Opinion
1-20-1159
09-30-2021
CD CONSORTIUM CORPORATION, Plaintiff-Appellant, v. SAINT JOHN CAPITAL CORPORATION, Defendant-Appellee.
This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).
Appeal from the Circuit Court of Cook County. No. 19 CH 7799 Honorable Sophia Hall, Judge, presiding.
JUSTICE LAMPKIN delivered the judgment of the court. Presiding Justice Reyes and Justice Rochford concurred in the judgment.
ORDER
LAMPKIN, JUSTICE.
¶ 1 Held: Plaintiffs second amended complaint was properly dismissed with prejudice for failure to state claims for tortious interference with prospective business advantage and preliminary injunctive relief.
¶ 2 Plaintiff CD Consortium Corporation filed suit against defendant Saint John Capital Corporation, alleging tortious interference with prospective business advantage and seeking a preliminary injunction. The trial court granted, with prejudice, defendant's motion to dismiss plaintiffs second amended complaint for failure to state a claim.
¶ 3 On appeal, plaintiff argues that it pled a prima facia case of tortious interference with prospective business advantage and would suffer irreparable injury to its contract rights with no adequate remedy at law if the court did not grant plaintiff a preliminary injunction.
¶ 4 For the reasons that follow, we affirm the judgment of the circuit court.
In adherence with the requirements of Illinois Supreme Court Rule 352(a) (eff. July 1, 2018), this appeal has been resolved without oral argument upon the entry of a separate written order.
¶ 5 I. BACKGROUND
¶ 6 Plaintiff and defendant were competitors in the transportation factoring business, which is a financing method in which truck drivers sell their accounts receivable at a discount to a third-party funding source (the factor). The factor then collects the full invoice. The larger the discount rate, the more profit for the factor and the less profit for the trucker. Transportation factoring allows truck drivers to raise capital quickly and maintain a cash flow to fund their day-to-day business operations.
¶ 7 George Nediyakalayil was the principal of plaintiff, and Nikolaos Pipilas was the principal of defendant. They had been partners in the factoring business until Pipilas sold his interest to Nediyakalayil and started defendant corporation.
¶ 8 In 2019, defendant solicited four of plaintiff's customers to provide them with factoring services at a lower cost. Plaintiff reacted by filing suit in June 2019. The trial court, however, dismissed plaintiff's original and first amended complaints under section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2020)), for failure to state a claim.
¶ 9 In March 2020, plaintiff filed its second amended complaint, alleging that defendant was liable to plaintiff for tortiously interfering with plaintiff's prospective business advantage by soliciting certain customers while those customers were doing business with plaintiff under a yearly self-renewing contract. Plaintiff also sought a preliminary injunction to stop the competition. Specifically, plaintiff alleged that four customers, i.e., ASOT Carrier Inc., Tree Transport LLC, P & A Logistics LLC, and Infinity Trans Inc. (collectively, the customers), executed purchase and sale agreements (the contracts) with plaintiff that governed the terms by which the customers factored invoices with plaintiff. The contract dates and discount rates (the rate at which plaintiff would purchase the customer's invoices) for the contracts varied as follows:
• ASOT Carrier Inc.'s contract, dated April 7, 2015, had a 3% discount rate.
• Tree Transport LLC's contract, dated September 19, 2017, had a 3% discount rate.
• P & A Logistics LLC's contract, dated September 14, 2017, had a 2.5% discount rate.
• Infinity Trans Inc.'s contract, dated September 28, 2015, had a 2.5% discount rate.
¶ 10 These contracts automatically renewed every year unless the customer provided notice of cancellation more than 90 days prior to the end of the term. When that notice was given, the agreement would expire at the end of the term. Without the proper cancellation notice, the customer was locked in for another year.
¶ 11 Plaintiff alleged that defendant (1) contacted plaintiff on behalf of its customers before their contract cancellation deadlines to obtain buyout agreements of the contracts, knowing that plaintiff's contracts did not contain an early termination provision and that plaintiff would not agree to a buyout, (2) offered plaintiff's customers below market discount rates of 1%, (3) contacted plaintiff's customers before their contract cancellation deadlines and prepared termination notices for them to sign and send to plaintiff, (4) knew the customers could not avail themselves of defendant's discount rate without breaching their contracts with plaintiff, and (5) undermined plaintiff's relationship with its customers for no legitimate business purpose other than to interfere with plaintiff's expectancy that its contracts with the customers would be renewed. Plaintiff also alleged that as a result of defendant's unjustified, improper, purposeful and malicious interference, customers Infinity Trans Inc. and P & A Logistics LLC tendered termination notices to plaintiff that were prepared by defendant. Plaintiff alleged the nonrenewal of the contracts resulted in a loss of expected business in excess of $50,000.
