In the
United States Court of Appeals
For the Seventh Circuit
No. 99-3927
Interim Health Care of Northern Illinois, Inc.,
Plaintiff-Appellant,
v.
Interim Health Care, Inc.,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division
No. 98 C 5259--David H. Coar, Judge.
Argued April 12, 2000--Decided August 25, 2000
Before Cudahy, Coffey and Kanne, Circuit Judges.
Cudahy, Circuit Judge. In 1981, registered nurse
Nancy Williams began working at the Evanston,
Illinois franchise of a national company called
Interim Health Care (Interim-Evanston),/1 which
provided temporary medical services in patients’
homes. She eventually became the administrator of
the office. In 1986, Williams bought the Evanston
franchise of Interim Health Care. The Evanston
franchise served Chicago’s northern suburbs; two
other franchises, located in Oak Park, Illinois
and Joliet, Illinois, served other areas in
suburban Chicago. In 1991, the national office of
Interim (Interim-National) purchased the Oak Park
franchise, and began operating it. Also that
year, Interim-National purchased a company known
as Professional Nurses Bureau, which provided
temporary medical services on the North Side of
Chicago.
Interim-National’s decision to begin operations
in the Chicago area led to tensions with
Williams. Williams charges that Interim-National
began serving patients in her territory in
violation of her franchise agreement. And she
charges that Interim-National began cutting
Interim-Evanston out of contracts to provide
services to national clients with patients in the
Evanston area. In late 1997, Interim-National
offered to buy Interim-Evanston, but Williams
refused. In May 1998, Williams apparently missed
the deadline for renewing her franchise. By
August 1998, Interim-National advised Interim-
Evanston that it was in default on its royalty
payments. Interim-National then terminated
Interim-Evanston’s franchise. Interim-Evanston
sued Interim-National for breach of contract,
breach of the implied duty of good faith,
tortious interference with its business
relationship and unjust enrichment and requested
an accounting. The district court granted summary
judgment in favor of Interim-National on the
contract, good faith, tortious interference and
accounting claims, but denied summary judgment on
Williams’s claims of unjust enrichment. Williams
now appeals the grant of summary judgment.
We review the district court’s grant of summary
judgment resulting from its contract
interpretation de novo. See Winter v. Minnesota
Mutual Life Ins. Co., 199 F.3d 399, 405-06 (7th
Cir. 1999). Summary judgment is proper "if the
pleadings, depositions, answers to
interrogatories 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 judgment as a
matter of law." Fed. R. Civ. P. 56(c). A genuine
issue of material fact exists for trial when, in
viewing the record and all reasonable inferences
drawn from it in a light most favorable to the
non-movant, a reasonable jury could return a
verdict for the non-movant. See Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
I. Breach of Contract
Williams charges that when Interim-National
"encroached" on her territory, it violated the
terms of her franchise agreement. Both parties
seem to agree that Illinois law applies to this
contract dispute. See Appellant’s Br. at 37-38;
Appellee’s Br. at 36-44. We will not question
their understanding. See, e.g., Bird v.
Centennial Ins. Co., 11 F.3d 228, 231 n.5 (1st
Cir. 1993). There are two types of contractual
ambiguity: intrinsic and extrinsic. Intrinsic
ambiguity exists when the agreement itself is
unclear, and extrinsic ambiguity exists when a
perfectly clear agreement is unclear when applied
to the real-world context of the deal. See FDIC
v. W.R. Grace & Co., 877 F.2d 614, 620 (7th Cir.
1989). In Illinois, clear and unambiguous terms
in a contract are given their "ordinary and
natural meaning." See Emergency Medical Care,
Inc. v. Marion Memorial Hosp., 94 F.3d 1059, 1061
(7th Cir. 1996). Ambiguity can be found only if
the contract language is "reasonably or fairly
susceptible of more than one construction." A.A.
Conte, Inc. v. Campbell-Lowrie-Lautermilch Corp.,
132 Ill. App. 3d 325, 328 (1st Dist. 1985).
Illinois courts endeavor to construe contracts as
a whole, giving meaning to each provision. See
Emergency Medical Care, 94 F.3d at 1021. The fact
that parties disagree about the meaning of a
contractual provision does not mean the contract
is ambiguous. See id. And, because Illinois
courts favor competition and frown on restraints
on trade, "we must strictly construe
noncompetition agreements against the party
seeking restriction." Id.
