Kempner’s assertion regarding Cingular’s misrepresentations on equipment and service
pricing is based, in part, on a letter, dated May 8, 2001, from Laren Whiddon, Cingular’s Vice
President and General Manager of Illinois and Wisconsin. The letter states in relevant part:

All dealers have access to the same level of service pricing as the internal team.

Discounts applied to equipment and accessory pricing are left to the discretion of

the internal/dealer organization and impact their respective margins accordingly.
(Whiddon letter, Tab 14) (emphasis added). Although the actual content of the letter cannot be
genuinely disputed, Kempner’s claim is based not only on the letter, itself, but also on an asserted
oral representation by Mr. Whiddon. Mr. Whiddon allegedly told Mr. Kempner, at ameeting during
the first week of May 2001, prior to the date of the letter (which Kempner asserts summarized their
conversation and was consistent with Whiddon’s oral representations), that “his costs were still the
same for equipment as the internal channels” (P1.’s 56.1 Resp. (47-48, citing 09/09/03 Kempner
Dep. at 488:10-22; 489:6; 491:10, Tab 5; Kempner Dect., Tab A). Cingular claims there was no
misrepresentation. Cingular says that the Agreement did not “guaranty Kempner access to identical
pricing for wireless service as other distribution channels” (Def.’s 56.1 St. | 15). While Kempner
agrees that the 1999 Agreement is “silent” with respect to pricing, Kempner also points out that the
1999 Agreement “gives Cingular discretion to establish the[] prices” at which he was permitted to
offer service to Cingular customers (Agmt. 4} 5(C), Tab 4). Kempner’s point, therefore, is that
Cingular misled him by saying his prices would be the same as those offered to internal distribution.
channels, when in fact that was not so.

A jury must determine whether to believe Mr. Kempner because Cingular, conversely, asserts

that “[a]t no time did Whiddon promise Kempner any particular pricing on equipment (Def.’s 56.1

19


placed his store within three miles of an existing Cingular location, was approved (Tab G, Ex. 2).
Therefore, Kempner has no injury and thus no cause of action based upon a breach of any three-mile
policy, even if it existed.

4.

To summarize, the evidence (read most favorably to Kempner) describes a policy that was
subject to Cingular’s discretion, was not applied absolutely, and was — in short — not even followed
in the case of Kempner, the very company that now wishes to elevate this unwritten, discretionary
“policy” to the level of a binding contract term. Moreover, the parol evidence essential to
Kempner’s argument is inadmissible, because the 1999 Agreement contains unambiguous terms that
— under the “four-corners” rule of contract interpretation followed in Illinois — precludes parol
evidence to interpret the parties’ obligations. And, in any event, the claims are barred by the one-
year contractual limitations period. We therefore grant Cingular summary judgment on Counts IIT
and IV.

B.

In Count 1X, Kempner claims that Cingular violated the Illinois Franchise Disclosure Act (the
"Act"), Cingular moves for summary judgment on Count IX, claiming that Kempner fails to qualify
as a franchisee under the Act. The undisputed material facts also require summary judgment on this
claim

To qualify for the Act's protections, a potential franchisee must satisfy a three-prong test. 815
ILCS 705/3(1) (2003). Cingular contends that the undisputed facts show Kempner cannot satisfy the
Act's third requirement: “the person granted the right to engage in such business is required to pay,

directly or indirectly, a franchise fee of $500 or more.” 815 ILCS 705/3(1)(c). A franchise fee is

13


The Court, therefore, denies summary judgment to Cingular on the equipment and service pricing

claim in Count VIL."

We reach a different conclusion as to the other alleged misrepresentations upon which
Kempner seeks to rely. As discussed above, there are no genuine disputed material facts that support
Kempner’s claim of misrepresentation with respect to promotional advertising. There are genuine
disputes concerning the facts surrounding Cingular’s efforts (or lack of efforts) to correct the
erroneous listing for one of Kempner’s location that was on Cingular’s “support number system.”
Kempner claims that Cingular told Kempner that it was reviewing the listings and making necessary
revisions, when in fact Cingular was dragging its feet in making those revisions; Cingular claims that
in fact it was timely reviewing the listings in attempting to make revisions (compare Def.’s Rule
56.1(a)(3) St., 4] 57-59 with Pl.’s Rule 56.1 Response to those assertions).

However that factual dispute may be resolved, the Court finds that Kempner has offered no

genuine material facts — disputed or otherwise — to support the proposition that any misrepresentation

‘SWe note that Cingular also has raised the argument that the one-year contractual limitations period bars the
common law consumer fraud and statutory fraud claims (Def.’s Mem. at 10, 11). Although this would appear, at first
blush, to be a threshold issue, the argument is made as a passing last sentence with respect to the common law claim and
is buried toward the end of the arguments regarding statutory fraud. The case cited by Cingular to support the argument
that the parties limitation period applies to bar this claim is Cange v. Stotler and Co., Inc., 826 F.2d $81, 584-85 (7" Cir.
1987). There, the Court of Appeals found that the parties’ one-year contractual limitation period did apply to bar the
statutory fraud claim raised in that case (despite the longer three year period contained within that statute) because public
policy did not preclude the parties from contracting for a shorter limitations period than the one provided by statute. /d.
at 585. Kempner argues that the one-year contractual limitations period in this case does not apply, as it did in Cange,
because there the parties agreed to apply that limitations period to “any controversy between us arising out of this
Agreement” whereas, here, the parties only agreed to apply the one-year provision to “two discrete claims (ifany): those
to enforce or declare terms of the Agreement; and those to recover damages for breach of the Agreement” (P!.’s Mem.
at 9,0,2). Kempner argues that his fraud claims, both under common law and statute, are not affected by the contractual
limitations period in the 1999 Agreement because the fraud claims arise outside of the Agreement and its terms. Cingular
abandons the argument in its Reply - and, in any event, we agree with Kempner’s readings that the one-year limitations
period does not apply to the tort claims Kempner asserts in this case.

23


. One Administrative Procedure “established by Cingular” is the three-mile exclusive territory
restriction (i.¢., “no entity may open a sales location for the sale of Cingular cellular
telephone services and equipment with a three-mile radius of any other sales location for the
sale of Cingular cellular telephone services and equipment”) (/d.).

. Kempner had an established sales location at 4722 W. Touhy Avenue in Lincolnwood,
within three miles of the Cingular owned kiosks (/d., 4 43).

. The Agreement contains a provision in Section 10 (“Rules and Procedures”) which

incorporates by reference the terms of the Administrative Procedure Manual (“APM”) (Tab

4, Agmt. ¥] 10).