¶ 12 Regarding its request for a preliminary injunction, plaintiff alleged that it would suffer irreparable injury by losing its current business from customers breaching their existing contracts due to defendant's unlawful interference unless defendants were restrained and enjoined from contacting plaintiff's customers and inducing them to terminate their contracts before the end of their current term. Plaintiff alleged it had no adequate remedy at law and would likely succeed on the merits of its claim against defendant.
¶ 13 Defendant moved to dismiss plaintiff's second amended complaint under section 2-615 of the Code, arguing that plaintiff was not entitled to injunctive relief and failed to plead facts to support its allegations regarding (1) plaintiff's reasonable expectation that its contracts would be renewed, (2) defendant's purposeful interference with improper conduct, and (3) damages. Defendant also argued that plaintiff's tortious interference claim was barred by the competition privilege.
¶ 14 The trial court granted defendant's motion to dismiss with prejudice, and plaintiff timely appealed.
¶ 15 II. ANALYSIS
¶ 16 A. Tortious Interference Claim
¶ 17 A motion to dismiss under section 2-615 of the Code attacks only the legal sufficiency of a complaint. Illinois Graphics Co. v. Nickum, 159 Ill.2d 469, 484 (1994). "The question presented by a motion to dismiss for failure to state a cause of action is whether sufficient facts are contained in the pleadings which, if established, could entitle the plaintiff to relief." Id. at 488. The trial court should dismiss a cause of action on the pleadings only if it is clearly apparent that no set of facts can be proven which will entitle a plaintiff to recover. Id. Illinois is a fact-pleading state. Marshall v. Burger King Corp., 222 Ill.2d 422, 429 (2006). Section 2-615 motions admit all well-pleaded facts in a complaint and all reasonable inferences therein, but do not admit conclusions of law or conclusions of fact unsupported by allegations of specific fact. Id. at 429-30. We review de novo an order granting or denying a section 2-615 motion to dismiss. Id. at 429; see also Thomas v. Weatherguard Construction Co., Inc., 2015 IL App (1st) 142785, ¶ 63 (de novo consideration means the reviewing court performs the same analysis that a trial judge would perform).
¶ 18 To properly plead its tortious interference with prospective business advantage claim, plaintiff had to plead facts to support each of the following four elements: (1) plaintiff's reasonable expectation of entering into a valid business relationship, (2) defendant's knowledge of the expectation, (3) purposeful interference by defendant that prevents plaintiff's legitimate expectancy from ripening into a valid business relationship, and (4) damages to plaintiff resulting from the defendant's interference. Miller v. Lockport Realty Group, Inc., 377 Ill.App.3d 369, 374 (2007). The plaintiff does not need to establish actual interference with the plaintiff's contractual relationship to prevail in this cause of action; instead, the plaintiff must establish that the defendant interfered with the plaintiff's reasonable expectation of entering into a business relationship. Id. at 375.
¶ 19 Plaintiff pled that it had a reasonable expectation of a business relationship because it had an ongoing relationship for several years with its customers, who took no action to prevent their contracts from renewing automatically. It is not reasonable, however, to expect the existence of a current renewable service contract to serve as a guarantee that the agreement would continue indefinitely. Plaintiff failed to plead any facts that established its reasonable expectation that the customers would renew their contracts. The contract term was for one year with the possibility of renewal if the customer took no action by the defined deadline to terminate the contract. Although plaintiff may have entertained a hope that its customers would not act to terminate the automatic renewal of their contracts for future years, that mere hope does not constitute a reasonable expectancy as must exist to state a cause of action for tortious interference. Williams v. Weaver, 145 Ill.App.3d 562, 569 (1986).
¶ 20 Plaintiff cites Dowd and Dowd, Ltd. v. Gleason, 352 Ill.App.3d 365 (1994), as support for its claim that satisfied customers create a reasonable expectation for contract renewal sufficient to state a tortious interference with prospective advantage claim. Dowd, however, involved the relationship between an attorney and his client, which is terminable at will. Id. at 380-81 ("until terminated, the relationship created by an at-will contract will presumptively continue in effect so long as the parties are satisfied, and therefore, such a relationship is sufficient to support an action for tortious interference"). Plaintiff's relationship with its customers was not based on an at-will contract; rather the customers were required to terminate their contracts by specified deadlines to avoid being in breach of contract.