Applying these well-worn contract principles, we
must decide whether the franchise agreement is
either intrinsically or extrinsically ambiguous.
The franchise agreement was first drafted in
1973. The agreement has remained essentially
unchanged for almost thirty years./2 Paragraph
1 of the agreement states that:
Company hereby grants, and Licensee hereby
accepts, for the period, within the area
hereinafter described . . . the right and license
. . . to operate a temporary help service
franchise for the sole purpose of furnishing and
supplying individuals or group services of
personnel, in office, clerical, nursing, dental
and medical occupations. This franchise shall not
extend to the operations of a temporary help
service in any other occupations or for any other
purpose, which is specifically reserved to the
Franchisor.
Paragraph 2 of the agreement states that:
This franchise is for the area described as
follows [geographic terms found here] and Company
agrees that, as long as Licensee shall not be in
default hereunder, neither it nor any person or
firm authorized or licensed by it shall establish
an office for the purposes heretofore described,
within the foregoing area.
R.8 at Exhibit A (emphasis added).
Interim-National argues that because a comma
appears between "described" and "within," the
"within the foregoing area" phrase modifies the
entire preceding phrase, and not just the word
"purposes." Therefore, it argues, the
geographical limitation applies only to the
placement of an office that provides health care.
Williams takes the opposite position, that
"within the foregoing area" modifies the phrase
"for the purpose heretofore described," meaning
that regardless of where Interim-National’s
office sits, it may not provide health services
in her territory. Williams contends that this
reading is more sensibly synthesized with
paragraph one, which specifically reserves to the
franchisor only the right to operate a temporary
employment agency offering non-medical services.
Williams contends these two paragraphs together
create mutually exclusive rights in the
franchisee and franchisor. The former has an
exclusive territory for the provision of
temporary health services, and the latter has the
exclusive right to provide other temporary
services in that territory.
Although we think Interim-National places too
much weight on the lone comma in this passage, we
agree that the "ordinary and natural" meaning of
the words does not suggest that the franchisor is
prohibited from providing health care services in
the Evanston region. The phrase referring to
health care provision, "for the purposes
heretofore described," is a descriptive phrase,
modifying the direct object of the passage, which
is "office." See, e.g., Robert Perrin, The Beacon
Handbook at 144-47 (5th ed. 2000). This suggests
that the national franchisor is prohibited from
establishing an office (of a certain type) in the
territory. This language squares with the
language of paragraph one, which specifically
permits the franchisor to offer services of
another type--non-medical--in currently
franchised territories.
In so interpreting the language, we are giving
the words their "ordinary and natural meaning"
without questioning the logic of that meaning,
which is appropriate in evaluating intrinsic
ambiguity. The result is similar to the one we
reached in Emergency Medical Care. In that case,
a hospital terminated its contract with one
company that provided emergency room physicians,
and hired a similar company to provide the same
service. See 94 F.3d at 1060. The hospital had
agreed not to "directly or indirectly enter into
any agreement . . . with any physician" the first
company had introduced to the hospital. Id. The
second company hired some of the same doctors
that the first company had hired, and the first
company contended this constituted an indirect
agreement by the hospital with the physicians, in
violation of their contract. Id. We held that the
hospital entered an agreement with the second
company, which did not amount to an indirect
agreement with the physicians. See id. at 1061.
We rejected the company’s argument that a bar on
"indirect agreement" was actually intended to
prevent the hospital from using the physicians
"by any means." Id. at 1061-62. The same
principle, requiring us to construe the words’
plain meaning rather than a broader meaning,
applies in the present case. The language bars
the establishment of an office for certain
purposes in the Evanston territory. It does not
bar the establishment of an office for those same
purposes outside the Evanston territory, which
means that the provision of health services in
the Evanston area from an extraterritorial office
is permissible. Had the parties wished to wholly
restrict the provision of health care in the
territory, they could have said so.
