Slay v. Allstate Corp.
2018 IL App (1st) 180133
Ill. App. Ct.2019Background
- Mary Slay was an exclusive Allstate agent who purchased an existing book of business in 2005 and later signed an Exclusive Agency (EA) Agreement that incorporated an EA Manual.
- Mary’s husband, Buddy Slay, was an independent Allstate agent in Florida; Mary alleges Buddy was qualified to buy her book upon her termination.
- Allstate terminated Mary’s EA Agreement in 2011 for production shortfalls; Mary sought to transfer her economic interest to Buddy, but Allstate denied approval and instead transferred the book to Faye McKnight (the territory manager’s spouse).
- Mary alleges Allstate offered a $40,000 termination payment (which she accepted under economic duress) but that amount was far less than the book’s value.
- Mary sued for breach of contract based on a breach of the implied covenant of good faith and fair dealing, alleging Allstate abused its contractual discretion by denying the transfer to benefit Faye.
- The trial court dismissed Mary’s second amended complaint with prejudice under both section 2-615 and 2-619 of the Illinois Code of Civil Procedure; Mary appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Mary pleaded a viable breach-of-contract claim (implied covenant of good faith) despite contract granting Allstate discretion to approve transfers | Slay: EA granted discretion but she pleaded that Allstate abused that discretion by denying transfer to her qualified husband for an arbitrary, bad-faith reason (to benefit Faye) | Allstate: EA gave "exclusive judgment" to approve/disapprove transfers, precluding reasonable expectation and claim; denial was within contractual discretion | Court: Reversed dismissal — allegations suffice at pleading stage to infer abuse of discretion and breach of implied covenant; factual discovery permitted |
| Whether Allstate established an "affirmative matter" under 2-619 that defeats Mary’s claim (e.g., EA Manual language, termination payment, notice) | Slay: EA Manual’s spouse exception Note preserves discretion to consider spouse transferees; termination payment does not negate harm; notice reiterates discretion but does not disprove bad faith | Allstate: Affidavit and EA Manual show categorical limits on transfers (no transfers to independent agents), termination-payment remedy given and paid, and notice warned of Allstate’s absolute approval right — these refute claim | Court: Materials attached to Allstate’s affidavit did not negate Mary’s pleaded facts or refute claim; 2-619 dismissal improper |
| Whether Barille v. Sears (prior precedent) requires dismissal | Slay: Distinguishes Barille — here specific factual allegations support inference of improper motive | Allstate: Relies on Barille to show broad contractual discretion negates bad-faith claim | Court: Distinguished Barille on grounds that Barille lacked specific factual allegations of improper motive; here Mary pleaded specific facts supporting inference of bad faith |
| Whether the EA Manual (not attached to complaint) should be considered at 2-615 stage | Slay: EA Manual not part of complaint so its limiting language cannot defeat pleading | Allstate: Relied on EA Manual language to argue no reasonable expectation to transfer to an independent agent | Court: For 2-615 review, EA Manual not considered; plaintiff’s allegations suffice without considering extrinsic manual language |
Key Cases Cited
- Barille v. Sears Roebuck & Co., 289 Ill. App. 3d 171 (Ill. App. Ct.) (upholding dismissal where plaintiff lacked specific facts showing improper motive by employer)
- Dewan v. Ford Motor Co., 363 Ill. App. 3d 365 (Ill. App. Ct.) (definition and scope of "affirmative matter" for 2-619 motions)
- Wilson v. Career Education Corp., 729 F.3d 665 (7th Cir.) (discussing reasonable expectations and abuse of contractual discretion under implied covenant of good faith)