Pam's Acad. of Dance/Forte Arts Ctr. v. Marik

2018 IL App (3d) 170803

128 N.E.3d 321

431 Ill.Dec. 651

PAM'S ACADEMY OF DANCE/FORTE ARTS CENTER, Plaintiff-Appellee,

v.Callie MARIK, Defendant-Appellant.

Appeal No. 3-17-0803

Appellate Court of Illinois, Third District.

Opinion filed December 11, 2018

Kenneth J. Vanko and Emily L. Langhenry, of Clingen Callow & McLean, LLC, of Lisle, for appellant.

Sabuco, Beck, Hansen, Massino & Pollack, P.C., of Joliet (Zachary B. Pollack, of counsel), for appellee.

JUSTICE SCHMIDT delivered the judgment of the court, with opinion.

¶ 1 In this action brought by plaintiff, Pam's Academy of Dance/Forte Arts Center (Pam's Academy), against defendant, Callie Marik, the Grundy County circuit court certified two questions for interlocutory appeal pursuant to Illinois Supreme Court Rule 308(a) (eff. July 1, 2017). We granted defendant's application for leave to appeal. We decline to answer the first certified question, answer the second certified question affirmatively, and remand for further proceedings.

¶ 2 I. BACKGROUND

¶ 3 On April 7, 2017, plaintiff filed an amended three-count complaint against defendant, seeking monetary damages and injunctive relief. Two counts alleged breach of contract, and the third count alleged breach of the Illinois Trade Secrets Act ( 765 ILCS 1065/1 et seq. (West 2016) ). Specifically, plaintiff asserted that defendant, a former employee, breached the parties' "NON-DISCLOSURE AGREEMENT AND RESTRICTIVE COVENANT" (Agreement) by opening a dance studio within 25 miles of Pam's Academy and soliciting students and/or teachers via an improperly-obtained customer list.

¶ 4 Although plaintiff did not specify which covenants in the Agreement defendant allegedly violated, the Agreement contains three posttermination restrictive covenants that form the basis for the action. In particular, the Agreement provides:

"3. Upon termination of employment for any reason whatsoever, the undersigned will not engage in any similar business, either directly or indirectly, as a shareholder, officer, or director of any corporation, or as a partner in any general or limited partnership or individually as a sole proprietorship engaged in a similar business within a 25 mile radius of Pam's Academy of Dance/Forte Arts Center, for a period of not less than five (5) years form [sic ] the date of written termination of employment from Pam's Academy of Dance/Forte Arts Center.

4. It is further agreed, that as a condition of employment and/or continued employment of Pam's Academy of Dance/Forte Arts Center, the undersigned will not solicit or do business with any of the teachers, students and/or parents of Pam's Academy of Dance/Forte Arts Center * * * for a period of not less than three (3) years from the date of termination of employment, for whatever reason, notwithstanding that the undersigned may be engaged, either directly or indirectly in a similar business within a twenty five (25) mile limitation described above.

* * *

7. The undersigned agrees not to solicit, interfere with, divert, or otherwise communicate with any person who is a customer, client, student, parent, or employee for the purpose of providing similar services or products as provided by Pam's Academy of Dance/Forte Arts Center."

¶ 5 On April 25, 2017, defendant filed a motion to dismiss all claims pursuant to section 2615 of the Code of Civil Procedure ( 735 ILCS 5/2-615 (West 2016) ). Defendant argued that all of plaintiff's claims were defective because (1) the provisions of the Agreement it was attempting to enforce were invalid and unenforceable as a matter of law (counts I and II) and (2) it failed to allege a plausible factual basis that she misappropriated a customer list (count III).

¶ 6 Following a June 2017 hearing, the trial court entered its order denying defendant's motion as to counts I and II, but striking paragraph seven of the Agreement as overbroad. The court also dismissed count III without prejudice. Thereafter, on defendant's motion, the court certified the following two questions for interlocutory review pursuant to Illinois Supreme Court Rule 308(a) (eff. July 1, 2017):

"[1]. Do employment-based restrictive covenants with time periods lasting ‘not less than’ five and ‘not less than’ three years contain an enforceable and reasonable temporal scope under Prairie Rheumatology Assocs., S.C. v. Francis , 2014 IL App (3d) 140338, 388 Ill.Dec. 150, 24 N.E.3d 58, and Reliable Fire Equipment Co. v. Arredondo , 2011 IL 111871, 358 Ill.Dec. 322, 965 N.E.2d 393 ?

[2]. In the context of employment-based restrictive covenants, do restrictions lasting ‘not less than’ five and ‘not less than’ three years mean five and three years respectively?"

This court allowed defendant's application for leave to appeal.