The Illinois appellate court took a similarly
literal approach in Diepholz v. Rutledge, 276
Ill. App. 3d 1013 (4th Dist. 1995). In Diepholz,
an automobile dealer sold his dealership, and
signed a non-compete clause which required him to
"refrain, directly or indirectly . . . from
engaging in the automobile sales or service
business . . . in Coles County, Illinois." See
id. at 1014. The seller bought a dealership in an
adjacent county, where he began soliciting former
customers who lived in Coles County, and running
newspaper and radio advertisements in Coles
County. The court concluded that the contract did
not specifically forbid the seller to advertise
or solicit in Coles County; it only barred him
from selling or servicing cars there. See id. at
1016-17. In the present case, the exact language
of the contract forbids Interim-National from
establishing an Evanston office that administers
home health care, but it does not specifically
bar it from soliciting or servicing clients from
outside the territory’s boundaries.
Williams says the exclusivity of her territory
is demonstrated by another provision of the
contract, which states that Interim-National will
furnish her with national account leads. Williams
reasons that because Interim-National was
ostensibly obligated to furnish all national
account leads that would involve Evanston
patients, this meant that Interim-Evanston "was
contractually entitled to all business in its
territory, and there would be no basis to hold
that [Interim-Evanston] is entitled to all
business in its territory under paragraph 7, but
not under paragraphs 1 and 2." Appellant’s Br. at
28. But even if Interim-National were obligated
to turn over all the national account leads it
unearthed (as discussed below, we are not sure it
was), this does not amount to a grant of an
exclusive territory to Interim-Evanston. This
provision would not prevent other Interim
franchises from developing their own local
accounts in the Evanston region, and servicing
them from offices outside the Evanston territory.
And the language does not explicitly bar Interim-
National from developing local accounts and
keeping them for itself. So the promise to
furnish national account leads does not add any
ballast to Williams’s argument that the language
of the contract granted her an exclusive
territory or is intrinsically ambiguous on that
point.
Williams also argues that the contract is
extrinsically ambiguous, because the temporary
home health care industry "is not a location-
sensitive business." Appellant’s Br. at 9
(quoting Williams’s expert witness). Therefore,
she suggests, anyone in the industry would have
recognized that a geographic limit on office
location was of little value, and would have
taken the phrase to indicate a limit on the
actual provision of services. But extrinsic
ambiguity requires an objective disparity between
language and reality, not merely an inference of
disparity based on one party’s potentially self-
serving opinion about the language at issue. For
instance, as we explained in Rosetto v. Pabst
Brewing Co., 217 F.3d 539 (7th Cir. 2000), the
notorious contract in Raffles v. Wichelhaus, 2 H.
& C. 906, 159 Eng. Rep. 375 (Ex. 1864), was
extrinsically ambiguous because, although its
reference to the ship Peerless, was clear on
paper, the reality was that two ships sailing
from the port in question at the time in question
bore the same moniker. So a term that purported
to identify a single ship to provide the
contracted-for transportation could not, in
reality, do so. In this case, the parties agreed
that Williams would have the right to establish
the only Evanston office for the provision of
health care services. Reference to the real-world
meaning of "office" in the home health sector
does not reveal that the contract term failed to
identify the thing bargained for. While office
location in the home health industry may not be
of paramount significance, we are skeptical that
it is altogether irrelevant, as it would have to
be for Williams’s extrinsic ambiguity argument to
succeed. While the individual consumers of home
health services may not be motivated by the
location of an office they do not plan to visit,
corporate clients and potential employees may
very well affiliate with one purveyor of home
health services rather than another based on
office location. For instance, the parties agree
that Interim "is required to train employees on
blood borne pathogens and other safety issues,
and to offer Hepatitis B vaccinations. Those
functions are performed at the IHC office
location." See R.52 at 6 (Def. Rule 12(M)(3)
Statement of Material Facts in Support of Its
Motion for Summary Judgment); R.60 at 8 (Pl. Rule
12(N)(a) Response to Def. Statement of Facts in
Support of Its Motion for Summary Judgment). In
addition, clinical operations managers work out
of the office, and participate in patient care
conferences with medical staffers who work in the
office. So a temporary agency may find it easier
to recruit workers if it can promise that neither
patient visits nor required office visits will
entail long-distance trips.
Moreover, location was likely of considerable
importance in 1973, when this contract was
drafted. At that point, before the introduction
of direct deposit of paychecks, facsimile
machines, e-mail and the like, there was
undoubtedly some value in operating an office in
the vicinity of likely staffers and clients. For
instance, temporary nurses and doctors likely
stopped by the office to pick up their paychecks.
