Axion RMS, Ltd. v. Booth , 2019 IL App (1st) 180724 ( 2019 )

2019 IL App (1st) 180724SIXTH DIVISION
MARCH 29, 2019
No. 1-18-0724
AXION RMS, LTD., an Illinois Corporation, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. ) No. 17 CH 01590
)
MICHAEL BOOTH, ) Honorable
) Franklin W. Valderama,
Defendant-Appellee. ) Judge Presiding.
JUSTICE CUNNINGHAM delivered the judgment of the court, with opinion.
Justices Connors and Harris concurred in the judgment and opinion.
OPINION
¶1 The plaintiff-appellant, Axion RMS, Ltd. (Axion), appeals from a judgment of the circuit
court of Cook County, dismissing its complaint against the defendant-appellee, Michael Booth
(Booth), and denying it leave to file an amended complaint. For the following reasons, we affirm
the judgment of the circuit court of Cook County.
¶2 BACKGROUND
¶3 Axion, 1 an Illinois corporation engaged in the business of insurance brokerage and
employee benefits consulting, filed a verified complaint 2 against Booth, its former president (the
verified complaint). The verified complaint contained four claims: counts I and II were breach of
1
Axion was known as Mid American Group, Inc., until 2014, when it was restructured into Axion
RMS, Ltd.
2
A pleading may be verified by an oath of the party filing it. 735 ILCS 5/2-605 (West 2016). “In
pleadings which are so verified, the several matters stated shall be stated positively or upon information
and belief only, according to the fact.” Id. Any admission contained in the original verified pleading,
which is not the product of mistake, is considered to be a binding judicial admission. Nissan Motor
Acceptance Corp. v. Abbas Holding I, Inc., 2012 IL App (1st) 111296, ¶ 19.
1-18-0724
contract claims, count III was a tortious interference claim, and count IV was an accounting
claim. Counts I, II, and IV were based on alleged violations of a noncompete clause in a five-
year employment agreement between Axion and Booth (the employment agreement).
¶4 Paragraphs 5 and 6 of the verified complaint stated:
“5. In or about October 2010, Axion RMS hired Booth as
Vice President of Sales with a starting salary of $300,000. In 2014,
Booth was promoted to President of Axion RMS and was paid a
salary of $500,000. In connection with his employment, Booth and
Axion RMS entered into an Employment Agreement ***. A copy
of [the employment agreement] is attached hereto as Exhibit 1.
6. On or about November 12, 2014, Booth also became a
shareholder of Axion RMS.”
The verified complaint attached the employment agreement, which was signed by Booth and the
chief executive officer of Axion. The employment agreement stated that it was entered into on
January 1, 2015. The verified complaint cited a noncompete clause in the employment agreement
that restricted Booth from soliciting Axion’s clients or employees during his employment and for
a period of two years following termination of his employment. 3
¶5 The verified complaint further alleged the following, in part:
“9. The [employment agreement] was adequately supported by
consideration by virtue of Booth’s continued employment with Axion
RMS and the compensation paid by Axion RMS during his employment.
3
The employment agreement stated that Booth was an “at will” employee, meaning that Booth
could resign at any time and that Axion could terminate his employment at any time, with or without
cause.
-2-
1-18-0724
10. Pursuant to [the employment agreement], Booth agreed
that he would pay all of his earnings from any violation of the non-
compete provision to Axion RMS, which the parties agreed would
be calculated as the present value of revenues generated from the
loss of a client’s business over a ten year period.
***
14. In or about December 2015, Booth resigned from his
position with Axion RMS to begin work at HUB International
Limited (‘HUB’), a competitor of Axion RMS. In his resignation
letter, Booth stated, ‘I have a signed copy of my Axion
employment agreement and I understand the terms.’ ***
15. On information and belief, upon resigning from Axion
RMS and joining HUB, and in direct violation of [the employment
agreement], Booth began directly or indirectly contacting and
soliciting Axion RMS’s existing clients and customers he was in
contact with while employed by Axion RMS, many of whom had
existing Broker of Record Agreements with Axion RMS.
