Jespersen v. Minnesota Mining & Manufacturing Co.

                                          FIFTH DIVISION
                                          May 30, 1997  







No. 1-96-2349

VICTOR K. JESPERSEN, d/b/a Trim-Line of   ) APPEAL FROM THE 
Chicago and Trim-Line of Chicago, Inc.,   ) CIRCUIT COURT OF
On Behalf of Himself and All Others       ) COOK COUNTY.
Similarly Situated,                       ) 
                                          ) 
               Plaintiff-Appellant,       )  
                                          )                       
            v.                            )
                                          )  
MINNESOTA MINING AND MANUFACTURING        ) THE HONORABLE
COMPANY, Individually and as Survivor     ) MICHAEL B. GETTY,
Corporation of Trim-Line, Inc., and       ) JUDGE PRESIDING.
TRIM-LINE, INC.,                          )
                                          )
               Defendants-Appellees.      ) 


     JUSTICE SOUTH delivered the opinion of the court:         

     Plaintiff, Victor R. Jespersen, doing business as Trim-Line
of Chicago and Trim-Line of Chicago, Inc. (collectively
Jespersen), on behalf of himself and other similarly situated
distributors of Trim-Line products, filed a third amended class
action complaint against defendants, the Minnesota Mining and
Manufacturing Company (3M) and Trim-Line, Inc. (Trim-Line)
alleging breach of contract.  3M filed a motion to dismiss the
third amended complaint pursuant to section 2-615 of the Illinois
Code of Civil Procedure (735 ILCS 5/2-615 (West 1994)), for
failure to state a cause of action.  The circuit court granted
3M's motion to dismiss and entered judgment in favor of 3M and
against Jespersen.  Jespersen appeals.  
     On January 16, 1978, Jespersen entered into a sales
distribution agreement with Trim-Line.  Under the terms of this
agreement, Jespersen was appointed the exclusive distributor of
Trim-Line products in a specifically defined geographical area
and was granted a license to use Trim-Line trademarks.  Trim-Line
manufactured, sold and installed automobile body trim, moldings,
decorative designs, and other related parts and services.  Trim-
Line distributed its products and services, in part, through
independent distributors such as Jespersen.     
     In the early 1980s, 3M purchased Trim-Line, which became a
wholly owned subsidiary of 3M.  On or about January 1, 1991, 3M
implemented a plan to dissolve Trim-Line as a separate
corporation and merged its business activity into 3M's Automotive
Trades Division.  On January 2, 1991, 3M sent its distributors, 
including Jespersen, a letter terminating the sales distribution 
agreement. 
     On December 28, 1994, Jespersen and two other terminated
distributors filed a class action complaint against 3M and Trim-
Line alleging various claims, including one for breach of an
implied covenant of good faith and fair dealing.  On June 29,
1995, the initial complaint was dismissed with leave to refile an
amended complaint.  On July 27, 1995, the first amended complaint
was filed.  That amended complaint was withdrawn, and a second
amended complaint for breach of an implied covenant of good faith
and fair dealing was filed on November 14, 1995.  On December 26,
1995, the circuit court dismissed the second amended complaint in
a written memorandum of opinion, and Jespersen was granted leave
to amend the complaint.  On January 23, 1996, Jespersen filed his
third amended class action complaint for breach of contract.  On
February 22, 1996, 3M moved to dismiss Jespersen's third amended
complaint under section 2-615 (735 ILCS 5/2-615 (West 1994)).  On
May 30, 1996, the circuit court granted 3M's motion and dismissed
the third amended complaint in a written memorandum of opinion. 
Jespersen appeals the dismissal of his third amended complaint.
                                 OPINION 
     The standard of review on appeal from a section 2-615 motion
to dismiss is whether the complaint sufficiently states a cause
of action.  Saunders v. Michigan Avenue National Bank, 278 Ill.
App. 3d 307, 662 N.E.2d 602 (1996).  We do not consider the
merits of the claim.  Saunders, 278 Ill. App. 3d 307, 662 N.E.2d 602.  All well-pleaded facts and reasonable inferences that could
be drawn from those facts are accepted as true (Talber v. Home
Savings of America, F.A., 265 Ill. App. 3d 376, 638 N.E.2d 354
(1994)), but not conclusions of law or conclusions of fact
unsupported by allegations of specific facts (Groenings v. City
of St. Charles, 215 Ill. App. 3d 295, 574 N.E.2d 1316 (1991)).  A
complaint should not be dismissed under section 2-615 unless it
clearly appears that no set of facts could be proved under the
pleadings that would entitle the pleader to relief.  Illinois
Graphics Co. v. Nickum, 159 Ill. 2d 469, 639 N.E.2d 1282 (1994). 
     Jespersen's third amended complaint alleges five separate
but related breaches of various provisions of the sales
distribution agreement.  Specifically, Jespersen alleges that (1)
3M breached section 4.01 by terminating the agreement without
