
USCA1 Opinion

	




          May 26, 1993                                [NOT FOR PUBLICATION]                                [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 91-1837                          BENEFIT MANAGEMENT OF MAINE, INC.,                                Plaintiff, Appellant,                                          v.                         ALLSTATE LIFE INSURANCE CO., ET AL.,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                              FOR THE DISTRICT OF MAINE              [Hon. W. Arthur Garrity, Jr.,* Senior U.S. District Judge]                                             __________________________                                 ____________________                                        Before                                 Selya, Circuit Judge,                                        _____________                            Coffin, Senior Circuit Judge,                                    ____________________                             and Young,** District Judge.                                          ______________                                 ____________________            Robert W. Harrington for appellant.            ____________________            William J. Kayatta, Jr. with whom Catherine R. Connors, Pierce,            _______________________           ____________________  _______        Atwood, Scribner, Allen, Smith & Lancaster, John E. Hughes, III,        __________________________________________  ___________________        Walter D. Willson, Wells, Wells, Marble & Hurst, and Ralph J. Elwart        _________________  ____________________________      _______________        were on brief for appellees.                                 ____________________                                 ____________________        _____________________        *  Of the District of Massachusetts, sitting by designation.        ** Of the District of Massachusetts, sitting by designation.                            YOUNG,  District  Judge.   From  a welter  of                                    _______________             various  claims,  sounding  in   both  contract  and   tort,             Appellant Benefit  Management of Maine, Inc.  ("Benefit"), a             retail purveyor  of various insurance products,  here raises             the  propriety  of two  pre-trial  rulings  as well  as  two             aspects of the directed  verdict which ultimately dashed its             hopes.   After a thorough review of the entire trial record,             we affirm.                            Since the  four issues raised on appeal arise             out  of the  contractual relations  between the  parties, we             sketch  those  matters briefly  at  the  outset  to put  the             following discussion in context.1                            On   or  about  September  9,  1983,  Benefit             executed  a  Group  Agency  Agreement  with  Northbrook Life             Insurance  Company ("Northbrook").   Under the  Group Agency             Agreement, Benefit  had an exclusive agency  to sell certain             Northbrook  group health  insurance products  in Maine,  New             Hampshire,  and Vermont.    On  or  about  April  13,  1984,                                              ____________________             1  As Benefit's case began  to sink on  summary judgment and             ultimately foundered  upon a  directed verdict, we  draw all             reasonable   inferences   in  Benefit's   favor  throughout.             Continental  Grain  Co.  v.  Puerto  Rico  Maritime Shipping             _______________________      _______________________________             Auth., 972 F.2d 426, 431  (1st Cir. 1992) (inferences  drawn             _____             against  party prevailing  on summary judgment);  DiPalma v.                                                               _______             Westinghouse Electric  Corp., 938 F.2d 1463,  1464 (1st Cir.             ____________________________             1991) (inferences drawn against party prevailing on directed             verdict).                                         -2-                                          2             Northbrook  and  its  parent  Allstate  Life  Insurance  Co.             ("Allstate")  contracted  with   Equitable  Life   Assurance             Society of the United States ("Equitable") to have Equitable             agents sell certain insurance products of Northbrook.  Since             this   Northbrook-Equitable  agreement   arguably  infringed             Benefit's exclusive agency,  Northbrook offered, and Benefit             accepted, an Amended Group Agency Agreement which  permitted             the  sales by the Equitable Agents in return for a reduction             in  Benefit's franchise  fee  as well  as added  contractual             protections for Benefit.                            On  March  18,  1988,   Northbrook,  claiming             severe  business losses,  sent  Benefit a  formal notice  of             withdrawal  and suspension pursuant  to the  Amended General             Agency  Agreement.2   At the  same time,  Northbrook offered             Benefit a limited Service Agreement ("the Northbrook Service             Agreement")  which allowed Benefit certain renewal marketing             and  extended  claims  paying authority  on  the  Northbrook             policies then in force which were being serviced by Benefit.                                              ____________________             2 This notice stated, in pertinent part:                    Current   business  conditions   have  caused                    Northbrook  to  revaluate  its  Group  Agency                    operations, resulting in our  withdrawal from                    the small-to-medium sized employer group life                    and health insurance market in certain market                    territories.                                         -3-                                          3             Likewise, Allstate offered Benefit a service agreement ("the             Allstate Service Agreement") which granted Benefit marketing             and  claims  administration  authority  for  certain  future             insurance business under the Allstate name.                            Benefit was reluctant to enter into these two             service   agreements   (collectively   the   "1988   Service             Agreements") since the  offer was extended  for but a  short             time and  then on a 'take  it or leave it  basis,' and since             the termination  provisions were  less favorable to  Benefit             than those found in  the  Amended General  Agency Agreement.             The   alternative,   however,   was   no   further  business             relationship at all  with a most lucrative  account.3  Since             Allstate  was  dangling  the   prospect  of  a  longer  term             relationship,4 Benefit signed.                                              ____________________             3 During 1988, Benefit derived more than 65% of its revenues             from its Northbrook  business --  a sum  of over  $2,000,000             from  which Benefit  received  commissions of  approximately             $665,000.             4 Allstate's agents communicated with Benefit as follows:                    The term of the new Allstate contract is one year.                    We anticipate that during this year  major changes                    will   evolve  in   our  strategy   of  healthcare                    delivery.  . .  .   This  provision  has not  been                    included with  the idea  of terminating  without a                    continuation option.   It  has been placed  in the                    contract to prompt renegotiation more favorable to                    all  parties when  the cycle  is complete  and our                    local market strategy is solidified.                                         -4-                                          4                            Less  than  two months  later  Northbrook and             Allstate  gave notice  that they  were terminating  the 1988             Service Agreements with Benefit.                            This action ensued,  Benefit charging,  among             other  claims, breach of contract and fraud.  Certain of its             claims   succumbed  to   summary  judgment;   the  remainder             collapsed  when  the District  Court  allowed  a motion  for             directed  verdict  in  favor  of  Northbrook  and  Allstate.             Benefit's appeal raises four issues.                       1.  Denial  by the Magistrate  Judge of  Benefit's                       1.  Denial  by the Magistrate  Judge of  Benefit's                           ______________________________________________             Motion             Motion             ______                           to Compel                           to Compel                           _________                            On April 23, 1991, in the course of preparing             for  trial, Benefit  moved to  compel discovery  of fourteen             documents  which Allstate  and Northbrook had  withheld from             production on the  grounds that they  were protected by  the             attorney-client privilege and the work-product doctrine.  In             support  of its  motion, Benefit  argued that  the documents             were subject to the crime-fraud exception to the privilege.                            After a  hearing and  an in camera  review of                                                     __ ______             the documents, the Magistrate Judge denied the motion due to             Benefit's failure to make  the requisite prima facie showing                                                      _____ _____             of fraud.   On  June 10,  1991, Benefit  filed a  motion for                                         -5-                                          5             reconsideration.  No memorandum in support of the motion was             filed,  in violation of Local  Rule 19 of  the United States             District Court for the District  of Maine.  Instead, Benefit             submitted  an amended  Rule 19  Statement of  Material Facts             signed by  counsel for Benefit for  submission in opposition             to  the  pending summary  judgment  motion  by Allstate  and             Northbrook.   After a  hearing, the Magistrate  Judge denied             the motion to reconsider.   No transcript of the  hearing is             available in the record.                            