United Methodist Homes and Services v. Symbria, Inc ( 2022 )

2022 IL App (1st) 201181-UNo. 1-20-1181
Second Division
March 8, 2022
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the
limited circumstances allowed under Rule 23(e)(1).
____________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT
____________________________________________________________________________
) Appeal from the
UNITED METHODIST HOMES & ) Circuit Court of
SERVICES, ) Cook County.
)
Plaintiff-Appellee, )
) No. 19 CH 15107
v. )
SYMBRIA, INC., ) Honorable
) Anna H. Demacopoulos
Defendant-Appellant. ) Judge, presiding.
(and, as necessary parties only, CENTRAL )
BAPTIST VILLAGE; COVENANT )
RETIREMENT COMMUNITIES, INC.; )
FRANCISCAN SISTERS OF CHICAGO )
SERVICE CORPORATION; EMBRACE )
LIVING COMMUNITIES f/k/a LIFELINK )
CORPORATION; LUTHERAN HOME AND )
SERVICES FOR THE AGED, INC.; )
MATHER LIFEWAYS; NORWEGIAN )
LUTHERAN BETHESDA HOME )
ASSOCIATION; NORWOOD LIFE CARE )
FOUNDATION; FRIENDSHIP SENIOR )
OPTIONS, NFP; REST HAVEN ILLIANA )
CHRISTIAN CONVALESCENT HOME; ST. )
PAULS HOUSE & HEATLH CARE )
CENTER; JILL KRUEGER, an individual; )
No. 1-20-1181
THOMAS NOESEN, an individual; and
JOHN CALLEN, an individual, )
Defendants.) )
____________________________________________________________________________
JUSTICE COBBS delivered the judgment of the court.
Justices Howse and Lavin concurred in the judgment.
ORDER
¶1 Held: The circuit court’s grant of summary judgment for plaintiff is reversed where the
plain language of the parties’ contract did not support a reading that two non-
solicitation provisions were geographically limited to the state of Illinois.
¶2 This appeal arises from a declaratory judgment action asking the circuit court to determine
the geographic scope of two non-solicitation provisions in a written Stock Purchase Agreement
(SPA) between the seller, plaintiff-appellee United Methodist Homes and Services (UMHS), and
the buyer, defendant-appellant Symbria, Inc. (Symbria). The circuit court entered summary
judgment for UMHS, ruling that the provisions in question only prohibited the solicitation of
potential employees and clients within Illinois. Symbria now appeals, and we reverse for the
reasons that follow.
¶3 I. BACKGROUND
¶4 Symbria is an Illinois-based company that provides patients with physical, occupational,
and speech therapies. Symbria conducts business through its subsidiaries located in Illinois and
several other states, including Arizona, Connecticut, Missouri, Ohio, and Pennsylvania. Prior to
October 2015, Symbria was owned by a group of shareholders that included companies in the
business of operating senior living facilities. UMHS was one such shareholder.
¶5 On October 31, 2015, UMHS and the other Symbria shareholders entered into an SPA to
sell the entirety of Symbria’s outstanding shares to Symbria’s employees via an employee stock
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ownership plan (ESOP). Relevant to this appeal is section 5.4 of the SPA, which contains
restrictive covenants that were to remain in effect during a “Noncompetition Period” beginning on
the closing date and extending for at least five years or until the respective seller’s subordinate
note was paid in full.
¶6 The first restrictive covenant is a non-competition provision found in Section 5.4(a). That
section provides in pertinent part that during the Noncompetition Period, each seller
“shall not engage in *** any business anywhere in the state of Illinois which is engaged,
either directly or indirectly, in the business of developing, marketing, providing,
representing, or selling any products or services which are competitive with products or
services developed, marketed, provided, sold or under development by, any member of
[Symbria] or its Affiliates as of the Closing Date (the ‘Restricted Business’).”