¶ 21 Plaintiff also failed to plead facts establishing defendant's purposeful interference that prevented plaintiff's legitimate expectancy from ripening into a valid business relationship. The element of. purposeful or intentional "interference refers to some impropriety committed by the defendant in interfering with the plaintiff's expectancy of entering into a valid business relationship with an identifiable third party." Romanek v. Connelly, 324 Ill.App.3d 393, 406 (2001) (citing Dowd & Dowd, Ltd. v. Gleason, 181 Ill.2d 460, 485 (1998). "In this regard, facts must be alleged suggesting that the defendant acted intentionally with the aim of injuring the plaintiff's expectancy." Id. Plaintiff must allege facts indicating that defendant acted with the purpose of interfering with plaintiff's expectancy of the continuation of its transportation factoring contracts with its customers and that defendant's actions were improper.
¶ 22 This tort "recognizes that a person's business relationships constitute a property interest and as such are entitled to protection from unjustified tampering by another." Miller, 377 Ill.App.3d at 373. "The cause of action implies a balancing of societal values: an individual has a general duty not to interfere with the business affairs of another, but he may be privileged to interfere, depending on his purpose and methods, when the interference takes a socially sanctioned form, such as lawful competition." Id.
¶ 23 The privilege of lawful competition permits one to divert business from a competitor generally as well as from one's particular competitor "provided one's intent is, at least in part, to further one's business and is not solely motivated by spite or ill will." Soderlund Brothers, Inc. v. Carrier Corp., 278 Ill.App.3d 606, 615 (1995). If a qualified privilege is asserted in the pleadings or is apparent, then the plaintiff bears the burden of pleading and proving that the defendant acted with actual malice and without justification. Miller, 377 Ill.App.3d at 375. "Actual malice" is defined as "a positive desire and intention to annoy or to injure another." Philip I. Mappa Interests, Ltd. v. Kendle, 196 Ill.App.3d 703, 708 (1990). A plaintiff must establish that a defendant acted "with a desire to harm which was unrelated to the interest he was presumably seeking to protect by bringing about the breach." Id.
¶ 24 Plaintiff did not allege facts showing that defendant did anything improper, other than compete with plaintiff. Rather, defendant engaged in activities to further promote its transportation factoring business, which was the same business as plaintiff. The alleged facts show no impropriety with defendant's buyout offer, which plaintiff rejected. Furthermore, defendant did not offer plaintiff's customers the low interest rates solely to undermine plaintiff's business relationship and not for any legitimate business purpose. The alleged facts show that the parties were competitors and defendant offered discount rates that were only one or two points lower than plaintiff's rate. Furthermore, the emails plaintiff attached to its complaint show that defendant was actually ready to factor invoices at the 1% rate. Finally, the customers were well within their rights to cancel their agreements with plaintiff if a better finance rate came along, which defendant offered. The amended complaint lacks allegations of fact, rather than legal conclusions, that defendant acted with actual malice or without justification in an attempt to prevent plaintiff from maintaining its business relationship with the customers.
¶ 25 We conclude that the trial court appropriately dismissed plaintiff's tortious interference claim under section 2-615 of the Code.
¶ 26 B. Preliminary Injunction
¶ 27 Plaintiff did not state any claim that warranted the extraordinary remedy of injunctive relief. See Behl v. Duffin, 406 Ill.App.3d 1084, 1093 (2010). Injunctive relief will only be granted when a plaintiff can establish a clear and ascertainable right in need of protection, irreparable harm, and no adequate remedy at law. In re Marriage of Seffren, 366 Ill.App.3d 628, 637 (2006).
¶ 28 An inadequate remedy at law implies transgressions of a continuing nature. Behl, 406 Ill.App.3d at 1093. Where "a person's injury can be adequately compensated through money damages, then it has an adequate remedy at law and does not need the extraordinary remedy of injunctive relief." People ex rel. Madigan v. Excavating & Lowboy Services Inc., 388 Ill.App.3d 554, 565-66 (2009).
¶ 29 Here, plaintiff could sue for the money damages it claimed to have suffered, including lost profits, to compensate it for the loss of its customers, if plaintiff could prove that defendant had committed the tort of intentional interference with prospective business advantage. Consequently, plaintiff did not show that it had no adequate remedy at law and, thus, was not entitled to a preliminary injunction.
¶ 30 III. CONCLUSION
¶ 31 For the foregoing reasons, we affirm the judgment of the circuit court.
¶ 32 Affirmed.