On  July 10,  1991, the  first day  of trial,             Benefit filed a "Motion for Reconsideration By the Presiding             Judge of a              Decision  of the Magistrate Judge Entered July 2, 1991."  No             supporting  memorandum  was  filed.    The  District   Judge             informed  Benefit that he would not  rule immediately on the             motion,  that he would not reverse the Magistrate Judge on a             "judgment call" on a discovery issue, but that "[i]f, on the             other hand,  there's a  matter of  law  here involved,  some             legal issue  that you  can indicate was  erroneously decided             and you are clearly right, well then, I would maybe hear you             at 4 o'clock  next Friday afternoon or  something."  Benefit             has  presented no  evidence that it  raised the  issue again             with the  District Court  or pressed  for a  ruling thereon.                                         -6-                                          6             Accordingly, we rule that  Benefit has waived this  issue by             its failure to develop the record in the District Court.                            Pursuant to 28  U.S.C.   636(b)(1)(A) (1991),             "[a] judge may designate a magistrate to hear and  determine             any  pretrial  matter   pending  before   the  court   [with             exceptions not relevant  here] . . . . A  judge of the court             may reconsider  any pretrial matter  under this subparagraph             (A) where it has  been shown that the magistrate's  order is             clearly  erroneous or contrary to law."  See also Park Motor                                                      ___ ____ __________             Mart, Inc.  v. Ford Motor  Co., 616 F.2d 603,  604 (1st Cir.             __________     _______________             1980).   Consideration of discovery matters  by a magistrate             judge comes within the purview  of the above subsection (A).             See Detection Systems, Inc. v. Pittway Corp., 96 F.R.D. 152,             ___ _______________________    _____________             154  (W.D.N.Y. 1982);  Citicorp v.  Interbank Card  Assn, 87                                    ________     ____________________             F.R.D.  43, 46  (S.D.N.Y. 1980).5   "Moreover,  in resolving             discovery  disputes,  the   Magistrate  is  afforded   broad             discretion  which   will  be  overruled  only   if  abused."             Detection  Systems, Inc.,  96 F.R.D.  at 154.   Interpreting             ________________________                                              ____________________             5 Subsection (b)(1)(B) of 28 U.S.C.   636 permits a district             judge to  designate a  magistrate judge to  conduct hearings             and to submit proposed  findings of fact and recommendations             regarding dispositive motions and other matters specifically             excepted from subsection (b)(1)(A).   A district judge shall                                                                    _____             make a de novo review  of these findings if a  party objects                                                      __             within the required time period.  It is undisputed, however,             that subsection (b)(1)(A) applies  to the instant  discovery             matter.                                         -7-                                          7             this subsection, the First  Circuit has stated that "[u]nder             subsection (b)(1)(A) certain pretrial matters may be decided             without  further reference  to the  district judge,  but the             judge 'may reconsider . . . where it has been shown that the             magistrate's  order  is  clearly  erroneous or  contrary  to             law.'"  ParkMotor Mart,616 F.2d at604 (omission inoriginal).                     ______________                            In the  instant case, the  District Judge was             under no obligation to review the decision of the Magistrate             Judge.     The  District  Judge  here   offered  Benefit  an             opportunity to  present something concrete showing  that the             decision was clearly erroneous but the opportunity was never             exercised by  Benefit.   Other than  concerns as  to subject             matter jurisdiction, we are  reluctant to consider on appeal             a  matter  upon  which  the  District  Judge  was  given  no             opportunity  to rule.   Park  Motor Mart,  616 F.2d  at 605.                                     ________________             This  is a corollary of the well settled appellate rule that             "issues  adverted to  [on appeal]  in a  perfunctory manner,             unaccompanied by some effort at developed argumentation, are             deemed  waived."  United States  v. Zannino, 895  F.2d 1, 17                               _____________     _______             (1st Cir. 1990), cert.  denied, 494 U.S. 1082 (1990).   Upon                              _____________             this record, we conclude Benefit waived its challenge to the             ruling of the Magistrate Judge.                                         -8-                                          8                       2.   Exclusion  of  the  Group   Agency  Agreement                       2.   