Inc., 292 Ark. 482, 485 (1987). In

this case, all of the contracts contained a provision choosing Illinois law. The
choice of Illinois law bears a strong relationship to the transaction in that Samsung
was located in Illinois and much of the training and support provided to the Dealers
took place in Illinois. (Defs.’ Stmt of Undisp. Facts, para. 3; Defs.’ Exh. 9, para. 7).
Furthermore, the Illinois law that applies to dealerships tracks Arkansas substantive
Jaw, which is our best indication of Arkansas public policy in this area. See, e.g.,
Ark. Stat. § 4-72-204(a)(1); Ark. Stat. § 4-72-304. In addition, the Arkansas
Franchise Practices Act is limited to in-state franchises, Ark. Stat. § 4-72-203, as is
the Illinois Franchise Disclosure Act (“IFDA”). 815 ILCS § 705/1 et seq; Highway

Equipment Co. v. Caterpillar, Inc., 908 F.2d 60, 63 (6th Cir. 1990). We can safely

assume that no fundamental Arkansan public policy will be subverted by the
application of similar Illinois laws.
B. Applicability of the Dealership Agreements

Volvo argues its motion under the assumption that all of the Dealership

Agreements dictate the outcome of this matter. However, the Agreements are only


In addition, the Dealers have agreed with Volvo CE’s contention that we
should dismiss, with prejudice, their claim for misappropriation. Accordingly, we
dismiss the claim with prejudice and turn to the remaining counts.

A. Choice of Law

This case involves only questions of state law, as our jurisdiction over this
matter rests solely on the diversity of the parties.' 28 U.S.C. § 1332(a). A federal
court sitting in diversity considers state law causes of action and therefore must

apply state substantive law. Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). A

federal court also must apply the choice-of-law rules of the state in which it sits.
Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487 (1941). However, when a
case has been transferred from another district court, the transferee court must act as
though it sits in the state of the transferring court and apply the choice-of-law rules
of that state rather than its home state. Van Dusen v. Barrack, 376 U.S. 612 (1964).

In this case, we are a federal court sitting in diversity over an action that was
transferred to us from the Western District of Arkansas. Therefore, for the purposes
of this case, we must apply Arkansas choice-of-law and decide this case as if we

were an Arkansas state court.

'The Dealers hale from Texas, Maine, Alberta, New York, Saskatchewan, and
Montana. Volvo CE is a Delaware corporation with its principal place of business in
North Carolina. (Defs. Stmt. of Undisp. Facts, paras. 4, 8-15).

-5-


without cause. The characterization of the nature of the relationship is therefore
unimportant, as it does not affect the result in this case. Volvo asserts that the terms
of the Agreements continued to govern the parties’ relationships even after their
expiration.
1. Contract Claims

In addressing the Dealers’ claims for breach of contract, the parties focus on
the applicability of the provisions of the IFDA. Because the contract indicated that
it would be governed by Illinois law, the Dealers assert that they are protected by
the provisons of the IFDA, specifically the termination-with-cause and antiwaiver
provisions. 815 ILCS §§ 705/19, 41.

The IFDA does not apply to this dispute for two reasons. First, contractual
choice-of-law provisions are intended to be gap fillers, supplying controlling law
where the parties have not supplied thier own transactional rules in specific

contractual terms. Infomax Office Systems, Inc., v. MBO Binder & Co. of Amer.,

976 F.Supp. 1247, 1254-55 (S.D. Iowa 1997); Restatement (Second) of Conflict of.
Laws § 187 cmt. c (1971). In other words, we will not allow a general choice-of-
law provision to trump a specific contradictory term of a bargained-for contract
between sophisticated parties. Second, it is well established that the IFDA and
similar franchise statutes operate to protect only in-state franchisees. 815 ILCS §§

705/2, 19; Dayan v. McDonald’s Corp., 466 N.E.2d 958, 973 (Ill. App. Ct. 1984)

-8-


F

Minute Order Form (06/97)

United States District Court, Northern District of Illinois

lame of Assigned Judge ting Judge if Other
vig Magistrate Jude Charles P. Kocoras “han Assigned Judge
CASE NUMBER 00 C 8143 DATE 9/25/2001
CASE Cromeens, Hollomon, Sibert, Inc. vs. AB Volvo et al
TITLE

[in the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.}

(il)

MOTION:
DOCKET ENTRY:
d) Oo Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due.
(3) Oo Answer brief to motion due____. Reply to answer brief due____.
(4) im} Ruling/Hearingon__setfor___—_at
(5) QO Status hearing[held/continued to] [set for/re-set for]on__set for at
(6) o Pretrial conference[held/continued to] [set for/re-set for]on___set for at.
(7) oOo Trial[set for/re-set for] on at
(8) oO [Bench/Jury trial] [Hearing] held/continued to__—_at
(9) im This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to}
OFRCP4(m) OGeneralRule2? O FRCP41(a)(1) [1 FRCP41(a)(2).
do) «xf {Other docket entry] ENTER MEMORANDUM OPINION: Volvo Construction Equipment

North America’s (“Volvo CE”) request that all defendants except Volvo CE be dismissed is granted. All
defendants except Volvo CE are dismissed without prejudice. Defendant’s motion (Doe 30-1) for
summary judgment is granted as to all claims.