16. On information and belief, Booth also contacted and
solicited Axion RMS employees Jason Bryan ***, Michelle
Carlson ***, Suzanne Taylor *** and Thomas Judge *** to leave
Axion RMS and join him at HUB. Booth’s solicitation of Bryan,
Carlson, Taylor and Judge was in direct violation of Section 7.1(c)
of [the employment agreement].”
-3-
1-18-0724
¶6 Booth filed a motion to dismiss the verified complaint pursuant to section 2-615 of the
Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2016)). His motion cited numerous
cases from this court holding that, where the only consideration given to an employee in
exchange for signing a noncompete covenant is continued employment, the employee must work
for at least two years after signing the noncompete covenant in order for there to be adequate
consideration and to render the noncompete covenant enforceable. Booth’s motion argued,
inter alia, that the noncompete clause in the employment agreement he signed lacked adequate
consideration because he resigned from Axion less than a year after signing it and, therefore, the
verified complaint was defective on its face.
¶7 Axion responded to Booth’s motion to dismiss by arguing that the court should not apply
a “bright-line test” of two years of employment, but instead a “totality of the circumstances test”
to determine adequate consideration. Axion claimed that Booth’s promotion to president and
shareholder should be considered in determining whether there was adequate consideration given
to Booth in exchange for signing the noncompete clause in the employment agreement.
¶8 Following a hearing on Booth’s motion to dismiss, the trial court granted the motion, in
part. In its written memorandum and order, the trial court stated:
“Axion does not contend that [the employment agreement’s
noncompete clause] that prohibits Booth from soliciting Axion’s
employees and customers are supported by any traditional form of
consideration contemporaneous with Booth’s execution of [the
employment agreement]. Instead, Axion relies exclusively on
Booth’s continued employment after he executed [the employment
agreement]. *** [T]he general rule *** is that ‘continued
-4-
1-18-0724
employment for two years or more constitutes adequate
consideration.’ McInnis [v. OAG Motorcycle Ventures, Inc.], 2015
IL App (1st) 142644, ¶ 27. Indeed, Illinois courts have consistently
found restrictive covenants to be supported by adequate
consideration when based on the employee’s continued
employment for more than two years.”
The trial court acknowledged that there were predictions from several federal district court cases
that our supreme court would adopt a totality of the circumstances approach to determine
adequate consideration for restrictive covenants. Nonetheless, the trial court recognized that our
supreme court has not yet adopted that approach. Therefore, the trial court was bound to follow
the decisions from this court, holding that where restrictive covenants are supported by adequate
consideration based exclusively on continued employment, the employee’s employment must
continue for at least two years after execution of the restrictive covenant. The court therefore
found that Booth’s employment for less than a year after he entered into the employment
agreement at issue was insufficient to constitute adequate consideration.
¶9 The court concluded that due to the lack of adequate consideration, the noncompete
clause between Axion and Booth was unenforceable. It consequently found that Axion could not
sufficiently plead counts I, II, and IV (breach of contract and accounting claims) of its verified
complaint and dismissed those counts with prejudice. The court also dismissed count III, the
tortious interference claim, without prejudice and granted Axion leave to file an amended
complaint for that count. 4
4
However, the tortious interference count is not at issue in this appeal.
-5-
1-18-0724
¶ 10 Axion subsequently filed a first amended verified complaint, which contained a single
count for tortious interference. At the same time, Axion also filed a combined motion to
reconsider the court’s order dismissing counts I, II, and IV and for leave to file a second
amended complaint (the combined motion). The combined motion argued that the court should
reconsider its order and instead dismiss counts I, II, and IV without prejudice, so that Axion
could amend its complaint to cure the pleading defects regarding adequate consideration. The
combined motion attached a proposed second amended complaint (the proposed amended
complaint), which sought to plead adequate consideration in order to render the noncompete
clause enforceable. The proposed amended complaint stated, in relevant part:
“5. In or about October 2010, Axion RMS, then known as
Mid American Group, Inc., hired Booth as Vice President of Sales
with a starting salary of $300,000, which he earned through
December 31, 2014. Booth executed an employment agreement at
or about the time he was hired.