The franchisee probably drove from the franchise
office to client offices to solicit business or
pick up paperwork--making a nearby franchise
office more convenient. Notably, the use of
facsimile machines and direct deposit was
underway in 1986, suggesting that the importance
of office location may have been diminishing when
Williams signed this contract. In spite of this
trend, she did not attempt to negotiate a
stronger protection of her territory.
Consequently, the real-world context in which
this agreement was to be performed does not
reveal an obvious ambiguity in the language.
Based on the foregoing, we do not find the
contract to be either intrinsically or
extrinsically ambiguous. Therefore, we need not
examine extrinsic evidence to discern the
parties’ intent. However, we note that the
extensive extrinsic evidence before us does not
seem to demonstrate that this contract created an
exclusive territory. Williams’s evidence consists
largely of statements by Interim-National
officials indicating that the company’s policy
was to discourage cross-border servicing of
patients by those outside the franchise
territory, and that it occasionally favored
reimbursing franchisees when others served
clients in their areas. Even if we take these
statements as true, this does not establish that
Interim-National understood the franchise
agreement to bar such cross-border arrangements.
As we have explained in the past, if a contract
gives one party the option of taking certain
action, that party may exercise the option
without undertaking an obligation to act
accordingly in the future. See R.T. Hepworth Co.
v. Dependable Ins. Co., 997 F.2d 315, 320 (7th
Cir. 1993). On the other hand, if the contract is
silent about a certain obligation and one party
honors it regularly, then he may be said to have
assumed the obligation. See id. In the present
case, this contract gives Interim-National the
right to provide (on its own, or by licensing a
franchisee) health services in the Evanston area,
so long as it does not establish an office in
that area. While Williams has presented
significant evidence that Interim opposed such
cross-border servicing as a rule, she has also
presented significant evidence that the policy
was not uniformly followed. The Oak Park office,
both when owned by a franchisee and when owned by
Interim-National, often served patients outside
its service area. It is unclear how diligently
Interim-National tried to stop this "poaching,"
but under the contract it was not obligated to
stop it at all. So an occasional effort to deter
the practice does not establish a legal
obligation to police it. In fact, some of the
extrinsic evidence suggests that Williams may
have understood that the contract allowed for
such cross-border servicing. While serving as
administrator of Interim-Evanston for the
previous owner, Williams was aware that other
offices occasionally placed nurses inside the
Evanston territory, and that on rare occasions
the Evanston franchise might serve patients in
other territories. See R.54, Ex. F at 17-19; Ex.
E at 19-20. So Williams’s extrinsic evidence does
not conclusively establish that the franchise
agreement barred such activity. Additionally,
Williams did not try to negotiate stronger
exclusivity language when she purchased the
franchise, despite the knowledge gleaned as
office administrator that cross-border servicing
of patients took place from time to time. See id.
Even if the contract were intrinsically or
extrinsically ambiguous, the extrinsic evidence
before us does not clearly spell out a
prohibition on cross-border servicing of
patients. In sum, the franchise agreement
permitted Interim-National to serve patients in
the Evanston area, and therefore it did not
breach the contract by doing so./3
II. Breach of Duty of Good Faith
Williams next charges that Interim-National
violated its duty of good faith and fair dealing
under the contract by (a) encroaching on her
territory and usurping her leads, and (b)
terminating the franchise. In order to properly
evaluate this claim, we must examine further
whether Interim-National was obligated to furnish
national account leads to Interim-Evanston.
The contract specifies that Interim-National
"agrees to . . . [c]ooperate with Licensee in
obtaining contracts for its services from
government or industry . . . [and f]urnish
national account leads . . . ." Verified Amended
Complaint, Ex. A at 3-4. Williams argues that
this language obligates Interim-National to
provide her with all national account leads that
involved patients in the Evanston territory.
Interim-National maintains the language is merely
hortatory and permitted it to forward leads at
its discretion, which it did unless it questioned
the franchise’s ability to handle the business.
