Breach of Employment Contract (Non-Renewal Option) — “Breaching Party Cannot Take Advantage of Contract It Breached”

Breach of Employment Contract (Non-Renewal Option): Assaf v. Trinity Med. Ctr., 696 F.3d 681, 685-86 (7th Cir. 2012)

As the Seventh Circuit articulated in Assaf v. Trinity Med. Ctr., 696 F.3d 681, (7th Cir. 2012), Illinois forbids a party in material breach of a contract from taking advantage of terms in that contract which benefit him. The Seventh Circuit stated: “the simple rationale behind the Illinois rule, a classic rule of contract law, is that a party should be prevented from benefitting from its own breach.” Assaf v. Trinity Med. Ctr., 696 F.3d 681, 686 (7th Cir. 2012).

In Assaf, the plaintiff-appellant, Dr. Bassam Assaf was terminated from his position as director of the epilepsy clinic at Trinity Medical Center in Rock Island, Illinois. Dr. Assaf then sued Trinity in Illinois state court. The case was removed from state court to federal court on the basis of diversity jurisdiction.

The federal district court made two determinations that were later contested on appeal. First, the district court, applying Illinois contract law, ruled that under the terms of Dr. Assaf’s contract with Trinity, he could not collect professional fees lost as a result of Trinity’s failure to employ him through 2011. Second, the district court declined to order specific performance of Trinity’s promise to reinstate Dr. Assaf.

Specific performance is an equitable remedy where a Court will order a party to honor the terms of its contracts. It is discretionary, and hinges on the individual facts of each case. Claimants are not entitled to specific performance as of right, and courts are generally reluctant to order specific performance of employment contracts.

Dr. Assaf argued that under the terms of his contract, he was entitled to reinstatement through 2012. The contract stated that Dr. Assaf’s employment would automatically renew at the end of 2011 unless either party chose to terminate the relationship within 90 days of the end of the term. Although it never re-instated Assaf, Trinity notified him in the fall of 2011 that it did not intend to continue to employ him beyond 2011. The Court held that this notification satisfied the 90–day notice due under the agreement. However, Dr. Assaf argued that because it had breached of the agreement, Trinity was prohibited by Illinois law from seeking to enforce a term of the contract in its own favor.

While the Seventh Circuit ultimately did not find that after breaching the contract, Trinity endeavored to take advantage of terms in its contract with Dr. Assaf in its own favor, it did hold that Dr. Assaf was entitled to receive lost professional fees for the years 2009 through 2011. The Seventh Circuit reversed and remanded the case back to the district court for trial to properly ascertain Assaf’s damages, and stated as follows:

We have already determined that Trinity breached the agreement; the only remaining question for the district court is, what is the proper computation of damages? We believe that Assaf is entitled to seek the lost fees he incurred as a result of Trinity’s failure to re-employ him from the time of his termination in 2009 until the end of 2011. Assaf v. Trinity Med. Ctr., 696 F.3d 681, 686 (7th Cir. 2012).

The Chicago unpaid wage and breach of contract attorneys at Lubin Austermuehle near Chicago and Oak Brook represent business owners and professionals regarding wage claims, non-competition agreements, covenants not to compete, restrictive covenants and other claims throughout the Chicagoland area, including Waukegan and Aurora; and in the Mid-West region, including Indiana, Wisconsin and Iowa. You can contact one of our Chicago business trial attorneys by calling our toll free number 630-333-0333 for a consultation or contact us online by filling out the form at the side of this blog.

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