¶ 7 II. ANALYSIS

¶ 8 A. Certified Questions and the Standard of Review

¶ 9 Our review of an interlocutory appeal brought pursuant to Rule 308 is limited to the certified questions. De Bouse v. Bayer AG , 235 Ill. 2d 544, 550, 337 Ill.Dec. 186, 922 N.E.2d 309 (2009). We will consider a certified question only if it asks a question of law but will decline to answer if the ultimate decision turns on the resolution of facts. Spears v. Association of Illinois Electric Cooperatives , 2013 IL App (4th) 120289, ¶ 15, 369 Ill.Dec. 267, 986 N.E.2d 216. We review de novo certified questions under Rule 308. Simmons v. Homatas , 236 Ill. 2d 459, 466, 338 Ill.Dec. 883, 925 N.E.2d 1089 (2010).

¶ 10 B. The Meaning of "Not Less Than" in Employment-Based Restrictive Covenants

¶ 11 Because we must first resolve the second certified question to place the first certified question in the proper context, we address it first. Thus, we must determine whether "[i]n the context of employment-based restrictive covenants," restrictions of "not less than" five and "not less than" three mean five and three years respectively.

¶ 12 The primary objective when construing the language of a contract is to give effect to the intent of the parties, which is discerned from the language of the contract. Thompson v. Gordon , 241 Ill. 2d 428, 441, 349 Ill.Dec. 936, 948 N.E.2d 39 (2011). "If the words in the contract are clear and unambiguous, they must be given their plain, ordinary and popular meaning." Id. "[I]f the language of the contract is susceptible to more than one meaning, it is ambiguous." Id. However, "[a] contract is not rendered ambiguous merely because the parties disagree on its meaning." Central Illinois Light Co. v. Home Insurance Co. , 213 Ill. 2d 141, 153, 290 Ill.Dec. 155, 821 N.E.2d 206 (2004). "Rather, ambiguity exists only if the term is susceptible to more than one reasonable interpretation." Nicor, Inc. v. Associated Electric & Gas Insurance Services Ltd. , 223 Ill. 2d 407, 417, 307 Ill.Dec. 626, 860 N.E.2d 280 (2006).

¶ 13 As indicated above, paragraph three of the Agreement provides that defendant may not engage "in a similar business within a 25 mile radius of Pam's Academy of Dance/Forte Arts Center, for a period of not less than five (5) years." (Emphasis added.) Paragraph four of the Agreement provides that defendant may "not solicit or do business with any of the teachers, students and/or parents of Pam's Academy of Dance * * * for a period of not less than three (3) years from the date of termination of employment." (Emphasis added.)

¶ 14 Plaintiff asserts that the time limits in the Agreement "clearly set an unambiguous period of three and five years for each restrictive covenant to terminate." Defendant disagrees, asserting that a strict construction of the Agreement requires this court to avoid an interpretation that devolves the "no less than" language into mere surplusage. See Berkeley Properties, Inc. v. Balcor Pension Investors II , 227 Ill. App. 3d 992, 1002, 169 Ill.Dec. 576, 592 N.E.2d 63 (1992) ("It is presumed that parties do not insert meaningless words and phrases into contracts; therefore, no part of a contract should be rejected as meaningless or surplusage.").

¶ 15 The phrase "not less than" is routinely used in Illinois statutes and contracts. In some cases, it establishes a minimum requirement. See, e.g. , 625 ILCS 5/12-601(a) (West 2016) (a motor vehicle must be equipped with a horn audible from a distance of not less than 200 feet); 820 ILCS 105/4 (West 2016) (setting minimum hourly wage at not less than $8.25); 510 ILCS 5/13(a) (West 2016) (requiring confinement of a dog that bites a human for a period of not less than 10 days); 725 ILCS 205/1.01 (West 2016) (defining "sexually dangerous persons" as "[a]ll persons suffering from a mental disorder * * * [that] has existed for a period of not less than one year * * * who have demonstrated propensities toward acts of sexual assault or acts of sexual molestation of children" (emphasis added) ); 735 ILCS 5/9-209 (West 2016) ("A landlord or his or her agent may, any time after rent is due, demand payment thereof and notify the tenant, in writing, that unless payment is made within a time mentioned in such notice, not less than 5 days after service thereof, the lease will be terminated." (Emphasis added.) ); Rosenberger v. United Community Bancshares, Inc. , 2017 IL App (1st) 161102, ¶ 7, 411 Ill.Dec. 558, 73 N.E.3d 642 (employment contract provided an initial base salary of $200,000 per year subject to annual increases in " ‘an amount not less than the increase to the Consumer Price Index for the prior twelve months’ " (emphasis added) ); McHale v. Kiswani Trucking, Inc. , 2015 IL App (1st) 132625, ¶ 13, 396 Ill.Dec. 46, 39 N.E.3d 595 (agreement required carrier "to procure and maintain not less than $5 million each in both comprehensive liability insurance and vehicle liability insurance" (emphasis added) ).

¶ 16 In other situations, the "not less than" phrase is used to establish a starting point followed by language that defines a termination point. See, e.g. , 730 ILCS 5/5-4.5-40(a) (West 2016) (sentencing range for a Class 3 felony shall be "not less than 2 years and not more than 5 years" (emphases added) )...