The undisputed facts material to Counts III and IV are as follows. In 1997, Kempner made
a request to open a sales location in the Lincolnwood Town Center (Am. Compl., 35, Tab 3). That
location request predates the 1999 Agreement (/d., 36). By 1998, Cingular was operating a store
in the Lincolnwood Town Center (/d., | 39), and Kempner was not. Kempner did not receive and
does not complain about any subsequent denials by Cingular of requests by Kempner to open new,
additional locations, nor does he complain about the denial of any relocation requests during the term
ofthe contract. And, he cannot: Cingular approved Kempner’s only request during the contractual
period, which was for the relocation of the Wilmette store — a store that, once moved, existed within
three miles of an existing Cingular store (/d., | 37; Tab G, Ex. 2; Def.’s Supp. 56.1 St. { 120).

Kempner’s other claim does not concern a request that Kempner made, but, instead, concerns an

action taken by Cingular in September 2000, when it opened a store in Skokie within three miles of

*Kempner states that he “refrained from submitting additional locations because Cingular represented that the
three-mile rule precluded consideration of these locations,” and he cites to his own testimony (Pl.’s 56.1 Resp. §| 37;
Tab 6, Kempner Hrg. Test. 302:13-17). But, this statement fails to create a genuine fact dispute in the face of undisputed
evidence that, in April 2000, Kempner did, in fact, open a store in Wilmette within three miles of another Cingular store,
based on Cingular's approval of Kempner’s request to do so, and testimony that Kempner “did not care” -- or at least did
not concer itself with - whether the request for the Wilmette store was within three miles of another Cingular store
(Defs.’ Supp. $6.1 St., {| 120 (citing Tab 6, Kempner Hrg. Test. at 293:24-297:10)).

4


St. 1 48; Pl.’s 56.1 Resp. { 48).'' This disputed testimony can only be resolved by the trier of fact
who must assess the credibility of the witnesses and make a judgment about whether the alleged
representations were made by Whiddon: A jury must determine from the disputed testimony (by
assessing credibility as well as the other evidence) whether the alleged oral representations regarding
equipment were made by Whiddon - or not. The jury must then determine whether these statements
were not only false (i.¢., that Mr. Kempner received differential pricing contrary to representations
made by Cingular), but also whether Mr. Whiddon knew or believed those representations to be false
(a credibility question) and, by making these statements, whether Whiddon (and, thus, Cingular)
intended to “induce” Mr. Kempner to act in the way Kempner alleges (i.¢., to be loyal and to sell
exclusively for Cingular).'?

A jury must also determine from Mr. Kempner’s testimony, which he offers on summary
judgment, whether Kempner relied on the “truth” of these representations and, in so doing, suffered

damage as a proximate cause of such reliance. The parties spar about just what detrimental reliance

"Cingular disputes that its statements to Kempner regarding access to service and equipment pricing were false,
but it provided no citation to the record to support this dispute. The Court therefore deems this fact admitted, for
summary judgment purposes, pursuant to Local Rule 56.1. However, this admission does not mean summary judgment
must be granted in favor of Kempner, because Cingular has genuinely disputed facts elsewhere in the record, based on
other fact statements, that put Kempner’s allegations in Count VII into genuine dispute.

“Cingular attempts to obtain summary judgment by arguing that Kempner must prove the misrepresentation
of an existing fact, as opposed to the representation of a future fact, citing HP Health Care Services, Inc. v. Mt. Vernon
Hosp., Inc., 845 N.E.2d 672, 682 (Ill. 1989). Although the HP/ court does state that this is the general rule, it admits
an exception where, as here, “the false promise or representation of future conduct is alleged to be the scheme employed
to accomplish the fraud,” /d. at 682 (quoting Steinberg v. Chicago Med. Sch., 37\ N.£.2d 634, 641). Kempner argues
that this exception applies to his claims and, for purposes of assessing summary judgment, we agree.

In addition, we question whether Cingular properly may assert that statements allegedly made by Cingular
concerning actions solely within Cingular's control (specifically, that it would charge Kempner the same price for
services in products that it would charge to interna} dealers) are not actionable on the ground that they are representations
of future facts. A statement about the prices Cingular will charge certainly is a representation about something that would
happen in the future. But, then again, so is a representation by one party that it will perform the terms of a contract, such
as, by paying the agreed contractual amount. Yet, if the party at that time knew it never intended to do so, no one would
claim that representation could not be the basis for a fraud action — assuming the other elements of fraud were met.

20


of defendant on Counts II], 1V, VIII and IX of plaintiff's Amended Complaint. Summary judgment
is denied to defendant on Count VII, the common law fraud claim.

ENTER:

My zdae

IRNEY IL s¢: HENKIER
SIN States AEN RIES Judge

Dated: November 6, 2003

26


exclusive arrangement it had agreed to sufficiently lucrative” (Reply Mem. at 6). However,
Cingular’s argument assumes the very point that is in factual dispute — whether, when assessing how
his business was performing, Kempner relied on representations that he was getting the same pricing
as interna] Cingular outlets when, in fact, that was not the case. Whether knowledge of the true state
of affairs (assuming that there were misrepresentations in fact made) would have caused Kempner
to jettison the Cingular agreement and move to Nextel is a question for the jury to decide at trial, and
not for the Court to resolve on summary judgment."*

The elements necessary to establish a common law fraud claim to ajury—questions of belief,
intent, and reliance ~ are typically fact questions. See James v. Lifeline Mobile Medics, 792 N.E.2d
461, 465 (Ill. 4" Dist. 2003) (issues of misrepresentation and reliance — which require the injured
party to use ordinary prudence and due diligence before relying on allegedly false statement — are
questions of fact to be determined by the trial court). See also Roe v. Jewish Children’s Bureau of
Chicago, 790 N.E.2d 882, 895-96 (lll. 1* Dist. 2003) (summary judgment denied on fraudulent
misrepresentation claim, where fact issues precluded it on questions of intent to deceive). We find

that, in this case, those issues need to be decided by a jury based on the credibility of the witnesses.

‘Whether Mr. Kempner can prove that it lost profits as a proximate cause of his reliance on the alleged
misrepresentations is a disputed question of fact for the jury (Def.’s 56.1 St. {{] 63-64) (PI.’s Opp. Mem. at 10). But,
Kempner need not, as Cingular asserts, provide Cingular or the Court with a calculation of damages to defeat summary
judgment (Def.’s Mem. at 9) (Def.’s 56.1 St. § 64).