cause; (2) 3M breached section 2.01 by appointing 3M's Automotive
Trades Division to sell Trim-Line products and services in the
area of primary responsibility that had been previously assigned
to Jespersen; (3) 3M breached section 3.01 by withholding from
Jespersen 3M's acceptance of orders and failing to make full and
timely delivery of products previously ordered; and (4) 3M
breached sections 5.01 and 5.02 by failing to consult with
Jespersen prior to terminating his area of primary responsibility
and failing to consider the appropriate contractual factors, such
as Jespersen's performance in his area,  before the termination. 
However, the basis of the entire third amended complaint is that
3M could not terminate the distribution agreement except for
cause as provided in section 4.01 of the agreement.  
     In granting 3M's motion to dismiss the third amended
complaint, the circuit court found that (1) the sales
distribution agreement expressly provided that it was to last
indefinitely and was thus terminable at will as a matter of law,
and (2) the agreement expressly granted 3M the right to cancel
Jespersen's license to use the Trim-Line trade name upon request
and, without a right to use the Trim-Line name, the sales
distribution agreement has no effect.   
     On appeal, Jespersen contends that the circuit court erred
in finding that the sales distribution agreement was terminable
at will.  Jespersen argues that examination of both sections 2.05
and 4.01 illustrates that the sales distribution agreement
contained definite termination events which are provided in
section 4.01 and expressly limited termination by 3M for cause
only.  Jespersen concludes that, since he did not violate any
provision of section 4.01, 3M's termination of the sales
distribution agreement was a breach of the agreement.  We affirm
the order of the circuit court. 
     Initially, we note that section 6.05 of the sales
distribution agreement specifies that the interpretation of the
agreement shall be construed under the laws of the state of
California.  Nevertheless, both parties rely primarily upon
Illinois law to support their respective positions.  Because
California law and Illinois law are consistent in holding that
contracts of indeterminate duration are terminable at will by the
parties (see El Cajon v. Police Officers' Ass'n, 56 Cal. Rptr. 2d 723 (1996); Ruca Hardware Ltd. v. Ruca Chien, No. 94-C-3635 (N.D.
Ill. 1995); R.J.N. Corp. v. Connelly Food Products, Inc., 175
Ill. App. 3d 655, 529 N.E.2d 1184 (1988)), the determination of
this matter is not altered.  
     Although it is well established that contracts of perpetual
duration are terminable at will by the parties, a contract which
nonetheless provides that it will terminate upon the occurrence
of a specific event is not deemed perpetual in duration and is
not terminable at will, but is terminable upon the occurrence of
any of the conditions enunciated.  Dawson v. W & H Voortman,
Ltd., 853 F. Supp. 1038, 1042 (N.D. Ill. 1994); Ruca, No. 94-C-
3635.
     The event upon which the contract will terminate must be an
"objective event" so as to make the contract sufficiently
definite in duration.   R.J.N. Corp., 175 Ill. App. 3d 655, 659,
529 N.E.2d 1184, 1187.  "[I]f one of the parties could institute
a termination-triggering event, then the contract should be
considered terminable at will."  Yale Security, Inc. v. Freedman
Sales, Ltd., No. 96-C-6501 (N.D. Ill. 1997), slip op. at 3.
     In the present case, Jespersen could institute a
termination-triggering event under sections 4.01 and 4.02.  It is
impossible to ascertain whether or when Jespersen would institute
such an event, therefore, the agreement offered the possibility
of perpetual duration and was terminable at will by the parties. 
     Section 2.05 provides:
          "Term. Unless terminated as hereinafter
          provided in Article IV, this agreement, and
          the appointment of the Distributor hereunder,
          shall continue in force indefinitely and
          govern all transactions between the parties." 
           
     Section 4.01 provides:

          "Trim-Line's Right to Terminate.  Trim-Line,
          may, upon not less than thirty (30) days
          notice to Distributor, terminate this
          agreement for any of the following reasons:
     
          (a) Distributor's failure to reasonably
          promote Trim-Line's products in the area of
          primary responsibility, or demonstrated
          failure or inability to render adequate
          installation and related services.

          (b) Distributor's breach of any term or 
          condition of the agreement. 
  
          (c) Distributor's failure to make payment to Trim-
          Line within ninety (90) days of shipment or
          products ordered by Distributor.

          (d) The bankruptcy or insolvency of Distributor.

          (e) The sale, lease, rental, assignment or
          transfer whether for consideration or not of all
          or any part of Distributor's rights under the
          contract without the written approval and consent
          of Trim-Line."

