Opinion ID: 2995219
Heading Depth: 1
Heading Rank: 4

Heading: Ill Tool Works, Inc., 628 N.E.2d 1165,

Text: 1168 (Ill. App. Ct. 1993). Where no ambiguity exists, construction of the contract is a question of law. See Spectramed Inc. v. Gould Inc., 710 N.E.2d 1, 6 (Ill. App. Ct. 1998). In our view, the producer contract at issue here is unambiguous. More precisely, several unambiguous provisions in the contract require a ruling in Pacific Mutual’s favor. First, the contract contains an integration clause, which states that [t]his contract supercedes all previous contracts and agreements between [CICI and Pacific Mutual] made for the procurement of insurance products. R.26, Ex.2 at 2. The Illinois Supreme Court has held that when parties formally include an integration clause in their contract, they are explicitly manifesting their intention to protect themselves against misinterpretations which might arise from extrinsic evidence. Air Safety, Inc. v. Teachers Realty Corp., 706 N.E.2d 882, 885 (Ill. 1999). An integration clause is a clear indication that the parties desire the contract be interpreted solely according to the language used in the final agreement. . . . [The plaintiff] was free to negotiate a contract omitting the integration clause. It did not, and it is bound by its bargain. Id. at 886; see also Owens v. McDermott, Will & Emery, 736 N.E.2d 145, 152 (Ill. App. Ct. 2000) (explaining that the presence of an integration clause is significant because it clearly indicates the parties’ desire that the agreement be interpreted solely according to its own language)./1 Second, the compensation schedule in effect at the time CICI entered into the producer contract with Pacific Mutual, and at the time the PSE policies were sold, emphasized that compensation was to be paid in accordance with the agreement between the plaintiffs and MSC./2 In pertinent part, that document states the following: Pacific Mutual reminds Producers that registered products can only be sold by properly licensed Registered Representatives, registered with a NASD member Broker-Dealer that has a Selling Agreement in effect. Compensation to the Producer for registered insurance products will then be in accordance with the compensation agreement and schedules between the Broker-Dealer and the Producer currently in effect. Pacific Mutual has not and can not grant authority to sell registered products by Producers that do not have the proper SEC, NASD, and state insurance licenses. R.26, Ex.110 at 6. The integration clause states that the contract is inclusive and that everything necessary to interpreting it is contained within that contract and its supporting documentation (the compensation schedule). Looking to the compensation schedule, it provides, as indicated above, that the plaintiffs’ compensation is to be in accordance with the compensation agreement and schedules between the Broker-Dealer [MSC] and the Producer [CICI] currently in effect. Thus, the contract, which has been rendered inclusive by the integration clause, instructs the plaintiffs to look to their agreement with the broker- dealer, MSC, for their compensation and not to their agreement with Pacific Mutual. The district court noted that the contract provides that Pacific Mutual retained the right . . . to set the compensation on plans not included in the Compensation Schedules which are now or may hereinafter be issued by [Pacific Mutual]. R.91 at 23. The court believed that this language permitted Pacific Mutual to fix compensation outside the schedules created by Pacific Mutual and that Kolasny had the actual or apparent authority to set compensation in such a fashion. We find ourselves in respectful disagreement with the district court on this issue. Given (1) the explicit mention in the existing compensation schedule that compensation for registered insurance products was to be in accordance with the compensation agreement and schedules between the broker-dealer and the producer currently in effect and (2) the explicit warning in the same provision that registered products only can be sold by properly li censed representatives registered with a NASD member broker-dealer, the plaintiffs cannot rely reasonably on the contractual provision that gives Pacific Mutual authority to fix compensation schedules for the plans later issued by Pacific Mutual. Pacific Mutual simply was not licensed to sell this sort of plan.