The district court determined that Interim-
National was not required to furnish all such
account leads to Williams. We think the promise
to "furnish national account leads" is
intrinsically ambiguous, because it does not
specify whether all or merely some leads would be
forwarded. However, both parties agree that
Interim-National would not furnish absolutely all
national leads it unearthed--at most it would
furnish all leads pertaining to the Evanston
region, and at least it would furnish those
Evanston leads it thought the franchisee could
handle. We might attempt to further define the
scope of Interim-National’s discretion based on
the course of performance between the parties,
but they have given us virtually no such
evidence. So, for the purposes of evaluating
Williams’s breach of good faith claim, we arrive
at roughly the same place as the district court:
Interim-National had some discretion in
forwarding leads to Interim-Evanston.
The district court viewed Williams’s breach of
duty of good faith claim as a separate legal
theory, reasoning that if Interim-National had no
obligation under the contract to refrain from
providing health services in Evanston, or to
furnish all national account leads, there was no
basis for a duty of good faith. The district
court further reasoned that so long as Interim-
National had good cause to terminate the
franchise--Williams’s monetary default-- the
termination was not in bad faith. With respect,
we think the district court took the wrong view
of this claim.
In Illinois, a covenant of good faith and fair
dealing is implied in every contract absent
express disavowal. See Martindell v. Lake Shore
Nat’l Bank, 15 Ill. 2d 272, 286 (1958). Problems
relating to good faith performance are most
common where one party to an agreement is given
wide discretion, and the other party must hope
the discretion is exercised fairly. See Dayan v.
McDonald’s Corp., 125 Ill. App. 3d 972, 990 (1st
Dist. 1984). In the case now before us, the
parties agree that the franchise agreement vested
Interim-National with some unspecified level of
discretion to refer national account leads to
Interim-Evanston. When one party to a contract is
vested with contractual discretion, it must
exercise that discretion reasonably and with
proper motive, and may not do so arbitrarily,
capriciously or in a manner inconsistent with the
reasonable expectations of the parties. See id.
at 991.
In Dayan, which is a close cousin to the
present case, the McDonald’s Corporation
permitted a French businessman to open several
franchise outlets in Paris. For a period of
years, the franchisee failed so-called quality,
service and cleanliness inspections. The
franchise agreement clearly spelled out that
failure to adhere to the McDonald’s cleanliness
standards was a basis for terminating the
franchise. The company repeatedly told the
franchisee that he was falling short, and offered
to help him bring his stores into compliance. The
slovenly conditions persisted and the franchise
was terminated. See id. at 981. The franchisee
contended that McDonald’s real motive in
terminating the franchise was to obtain the
lucrative Paris market. See id. at 993. The
Illinois court held that McDonald’s had good
cause for the termination; that alone was enough
to satisfy the covenant of good faith, even
assuming the company’s secondary motives were
less than pure. See id. We reached a similar
result in another case of franchise termination,
Original Great American Chocolate Chip Cookie Co.
v. River Valley Cookies, Ltd., 970 F.2d 273 (7th
Cir. 1992). But in Original Great American, we
suggested that if a contract party invoked a
reasonable contract term dishonestly to achieve
a purpose "contrary to that for which the
contract had been made," such a course would
amount to bad faith. Id. at 280.
We do not think that in allowing or initiating
cross-border servicing of patients Interim-
National violated the duty of good faith because
the terms of the contract permitted this
activity. But the contract is far less conclusive
on the subject of referring account leads--the
parties agree that Interim-National may decide to
withhold some account leads, but the contract is
vague about which leads it may withhold, and what
justifies withholding. Interim-National had wide
discretion, and its exercise of that discretion
was governed by a duty of good faith. See, e.g,
Dayan, 125 Ill. App. 3d at 991. This means it was
not permitted to withhold national account leads
for improper motives, or in a manner inconsistent
with the reasonable expectations of the parties.
Interim-National now claims it withheld leads
because it was dissatisfied with Williams’s
performance--it contends that patients had
trouble reaching her and that she kept irregular
office hours--and doubted she could handle the
additional business. See Appellee’s Br. at 7, 19.
But the franchise agreement does not condition
the furnishing of account leads on performance.
And there is no evidence that Interim-National
advised Williams informally that it would
withhold leads if her performance waivered.
Moreover, the national franchisor did not, so far
as the appellate record reflects, notify Williams
of its displeasure. In this respect, the case is
at the opposite end of the spectrum from Dayan,
in which the court found good faith after
McDonald’s representatives clearly spelled out
the consequences of subpar performance,
repeatedly inspected the franchisee’s stores and
consulted with him frequently over a period of
more than five years to help him try to rectify
the problems. In the present case, the franchise
agreement specifically states that Interim-
National will furnish franchisees with materials
to help them abide by Interim-National standards
and use Interim-National procedures. These
provisions establish a reasonable expectation by
both parties that the franchisor would make
remedial efforts with struggling franchisees.