      Examination of sections 2.05 and 4.01 illustrates that the
termination-triggering events enunciated therein did not create a
definite durational term.  Section 2.05 expressly provides that
unless the agreement is terminated as provided in article IV, the
agreement shall continue in force indefinitely.  Jespersen had
complete control over whether or when he would institute a
termination-triggering event under article IV, section 4.01. 
Inasmuch as the occurrence of a termination-triggering event
under section 4.01 was within the complete control of Jespersen, 
it is impossible to determine whether or when Jespersen would
institute a termination-triggering event.  Consequently, a
durational term cannot be ascertained from the sales distribution
agreement.  The events in section 4.01 cannot be considered
objective events that would have had the effect of making the
agreement sufficiently definite in duration.  Rather, section
4.01 indicates an indefinite duration of the agreement based upon
Jespersen's complete control over the occurrence of those events.
     Furthermore, where one party has the option or decision to
either comply with the contract or not, the duration of the
contract is indefinite and terminable at will.  R.J.N., 175 Ill.
App. 3d 655, 529 N.E.2d 1184.  Section 4.02 provides:
          "Distributor's Right to Terminate.  Distributor
          may terminate this agreement upon thirty (30) days
          written notice to Trim-Line."

Jespersen had the option to either comply with the sales
distribution agreement or not, based upon his ability to
terminate the agreement under section 4.02.  Thus, the sales
distribution agreement would remain in effect only as long as
Jespersen decided to comply with the agreement.  Whether or when
Jespersen would decide to no longer comply with the agreement and
terminate the agreement under section 4.02 cannot be ascertained
and, therefore, the agreement was indefinite in duration and
terminable at will.
     Jespersen next contends that the circuit court's reasoning
that because section 3.08(c) expressly granted 3M the right to
cancel Jespersen's license to use the Trim-Line trade name upon
request and that without a right to use the Trim-Line name the
sales distribution agreement has no effect, is flawed and should
be rejected by this court.  Careful review of the record
indicates that, in his response to 3M's motion to dismiss,
Jespersen failed to address section 3.08(c) in the circuit court. 
An argument not raised in the circuit court in response to a
motion to dismiss and presented for the first time on appeal is
waived.  Softa Group, Inc. v. Scarsdale Development, 260 Ill.
App. 3d 450, 632 N.E.2d 13 (1993); In re M.K., 284 Ill. App. 3d
449, 672 N.E.2d 271 (1996).  Hence, we need not examine the
merits of this argument.    
     Jespersen further argues that the circuit court erred in
holding that 3M's termination letter was sufficient notice under
the agreement and by failing to consider the implied covenant of
good faith and fair dealing.  Although the circuit court
dismissed two prior versions of Jespersen's complaint containing
alleged breaches of the implied covenant of good faith and fair
dealing, no appellate review of those earlier judgments is sought
in this appeal.  Jespersen's third amended complaint does not
contain any allegation or claim that 3M's termination letter
failed to give reasonable notice.  Nor does the complaint contain
any allegation concerning the implied covenant of good faith and
fair dealing.    
     Moreover, Jespersen failed to raise these issues before the
circuit court when addressing 3M's motion to dismiss the third
amended complaint.  As previously indicated, an argument not
raised in the circuit court in response to a motion to dismiss
and presented for the first time on appeal is waived.  Softa, 260
Ill. App. 3d 450, 632 N.E.2d 13; In re M.K., 284 Ill. App. 3d
449, 672 N.E.2d 271.
     In addition, terminable-at-will contracts are generally held
to permit termination for any reason, good cause or not, or for
no cause at all.  Alderman Drugs, Inc. v. Metropolitan Life
Insurance Co., 161 Ill. App. 3d 783, 515 N.E.2d 689 (1987). 
Mindful that every contract carries the duty of good faith and
fair dealing, as a matter of law, absent express disavowal by the
parties (e.g., Dayan v. McDonald's Corp., 125 Ill. App. 3d 972,
985, 466 N.E.2d 958, 971, (1984)), the duty of good faith and
fair dealing does not override the clear right to terminate at
will, since no obligation can be implied which would be
inconsistent with and destructive of the unfettered right to
terminate at will.  Gordon v. Matthew Bender & Co., 562 F. Supp. 1286, 1289-90 (N.D. Ill. 1983). 
     Here, as the sales distribution agreement was indefinite,
and thus terminable at will, it would be incongruous to say that
an inference may be drawn that 3M impliedly agreed to an
obligation that would be inconsistent with and destructive of its
right to terminate the agreement at will.  Accordingly, the order
of the circuit court dismissing Jespersen's third amended
complaint for failure to state a cause of action was proper.
     Affirmed.
     HOURIHANE, J., concurs.
     HOFFMAN, J., dissents