Exclusion  of  the  Group   Agency  Agreement                            _____________________________________________             Claims             Claims             ______                            Benefit filed its complaint on June 19, 1990.             On the day  prior to the expiration  of its right to  amend,             Benefit moved to amend its  complaint and the District Court             duly  allowed this  motion.   When  Northbrook and  Allstate             challenged  the amended  complaint by  a motion  for summary             judgment, the briefing revealed a dispute concerning whether             Benefit had claimed, in  its amended complaint, a breach  of             the Amended  General Agency  Agreement.  The  District Court             ruled that no such claim  had been set forth in  the Amended             Complaint.                              Benefit argues that mention of "contracts" in             Counts I and II  of the Amended Complaint are  references to             the  Amended General Agency Agreement as well as to the 1988             Service Agreements.  Benefit  also argues that references to             "agreements"  throughout the  Amended Complaint  are to  the             Amended  General  Agency  Agreement  and  the  1988  Service             Agreements.  Lastly, Benefit urges that it pursued its claim             for  breach of  the Amended  General  Agency Agreement  in a             number  of  significant  pleadings  and  that  Allstate  and             Northbrook  were  fully prepared  and  would  not have  been             prejudiced by the trial of these claims.                                         -9-                                          9                            These  arguments are unpersuasive.  A reading             of   the  Amended   Complaint  as   a  whole   supports  the             determination  of  the  District   Court  that  the  Amended             Complaint does not state  a claim for breach of  the Amended             General Agency Agreement.  In its recitation of the facts in             the Amended Complaint, Benefit makes a perfunctory reference             to Northbrook's  exercise of the  Withdrawal and  Suspension             clause of the Amended  General Agency Agreement by alleging,             "Northbrook  exercised  its   termination  power  under  the             Agreement."  This allegation does not challenge Northbrook's             actions in  any way.  Moreover,  a fair reading  of the word             "contracts"  in  Counts  I  and  II  is  most  reasonably  a             reference to the 1988  Service Agreements.  In fact,  as the             District  Court  observed,  Count  I  (alleging  breach   of             contract against  Allstate) could  not refer to  the Amended             General  Agency Agreement since Allstate  was not a party to             that  agreement and  had  no  contractual relationship  with             Benefit prior to the 1988 Allstate Service Agreement.                            Finally,  Benefit's  argument  that   it  has             pursued its claim  for breach of the Amended  General Agency             Agreement  throughout the  pleadings  and that  Allstate and             Northbrook should therefore have been on notice and prepared             to respond to these claims at trial is                                          -10-                                          10             without  merit.   This  is tantamount  to  a claim  that the             District  Court ought have allowed a further motion to amend             the complaint -- a motion Benefit never made.  Rule 15(a) of             the Federal  Rules of  Civil Procedure permits  amendment to             the  pleadings "by leave of  court or by  written consent of             the adverse party."  Rule 15(b) provides that  pleadings may             be  amended  to conform  to  the evidence  where  issues not             raised  by the pleadings are tried by the express or implied             consent  of  the parties.    Here,  Northbrook and  Allstate             oppose any such amendment  and the District Court  was never             asked to approve a  further amendment.  Even if  the actions             of the District Court could be  interpreted as a denial of a             motion by  Benefit to  further amend the  Amended Complaint,             such a denial was well within the discretion of the district             judge.  See  Riofrio Anda  v. Ralston Purina  Co., 959  F.2d                     ___  ____________     ___________________             1149, 1154-55  (1st Cir.  1992) (affirming district  court's             denial of motion to amend after deadline  for amendments has             passed as consistent with purpose of Rule 15[b]).  Here, the             original Complaint was filed on June 19, 1990.  The District             Court ordered that  all amendments to the pleadings  be made             by November 30, 1990.  Since Benefit did not  even raise the             issue before  the summary judgment hearing on  or about June                                         -11-                                          11             24,  1991, there was no  abuse of discretion  in denying any             further motion to amend.                       3.   Fraud                       3.   