6. In 2014, Mid American Group, Inc, was restructured and
subsequently became known as Axion RMS, Ltd.
7. In connection with the restructuring, on or about
November 12, 2014, Booth became a shareholder of Axion RMS.
See attached Exhibit 1.
8. Also in connection with the restructuring, Booth and
Axion RMS executed a new employment agreement (‘Booth
Employment and Non-Compete Agreement’), a copy of which
is attached hereto as Exhibit 2.
-6-
1-18-0724
9. The Booth Employment and Non-Compete Agreement
was entered into on January 1, 2015, which coincided with the first
date that Axion RMS began operating as Axion RMS, Ltd.
***
13. Booth’s salary was increased from $300,000 to $500,000
contemporaneous with the effective date of the Booth Employment
and Non-Compete Agreement as additional compensation for
execution of the Employment and Non-Compete Agreement,
including its restrictive covenants. This increased salary was
memorialized in Paragraph 2.2 of the Booth Employment and Non-
Compete Agreement ***.
14. The first date that Booth received his increased salary
was January 1, 2015, the same date as, and contemporaneous with,
the date the Booth Employment and Non-Compete Agreement
took effect; See attached Exhibit 3, group exhibit of payroll
registers for Booth showing pay increase taking effect on January
1, 2015.
15. Also in connection with the restructuring and execution
of the Booth Employment and Non-Compete Agreement and its
restrictive covenants, Booth was promoted from Vice President of
Sales to President. This promotion was memorialized in Paragraph
2.2 of the Booth Employment and Non-Compete Agreement ***.
16. Booth’s increased $500,000 salary and promotion to
-7-
1-18-0724
President are both contained within the four corners of the Booth
Employment and Non-Compete Agreement.
17. The restrictive covenants under the Booth Employment
and Non-Compete Agreement were adequately supported by
consideration by virtue of, among other things, Booth’s additional
compensation and promotion contemporaneous with the effective
date of the Booth Employment and Non-Compete Agreement and
Booth’s execution of this agreement,
18. Booth’s increased salary and promotion constitute new
consideration for the Booth Employment and Non-Compete
Agreement and its restrictive covenants. In addition, Booth also
became a shareholder of Axion RMS in connection with the
restructuring.”
¶ 11 Following a hearing, the trial court entered an order denying Axion’s combined motion to
reconsider and for leave to file its proposed amended complaint. In its ruling, the court focused
on the fact that Axion originally filed a verified complaint, which pled that Booth had been
promoted and given a raise in 2014, prior to the execution of the employment agreement on
January 1, 2015. The court explained:
“[Axion’s original] verified complaint stated on paragraph 5 that
[‘]in or about October 2010, Axion RMS hired Booth as vice-
president of sales with a starting salary of $300,000. In 2014 Booth
was promoted to president of Axion RMS and was paid a salary of
[$]500,000[’]. In the proposed [amended complaint], paragraph 5
-8-
1-18-0724
reads as follows: [‘]In or about October 2010, Axion RMS, then
known as Mid-American Group, Inc., hired Booth as vice-
president of sales with a starting salary of 300,000, which he
earned through December 31 of 2014.[’] Having considered that
statement, I am left with the inescapable conclusion that the
[proposed amended] complaint is not providing additional facts as
has been suggested, but rather seeking to contradict what was
previously stated in the original [verified] complaint, and that is
that in the entire year of 2014, Booth was paid a salary of
[$]500,000, which is what is in the original [verified] complaint.
No mention is made whatsoever in that pleading that he earned a
portion of that salary or that he earned only [$]300,000 in 2014.
And I don’t see how a reasonable reading of that paragraph would
lead one to conclude that he earned something less than [$]500,000
in [2014]. The reason why that is a significant issue for this court is
that Illinois case law is well settled that any admission contained in
an original verified pleading, which is not the product or mistake
or inadvertence, is a binding judicial admission. Such an admission
has the effect of withdrawing a fact from issue and dispensing
wholly with the need or proof of a fact.”
¶ 12 Axion then voluntarily dismissed count III of its first amended complaint, the sole
remaining claim in its case. This appeal followed.
