De Novo Standard Of Review For Judgment Based On Contract Construction

Jeffrey Covinsky was CEO of Hannah Marine Corporation. He sued the company after it refused to pay him pursuant to a “golden parachute” clause in his employment contract. In turn, Hannah counterclaimed against Covinsky for breach of fiduciary duty. The trial court gave Covinsky summary judgment on his claim. Hannah appealed.

The First District Illinois Appellate Court analyzed the proper standard of review of a summary judgment in a contract action. The appellate court acknowledged the usual review standard for summary judgments is de novo (circuit court ruling gets no deference). However, “Whether a breach of contract has occurred generally is not a legal question subject to de novo review, but rather a question of fact which will not be disturbed unless the finding is against the manifest weight of the evidence.”

In this case, the trial court’s ruling was based only on an interpretation of the contract, and no question of fact was involved. So the appellate court chose the de novo standard. Here’s the court’s explanation:

“[W]here only the construction of a contract is at issue, the legal effect and interpretation of the contract is a question of law, and summary judgment is proper.” … The parties disputed whether Covinsky resigned or was involuntarily terminated but, given the court’s decision that paragraph 7(g) applied regardless of whether Covinsky voluntarily resigned or was involuntarily terminated, the court determined that it did not need to make this factual determination and resolved the case by construing the parties’ employment contract. We review the court’s grant of summary judgment de novo.

Read the whole opinion, Covinsky v. Hannah Marine Corp., No. 1-08-0695 (2/17/09), by clicking here.