This is particularly so if a benefit to be
accorded Williams--national account leads--
depends on her adherence to corporate standards.
In light of the contract’s implicit assurances of
franchisee assistance, and its silence as to the
link between performance and account leads, the
failure to advise Williams that she was
jeopardizing her access to national account leads
by poor performance weighs against a finding that
Interim-National exercised its discretion in
accord with the reasonable expectations of the
parties.
Additionally, Dayan states that discretion must
be exercised "with proper motive." While in Dayan
it was alleged that the corporation coveted the
franchisee’s territory, the corporation in that
case did not appear to place that desire above
its duty of good faith to the franchisee.
Instead, it made extensive efforts to help the
franchisee address his problems before
terminating the franchise. In the present
circumstance, there is evidence in the record
that Interim-National made several attempts to
purchase the Evanston territory, and that it was
launching a corporate presence in the Chicago
area (by purchasing the Oak Park franchise and
buying an unaffiliated temporary service in the
city). There is no evidence in the record, other
than the conclusory deposition testimony of one
Interim-National official, that Williams’s
franchise was underperforming before Interim-
National became involved in accounts that the
Evanston franchise had previously serviced. So it
is not beyond the bounds of speculation that
Interim-National may have exercised its
discretion to withhold national account leads
with improper motive, thus indicating a breach of
the covenant of good faith and fair dealing. We
at least think there is a genuine issue of
material fact lurking here regarding the genuine
reason for Interim-National’s decision and the
veracity of its claims that Williams’s franchise
was subpar. So we think the grant of summary
judgment was improper.
The same concerns lead us to reverse the
district court’s conclusion that Interim-National
did not violate the duty of good faith by
terminating the franchise agreement. The district
court reasoned that so long as the franchisee
violated a term of the franchise agreement, the
franchisor had good cause to terminate. Here,
Williams defaulted in her duty to make royalty
payments to Interim-National, and the district
court stated that this default was sufficient
justification for the termination, whether or not
Interim-National may have had designs on the
territory itself. Mem. Op. at 7. The district
court acknowledged Williams’s argument that the
reason she could not pay her royalties was that
her profits dwindled when the national franchisor
began usurping her territory. The district court
then stated that the franchisor’s responsibility
for causing the default was irrelevant. The court
stated that this result followed from Original
Great American, 970 F.2d at 279, in which we held
it irrelevant that the franchisee’s contract
violations were the fault of the manager. A close
reading of that case indicates that the "manager"
we spoke of was an employee of the franchisee,
and that the franchisor did nothing to hasten the
franchisee’s demise. So Original Great American
does not apply to the present circumstance, where
the franchisor has arguably forced the franchisee
into default. In the present case, the record
evidence interpreted in the light most favorable
to Williams indicates that Interim-National lured
away at least two of Williams’s major clients by
withholding account information from her. This
seems the paradigmatic case of a contract party
invoking a reasonable contract term (the
discretionary obligation to furnish account
leads) dishonestly to achieve a purpose "contrary
to that for which the contract had been made."
Id. at 280. Such manipulation, we have intimated,
is the essence of bad faith. See id. A genuine
issue of material fact exists regarding how much
and why Interim-National withheld information,
and thus summary judgment was inappropriate.
III. Tortious Interference
with Prospective Economic Advantage
Williams next contends that Interim-National
tortiously interfered with her prospective
economic advantage by taking "numerous business
opportunities from national accounts, government
and industry for itself, even though the patients
were located inside the exclusive territory of
[Interim-Evanston], and even though the Franchise
Agreement required IHC to refer such business
opportunities to IHC." Verified Amended Complaint
at 7. In her complaint, Williams states she has
specific knowledge about just one such incident,
in which the national franchisor acted to exclude
her from meetings with a client, and to sever the
flow of information about the client to Interim-
Evanston. We gather from the complaint that the
client, Cardiac Solutions, was already working
with Interim-Evanston, because Williams alleges
that the national company’s interference
prevented it from "serv[ing] Cardiac Solutions in
a satisfactory manner." Id. at 7. Additionally,
in her appellate brief, Williams alleges that
both she and the Interim branch in the City of
Chicago (Interim-Chicago) had contracts with the
Illinois Department of Rehabilitative Services
(DORS) in 1993. The city branch renewed its
contract, and began serving patients in the
Evanston area. At the same time, Williams failed
to expand her business for DORS in her territory.