-9-
1-18-0724
¶ 13 ANALYSIS
¶ 14 We note that we have jurisdiction to review this matter as Axion filed a timely notice of
appeal. Ill. S. Ct. R. 301 (eff. Feb. 1, 1994); R. 303 (eff. July 1, 2017).
¶ 15 Axion presents the following two issues on appeal: (1) whether the court erred in
dismissing its verified complaint and (2) whether the court erred in denying it leave to file its
proposed amended complaint.
¶ 16 As an initial matter, we address Booth’s motion to strike portions of Axion’s reply brief.
Booth’s motion to strike makes two arguments. First, Booth argues that this court should strike
13 pages from Axion’s reply brief because Axion did not properly raise the arguments on those
pages in its opening brief in accordance with Illinois Supreme Court Rule 341(h)(7) (eff. Nov. 1,
2017). Specifically, Booth contends that Axion did not “meaningfully address” the judicial
admission issue in relation to its argument that the court erred in denying it leave to file its
proposed amended complaint. However, we find that Axion did properly address the judicial
admission issue in its opening brief. Axion dedicated three pages of its opening brief to an
argument titled, “There is No Factual Inconsistency Between Axion’s Original Complaint and its
Proposed Second Amended Complaint.” Although, as Booth points out, Axion’s opening brief
only used the phrase “judicial admission” once, Axion made arguments clearly related to the
judicial admission issue. We acknowledge that the arguments in Axion’s reply brief regarding
judicial admission are more developed, but they are primarily in response to the arguments made
in Booth’s brief. Nevertheless, as discussed, Axion did address the judicial admission issue in its
opening brief. Therefore, Axion did not violate Rule 341(h)(7), and we reject this argument by
Booth.
- 10 -
1-18-0724
¶ 17 Second, Booth’s motion to strike argues that this court should not consider the following
statement made by Axion in its reply brief: “Notably, there is no evidence as to when Booth
actually executed the [employment] agreement, only that its effective date was January 1, 2015.”
Booth argues that Axion never raised this argument in the trial court and, therefore, Axion has
forfeited it on appeal. See In re Estate of Chaney, 2013 IL App (3d) 120565, ¶ 8 (“It is well-
settled law in Illinois that issues, theories, or arguments not raised in the trial court are forfeited
and may not be raised for the first time on appeal.”). However, as Axion points out, in the facts
section of its opening brief, Axion stated that the employment agreement “was made as of” or
“entered into on” on January 1, 2015, while Booth stated numerous times in his brief that he
“signed” the employment agreement on January 1, 2015. So Axion’s statement that there is no
evidence as to when Booth actually signed the employment agreement was clearly in response to
the multiple statements made in Booth’s brief regarding the execution date of the employment
agreement. See Rome v. Commonwealth Edison Co., 81 Ill. App. 3d 776, 780 (1980) (points
raised for the first time in an appellant’s reply brief are not forfeited where those contentions
serve to rebut arguments advanced by the appellee in his brief); Bowler v. City of Chicago, 376
Ill. App. 3d 208, 218 (2007) (“Issues raised for the first time in an appellant’s reply brief are
deemed [forfeited] on appeal [citation], unless responsive to an argument raised in the appellee’s
brief.”). We therefore also reject this argument by Booth. Accordingly, we deny his motion to
strike in its entirety.
¶ 18 Turning to the merits, we now consider Axion’s first argument: that the court erred when
it granted Booth’s motion to dismiss pursuant to section 2-615 of the Code and dismissed its
verified complaint with prejudice. Axion contends that the court “erroneously applied a bright
line two-year rule” to determine whether the noncompete clause in the employment agreement
- 11 -
1-18-0724
was supported by adequate consideration. In Axion’s view, the court improperly limited itself to
considering only the length of time Booth worked at Axion after signing the employment
agreement. Axion claims that the court should have instead applied a “totality of facts and
circumstances” test, which would have allowed the court to consider Booth’s salary increase,
newly issued stock, and promotion as adequate consideration to render the noncompete clause
enforceable. 5
¶ 19 While a plaintiff is not required to prove his case in the pleading stage, he must allege
sufficient facts to state all the elements which are necessary to sustain his cause of action.