¶7 The covenants that are the subject of this appeal are two non-solicitation provisions found
in sections 5.4(b) and (c), respectively. Section 5.4(b) provides that each seller:
“severally covenants that, during the Noncompetition Period, he, she or it shall not solicit
or entice, or attempt to solicit or entice, any clients or customers of [Symbria] or potential
clients or customers of [Symbria] for purposes of diverting their business or services from
[Symbria].”
Similarly, section 5.4(c) provides that each seller
“severally covenants that, during the Noncompetition Period, he, she or it shall not solicit
the employment or engagement of services of any person who is or was employed as an
employee, contractor or consultant by [Symbria] during such period on a full- or part-time
basis.”
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¶8 Also important to this appeal is a second sentence of section 5.4(a) of the non-competition
provision, which contains language not mirrored in the other subsections. Specifically, the second
sentence of section 5.4(a) provides:
“It is recognized that the Restricted Business is expected to be conducted throughout the
state of Illinois and that more narrow geographic limitations of any nature on this non-
competition covenant (and the non-solicitation covenants set forth in Sections 5.4(b) and
5.4(c) are therefore not appropriate.”
¶9 Within the Noncompetition Period, on December 6, 2019, Symbria sent a letter to UMHS,
seeking a set-off for damages caused by UMHS’s alleged violations of the restrictive covenants.
In particular, Symbria asserted that UMHS violated section 5.4(a) by competing within Illinois
and also sections 5.4(b) and (c) for soliciting clients and employees both inside and outside Illinois.
¶ 10 After receiving the letter, on December 31, 2019, UMHS filed a declaratory action “as to
whether the SPA’s non-solicitation provisions in Section 5.4(b) and (c) are restricted to Illinois or
do not have a geographic limitation.” The parties filed cross-motions for summary judgment, each
arguing that the SPA was unambiguous in their favor and agreeing that the issue could be decided
on the pleadings. In its motion, UMHS contended that the second sentence of section 5.4(a) limited
the geographic scope of all three restrictive covenants to Illinois, and that any other interpretation
would render the parenthetical portion of section 5.4(a) superfluous and the non-solicitation
provisions unreasonable. Symbria, on the other hand, maintained that the second sentence of
section 5.4(a) did not limit the scope of the non-solicitation provisions, but merely acknowledged
the parties’ agreement that restrictions narrower than the entire state of Illinois were insufficient.
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¶ 11 After a hearing on the parties’ cross-motions, the circuit court opined that Symbria’s
interpretation of the restrictive covenants would require the court to “ignore the plain language of
[section] 5.4(a) imposing geographical limitations” and “completely disregard the parenthetical
information” referencing the non-solicitation provisions. Accordingly, the court denied Symbria’s
motion for summary judgment and instead entered summary judgment in favor of UMHS
¶ 12 This appeal followed.
¶ 13 II. ANALYSIS
¶ 14 As this case comes to us from a grant of summary judgment, we set forth the familiar
standards governing summary judgment. “Summary judgment is a drastic measure and should only
be granted if the movant’s right to judgment is clear and free from doubt.” Outboard Marine Corp.
v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102 (1992). Summary judgment is appropriate
only “if the pleadings, depositions, and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and that the moving party is entitled to
a judgment as a matter of law.” 735 ILCS 5/2-1005(c) (West 2020). We review a trial court’s grant
of summary judgment de novo, meaning we perform the same analysis that a trial judge would and
give no deference to the trial judge’s conclusions or specific rationale. Milevski v. Ingalls
Memorial Hospital, 2018 IL App (1st) 172898, ¶ 26.
¶ 15 The issue on appeal is whether the non-solicitation provisions in sections 5.4(b) and (c) of
the SPA are limited to the state of Illinois. In interpreting a contract, our primary objective is to
determine and give effect to the intention of the parties at the time they entered into the agreement.