It is unclear whether the existing DORS contract
expired while Interim-Chicago was serving
Evanston area patients covered by the DORS
contract.
Under Illinois law, "the tort of interference
with prospective economic advantage has four
elements: (1) plaintiff must have a reasonable
expectancy of a valid business relationship with
a third party; (2) defendant must know of the
prospective business relationship; (3) defendant
must intentionally interfere with the prospective
business relationship such that the prospective
business relationship never materializes; and (4)
the interference must damage the plaintiff."
Lynch Ford, Inc. v. Ford Motor Co., 957 F. Supp.
142, 145-46 (N.D. Ill. 1997). The district court
examined just the Cardiac Solutions relationship,
as that was the only one detailed in the record
at the time of the summary judgment motion. The
court stated that while the first element was
probably satisfied, Williams had not supplied
sufficient evidence that Interim-National knew it
had an account with Cardiac Solutions, or that it
had purposely thrown a wrench into that
relationship or damaged Interim-Evanston.
Interim-Evanston does not challenge these
conclusions per se. Instead, it says that the
district court erred by focusing on Cardiac
Solutions. See Appellant’s Br. at 42-43. The
court should have viewed the claim in light of
all potential patients in the Evanston territory,
it insists. If it had, then elements two, three
and four would have been satisfied: Interim-
National allegedly knew the Evanston branch had
a right to all the patients in the territory;
Interim-National allegedly interfered with
Interim-Evanston’s right to contract with them by
swooping down first. And Interim-Evanston claims
that according to an internal Interim-National
survey completed in 1994, the Oak Park branch was
treating more than one hundred clients in the
Evanston territory, whose accounts were worth
$30,000 to $60,000. Had Interim-Evanston received
that money, it might have avoided its fatal
default. The problem with this alternate theory
urged on us is that it fails to meet the first
element of the tort. Interim-Evanston did not
have a reasonable expectancy of a valid business
relationship with all Interim patients in its
territory. As explained above, Interim-National
and its other franchisees were permitted to
service Evanston clients so long as they did it
from without their borders. So Interim-Evanston
was not entitled to service every patient, and
therefore it did not have a firm expectation of
doing business with those patients that Interim-
National eventually took on. The grant of summary
judgment on this count was appropriate.
IV. Accounting
Finally, Williams appeals the district court’s
grant of summary judgment on her request for an
equitable accounting of the money still owed her
by Interim-National. The district court reasoned
that Interim-National was obliged to turn over
some money to Interim-Evanston to reflect its use
of the Interim-Evanston office for a period
following the franchise termination. However,
Interim-National also had the right to collect
accounts receivable for Interim-Evanston, and
since Interim-Evanston was delinquent in its
royalty payments when the franchise was
terminated, Interim-National was entitled to keep
those funds. Despite the fact that Interim-
Evanston is entitled to just a portion of the
funds, we agree with the district court that the
accounts are not sufficiently complicated to
justify a separate claim for an equitable
accounting. See, e.g., Zell v. Jacoby-Bender,
Inc., 542 F.2d 34, 36 (7th Cir. 1976).
In sum, we affirm the district court’s grant of
summary judgment on the breach of contract,
tortious interference and accounting claims. We
reverse the district court’s grant of summary
judgment on the claim that Interim-National
breached its duty of good faith and fair dealing,
and remand for further proceedings consistent
with this opinion.
/1 We will use "Williams" and "Interim-Evanston"
interchangeably throughout this opinion.
/2 A 1985 amendment by which Williams’s predecessor
ceased operating a related franchise in temporary
clerical services did not alter any of the terms
relevant to us today.
/3 Williams also complains that Interim-National
promised that when a client contracted to pay the
national office, that office would forward
payment within five days. Williams contends
Interim-National delayed numerous payments for
weeks or months. But this "promise" is not
contained in the Franchise Agreement and is
documented nowhere in the record.