Visvardis v. Eric P. Ferleger, P.C., 375 Ill. App. 3d 719, 724 (2007). A trial court should dismiss
a complaint under section 2-615 only if it is readily apparent from the pleadings that there is no
possible set of facts that would entitle the plaintiff to the requested relief. Quinn v. Board of
Education of the City of Chicago, 2018 IL App (1st) 170834, ¶ 57. “The question for the court is
whether the allegations of the complaint, when construed in the light most favorable to the
plaintiffs, are sufficient to establish the cause of action.” Id. We review de novo the trial court’s
dismissal of a complaint pursuant to section 2-615. Alpha School Bus Co. v. Wagner, 391 Ill.
App. 3d 722, 735 (2009).
¶ 20 In support of its argument that the court should have applied a totality of the
circumstances test, Axion directs us to McInnis v. OAG Motorcycle Ventures, Inc., 2015 IL App
5
Axion also claims that during the hearing on Booth’s motion to dismiss, Axion explained to the
court that the noncompete clause was executed as part of the same restructuring transaction that included
Booth’s promotion, salary increase, and receipt of stock. Axion argues that these facts, if proven at trial,
would have entitled it to relief, and so the court therefore erred in dismissing its complaint. However, as
discussed infra, a motion to dismiss pursuant to section 2-615 of the Code alleges that a complaint is
deficient on its face, and so any oral arguments providing additional facts outside the four corners of the
complaint are not considered by the trial court. See Reynolds v. Jimmy John’s Enterprises, LLC, 2013 IL
App (4th) 120139, ¶ 25 (“In ruling on a section 2-615 motion, the court only considers (1) those facts
apparent from the face of the pleadings, (2) matters subject to judicial notice, and (3) judicial admissions
in the record.” (Emphasis added.)).
- 12 -
1-18-0724
(1st) 142644. In McInnis, the former employee, like Booth in this case, argued that the restrictive
covenant that he signed was unenforceable because he quit his job less than two years after
signing it. Id. ¶ 23. And the employer in that case, like Axion, argued that the case presented “a
unique factual situation that requires application of a fact-specific approach in determining the
adequacy of consideration.” Id. ¶ 28. In agreeing with the former employee, this court noted the
well-established principle in Illinois that continued employment for two years or more
constitutes adequate consideration to enforce a restrictive covenant. Id. ¶ 27. This court did
acknowledge that trial courts “are not limited to a numerical formulation,” and that courts may
engage in “a fact-specific approach to determine whether there [is] consideration.” Id. ¶ 36.
However, we clarified that a fact-specific approach, or a totality of the circumstances test as
Axion refers to it, would not apply in a case where the court has determined that no other
consideration, other than the continued employment, was given to the employee. Id. ¶¶ 47-48.
As the court in this case determined that Booth was not given any additional consideration
beyond continued employment, Axion’s reliance on McInnis is misplaced.
¶ 21 Indeed, it is well-established by this court that a promise of continued employment for an
at-will employee is adequate consideration to render a restrictive covenant enforceable, as long
as there is at least two years of continued employment following the execution of the restrictive
covenant. Fifield v. Premier Dealer Services, Inc., 2013 IL App (1st) 120327, ¶ 14; Brown &
Brown, Inc. v. Mudron, 379 Ill. App. 3d 724, 729 (2008). And where no additional
compensation, such as a raise or special benefits, is given to the employee, and the employee
resigns less than two years after executing the restrictive covenant, the consideration is
- 13 -
1-18-0724
inadequate and the restrictive covenant is unenforceable. McInnis, 2015 IL App (1st) 142644,
¶ 38; Prairie Rheumatology Associates, S.C. v. Francis, 2014 IL App (3d) 140338, ¶¶ 15-19. 6
¶ 22 Here, Axion’s verified complaint plainly stated: “The [employment agreement] was
adequately supported by consideration by virtue of Booth’s continued employment with Axion
RMS and the compensation paid by Axion RMS during his employment.” The verified
complaint did not allege any additional consideration given to Booth in exchange for him signing
the noncompete clause in the employment agreement. Although the verified complaint
mentioned Booth’s promotion to president and shareholder, it did not allege any connection
between those promotions in 2014 and the execution of the employment agreement in 2015. If
Axion had alleged additional consideration in its verified complaint, the court would have had
additional facts and information to consider. Instead, Axion pled in its verified complaint that the
only consideration given to Booth was his continued employment. This clearly limited the scope
of the court’s analysis, within the context of existing case law, to the length of Booth’s continued
employment.