Cingular also claims that Kempner’s lost profits claim is precluded by a contractual limitation of remedies
provision in the contract (se¢ Def.’s Rule 56.1 St., App. 1, Tab 4 (Agmt., 2). We disagree. “Illinois law is clear that
exculpatory clauses are not enforceable to insulate a party against responsibility for its own intentional torts — most
particularly fraud.” Time Warner Sports Merch. v. Chicagoland Processing Corp., 914 F. Supp. 1163, 1175 (N.D. Il.
1997). Moreover, Illinois law does not enforce such clauses to exclude claims that are not “explicitly covered” by the
terms of that clause. See Tyler Enterprises of Elwood, Inc. v. Skiver, 633 N.E.2d 1331, 1337 (Ill. 3d Dist. 1994) (citing
Scott & Fetzer Co. v. Montgomery Ward & Co., 493 N.E.2d 1022, 1029-30 (Ill. 1986)), And, the exculpatory clause
in Paragraph 2 of the 1999 Agreement does not “explicitly cover” — or even mention ~ tort claims,

22


Il.

Genuine issues of material fact preclude summary judgment on Count VII, the common law
consumer fraud claim, but not on Count VIII, the statutory fraud claims. We address each of those
claims in turn.

A.

In Count VII, Kempner alleges a claim of common law fraud (Tab 3, Am. Compl. { 61-65).
To survive summary judgment on this claim, Kempner must identify genuine issues of material fact
that, if resolved in its favor, would establish that Cingular made: “(1) [a] false statement of material
fact; (2) known or believed to be false by the party making it; (3) made to induce the other party to
act; (4) action by the other party in [justifiable] reliance on the truth of the statement; and (5) damage
to the other party resulting from such reliance.” HPI Health Care Services, Inc. v. Mt. Vernon Hosp.
Inc., 545 N.E.2d 672, 681 (Ill. 1989). The Court finds that Kempner has established genuine
disputes of material fact on all of the elements for common law fraud.

In its first amended complaint, Kempner alleges misrepresentation regarding: (1) access to
the same level of pricing and equipment discounts as Cingular internal distribution channels; (2)
promotional advertising terms (ie., that the “terms offered in the joint promotional advertising
required by the Agreements would be available to customers who patronized Kempner”), and (3)
review and revision of the store listings on the support number system (Tab 3, Am. Compl. { 61).
Mr. Kempner conceded in deposition testimony that there is no triable issue on the second alleged
misrepresentation concerning joint promotional advertising, by acknowledging that the allegations
in his first amended complaint must have been “a typo” (Tab 5, Kempner Dep. 689:17-21; 690:3-11;

691:13-20). Mr. Kempner’s attempt to vary that testimony by his recently submitted declaration

17



Finally, the 1999 Agreement, by its own terms, expressly authorizes Cingular to open itsown
stores anywhere within the geographic area in which Kempner operated (Agmt. 3, Tab 4). The
Vital memo is not to the contrary: it did not impose any three-mile restrictions on Cingular’s
internally-operated stores, but merely referred to the locations of stores operated by dealers (PI.’s
56.1 Resp. {4 30, 32).

B.

These undisputed, material facts lead to the conclusion that summary judgment must be

granted on Counts III and IV. There are three reasons for this conclusion.
1.

First, the one-year contractual limitations period eliminates Mr. Kempner’s contract claims
in Counts III and IV. Kempner’s request for approval on the Lincolnwood location was made in
1997. That request pre-dates the 1999 Agreement and thus that request, and its denial, cannot breach
any term of the 1999 Agreement. Moreover, the 1999 Agreement, by its terms, eliminates any prior
claims or understandings the parties might have had prior to its execution (Agmt. 24, Tab 4). In
addition, the one-year period eliminates any claim regarding the Skokie store opened by Cingular
in September 2000, because Mr. Kempner did not file his original state court complaint until May
8, 2002. And, even if the policy in the Vital memo had been incorporated into the 1999 Agreement,
that policy never purported to apply to internal Cingular outlets, as opposed to stores opened by
outside dealers of Cingular.

We reject Kempner’s arguments that the one-year contractual limitations period contained
in the 1999 Agreement does not and cannot apply to bar these claims. Kempner argues that the

contractual limitations period cannot be enforced because Cingular is “estopped . . . as a result of its



integration clause in their contract, they are explicitly manifesting their intention to protect
themselves against misrepresentations which might arise from extrinsic evidence”).

There is no dispute that the 1999 Agreement contains no express provision barring Cingular
from placing a location within three miles of Kempner’s locations. The 1999 Agreement does
contain a term which states, in relevant part: “. . . Agent agrees to comply, if applicable, with . . .
rules and procedures relating to such matters reasonably prescribed from time to time by Cellular
One through the Administrative Procedures Manual, which rules and procedures shall constitute
provisions hereof as if fully set forth herein ....” (Agmt. { 10, Tab 4). Kempner never received any
document called an Administrative Procedure Manual (“APM”) (/d., {[ 28). And, no document by
this name has been produced in this case.

Kempner’s claim in Counts III and IV is based, in part, on a 1994 memorandum (“Vital
memo”) that pre-dates the parties’ 1999 Agreement (Defs.” 56.1 St. | 26), which Kempner asserts
is an example of an administrative procedure (P1.’s 56.1 Resp. }27).° The Vital memo describes
a three-mile radius policy that applied to requests for new and/or additional locations, as well as
relocations of existing stores, but it did not prescribe a “rule,” let alone an “administrative
procedure.” Instead, the Vital memo merely states:

[C]ingular may approve additional new distribution points, if there is no other

Authorized Sales and Service Center within a radius of three miles. We feel very

strongly about the need for strict adherence to this policy and will take appropriate

steps to ensure compliance, up to and including termination of the dealer agreement,
ifnecessary. The geographic guidelines to be used for implementing the above are

We note that Kempner also relies on alleged representations from a Cingular representative, Bryan Klamer,
concerning the Vita! memo, representations which also predate the 1999 Agreement (Def.’s’ 56.1 St. 131; Def.’s. Supp.
Facts ] 100). Although these alleged representations by Mr. Kempner are disputed, the dispute is not material because
the alleged representations are not part of the 1999 Agreement, given the merger and integration clause (Agmt. 28, Tab
4). Although the Vital memorandum also predates the 1999 Agreement, there are other issues regarding that
memorandum that we address below.


a Kempner location (Am. Compl., 4 40). Both the Cingular Lincolnwood and Skokie stores were
within three miles of Kempner’s location.

