Court Opinion

ID: 9709647
Source: CourtListenerOpinion
Date Created: 2023-08-26 03:52:37.614784+00
Date Added: 2024-06-11T18:22:50.701664
License: Public Domain

JUSTICE CHAPMAN delivered the opinion of the court: Plaintiff, Rapp Insurance, seeks a preliminary injunction to enjoin its former employee, David Baldree, from transacting any business with plaintiff’s customers and from using confidential information Baldree obtained on customers while working for the plaintiff. The trial court granted plaintiff a temporary restraining order but denied it a preliminary injunction. Plaintiff appeals. We affirm. Plaintiff is a general insurance agency dealing in both personal and commercial accounts. In December 1988, plaintiff hired defendant, David Baldree, to solicit and service new insurance accounts. Defendant signed an employment contract which stated: “(5) In the event this agreement is terminated by the Employer, Employee hereby covenants and agrees with the Employer that he or she will not for a period of three (3) years from the date of such discharge, transact any business with any (individual) persons and/or corporate-commercial accounts and/or Association and its member accounts doing business with the Employer at the time of such termination without first obtaining the written consent of the Employer.” An identical clause followed which applied in the event of a voluntary termination on the part of the employee. Another clause provided: “(2) Employee shall receive as compensation such salary and wages as shall be agreed upon between Employer and Employee from time to time in exchange for performing the duties outlined in Paragraph 1 hereof and in consideration of the covenants and/or non-privacy agreement in Paragraphs 5 and 6 hereof.” At the end of 1991, plaintiff reduced Baldree’s compensation, and he became dissatisfied with the arrangement. Defendant admittedly copied Rapp Insurance files which he had compiled on his customers while working for Rapp. On February 9, 1992, plaintiff had a meeting with defendant in an attempt to retain defendant as an employee and to address his dissatisfaction with the new compensation agreement. During that meeting defendant stated that he had obtained a “better deal” with another agency. Defendant also asked for time to discuss his options with his wife and told Rapp that he would notify it by the following Friday on his final decision. Defendant then sent a letter dated February 5, 1992, to plaintiff in which he demanded a restoration of his original compensation and stated that a failure by plaintiff to respond to the letter within 10 days of its mailing would be deemed a breach of their written contract. Defendant did not return to work. On February 13, 1992, plaintiff’s attorney delivered a letter to defendant stating that plaintiff considered defendant to have terminated his employment. The letter further stated that if defendant contended otherwise he should respond within seven days or plaintiff would terminate his employment. On February 14, 1992, plaintiff filed its complaint requesting a temporary restraining order and a preliminary injunction. The court granted the temporary restraining order preventing defendant from using the allegedly confidential insurance files and from transacting any business with any of plaintiffs customers. The order was set to expire on February 24, 1992, at which time a hearing on the preliminary injunction would be heard. Plaintiffs motion for preliminary injunction was heard on February 24, 1992, and denied by an order filed February 27, 1992. Plaintiff filed a notice of interlocutory appeal on March 24,1992.  The issue before this court is whether the circuit court’s denial of the preliminary injunction was contrary to the manifest weight of the evidence. In order to prevail on a motion for a preliminary injunction, a plaintiff must prove that: (1) a clearly ascertained right or interest exists which needs protection; (2) irreparable injury will occur without the protection of an injunction; (3) the remedy at law is inadequate; and (4) there is a likelihood of success on the merits of the case. Southern Illinois Medical Business Associates v. Camillo (1989), 190 Ill. App. 3d 664, 671, 546 N.E.2d 1059, 1065; Lincoln Towers Insurance Agency v. Farrell (1981), 99 Ill. App. 3d 353, 355, 425 N.E.2d 1034, 1036. The party seeking a preliminary injunction must raise a fair question as to the existence of the right claimed and establish that it probably will be entitled to the requested relief if it proves its allegations. (Lincoln Towers, 99 Ill. App. 3d at 355, 425 N.E .2d at 1036.) The role of the reviewing court is to determine whether the trial court’s findings are contrary to the manifest weight of the evidence and to reverse the findings only upon such showing. (Millard Maintenance Service Co. v. Bernero (1990), 207 Ill. App. 3d 736, 743-44, 566 N.E .2d 379, 383.) We affirm. There were, in fact, two preliminary injunctions requested by the plaintiff. The first sought to enjoin defendant from using plaintiff’s proprietary business information (i.e., customer files), and the second was to enjoin defendant from transacting any business with plaintiff’s customers as per the employment contract. The trial court denied the plaintiff’s requests without specific comment.  