[For further detail see order attached to the original minute order.]

No notices required.

Mail AO 450 form.

\
SCT

No notices required, advised in open court.

Notices mailed by judge’s staff.
Notified counsel by telephone.

Docketing to mail notices.

Copy to judge/magistrate judge.
A

number of notices

ShP 26 100.

date docketed

docketing deputy initials

courtroom
deputy’s
initials

Date/time received in
central Clerk’s Office

rusiling deputy initials



2. Quasicontractual Relief

Volvo also seeks summary judgment that the Dealers are precluded from
seeking quasicontractual relief. Quasicontractual relief is available only where there
is no express contract between the parties. Barry Mogul and Assocs. v. Terrestris
Development Co., 643 N.E.2d 245, 252 (Ill. App. Ct. 1994) (quoting Industrial Lift
Truck Serv. Corp. v. Mitsubishi Int’] Corp., 432 N.E.2d 999, 1002 (Ill. App. Ct.
1982)). Here, the parties clearly had express contracts. Therefore, the fallback
remedies of quasicontract are unavailable to the Dealers and Volvo’s motion for
summary judgment as to those claims is accordingly granted.

3. Tortious Interference

As to the tortious interference claim with regard to its relationship with the
Dealers, Volvo is correct in asserting that a party cannot tortiously interfere with its
own contractual relationship. Douglas Theater Corp. v. Chicago Title & Trust Co.,
681 N.E.2d 564, 570 (Ill. App. Ct. 1997). Volvo’s motion for summary judgment on
that issue is therefore granted.

The Dealers’ claim that Volvo interfered with their relationships with
customers requires a closer examination. In Illinois, five elements make up the tort
of interference with contractual relations. Hi-Tek Consulting Servs. v. Bar-Nahum,
578 N.E.2d 993, 997 (Ill. App. Ct. 1991). First, there must be a valid and

enforceable contract. Id. Second, the defendant must be aware that the contract

-ll-


Agreements specifically stated that termination could be for any reason or no reason
at all. (Defs.’ Exh. 5, para 22.3; Defs.’ Exh. 7, para. 22.3). That type of provision
contradicts the presence of an implied covenant of good faith.

The Dealers are correct in asserting that the covenant of good faith and fair
dealing limits the discretion of parties to a contract that contains no contrary
provisions. Dayan, 466 N.E.2d, at 972-973. Contracts such as the ones in this case,
however, remove these limits with the provisions that they contain, allowing either
party to exercise unfettered discretion in terminating the contractual relationship.
Although the Dayan court noted that courts in New Jersey and West Virginia have
gone as far as to invalidate contract provisions that allow termination without cause
such as the one in this case, the Illinois courts have thus far only considered contracts
that are silent on the issue of termination without cause. We will not extend our
reach into the parties’ contract in such an invasive manner without a clear indication
that Illinois law requires us to do so. The Dealers argue that Dayan is such a
mandate, but we disagree. The court in Dayan held that the franchisor in that case
did have good cause for terminating the franchise and thus had no reason to address
the effect of a termination without cause on good faith. Dayan, 466 N.E.2d, at 974.
Accordingly, we find that Volvo acted within its contractual rights when it
terminated the relationships with the Dealers, and we therefore grant Volvo summary

judgment that their termination did not breach any of the Dealership Agreements.

-10-


relevant to our inquiry if they controlled the parties’ relationships at the time of
termination.

It is undisputed tht the Korpan and Performance contracts were still in force
at the time of termination, so it goes almost without saying that the propriety of
Volvo’s actions must be measured according to the contractual terms. The contracts
between Volvo and the other five Dealers, on the other hand, had expired by their
own terms before the terminations occurred. As such, we cannot automatically look
to the terms of the expired contracts. These five plaintiffs insist that the slate was
wiped clean upon the agreements’ termination and thus that the contractual terms
are irrelevant to our inquiry. They claim that the usage of trade in the construction
equipment franchise industry should dictate the parties’ respective obligations. We
disagree. Evidence of industry practice and course of dealing in a case like this
does not create a genuine issue of material fact. Equity Group, Ltd.,_v.

Painewebber, Inc., 839 F.Supp. 930, 934 (D.D.C. 1993). Rather, one of two

situations arose when the contracts expired. Either the parties continued to perform
under the same terms as those contained in the expired agreement, Foster_v.
Springfield Clinic, 410 N.E.2d, 604, 607 (III. App. Ct. 1980), or the relationship
became one terminable at will. Restatement (Second) of Contracts, § 33 cmt. d

(1982). Under either scenario, Volvo had a right to terminate the relationship


FMS’s and Hammer’s on March 31, 1999, and Keil’s on May 3, 1999. The
corresponding Volvo terminations occurred on December 31, 1999; May 31, 1999;
November 1, 1999; May 15, 1999; and June 7, 1999. Volvo informed some
customers of the Dealers that the relationships would be ending. They also
informed customers that the Samsung line was going to be discontinued and the
Dealers would not be able to provide service in the future for Samsung products.

