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Dam, Snell & Taveirne, LTD. v. Verchota

Case Date: 08/10/2001
Court: 2nd District Appellate
Docket No: 2-01-0315 Rel

August 10, 2001
No. 2--01--0315
IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

DAM, SNELL and TAVEIRNE,LTD.,)Appeal from the CircuitCourt
)of Lake County.
Plaintiff-Appellee, )
)
v.)No. 00--CH--1318
                                                                                      )
JOHN VERCHOTA and AIMIE S.)
ETTNER,                                                                                      )
)
Defendants )
) Honorable
(Mary Seda, a/k/a Mary Miller,                                                                                      )John R. Goshgarian,
Defendant-Appellant). ) Judge, Presiding.

JUSTICE GEIGER delivered the opinion of the court:

Defendant Mary Seda, a/k/a Mary Miller (Miller), appeals fromthe February 27, 2001, order of the circuit court of Lake Countyentering a preliminary injunction preventing her from performingany accounting services on behalf of the clients of her formeremployer, plaintiff Dam, Snell and Taveirne, Ltd. (DST). Onappeal, Miller argues that (1) the restrictive covenant containedin her employment agreement was invalid as a matter of law; and (2)the trial court abused its discretion in entering the preliminaryinjunction. We affirm.

The facts relevant to the instant appeal are as follows. DSTis a corporation engaged in public accounting and financialconsulting. At the time in question, DST maintained offices inLibertyville, Fox Lake, and Crystal Lake. Defendant Miller was anunlicensed accountant and was hired by DST in May 1994 to work inthe Crystal Lake office. At the time Miller was hired, she signedan employment agreement that contained a restrictive covenant. Thecovenant provided, in relevant part, as follows:

"In the event of termination of this agreement by eitherparty, the Employee agrees that he/she shall not, eitherdirectly or indirectly, in a professional capacity as anindividual, a partner of another firm, or as an employee ofanother individual or firm, for a period of two (2) yearsafter such termination, perform any accounting services as apublic accountant for any person, firm or corporation, whichis on the Employer's client list at the time of employeetermination. This provision also applies to the clients ofany predecessor firm that has since merged or been acquired bythe Employer."

In the Crystal Lake office, Miller worked under the directionof John Verchota, who was one of the directors and shareholders ofDST. Verchota had been responsible for opening and managing theCrystal Lake office on behalf of DST. Early in 1999, Miller andVerchota became romantically involved.

On August 1, 2000, Verchota terminated his employment with DSTto begin his own accounting practice in Crystal Lake. Immediatelyafter his resignation, Verchota began soliciting his clients to gowith him to his new accounting firm. On August 4, 2000, Milleradvised DST that she was resigning from the firm and that her lastday of employment would be August 18, 2000. Miller subsequentlyjoined Verchota's new firm, which was called Miller-Verchota.

On November 3, 2000, DST filed a six-count complaint namingMiller, Verchota, and another former DST employee, Aimie Ettner, asdefendants. The only count of the complaint that is relevant tothe instant appeal is count III, which sought the entry ofinjunctive relief against Miller. The count alleged that, sincethe termination of her employment with DST, Miller had begunworking at Miller-Verchota, where she was performing variousaccounting services for former clients of DST. DST alleged thatsuch conduct was a breach of the restrictive covenant contained inMiller's employment agreement and requested that Miller be enjoinedfrom performing any accounting work on behalf of any individuals orentities who had been clients of DST at the time Miller terminatedher employment there.

DST subsequently filed a petition for a preliminary injunctionagainst Miller. At the hearing on the petition, Miller testifiedthat she began to work for DST on May 2, 1994, at which time shesigned the employment agreement. Prior to her employment with DST,Miller had her own accounting business with approximately 25business clients and 40 to 50 individual clients. Miller estimatedthat she brought 80% to 90% of her clients with her to DST. Millerdid not have an accounting degree or license at the time she workedfor DST. She performed various services on behalf of DST clients,including bookkeeping, payroll, computer training, preparingcorporate and personal tax returns, and installing rudimentaryaccounting systems.

Miller testified that she had not decided to resign from DSTuntil August 4, 2000, which was the day that she tendered herresignation. Miller testified that she decided to resign afteranother DST employee, Aimee Ettner, had quit. Miller's resignationletter indicated that she was giving a 14-day notice and wouldcontinue working through August 18, 2000. Miller acknowledgedthat, during this 14-day period, she worked for only 1