Archives for September 2013

Implied-In-Fact Contract Claims and Motions to Reconsider – Illinois Law

In 1801 W. Irving, LLC v. Splitt Architects, Ltd., 2013 IL App (1st) 121357-U (September 12, 2013) a plaintiff developer sued an architect for breach of an oral contract and for implied indemnity in connection with the construction of a condominium building. 

The trial court struck all counts of the developer’s amended complaint and the developer appealed.

Held: Affirmed in part; reversed in part. 

Reasoning:

Breach of Oral Contract Claim

The court found the claimed oral contract was too indefinite to be enforced.  

Illinois requires that a contract’s material terms be sufficiently definite and certain so that the court can determine what the parties agreed to. ¶¶ 30-31.  

While certain nonessential terms can be missing, the parties’ failure to agree upon an essential term signals that mutual assent is lacking.

The court found several key terms were missing from oral contract including basic compensation terms.  For support, the court cited the developer’s deposition admission that the contract terms were in constant flux. ¶ 31.

Motion to Reconsider

The Court sustained the trial court’s denial of the developer’s motion to reconsider summary judgment for the architect.  A motion to reconsider’s purpose is to bring to the court’s attention (1) newly discovered evidence, (2) changes in the law, or (3) errors in the court’s prior application of law.  ¶ 33;

“Newly discovered evidence” means evidence that was not in existence at the hearing which generated the order being attacked.

Since the developer supported its motion to reconsider with its agent’s affidavit – an affidavit that wasn’t filed with its summary judgment responsethe developer  didn’t meet the newly discovered evidence test and the Court correctly refused to consider the affidavit.  ¶¶ 28, 33-34.

Implied-in-fact contract

The Court did find there was an implied-in-fact contract between the developer and architect.

An implied-in-fact contract, unlike an express contract, results from the parties’ acts and conduct. 

A contract implied-in-fact is one where a contractual obligation is imposed by the court due to some “expression or promise that can be inferred from the facts and circumstances.”   ¶ 40

The Court found the developer adequately pled an implied-in-fact contract.  The allegations that the architect and developer worked together on the project for several years without incident reflected a tacit services-for-compensation arrangement. ¶ 22.

Take-aways: A valid breach of contract claim requires that material terms be sufficiently definite and that there is a meeting of the minds on them;

A motion to reconsider based on newly discovered evidence means that the evidence didn’t exist at the time the challenged order entered;

An implied-in fact contract can present a fallback theory to breach of an express contract (if no formal contract exists) where the parties’ conduct indicates a mutual relationship with reciprocal performance and compensation.

“Private Statutes of Limitations” in Illinois: Some Quick Hits

The Featured Case: 15th Place Condominium Ass’n v. Fitzgerald Associates Architects, PC, 2013 ILApp(1st) 122292-U (September 5, 2013)

Key Rules:  

1/ Illinois’ ten-year statute of limitations (SOL) governs a developer’s breach of indemnity claim against a general contractor when the indemnity clause is part of a construction contract (735 ILCS 5/13-206);

2/ The four-year SOL (735 ILCS 5/13-214(a)) for construction-related claims does not apply to breach of a contract’s indemnification provision – even where the indemnification clause is contained in a construction contract;

3/ Contracting parties are free to agree to a shortened limitations period for claims as long as it’s unambiguous and the parties are on an equal negotiating footing;

4/ The nature of the injury determines the applicable SOL; not the pleader’s designation of the claim

–  Parties are free to mutually abbreviate a limitations period to file suit so long as it is reasonable;

¶¶ 40-44, 19-21, 50-51.

 

 

 

Facebook Announcement Doesn’t Equal Improper Client Solicitation: Mass. Court

In Invidia v. DiFonzo, 30 Mass. L.Rptr 390 (2012), a hair salon sued a former stylist for breaching a non-compete and non-solicitation clause in her employment agreement.  The Court examined whether the new employer’s posting a job change on defendant’s Facebook page and “friending” former clients was improper solicitation.

The employment contract contained a non-compete spanning two years and 10 miles and a two-year non-solicitation clause.  After she resigned, the defendant went to work for a competing salon less than two miles away.  Her new employer then posted an announcement on its Facebook page, promoting defendant’s new affiliation with the competing salon. 

The plaintiff saw the Facebook activity and sued.  The Court denied the request for injunctive relief because plaintiff failed to show a likelihood of success on the merits or irreparable harm.

Rules/Reasoning:

A preliminary injunction plaintiff must show (1) likelihood of success on the merits; (2) irreparable harm if the injunction is denied; and (3) the risk of irreparable harm to the movant outweighs similar risk of harm to the opposing party.  *2. 

Massachusetts courts scrutinize non-competition agreements because they often result from unequal bargaining power.  A covenant not to compete is enforceable only if it’s necessary to protect a legitimate business interest, is reasonably limited in time and space, and supported by the public interest.  *4.

The Non-Compete Provision

The salon plaintiff failed to show that it was likely to succeed on the merits on the noncompete because it was questionable whether a two-year/10-mile restriction was necessary to protect plaintiff’s interest and because plaintiff failed to show that its “legitimate business interest” – the goodwill which plaintiff claimed it lost – belonged entirely to plaintiff.  *5.  

The Court noted that in the hairdressing business, goodwill often belongs to the individual stylist rather than the salon.  That is, customers likely patronize a salon for a specific hairdresser; not because they like the salon itself. 

The Court also found the plaintiff failed to show irreparable harm, since plaintiff could clearly quantify its damages.  The Court pointed out that plaintiff offered evidence of the number of clients that it lost since defendant left (90) and the average dollar amount spent ($87.16) by each lost client.  This militated against a finding of irreparable harm.  *5.

The Non-Solicitation Clause

Turning to the non-solicitation clause, the Court found that the Facebook announcement of defendant’s affiliation with the new salon (by that salon) did not equate to active solicitation.*5.  

Nor did the defendant’s sending  friend requests to eight clients of plaintiff amount to a breach of the non-solicitation provision. 

The employer did however have some circumstantial evidence in support of its solicitation argument.  It offered documents at the injunction hearing that demonstrated that some 90 salon clients had cancelled (without rescheduling) appointments in the two-plus months since defendant’s departure. *6.  Yet the Court wasn’t prepared to find this a breach of the anti-solicitation provision.  The Court stressed that no current or former clients testified that defendant contacted them and solicited their business.

Take-aways: A third party’s passive Facebook posting and direct Facebook friends requests are not enough to establish solicitation for preliminary injunction purposes.  Instead, there must be direct evidence of active solicitation to merit injunctive relief.