The 1999 Agreement contains a term that establishes a one-year contractual limitation on any
claims that arise under the agreement, which states:

[A]ny suits or action . . . to enforce or declare any of the terms of this Agreement, . . . or to

recover any damages sustained as a result of a default in the performance of any obligations

under this agreement, .. . must be brought, if at all, within one (1) year after the underlying
cause of action accrues.
(Agmt. § 24, Tab 4). It is undisputed that Kempner did not file any suit claiming that Cingular
violated the 1999 Agreement by opening its Lincolnwood and Skokie stores until it filed this suit in
state court on May 6, 2002 — which then was removed to this Court on July 18, 2002.

The 1999 Agreement also contains a notice and cure requirement that provides:

if AGENT is in substantial compliance with this Agreement and [Cingular]

materially breaches this Agreement and fails to cure such breach within thirty (3)

days after written notice thereof is delivered to [CINGULAR], AGENT may

terminate this Agreement effective thirty (30) days after delivery to [CINGULAR]

of written notice thereof... .

(Defs.’ 56.1 St. 422; Agmt. { 18a, Tab 4).

The 1999 Agreement further contains a merger and integration clause which states in relevant
part: “This Agreement supersedes any prior agreements or understandings between the parties
relating to the subject matter thereof’(Defs.’ 56.1 St. 4 21; Agmt. § 18a, Tab 4). This provision
means, as a matter of law, that the Court may not consider any evidence outside the contract to

interpret its terms unless one or more of those terms is ambiguous on its face. Air Safety, Inc. v.

Teachers Realty Corp., 706 N.E.2d 882, 885 (Ill. 1999) (“where parties formally include an


(Tab A, Kempner Decl. {| 11) is futile. The Court will not allow eleventh-hour self-serving
testimony by Mr. Kempner to contradict earlier testimony under oath to defeat summary judgment.
See Palmer v. Circuit Court of Cook County, 905 F. Supp. 499, 504-05 (N.D. Ill. 1995) (citing
Koelsch v. Beltone Electronics Corp., 46 F.3d 705, 708 (7" Cir. 1995); Kalis v. Colgate-Palmolive
Co.,231 F.3d 1049, 1055 (7" Cir. 2000). The Court does not consider the advertisements to be such
evidence (Tab 16, Advertisements).

Therefore, there are only two alleged misrepresentations that we address below. We will first
address the alleged misrepresentations regarding pricing on equipment and services, and then move
the support number system allegations.

1.

In Count VII, Kempner alleges that Cingular misrepresented that he would receive the same
levels of equipment and service pricing available to its own internal channels. Kempner’s equipment
and service pricing allegations are supported by evidence that is genuinely disputed by the parties.
Kempner claims that he detrimentally relied on the alleged misrepresentation from Cingular that
Kempner would receive the same equipment and service pricing as enjoyed by Cingular’s internal
distribution channels (P1.’s 56.1 Resp. 61; Pl.’s 56.1 Add’ Facts [ 99). Kempner claims that, in
fact, he did not receive the same equipment and service pricing as Cingular’s internal distribution
channels, and that he knows this because he dug through the garbage of one of the internal
distributors in March 2002 and found documentation showing a disparity in pricing (P1.’s 56.1 Add’]
Facts | 99). Moreover, evidence produced during discovery support the proposition that Kempner

was charged higher prices than internal distribution outlets (Prelim. Inj. Order at 18-19).

18


of nearby Cingular stores was one factor among many in determining whether to approve a location
for another store (Defs.’ 56.1 St. 4] 41-43).

In fact, Kempner’s own witness, Cindy Long Gillman,’ a Cingular Account Manager from
November 1997 through April 2000, stated in her declaration that she understood the “three mile
rule” as “a criteria that Cingular used in evaluating and approving new points of distribution” (Tab
G, 4 6). She also stated that, although Cingular “required strict adherence to this policy,” there were
circumstances that justified “exceptions” (/d., ]7). Although Ms. Gillman stated that while she was
an Account Manager, who was responsible for submitting requests for new locations within three
miles, “only one exception to the three mile rule was approved” (/d., { 8), she also acknowledged that
the form attached to her declaration, a request for approval by Kempner to the Wilmette location,
was the type of form she used for approval within a three mile radius, That form indicates that Mr.
Kempner’s relocation request was approved by Mr. James M. Moen on April 20, 2000 — another

exception to the policy described in the Vital memo.

“Although Kempner attempts to dispute this testimony, the asserted basis for the dispute does not rise to the level
of “genuineness” necessary to defeat summary judgment. For example, in paragraph 41, Kempner acknowledges that
there were exceptions to the “three mile rule,” but he argues that they were not “encouraged.” Kempner’s admission
underscores the point that: there was no hard and fast rule. In paragraph 42, Kempner argues that one witness, Mr.
Sterna, had no basis for his opinion because he did not know “about any locations opened by anyone else.” However,
Mr. Sterna did have a basis to explain how Cingular treated him, and his testimony was that Cingular allowed another
agent to opena store “a few blocks away” from one of Mr. Sterna’s stores (Tab 12, 08/22/03, Sterna Dep. at 24:13-25:7).
Finally, in paragraph 43, Kempner attempts to dispute the testimony of Mr, Jacobs, who said that “any location less than
2 miles from another was subject to further review,” by stating that Mr. Jacobs also indicated that if a store opened within
2 miles of another “that was a big strike against you” (Tab 13, 8/20/03, Jacobs Dep. at 45:24-49:5). This testimony does
not undermine, controvert or defeat summary judgment on the three-mile rule.

’The Court denies Cingular’s motion to bar this testimony under Rule 37(c) (Def.’s Mem, at 3, n.4) as moot,
in light of the ruling on 10/07/03 stating that, although Ms. Gillman can be called as a witness, Kempner would have to
bear the costs of having to depose her belatedly (doc. #69). We also deny Cingular’s request for sanctions in connection,
with Ms. Gillman’s testimony (Def.’s Reply at 5, n.2).


about the pace at which Cingular was correcting the inaccurate listing in the support number system
was something that he relied on in deciding to continue the relationship with Cingular under the
1999 Agreement, and not to forego a relationship with Nextel. A reasonable jury could not conclude
if, in fact, Kempner did rely on this representation in making such an important business decision,
that such reliance was reasonable — particularly because Mr. Kempner concedes that he repeatedly
checked with Cingular to see if the problem was fixed and was aware that for an extended period of
time it was not (PI.’s Rule 56.1 Resp. {| 60). A party may not reasonably rely on a statement where
the facts within his grasp show the statement to be false. See GreatAmerica Leasing Corp. v. Cozzi
Iron & Metal, Inc. 76 F. Supp. 2d 875, 878-80 (N.D. Ill. 1999).