¶ 23 Axion argues that its verified complaint referenced the employment agreement and
attached it, which in turn referenced the adequate consideration. However, the record is clear that
the employment agreement cited Booth’s continued employment as the only consideration. A
promotion or salary increase is not mentioned anywhere in the employment agreement. And
notably, the employment agreement included an integration clause, which stated that “[t]his
instrument contains the entire Agreement of the parties pertaining to the subject matter hereof.”
6
Axion encourages us to follow “[r]ecent federal court decisions applying Illinois law” that
“provide persuasive authority to reject any bright line rule and instead apply the ‘totality of the facts and
circumstances’ test.” However, while federal district cases can provide guidance and act as persuasive
authority, we are not bound to follow their decisions. Reichert v. Board of Fire & Police Commissioners,
388 Ill. App. 3d 834, 845 (2009).
- 14 -
1-18-0724
(Emphasis added.) Thus, Axion cannot later argue that the parties agreed to consideration outside
of the employment agreement. We note also that Axion, as the employer, drafted the
employment agreement, including the integration clause.
¶ 24 In sum, Axion pled in its verified complaint that the only consideration given to Booth
was his continued employment, and that he resigned less than two years later. This is inadequate
consideration under existing case law. Consequently, it is readily apparent from the face of
Axion’s verified complaint that there is no possible set of facts which would render the
noncompete clause in the employment agreement enforceable. 7 Thus, the court did not err in
dismissing Axion’s verified complaint.
¶ 25 Axion next argues that the court erred in denying it leave to file its proposed amended
complaint. Axion claims that its proposed amended complaint cured any defects in its verified
complaint because the proposed amended complaint alleged adequate consideration given to
Booth for signing the noncompete clause, specifically the issuance of stock, a promotion, and an
increased salary. Axion further argues that the court erred in holding that the proposed amended
complaint was inconsistent with its original verified complaint. Axion avers:
“The [verified complaint] alleged that Booth’s salary was increased in 2014. The
[proposed amended complaint] clarified that the increased salary was effective
January 1, 2015, to coincide with the effective date of [the employment
agreement] and a corporate restructuring. There is nothing inconsistent with a
salary increase being agreed to in 2014 but taking effect on January 1, 2015.”
7
During oral arguments, Axion’s counsel argued, for the first time, that Axion was entitled to an
evidentiary hearing to determine if it had pled adequate consideration. However, as discussed supra, in
ruling on a section 2-615 motion, the court only considers (1) those facts apparent from the face of the
pleadings, (2) matters subject to judicial notice, and (3) judicial admissions in the record. Reynolds, 2013
IL App (4th) 120139, ¶ 25. Thus, an evidentiary hearing to determine whether Axion had pled adequate
consideration would be inappropriate.
- 15 -
1-18-0724
¶ 26 Section 2-616(a) of the Code provides that amendments to complaints may be allowed at
any time before judgment, on just and reasonable terms. 735 ILCS 5/2-616(a) (West 2012). The
decision to allow an amendment to a pleading rests within the sound discretion of the trial court,
and absent an abuse of discretion, we will not disturb the trial court’s decision. Mandel v.
Hernandez, 404 Ill. App. 3d 701, 705 (2010). A trial court abuses its discretion when no
reasonable person would take the view adopted by the trial court. Steele v. Provena Hospitals,
2013 IL App (3d) 110374, ¶ 93. In order to determine whether the trial court abused its
discretion in denying a party leave to file an amended pleading, “we consider the following
factors: ‘(1) whether the proposed amendment will cure the defective pleading; (2) whether the
proposed amendment would surprise or prejudice the opposing party; (3) whether the proposed
amendment was timely filed; and (4) whether the moving party had previous opportunities to
amend.’ ” 8 CIMCO Communications, Inc. v. National Fire Insurance Co. of Hartford, 407 Ill.