The Dealers brought suit in Arkansas state court, claiming that Volvo’s
termination was either in breach of their individual agreements or unlawful under
various states’ laws, including the Illinois Franchise Disclosure Act, 815 ILCS
705/1 et seg. Volvo removed the action to the Western District of Arkansas, and the
case was then transferred to our court.

Volvo asserts that, pursuant to the aforementioned provisions addressing
termination without cause, it was entitled to terminate the dealerships at any time

without cause and has moved for summary judgment of the Dealers’ claims.

LEGAL STANDARD
Summary judgment is appropriate when the record, viewed in the light most
favorable to the nonmoving party, reveals that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a matter of law.

Fed. R. Civ. P. 56(c). The moving party bears the initial burden of showing that no


BACKGROUND

Beginning in 1992 and 1993, Plaintiffs Cisco Ford Equipment (“Cisco”),
Con-Equip, FMS, Hammer Equipment Sales (“Hammer”), Keil Equipment (“Keil”),
Korpan Tractor & Parts (“Korpan”), and Performance Machinery Company
(“Performance”), hereinafter collectively referred to as “Dealers,” entered into
agreements with Samsung to serve as dealers of Samsung excavation equipment.
Each agreement allowed either party to terminate for enumerated causes as well as
for no reason at all, provided the terminating party gave 60 days’ notice. Each
agreement had a duration of two years, and all were renewed beyond the original
time period. The final renewed contracts were amended to include a provision
choosing Illinois law to govern all disputes regarding the relationships between the
parties.

Defendant Volvo Construction Equipment North America (“Volvo CE”)
bought Samsung on July 1, 1998, and assumed all of Samsung’s contractual
obligations to the Dealers. The expiration dates of agreements between Korpan and
Volvo and Performance and Volvo were July 29, 1999, and September 1, 1999,
respectively. Volvo terminated both dealerships before June 15, 1999. The other
agreements had expired by their own terms before Volvo terminated the dealerships.

Cisco’s agreement expired on August 10, 1998, Con-Equip’s in October 1998,



UNITED STATES DISTRICT COURT

‘ NORTHERN DISTRICT OF ILLINOIS’ y
EASTERN DIVISION RY Ch
<2, py,
“4,,°O
CROMEENS, HOLLOMON, SIBERT, INC., i

d/b/a CISCO FORD EQUIPMENT, a Texas
corporation; CON-EQUIP., INC., a Texas
corporation; CON-EQUIPMENT, INC., a
Texas corporation; FMS, INC., a Maine
corporation; HAMMER EQUIPMENT
SALES, LTD., a Canadian corporation; KEIL
EQUIPMENT CO., INC., a New York
corporation; KORPAN TRACTOR & PARTS,
a Canadian partnership; and PERFORMANCE
MACHINERY COMPANY, a Montana
corporation,

Plaintiffs,

vs. 00 C 8143

AB VOLVO, a Swedish corporation; VOLVO
EXCAVATORS AB, a Swedish corporation;
VOLVO CONSTRUCTION EQUIPMENT, NV,
a foreign corporation; and VOLVO
CONSTRUCTION EQUIPMENT NORTH

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
}
AMERICA, INC., a Delaware corporation, )
)
)

Defendants.
MEMORANDUM OPINION
CHARLES P. KOCORAS, District Judge:
This matter comes before the court on Defendant Volvo Construction

Equipment North America’s motion for summary judgment. For the following

HA

reasons, the motion is granted.


8

exists. Id. Third, the defendant must intentionally and without justification induce a
breach of the contract. Id. Fourth, the defendant’s wrongful conduct must actually
cause a breach. Id. Finally, the plaintiff must suffer damages. Id. To withstand a
motion for summary judgment of a tortious interference claim, the plaintiff must
show a. lack of justification to maintain the existence of the third element. R.LN.
Corp. v. Connelly Food Products, Inc., 529 N.E.2d 1184, 1190-91 (Ill. App. Ct.
1988). Unlike acts of fraud, deceit, physical violence, or deliberate disparagement,
supplying truthful information to parties to a contract or prospective parties does not
qualify as an unjustified act that would lead to liability for tortious interference.
Soderlund Bros., Inc., v. Carrier Corp., 663 N.E.2d 1, 9-10 (Ill. App. Ct. 1995). The
Dealers have not managed to create a material issue of fact on the issue of Volvo’s
lack of justification for taking the actions that they did, so we must grant Volvo’s
motion for summary judgment as to those claims as well.
CONCLUSION
For the reasons stated above, we grant Defendant’s motion for summary

judgment as to all claims.

RQ Peers

Charles P. Kocoras
United States District Judge

Dated: September 25, 2001

-12-