Accordingly, while we deny Cingular’s motion for summary judgment on Count VII, our
ruling limits the alleged misrepresentations that Kempner may seek to prove at trial to
misrepresentations concerning the level of pricing for services and equipment.

Cc.

In Count VIII, Kempner pleads a statutory fraud claim under the Illinois Consumer Fraud and
Deceptive Practices Act, 815 ILCS 505/10a. On this claim, summary judgment must be granted,
because Kempner cannot satisfy the consumer nexus requirement under the Act.

The Act requires: (1) a deceptive act or practice; (2) defendant’s intent that plaintiff rely on
the deception; (3) occurrence of the deception in the course of conduct of trade or commerce; (4)
actual damage to the plaintiff; (5) proximately caused by the deception. Oliveira v. Amoco Oil Co.,
776 N.E.2d 151, 160 (lll. 2002); Daniels v. Bursey, No. 03 C 1550, 2003 WL 22053580 (N.D. Ill.,
Sept. 3, 2003). Cingular properly points out that Kempner must identify a genuine issue of material

fact that would support a finding that there is a nexus between his claim and a public injury. Athey

24



Minult Order Form (0697 lan cTM

2

United Svaces District Court, Northern District of Illinois

si ju i i itting Jud

NameotasignedSuage | Sidney. Schenker __| Sinaia Sods

CASE NUMBER 02 C 5403 DATE 11/6/2003
CASE Kempner Mobile Electronics, Inc. vs. Southwestern Bell Mobile Syst.
TITLE

Tin the Following box (a) indicate the party filing the motion, eg. plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.] :

MOTION:

DOCKET ENTRY:

qd) oO Filed motion of [ use listing in “Motion” box above.]

(2) i) Brief in support of motion due

(3) a Answer brief to motion due. . Reply to answer brief due.

(4) Oo Ruling/Hearingon_ set for__at

(5) im Status hearing[held/continued to] [set for/re-set for] on__set for___at

(6) im Pretrial conference [held/continued to] [set for/re-set for] on_set for. at__.
(7) Oo Trial[set for/re-set for]on__at

(8) Oo [Bench/Jury trial] [Hearing] held/continued to__—__ at

(9) a) This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

COFRCP4(m) (Local Rule 41.1 CIFRCP41(a(1) CIFRCP41(a)(2).

(10) MM {Other docket entry] ENTER MEMORANDUM OPINION AND ORDER (attached). Defendant’s
motion for summary judgment is GRANTED as to the contract claims in Counts III, IV, the statutory fraud claim
in Count VII, and the Franchise Act claim in Count 1X; the motion is DENIED as to the common Jaw fraud claim

in Count VII. Qa, AL

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

No notices required, advised in open court.

No notices required
number of notices

NOV 07 2003

date docketed

Notices mailed by judge’s staff.

Notified counsel by telephone.

vu | Docketing to mail notices.

Mail AO 450 form.

Copy to judge/magistrate judge.

courtroom
mm7 deputy’s
initials

Date/time received in
central Clerk’s Office

i
‘mailing deputy initials



agreement”), And, Kempner cannot explain its failure to timely sue about actions regarding the
Lincolnwood location in 1997, based on actions by Cingular years later.*
2,

Second, in support of the claim that a three-mile rule was part of the 1999 Agreement (the
basis for his argument that Cingular breached the Agreement) Kempner resorts to parol evidence
(e.g., the Vital memorandum; the alleged oral representation of Klamer; the Gillman declaration).
Such evidence is not admissible unless a disputed term in the contract is ambiguous on its face. Air
Safety Inc, v. Teachers Realty Corp., 706 N.E.2d 882, 885 (Ill. 1999) (specifically declining to rule
on provisional admission rule absent merger clause). The term at issue is the term “Administrative
Procedure Manual.” The Court does not find that term ambiguous.” Either there is an APM or there
is not. It is undisputed that an APM does not exist or cannot be located; nor can an APM to the 1999
Agreement between the parties be identified. The failure of Kempner to prove that an APM exists
or that a three-mile policy was incorporated into the 1999 Agreement has nothing to do with
ambiguity; it has everything to do with proof. And, Mr. Kempner has failed to offer facts to prove

that the parties agreed to include a the three-mile “rule” in the 1999 Agreement.

*Kempner also argues that Cingular is estopped from enforcing the limitations period because, when Kempner
complained to Cingular about what Kempner perceived to be Cingular’s breaches of the Agreement, Cingular set up a
meeting in December 2001 to discuss purchasing Kempner’s business (Pl.’s Mem. at 8-9). Kempner claims that this
meeting proposal led him to believe the matter could be settled (/d.), and thus Cingular, according to Kempner, is now
estopped to assert the contractual limitations period (/d. at 9). Although Kempner does not say it, the argument is really
that Kempner did not file suit within the one-year limitations period on the three-mile policy claims because Kempner
believed, based on the meeting scheduled, that the parties could settle the matter. The pendency of “settlement
discussions,” which may or may not bear fruit, does not estop a party from asserting a contractual limitations period.

°Mr. Kempner argues that the 1999 Agreement is ambiguous because it “is silent as to where Cingular may place
additional points of distribution,” and because “the contract provides only that it may do so in the same geographical
areas (i.¢., the five IHinois counties listed on Exhibit A to the Agreement) served by Kempner” (PI.’s Mem. at 6). The
contract is not ambiguous simply because it is silent; if it is silent on the location points for new stores, then Cingular
simply has discretion that Mr. Kempner did not negotiate in his favor in the 1999 Agreement.

