Remember to Attach That Exhibit to the Contract!
An Illinois appellate court ruling issued last week, Duffy v. GTY Technology Holdings Inc., 2025 IL App (1st) 242017-U, reminds practitioners that where a written employment contract is being superseded with a new version, exhibits and attachments are as vital to the final product as the main agreement itself.? This ruling is issued under Supreme Court Rule 23, which limits its precedential value.? But it demonstrates how the existing law is applied in situations where the paperwork is fumbled, even in cases seeking to enforce arbitration .
Michael Duffy ran a start-up called CityBase, Inc. and in 2018 negotiated its sale to GTY Technology Holdings Inc.? The deal was for the sale of his interest in CityBase and his retention at GTY as COO of the CityBase unit of GTY.? Attached as Exhibit A to a September 2018 offer of employment letter to him was a “Fair Competition Agreement.”? The offer letter expressly incorporated the latter under its Paragraph 7, stating that the Offer letter and the FCA constituted an entire agreement between Duffy and GTY.? The Offer of Employment stated that? Duffy “agrees to execute and comply with the Fair Competition Agreement attached hereto as Exhibit A.”
The FCA was a non-compete and confidentiality agreement that restricted Duffy’s use of GTY’s trade secrets.? It also included a broad mandatory arbitration clause providing for final and binding arbitration of all claims “whatsoever” including any dispute over the arbitrability of any claim arising under the FCA.
This paperwork was executed in September 2018. Then in February 2019 GTY sent Duffy a revised offer letter that modified some terms of his employment. ?This revised offer letter contained the same Paragraph 7 stating that a Fair Competition Agreement was attached.? However that 2018 FCA was not attached, nor any other noncompete and confidentiality agreement. ?This omission in the 2019 offer was complicated by its repeating the provision from the 2018 offer letter that it and the FCA constituted the entire agreement between Duffy and GTY.? The new letter provided that the 2019 agreement superseded the 2018 agreement.
The 2019 offer letter was executed, and the sale of CityBase completed, on February 19, 2019.
But by 2023 the relations between the parties soured, particularly over GTY’s insistence that CityBase be fully integrated into GTY.? Duffy balked, GTY accused him of becoming a toxic presence, Duffy was then no longer at GTY (the case is unclear whether voluntary or not), and GTY sued him for intentionally interfering with GTY and violating the noncompete provisions of the FCA.? GTY sought arbitration and voluntarily “nonsuited” its court claim.?
Duffy sued for a declaratory judgment that the mandatory arbitration clause was unenforceable.? A Cook County trial court ruled against him, rejecting his claim that because there was no Exhibit A attached to the 2019 offer letter, there was no mandatory arbitration.? The trial judge was convinced the parties certainly understood that the reference to Exhibit A was sufficient.
The Illinois appellate court in Chicago reversed.? GTY argued that this dispute was for the arbitrator to handle, not the courts. ?That is, the parties had contracted that an arbitrator, rather than a court, had the authority to decide whether the arbitrator had authority to arbitrate the issues presented to him or her.
But this assumed that the arbitration provision was enforceable.? The evidence in this situation was unclear.? Duffy argued that the 2019 deal completely replaced the 2018 agreement. The new Offer Letter stated: “This offer letter supersedes in its entirety that certain offer letter between you and the Company dated as of September 12, 2018.” [emphasis added]
GTY contended that the revised offer letter’s explicit references to the FCA and its noncompete and arbitration clauses at specific paragraphs - identical with the 2018 offer letter - obviously took into account the exhibit to the original letter.? But the appellate court ruled that there was no evidence showing that the only noncompete agreement between the parties was the one attached to the 2018 letter.? The court noted the 2019 offer letter required Duffy to “execute” the fair competition agreement and wondered: “why would the parties require him to ‘execute’ an agreement that he had already executed in September 2018?”? To make for more of a counterpoint, GTY argued on appeal that the 2019 letter referred to a proper noun with a definite article, i.e., “the Fair Competition Agreement” not “a fair competition agreement.”
This back and forth was all on paper and actual evidence was nowhere in the record.? The appeals judges sent this case back “down” to the trial judge to decide (through “extrinsic evidence”) whether “a valid and enforceable arbitration clause even exists.”
?
Exhibits and other attachments matter.? For example, the courts have held that facts reliably set forth in an exhibit to a complaint trump contradictory facts in the complaint.? A court asked to enforce a contract or deny its enforcement will insist that all of the ducks be lined up: ?I’s dotted, T’s crossed, and all components of the contract. ???