Axion RMS, Ltd. v. Booth
138 N.E.3d 6
Ill. App. Ct.2019Background
- Axion RMS (formerly Mid American Group) employed Booth and attached a January 1, 2015 employment agreement containing a two‑year post‑termination noncompete. The verified complaint alleged Booth resigned in December 2015 and joined a competitor, solicited clients and employees.
- Axion’s verified complaint pleaded that the only consideration supporting the restrictive covenant was Booth’s continued employment and compensation during employment (he left under two years after the agreement’s effective date).
- Booth moved to dismiss under 735 ILCS 5/2‑615, arguing Illinois law requires at least two years’ continued employment to support a restrictive covenant where no other consideration is alleged.
- The trial court dismissed counts based on the noncompete (breach of contract and accounting) with prejudice for lack of adequate consideration; tortious interference was dismissed without prejudice.
- Axion sought leave to file a proposed amended complaint alleging contemporaneous promotion, salary increase and stock as consideration; the court denied leave because the proposed pleading contradicted admissions in Axion’s original verified complaint (judicial admissions).
- Axion appealed; the appellate court affirmed, holding the face of the verified complaint showed inadequate consideration and that the proposed amendment contradicted binding judicial admissions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Adequacy of consideration for noncompete at pleading stage | Apply a totality‑of‑circumstances test; promotion, raise, stock and restructuring supplied adequate consideration | Only continued employment was pled; under Illinois precedent continued employment must be at least two years to be adequate | Court dismissed: only continued employment pled and Booth left <2 years, so inadequate consideration; dismissal affirmed |
| Use of employment agreement effective date vs. execution date | Effective date Jan 1, 2015 may not equal execution; pay raise/effective consideration could be contemporaneous with effective date | Verified complaint admissions state Booth was paid $500,000 in 2014; that admission binds plaintiff | Court treated verified pleading as binding judicial admission; proposed amendment contradicted it and was denied |
| Leave to amend to add new consideration | Proposed amendment would cure defect by alleging raise, promotion and stock contemporaneous with agreement | Proposed amendment contradicts sworn facts in verified complaint; would create inconsistency and surprise | Court did not abuse discretion: amendment contradicted verified judicial admissions, so leave denied |
| Whether factual hearing was required on consideration | Oral argument and extrinsic facts would show adequate consideration; evidentiary hearing appropriate | On 2‑615 motion court may consider only the pleadings, judicial admissions and matters of record—no evidentiary hearing on facts outside the complaint | No evidentiary hearing required on a facial 2‑615 dismissal; court properly disposed on the pleadings |
Key Cases Cited
- Brown & Brown, Inc. v. Mudron, 379 Ill. App. 3d 724 (Ill. App. Ct. 2008) (continued employment for two years can constitute adequate consideration for a restrictive covenant)
- Loyola Academy v. S&S Roof Maintenance, Inc., 146 Ill. 2d 263 (Ill. 1992) (trial court should allow an amended complaint that clearly cures defects)
- Roti v. Roti, 364 Ill. App. 3d 191 (Ill. App. Ct. 2006) (judicial admissions in verified pleadings are binding and contradicting them resembles perjury)