Thompson v. Gordon, 241 Ill. 2d 428, 441 (2011). To do so, we must look to the language of the
contract itself, giving its terms their plain and ordinary meanings. In re Marriage of Lyman, 2015
IL App (1st) 132832, ¶ 71. We must also examine the contract as a whole and, where possible,
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avoid construing it in a way that nullifies or renders any provision meaningless. Thompson, 241
Ill. 2d at 442. Where the language of a contract is clear and unambiguous, a court need not resort
to evidence outside the four corners of the contract itself. Lyman, 2015 IL App (1st) 132832, ¶ 71.
¶ 16 With these principles in mind, we first note that, unlike the non-competition provision, the
non-solicitation provisions themselves do not contain any geographic limitations. The case thus
turns on section 5.4(a)’s parenthetical reference to the non-solicitation provisions. Specifically, the
second sentence of section 5.4(a) provides:
“It is recognized that the Restricted Business is expected to be conducted throughout the
state of Illinois and that more narrow geographical limitations of any nature on this non-
competition covenant (and the non-solicitation covenants set forth in Sections 5.4(b) and
5.4(c)) are therefore not appropriate.”
¶ 17 As it did in the court below, UMHS argues that this sentence means that the same Illinois-
wide geographic limitation applies to both the non-competition provision and the non-solicitation
provisions. However, we cannot read the second sentence of section 5.4(a) to limit the geographic
scope of the covenants referenced therein. To the contrary, the plain language of the sentence
merely states that a scope narrower than the state of Illinois would not be appropriate because the
parties recognized that Symbria would do business throughout the entire state. In our view, nothing
in the language necessitates or implies that a broader geographic scope should not apply to the
non-solicitation provisions.
¶ 18 Still, UMHS argues that the sentence implies only a state-wide scope for the non-
solicitation provisions because the parenthetical portion would otherwise be rendered meaningless.
We disagree. As UMHS itself explains in its brief on appeal, the second sentence of section 5.4(a)
is a standard provision designed to “provide the party seeking to enforce a covenant with evidence
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to support an argument that [the] scope of the restriction is reasonable and the covenant is thus
valid.” Under our interpretation, the parenthetical portion still serves as evidence that the non-
solicitation provisions should be extended to at least the entire state of Illinois if, for instance, a
court were to find that unlimited non-solicitation provisions were unreasonable in this case.
¶ 19 Our interpretation is also supported by a reading of the SPA as a whole. See Gallagher v.
Lenart, 226 Ill. 2d 208, 223 (2007) (contracts must be interpreted as a whole). For example, the
first sentence of section 5.4(a) expressly provides that the non-competition provision is limited to
the state of Illinois. In contrast, the non-solicitation provisions in sections 5.4(b) and 5.4(c) contain
no such language. It is a well-established cannon of contract interpretation that the use of different
language to address parallel issues gives rise to the inference that the parties intended to mean
different things. Lobo IV, LLC v. V Land Chicago Canal, LLC, 2019 IL App (1st) 170955, ¶ 81.
Thus, the difference in language between section 5.4(a) and sections 5.4(b) and (c) suggest that
the parties intended the non-solicitation provisions to have a different geographic scope than the
non-competition provision. Had the parties intended otherwise, it is logical to assume that they
would have used the same language in all three restrictive covenants.
¶ 20 We also find significant the fact that section 5.4 was negotiated to extend to Symbria’s
various subsidiaries, some of which operate outside of Illinois. The SPA itself defines the
subsidiaries to which the restrictive covenants apply as “all direct and indirect subsidiaries” of
Symbria, specifically listing several entities not only in Illinois but also Arizona, Connecticut,
Missouri, Ohio, and Pennsylvania. Thus, the record shows that the parties were aware that the
restrictive covenants were meant to protect entities outside of Illinois.
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¶ 21 In keeping with this understanding, we also note that the SPA contemplates potential
challenges to the restrictive covenants in multiple jurisdictions. Section 5.4(f) of the SPA provides
in relevant part:
“The covenants contained in this Section 5.4 and each provision thereof are severable and
distinct covenants and provisions. The invalidity or unenforceability of any such covenant
or provision as written shall not invalidate or render unenforceable the remaining covenants
or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such covenant or provision in any other jurisdiction
(emphasis added).”