App. 3d 32, 38 (2011) (quoting Board of Directors of Bloomfield Club Recreation Ass’n v. The
Hoffman Group, Inc., 186 Ill. 2d 419, 432 (1999)). A sworn statement of fact in a verified
pleading remains binding on a party even after an amendment, and the party cannot subsequently
contradict the factual allegation. L.D.S., LLC v. Southern Cross Food, Ltd., 2011 IL App (1st)
102379, ¶ 35. Consequently, if the factual allegations in a proposed amended complaint
contradict those in a verified complaint, the allegations in the verified complaint remain binding
and the party may not file the proposed amended complaint. Id.8
Axion additionally argues that the trial court “improperly applied a motion to reconsider
standard” to the proposed amended complaint. Axion’s argument appears to be based on the fact that the
court did not orally list all of these factors in its ruling. However, the record demonstrates that the court
nevertheless still considered all of the factors required for its analysis.
- 16 -
1-18-0724
¶ 27 We confine our analysis to the first factor, whether the proposed amended complaint
would cure the defective pleading, as it is the only one in dispute. Axion’s verified complaint
was dismissed because it failed to allege adequate consideration to render the noncompete clause
enforceable under Illinois law. After reviewing the proposed amended complaint, it undoubtedly
cured that defect by pleading that Booth was given a promotion and a raise as consideration for
executing the noncompete clause. 9 Generally, under these circumstances, a trial court would
abuse its discretion by denying the party leave to file the proposed amended complaint. See
Loyola Academy v. S&S Roof Maintenance, Inc., 146 Ill. 2d 263, 274-75 (1992) (if, after
comparing the two complaints, the defects have clearly been cured, the proposed amended
complaint should be allowed).
¶ 28 However, Axion’s original complaint was a verified complaint, which constitutes a
binding judicial admission. Ringgold Capital IV, LLC v. Finley, 2013 IL App (1st) 121702, ¶ 20.
See also Konstant Products, Inc. v. Liberty Mutual Fire Insurance Co., 401 Ill. App. 3d 83, 86
(2010) (“[j]udicial admissions are formal admissions in the pleadings that have the effect of
withdrawing a fact from issue and dispensing wholly with the need for proof of the fact.
[Citation.] *** [A]ny admissions that are not the product of mistake or inadvertence *** bind the
pleader throughout the litigation.”). Once Axion filed its verified complaint, the statements
alleged were binding judicial admissions that it could not later contradict. See Crittenden v. Cook
County Comm’n on Human Rights, 2012 IL App (1st) 112437, ¶ 45 (a party cannot create a
factual dispute by contradicting a previously made judicial admission). Any contradictions to
previously made judicial admissions are akin to perjury. See Roti v. Roti, 364 Ill. App. 3d 191,
9
We note that, despite Axion’s arguments to the contrary, the proposed amended complaint did
not plead that Booth received stock as consideration for executing the employment agreement.
- 17 -
1-18-0724
200 (2006) (the purpose of the judicial admission rule is to remove the temptation to commit
perjury). It should be noted that Axion chose the vehicle of a verified complaint to challenge
Booth, and Axion is therefore bound by the attendant principles of law surrounding a verified
complaint.
¶ 29 The focus of the trial court’s analysis in this case was the inconsistencies between
paragraph 5 in the verified complaint and paragraph 5 in the proposed amended complaint. The
relevant paragraph from the verified complaint provides as follows:
“In or about October 2010, Axion RMS hired Booth as Vice
President of Sales with a starting salary of $300,000. In 2014,
Booth was promoted to President of Axion RMS and was paid a
salary of $500,000. In connection with his employment, Booth and
Axion RMS entered into an Employment Agreement ***. A copy
of [the employment agreement] is attached hereto as Exhibit 1.”