il


~ ~~

conduct” (PI.’s Mem. at 7-8). Kempner’s position is that the contractual limitations period is not
enforceable, because the mediation provision in the contract requires completion of the mediation
process before a lawsuit can be filed; thus, argues Kempner, the mediation provision is inconsistent
with the one-year contractual limitations period, and it makes that limitations period “illusory”(Pl.’s
Mem. at 8; Agmt. 4] 35, Tab 4). Kempner’s reading of the 1999 Agreement is incorrect. The
mediation provision only requires the aggrieved party to “submit to a dispute resolution and
mediation procedure” and “give detailed written notice of its specific complaint to the offending
party prior to instituting litigation in any forum” (Defs.’ Rule 56.1 St. 4 115). The mediation
provision is not inconsistent with the limitations provision, because it does not preclude the
aggrieved party from instituting an action once the mediation process has begun and notice has been
given to the offending party. And, in any event, Kempner never resorted to the mediation procedure
prior to filing this suit; thus, Kempner cannot claim its presence delayed the filing of this action.
Kempner also makes an estoppel argument which is based on the notion that Cingular
breached a duty of good faith and fair dealing when it refused to grant Kempner’s request to open
the Lincolnwood store, but later decided to open its own store in Skokie, within three miles of
Kempner’s Wilmette location ~ a relocation that Cingular approved only months before it opened
the Skokie store (PI.’s Mem. at 7-8, citing Def.’s 56.1 St. {{] 100-02). This duty cannot support the
independent existence of a cause of action. Beraha v. Baxter Health Care Corp., 956 F.2d 1436,
1443 (7" Cir. 1992). Nor can the duty be contorted into creating a contractual provision that is not

in the 1999 Agreement. /d. (“the covenant guides the construction of explicit terms in the

10


a

set out in the existing attachment A. While exceptions to this rule may be considered
when the circumstances are particularly compelling, exceptions are not encouraged.

(Vital Memo, Tab 7).

Attachment A to the Vital memo states:

Distribution Certification Policy

1.

Dealers may expand through the purchase of another Cellular One distribution point.
However, before negotiations are finalized by the seller and buyer, these purchases
must have prior written approval by the Vice President ~ Sales, Cellular One
Chicago.

Cellular One may approve additional new distribution points, if there is no other
Authorized Sales and Service Center within a radius of three miles. These
applications must be submitted through your Dealer Account Representative and be
approved in writing by the Vice President — Sales, Cellular One Chicago.

An existing authorized location may be moved within one mile of its existing
location. These relocations must be submitted through your Dealer Account
Representative and must be approved in writing by the Vice President —~ Sales,
Cellular One Chicago.

(Tab G, Ex. 1).

The evidence establishes that, to the extent a three-mile policy existed in 1994, that policy

was not a hard and fast rule: (1) it was changed in 1995 (Prelim. Inj. Order at 15); (2) 16 other stores

were allowed to open within three miles of a preexisting Cingular location (Prelim. Inj. Order at 16);

(3) Kempner’s own Wilmette store was relocated within three miles of a preexisting Cingular

location (Def.’s Supp. 56.1 St. { 120); (4) Mr. Kempner testified that, when he asked for approval

to relocate to Wilmette, he did not even check whether the location was within three miles of another

(Def.’s 56.1 Supp. Facts ] 120; Tab 6, Kempner Hrg. Test. at 293:24-297:10); and (5) other

witnesses who testified on this subject said that there was no “‘three-mile” rule; rather, the location


Kempner claims. Cingular asserts that Kempner is improperly attempting to introduce into the case
a belated claim that Kempner was fraudulently induced to enter into the 1999 Agreement (Reply
Mem. at 5). We agree that it would be improper to introduce such a claim into the case on the eve
of trial; however, we do not read Kempner’s argument as attempting to do so. Rather, Kempner
asserts that the alleged misrepresentations occurred during the course of Cingular’s performance of
the 1999 Agreement, and were made not to induce him to enter into that agreement but rather to
“induce him to remain loyal to Cingular” during the term of the agreement (P1.’s 56.1 Resp., {ff 61-
63; Kempner Mem. at 10). Kempner argues that, throughout the duration of the 1999 Agreement,
he had “‘a standing offer to enter into a lucrative master dealer agreement with Nextel,” which he did
not exploit because of his reliance on Cingular’s alleged misrepresentations (/d.; see also Pl.’s 56.1
Resp., 4110). Kempner further claims that had it known that Cingular’s representations were false,
Kempner “could have terminated the Cingular Agreement and entered into the agreement with
Nextel” (PI.’s 56.1 Resp., J 111).2

Foregoing a lucrative business opportunity would constitute detrimental reliance. Cingular
does not confront that point, but rather argues that any asserted reliance by Kempner would have
been unreasonable because Kempner made a conscious decision not to declare the 1999 Agreement

terminated, and “knew at all times how its business was performing and whether it considered the

“Kempner does not argue that it would have been able to enter into an agreement with Nextel and, at the same
time, remain an authorized dealer with Cingular. Indeed, the 1999 Agreement expressly prohibited Kempner from doing
0, providing that during the term of the Agreement Kempner “agrees not to act as a representative or agent of any other
reseller or provider... in the relevant Area” (Def.’s Rule 56.1 St., Appendix 1, Tab 4 (Agmt., { 4(j)). Kempner has
offered no argument in the summary judgment papers as to why that exclusivity provision would not have been
enforceable during the term of the 1999 Agreement. Indeed, if Kempner’s position was that the exclusivity provision
was not enforceable during the term of the 1999 Agreement, Kempner would be hard pressed to explain why it did not
enter into the “lucrative master dealer agreement with Nextel” and market Nextel! products along with those of Cingular
Put another way, Kempner could not show that his failure to enter into a Nexte! agreement was in reasonable reliance
onanything that Cingular said or didn’t say, if Kempner were able to market products for both companies simultaneously.

21


but must use the evidentiary tools outlined above to identify the material facts that show there is a
genuine issue for trial. /d. at 324; Insolia, 216 F.3d at 598.
Il.

Applying these principles, the Court finds that Cingular is entitled to summary judgment on
Counts I, IV, VIH, and IX, but not on Count VII, the common law fraud claim. We will first
address Counts III and IV, which allege breach of contract claims involving a three-mile exclusive
territory allegation, and then move to Count IX, a claim under the Illinois Franchise Act. Finally,
we address the common law and statutory fraud claims in Counts VII and VII.

A.

In Count Ill, Kempner alleges that Cingular breached the parties’ 1999 Agreement by
opening a Cingular-owned kiosk at the Lincolnwood Town Center in September 1998, shortly after
Kempner closed its sales kiosk there in April 1998? (Def.’s Rule 56.1 St. Exs., Am. Compl. 4] 34-44,
Tab 3).> In Count IV, Kempner alleges that Cingular also breached the Agreement when it opened
a Cingular-owned kiosk at 4730 West Dempster Street in Skokie (Am. Compl., fj 46-47, Tab 3).
Kempner alleges that the opening of these Cingular kiosks violated the 1999 Agreement because:

. Cingular is obligated to establish Administrative Procedures and Guidelines for the sale of
Cingular products and services (/d., {| 42).