Had the parties intended for the restrictive covenants to apply only in Illinois, there would be no
reason to include this reference to enforceability in other jurisdictions, so such an interpretation
would render this portion of section 5.4(f) meaningless.
¶ 22 UMHS responds to this point with two arguments, neither of which we find persuasive.
First, UMHS contends that section 5.4(f) is a “general, boilerplate provision” that should not
control over the more specific language in section 5.4(a). This argument reflects the maxim that
“[g]enerally, if contractual provisions conflict or create an ambiguity, the more specific provision
controls.” Coe v. BDO Seidman, L.L.P., 2015 IL App (1st) 142215, ¶ 28. However, this maxim is
not applicable here because, as we have previously explained, section 5.4(a) does not limit the
non-solicitation provisions to Illinois. Thus, under our interpretation, sections 5.4(a) and 5.4(f) are
not in conflict, but in harmony. See id. (courts should make reasonable efforts to harmonize
seemingly conflicting provisions).
¶ 23 Second, UMHS argues that section 5.4(f) does not imply an unlimited scope to the non-
solicitation provisions because “jurisdiction” is not necessarily synonymous with “state.” For
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example, UMHS posits a scenario where a federal court, applying Illinois law and addressing an
issue not fully resolved by our supreme court, would reach a different conclusion than this court
might on the enforceability of a restrictive covenant. We reject this strained interpretation of
section 5.4(f). A court interpreting a contract should give the terms their most natural and ordinary
meaning and should avoid straining to find an ambiguity where none exists. Guadina v. State Farm
Mutual Automobile Insurance Co., 2014 IL App (1st) 131264. It is clear in context that the most
natural meaning of the term “jurisdiction” in section 5.4(f) is synonymous with “state” such that
if one of the restrictive covenants is deemed unenforceable under the laws of one state, it does not
necessarily mean the covenant is unenforceable under the laws of another state.
¶ 24 Lastly, UMHS argues that Symbria’s interpretation of the SPA should be rejected because
it would render the non-solicitation provisions unreasonable. We express no opinion on the
ultimate reasonableness of the non-solicitation provisions under any interpretation, a matter which
(as UMHS acknowledges) was not before the circuit court and is therefore outside the ambit- of
this appeal. However, even assuming, arguendo, that geographically unlimited non-solicitation
provisions would be unenforceable in this case, this does not change the plain language of the
contract. “When the contractual language is clear, the court must determine the parties’ intent
solely from the plain language of the contract.” Guarantee Trust Life Insurance Co. v. Platinum
Supplemental Insurace, Inc., 2016 IL App (1st) 161612, ¶ 30. Of course, parties can and sometimes
do intend to include restrictive covenants that are ultimately deemed unenforceable. See, e.g.,
AssuredPartners, Inc. v. Schmitt, 2015 IL App (1st) 141863, ¶ 41 (non-solicitation provision
unreasonable). Indeed, the parties in this case expressly contemplated a scenario in which one or
more of the restrictive covenants were “adjudicated to exceed the time, geographic, product or
service, or other limitations permitted by applicable Laws in any jurisdiction[.]” In such an
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instance, section 5.4(f) of the SPA provides that a court may reform the covenant “in such
jurisdiction to the maximum time, geographic, product or service, or other limitations permitted
by applicable Laws.” Thus, we find UMHS’s argument unconvincing.
¶ 25 III. CONCLUSION
¶ 26 Because we find that the plain language of the SPA provides no geographic limitations to
the non-solicitation provisions in sections 5.4(b) and (c), we conclude that the circuit court erred
in granting summary judgement to UMHS. Accordingly, we reverse the judgment of the circuit
court and remand the matter for further proceedings not inconsistent with this order.
¶ 27 Reversed and remanded.
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