In comparison, the relevant paragraph from the proposed amended complaint
states:
“In or about October 2010, Axion RMS, then known as Mid
American Group, Inc., hired Booth as Vice President of Sales with
a starting salary of $300,000, which he earned through December
31, 2014. Booth executed an employment agreement at or about
the time he was hired.”
¶ 30 We agree with the trial court that these two paragraphs are clearly inconsistent. The
relevant paragraph in the verified complaint alleged that Booth was given a raise and paid
$500,000 in 2014. It does not even state when in 2014 the raise was given; it could have been as
- 18 -
1-18-0724
early as January 1, 2014, based on the plain language. Meanwhile, the relevant paragraph in the
proposed amended complaint alleged that Booth was paid $300,000 through the end of 2014. It
is arguable that the relevant paragraph in the verified complaint is also slightly ambiguous.
Axion urges us to read it as though Booth was offered his raise in 2014, which took effect on
January 1, 2015. However, the plain language of the verified complaint states only that Booth
was given a raise in 2014, so that is how we must read it. We again emphasize that Axion chose
the vehicle of a verified pleading for its complaint. 10 And in verified pleadings, it is important for
the language to be precise. See North Shore Community Bank & Trust Co. v. Sheffield
Wellington LLC, 2014 IL App (1st) 123784, ¶ 102 (judicial admissions are deliberate, clear,
unequivocal statements).
¶ 31 Interestingly, during oral arguments, the issue arose of whether Axion had argued before
the trial court that the judicial admission in its verified complaint was the product of a mistake or
inadvertence. See Nissan Motor Acceptance Corp., 2012 IL App (1st) 111296, ¶ 19 (every
admission contained in a verified pleading is considered to be a binding judicial admission,
unless it is the product of a mistake or inadvertence). Axion claimed during oral arguments that it
had in fact argued that the judicial admission in its verified complaint was a mistake or
inadvertence before the trial court, and cited a page in the record that contains the following
statement from the hearing on its combined motion:
“[W]e do believe there’s not an inconsistency, but subject to, you
know, Your Honor’s ruling, a fair reading of the reply brief does
indicate that a clear error was made. If that is—if that sentence is
10
During oral arguments, in response to this court’s inquiry regarding the choice of a verified
complaint, Axion’s counsel suggested that they filed a verified complaint because they were considering
seeking injunctive relief.
- 19 -
1-18-0724
construed as saying he was paid, you know, for the entirety of
2014, $500,000, that—there’s documentation that we have and
plan to attach as an exhibit [the payroll registers], but is described
in the body of the proposed amended pleading that his paystubs
conclusively show that he was paid the $300,000 for the last
payment—pay period of 2014, and paid *** [$]500,00 effective on
January 1[, 2015]. So under a fair reading of the pleading, I would
say that that is illustrative of, you know, an error. But having said
that also, there’s additional new consideration, which is argued—”
This passive verbal mention, which was akin to a passing reference, was insufficient to properly
raise the issue of mistake or inadvertence so that the trial court could consider it. See Robertsson
v. Misetic, 2018 IL App (1st) 171674, ¶ 21 (an argument must be properly raised before the trial
court or else it is forfeited). Notably, immediately after mentioning the issue of mistake or
inadvertence, Axion shifted its argument back to its original theme of additional consideration
and a totality of the circumstances test, as that had been the thrust of its argument in its combined
motion. Axion had ample opportunity to properly raise the issue of mistake or inadvertence
before the trial court, but failed to do so. To the extent that it attempted to do so by passing
reference during oral arguments before this court, that effort fails. Axion accordingly forfeited
this argument.
¶ 32 In sum, the relevant portions of the proposed amended complaint are inconsistent with
the previously made judicial admissions in the verified complaint. A verified complaint is made
under oath and cannot be casually changed as may be expedient to circumvent a motion to
- 20 -
1-18-0724
dismiss. Thus, we find that the trial court did not abuse its discretion in denying Axion leave to
file its proposed amended complaint.
¶ 33 CONCLUSION
¶ 34 For the foregoing reasons, we affirm the judgment of the circuit court of Cook County.
¶ 35 Affirmed.
- 21 -