We first address the trial court’s refusal to restrain defendant from transacting any business with plaintiff’s customers based on the employment contract signed by the defendant with Rapp. The enforceability of a restrictive covenant is a question of law to be carefully scrutinized by the courts because such covenants operate as partial restraints of trade. (Reinhardt Printing Co. v. Feld (1986), 142 Ill. App. 3d 9, 15, 490 N.E.2d 1302, 1306-07.) A restrictive covenant may be held enforceable only if the time and territorial limitations are reasonably necessary to protect a legitimate business interest of the employer. (Reinhardt, 142 Ill. App. 3d at 15, 490 N.E.2d at 1307.) Plaintiff must therefore first establish that a legitimate business interest was threatened. In doing so, plaintiff must show injury to its legitimate business interests separate and distinct from defendant’s breach of the covenant to secure enforcement thereof, or such covenant will be deemed an unenforceable attempt to prevent competition per se. Reinhardt, 142 Ill. App. 3d at 15, 490 N.E.2d at 1307.  Ordinarily an employer has no proprietary interest in its clients; however, such an interest may be found for purposes of enforcing a covenant not to compete: (1) where, by the nature of the business, plaintiff has a near-permanent relationship with its customers and but for his or her employment, defendant would not have had contact with them; or (2) where the former employee learned trade secrets or acquired other confidential information while in plaintiff’s employ and subsequently attempted to use it for his own benefit. Camillo, 190 Ill. App. 3d at 673, 546 N.E.2d at 1065; Reinhardt, 142 Ill. App. 3d at 15-16, 490 N.E.2d at 1307.  Some of the factors to be considered in determining whether a near-permanent relationship exists include the time, cost, and difficulty involved in developing and maintaining the clientele, the parties’ intention to remain affiliated for an indefinite period, and the continuity and duration of the relationship. A.B. Dick, Co. v. American Pro-Tech (1987), 159 Ill. App. 3d 786, 793, 514 N.E.2d 45, 49; Reinhardt, 142 Ill. App. 3d at 16, 490 N.E.2d at 1307. As. concerns the time, continuity and duration factors of the relationships, we believe that the nature of most general insurance policies is somewhat transient. Granted, many such relationships endure over lengthy periods of time; however, most are easily can-celled within relatively short time periods and depend on constant periodic renewals. (See Camillo, 190 Ill. App. 3d at 674, 546 N.E.2d at 1066.) The evidence was undisputed that the customer files taken by defendant were those of his own customers. As such they could not have exceeded three years in duration when defendant left Rapp. We cannot say that such relationships were near-permanent.  Contrary to plaintiff’s argument, the mere potential to become a long-standing customer is not sufficient. As regards the remainder of Rapp’s customers, we again emphasize the transient nature of insurance policies in general. It was uncontested that insurance customers are frequently approached by competitors and that the customers willingly give the competitor information regarding their premiums in hopes of obtaining a better deal. Plaintiff has also failed to demonstrate any substantial cost or difficulties in developing or maintaining the clientele. Camillo, 190 Ill. App. 3d at 674, 546 N.E.2d at 1066. As most of the clients, according to testimony, were brought in via “cold calls,” we cannot say that defendant would not have had contact with them but for his employment with plaintiff, since most of these customers could be found in the phone book and randomly contacted by any insurance agent. We also do not conclude that the information in the customer files taken by the defendant contained trade secrets or confidential information. A trade secret has been defined as “a plan or process, tool, mechanism, compound, or informational data utilized by a person in his business operations and known only to him and such limited other persons to whom it may be necessary to confide it.” (Reinhardt, 142 Ill. App. 3d at 17, 490 N.E.2d at 1308.) Again, it was uncontested that the files defendant copied were those of his own customers, accounts he had established during his three-year tenure. Defendant could easily have contacted his former customers and obtained from them most, if not all, of the information contained in their files. Various employees of plaintiff had access to the same information, and plaintiff made little effort to guard the secrecy of the information other than the employment contract itself. As has already been stated, insurance customers may be targeted or contacted randomly by any given insurance salesman for any company and, more often than not, will voluntarily disclose information about their policies in the hopes of obtaining better deals. This is the nature of competition. Rapp wants this information, which may be liberally distributed by its very own customers to competing agents, to be classified, in the case of David K. Baldree, as a trade secret or confidential information which would prohibit him from transacting business with any of Rapp’s customers. The information is out there to be found by any persistent agent. It is neither a secret nor confidential. Thus, finding no permanent customer relationship or trade secret/confidential information involved, we cannot say that plaintiff has demonstrated a proprietary business interest such as to warrant an enforcement of a covenant not to compete. Concerning the first requested preliminary injunction seeking to enjoin defendant from using plaintiff’s proprietary business information (i.e., the customer files), we have already determined that these files contained no trade secret or information of a confidential nature which would warrant the reversal of the trial court’s ruling. We, therefore, cannot say that the trial court’s findings were contrary to the manifest weight of the evidence and, therefore, affirm. Affirmed. GOLDENHERSH, P.J., concurs.