°Mr. Kempner opened the Lincolnwood kiosk in Apri] 1997, but he could not obtain authorization from Cingular
to sell Cingular cellular telephone products and services there (Def.s’ 56.1 St. 4 35-39).

‘Hereinafter, the Court will refer to the defendant’s statement of undisputed facts as “Def.’s 56.1 St.|__” and
to the evidentiary exhibits submitted by defendant in support of those facts as “Tab” and the number designated to that
Tab (e.g, “Tab 1"). The plaintiff's response to the defendant’s statement of facts will be designated “PI.’s 56.1 Resp.
|__.” And, reference to the plaintiff's supporting exhibits is designated “Tab __” with the letter designated to that
Tab (¢.g., “Tab A”).

The plaintiff also has submitted “additional facts” pursuant to Local Rule 56.1(b)(3). This fact statement is

referred to as “Pl.’s Add’1 56.1 St. |__.”” The defendant's response to this statement is not used. However, in certain
places we refer to defendant’s “supplemental facts” submission as: “Def.’s Supp. 56.1 St. ]_”

3


defined as the right to enter into a particular business or to sell goods under an agreement. 815 ILCS
705/3(14). “A payment alleged to be a franchise fee must fit precisely within the statutory
definition.” Account Serv. Corp. v. DAKCS Software Services, Inc., 567 N.E. 2d 381, 399 (Ill. App.
Ct. 1990).

The statute directs the IHinois Attorney General to promulgate additional standards under the
Act. As to the franchise fee, the Illinois Administrative Code explains that franchise fees can be
made to either the franchisor or an affiliate of the franchisor. 14 Ill. Adm. Code 200.105(a) (2003).
But, payments made to a franchisor or an affiliate do not count as a franchise fee if the purchases are
not required, or if the franchisee could purchase the items from another source. 14 Ill. Adm, Code
200.105(c).

Here, Kempner’s claim that it was a franchise flies in the face of the provision in the 1999
Agreement expressly stating that the relationship between the parties was not a franchise (Tab 4, {
3). Moreover, Kempner admits that it paid no direct or explicit franchise fee to Cingular (PI.'s 56.1
Resp. {[| 66-67, 70). Nonetheless, Kempner argues that two payments it made under the 1999
Agreement constitute indirect payment of the franchise fee.'° First, Kempner made construction
improvements to its store on Touhy Avenue. (Pl.'s 56.1 Resp., § 69). Second, Kempner made
payments to Cingular for inventory purchases of cellular phone equipment (Pl.'s 56.1 Resp., | 71).

The undisputed facts show that neither of the two payments qualifies as franchise fees under the Act.

Cingular argued that insurance payments Kempner made to State Farm do not constitute a franchise fee (Def.’s
Mem. at 15-16). Kempner did not address the insurance payments in its memorandum in opposition; we therefore
deemed abandoned any claim by Kempner that insurance payments were franchise fee payments.

14


2.

The purchase of cellular phone equipment also does not satisfy the franchise fee requirement.
Kempner correctly states that equipment purchases may constitute a franchise fee when the
franchisee is required to maintain unreasonably large inventories. TLMS Motor Corp.,1998 WL
182475 at *4 (citing Wright-Moore Corp. v. Ricoh Corp., 908 F.2d 128 (7th Cir. 1990)). Even if
Kempner could show that Cingular required it to maintain a large inventory, Kempner would also
have to show that such a large inventory could not be resold within a reasonable time. 14 Il]. Adm.
Code 200.105(c); TLMS Motor Corp., 1998 WL 182475 at *4 (quoting Marathon Petroleum Co. v.
LoBosco, 623 F.Supp. 129, 134 (N.D. Ill. 1985). Not a single fact in the record supports the claim
that Kempner was required to maintain an unreasonably large inventory, or that Kempner could not
sell its existing inventory within a reasonable time.

Moreover, Kempner maintains that there was "no market for it to purchase equipment other
than through Cingular," thus resulting in a functional requirement to buy its inventory from Cingular
(PI's Mem. at 12). But, Kempner admits that it could purchase cellular phone equipment from other
vendors (/d.; Pl.'s 56.1 Resp., {| 93, 98). Thus, Kempner's cellular phone equipment purchases fall
squarely within the Administrative Code exception whereby items available for purchase from other
sources cannot qualify as payment of the franchise fee. 14 Ill. Adm. Code 200.105(c).

Because payments satisfying the franchise fee requirement must fit precisely within the
dictates of the Illinois Franchise Disclosure Act, both the construction improvements and the
purchase of cellular phone equipment fail to satisfy the franchise fee requirement. Therefore,

summary judgment is granted to Cingular on Count IX.

16


judgment on that issue, the Court must resolve the legal issue and enter judgment “as a matter of
law” for one side or the other.

With regard to factual issues, a genuine issue for trial exists only when “the evidence is such
that a reasonable jury could return a verdict for the nonmoving party.” Anderson vy. Liberty Lobby,
Inc.,477 US, 242, 248 (1986). Ifthe evidence is merely colorable, or is not significantly probative,
summary judgment may be granted. Jd. at 249-50; see also Flip Side Productions, Inc. v. Jam
Productions, Ltd., 843 F.2d 1024, 1032 (7" Cir.), cert. denied, 488 U.S. 909 (1988). In deciding a
motion for summary judgment, the Court must view all evidence in the light most favorable to the
nonmoving party, Valley Liquors, Inc. v. Renfield Importers, Ltd., 822 F.2d 656, 659 (7" Cir.), cert.
denied, 484 U.S. 977 (1987), and must draw all reasonable inferences in the nonmovant’s favor.
Santiago v. Lane, 894 F.2d 218, 221 (7" Cir. 1990).

When a material fact or a set of facts yields competing, but reasonable, inferences, then there
is a genuine issue that precludes summary judgment. The non-moving party’s burden is to identify
facts that are both material and genuinely disputed. Celotex Corp. v. Catrett, 477 U.S. 317, 324
(1986) To be material, a fact must be outcome determinative under the substantive law governing
the motion. /nsolia v. Philip Morris Inc., 216 F.3d 596, 598-99 (7" Cir. 2000). A “genuine issue”
exists when the party opposing the motion for summary judgment serves and files, pursuant to local
Rule 56.1, a concise statement outlining the material facts that require denial of summary judgment,
supported by citations to the evidentiary materials that support those denials (e.g., affidavits,
depositions, answers to interrogatories, admissions etc.). Fed. R.Civ.P. 56(c). Although the party
seeking summary judgment bears the initial burden of proving that there is no genuine issue of

material fact, Celotex, 477 U.S. at 323, the non-moving party cannot rely upon the pleadings alone,


Products Corp. v. Harris Bank Roselle, 89 F.3d 430, 436 (7" Cir. 1996); .C. Whitney & Co. v.
Renaissance Software Corp., No. 99 C 3714, 2000 WL 556610, *13-17 (N.D.IIL., Apr. 19, 2000).
Kempner has neither alleged nor shown that there is a consumer nexus between his claimed injuries
and the alleged misrepresentations by Cingular. Mr. Kempner is not a consumer of Cingular’s
products or services, and Mr. Kempner has neither alleged nor argued that he is one.

Although Kempner seeks to satisfy the consumer nexus element by arguing that its
advertising allegations involved deception “directed to consumers” (P1.’s Mem. at 11), this argument
fails completely. Kempner conceded the advertising allegations when, in his deposition, he indicated
that the allegations must have been a “typo.” Moreover, the promotional advertisements, by their
own terms, did not claim universal applicability to every listed store (Def.’s 56.1 St. 456, citing Tab
5, Kempner Dep. 690:3-11; 691:1-20). If this is the best argument Kempner has to defeat summary
judgment, then the statutory fraud claim must fail. The Court will grant summary judgment for
Cingular on Count VIII.

CONCLUSION
IT IS THEREFORE ORDERED that the Clerk of the Court grant the defendant’s motion for

summary judgment in part and deny it in part (doc. # 65). Final judgment should be entered in favor

25


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
KEMPNER MOBILE ELECTRONICS, INC., ) DOCKETED
an Illinois corporation, )
) NOV 0 7 2003
)
Plaintiff, )
) Case No. 02 C 5403
vs. )
) Magistrate Judge Schenkier
SOUTHWESTERN BELL MOBILE )
SYSTEMS, LLC, d/b/a CINGULAR )
WIRELESS f/k/a SOUTHWESTERN BELL )
MOBILE SYSTEMS, INC. d/b/a CELLULAR )
ONE-CHICAGO, )
)
Defendant. )

MEMORANDUM OPINION AND ORDER!

Defendant, Southwestern Bell Mobile Systems, LLC d/b/a Cingular Wireless (‘Cingular’),
seeks summary judgment on Counts III, IV, VII, VII and IX of the First Amended Verified
Complaint filed by Plaintiff, Kempner Mobile Electronics, Inc. (“Kempner”). For the reasons given
below, the Court grants Cingular’s motion for summary judgment on Counts IU, IV, VIII, and IX,
and denies summary judgment on Count VII

L

The legal standards governing a motion for summary judgment are well-established.
Summary judgment is proper if the record shows that there is no genuine issue as to any material
fact, and that the moving parties are entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).

Where the issues to be decided are purely legal, and the parties have filed cross-motions for summary

‘By consent of the parties and pursuant to 28 U.S.C. § 636(c), the case has been assigned to this Court for all

proceedings, including the entry of final judgment (doc. #s 5-7).


However, even if Kempner’s parol evidence were admissible and relevant, this evidence
would still fail to defeat summary judgment. The Vital memo is labeled as a “Distribution
Certification Procedure” that existed in October 1994, and it merely refers to a three-mile radius
policy (that had exceptions) with respect to “additional new distribution points” (Tab G). The Vital
memo is simply not evidence that a three-mile rule existed five years later, and was contained in an
APM that was integrated and merged into the parties’ 1999 Agreement. In other words, the
evidentiary link between the Vital memorandum and the 1999 Agreement is too attenuated to
provide a jury with a basis upon which to draw a reasonable inference that the three-mile policy was
in the APM, referenced in the 1999 Agreement.

3.

Third, even if we consider the parol evidence offered on the three-mile policy, which we need
not do since there is no ambiguity in the 1999 Agreement that requires admission of such evidence,
the undisputed facts show that to the extent a three-mile policy existed, there were exceptions to it
(Def.’s 56.1 St. {{§ 42-43). This testimony of non-party witnesses on this point is consistent with the
testimony of Cingular executives, who testified on this subject and explained that distance between
Cingular locations was not the only factor considered by Cingular in deciding to authorize a sales
location (/d. 4 41). Moreover, the testimony of Ms. Gillman, Kempner’s witness, does not
undermine this testimony because she stated in her declaration that the “three-mile rule was a criteria
that Cingular used in evaluating and approving new points of distribution” (during her tenure as an
Account Manager thru April 2000), but that this rule had “exceptions” (Tab G, {4 6-8) (emphasis
added). Kempner was not denied any location requests for new, additional locations during the term

of the 1999 Agreement; and Kempner’s April 2000 request for a relocation to Wilmette, a move that

12


1.

The construction improvements to the Touhy Avenue store do not constitute an indirect
franchise fee. An “alleged franchise fee must be an unrecoverable investment in the manufacturer's
distributorship." Cent. States Distrib., Inc. v. Minnesota Mining & Mfg. Co.,No.97 C 622, 1997 WL
370191 at *6 (N.D. Ill. June 27, 1997). Kempner maintains that it paid Cingular directly "through
offsets from commissions to Kempner" for the construction improvements. (PI.’s Mem. at 12). Not
only does Kempner fail to offer evidence that the monetary value of these improvements was greater
than $500, as requested by the Franchise Act, but Kempner also fails to dispute Cingular's contention
that these improvements fall under the Act's necessary fixtures exception. 815 ILCS 705/3(14)(d).
Finally, Kempner admits that these payments were in fact repayments of an interest-free loan that
Cingular advanced to Kempner, and thus could not constitute an unrecoverable investment (Tab 6,
Transcript of Preliminary Injunction Vol. 1A, 93:10 - 94:24, 227:19 - 228:1).

In addition, Kempner fails to offer any facts to show that Cingular required Kempner to
"build out" the Touhy Avenue store, or that any sums paid to Cingular for the construction
improvements could not have been paid to another source. Payments purporting to be franchise fees
must go beyond the range of ordinary business expenses. See TLMS Motor Corp. v. Toyota Motor
Distrib., No. 95 C 180, 1998 WL 182475, *3 (N.D. Ill. Apri! 15, 1998). Kempner concedes that the
1999 Agreement did not require Kempner to build out its store (Pl.'s 56.1 Resp., 4] 72). Although
Cingular required that agents adopt a particular "look," the undisputed facts show that Kempner paid
third party vendors directly for the construction improvements made to the Touhy Avenue store.
(PI's 56.1 Resp., | 79). And, Kempner does not allege that the third party vendors were affiliates

of Cingular.