Fraud                            _____                            We  next  consider  whether Northbrook's  and             Allstate's conduct was fraudulent.  As to this aspect of the             case, Benefit  relies especially upon the  testimony of Mark             Stadler,  former  general  manager of  Northbrook.   Stadler             administered  the  34  Northbrook General  Agencies  (NGA's)             including Benefit,  and he  and  others at  Northbrook  used             language such as "partners" and "partnerships" as matter  of             course in referring to  the NGA's.  In February,  1988, when             Northbrook  was  considering  withdrawal  from  the  Amended             General  Agency Agreements, however, Stadler, in an internal             memo, opined that the  NGA's "are sitting ducks!"   Two days             later, in  another internal memo, he  sketched this approach             to further contract negotiations:                            -- Terminate Northbrook Contracts - reinstate             under                               Allstate                            -- Remove Exclusivity Clause                            --  Run  out Northbrook  Certificates  .  . .             rollover to                               Allstate Paper . . .                            -- Immediately begin writing Allstate . . .                                         -12-                                          12                            -- Limit term of agreement to one year             Benefit also  presented evidence that in  March, 1988, prior             to the issuance of the  notice of Withdrawal and Suspension,             Allstate had  been advised  by  McKinsey &  Co., a  business             consulting company,  that Allstate  would need to  invest at             least $100,000,000 into its  group life and health insurance             business in order to be competitive.                            Then, four days before Northbrook  issued its             formal withdrawal  and suspension  notice, Stadler wrote  to             his superior, noting  that "all  of the NGA's  feel that  we             have Breached [sic]  our agreement  not to act  in a  matter             detrimental to them" and suggesting:                    I  believe  we need  to  ask  ourselves if  the                    tables were turned would  we sign the [proposed                    1988 Service] agreements as they  are currently                    worded.   I doubt it.  The NGA's have been good                    partners.  We should not turn our backs on them                    now.                            During  the  same period,  as  the  negotiations          leading to the execution of the 1988 Service Agreements spun out,          Allstate and  Northbrook agents continued to  claim that Allstate          "will  be a player in the health insurance business," despite the          fact that other Allstate representatives were, even then, meeting          with Goldman  Sachs  investment bankers  to discuss  the sale  of          Allstate's group life and health business.                                         -13-                                          13                            From   this  evidence  and  other  corroborating          circumstances, Benefit  argues strenuously that it can reasonably          be inferred that Northbrook and Allstate -- in league together --          concocted the notice of withdrawal and suspension of the  Amended          General  Agency Agreement  primarily to  get out  from under  its          terms.  Then,  well knowing  that they were  ultimately going  to          dump Benefit just as soon as it suited them, they  offered in its          place the 1988 Service Agreements.                            There is no dispute  as to the  fraud claim  but          that the law of Maine applies.  In Maine,                    [a] defendant is liable for fraud or deceit  if                    he (1) makes  a false representation  (2) of  a                    material fact (3) with knowledge of its falsity                    or in reckless disregard of whether it is  true                    or  false  (4)  for  the  purpose  of  inducing                    another  to act  or to  refrain from  acting in                    reliance  upon   it,  and  (5)   the  plaintiff                    justifiably relies upon  the representation  as                    true and acts upon it to his damage.          Jourdain  v. Dineen,  527  A.2d 1304,  1307  (Me. 1987)  (quoting          ________     ______          Letellier v. Small, 400 A.2d 371,  376 [Me. 1979]).  Moreover, to          _________    _____          sustain its burden  on the  claim of fraud,  Benefit "must  prove          every element of [its] claim by clear and convincing evidence; in          other words,  evidence that establishes every  factual element to          be highly probable."  Wildes v. Ocean National Bank of Kennebunk,                                ______    ________________________________          498 A.2d 601, 602 (Me. 1985).                                         -14-                                          14                            Benefit  asserts  that  in   order  to  properly          exercise its rights under the Withdrawal and Suspension clause of          the Amended  General Agency  Agreement,6 Northbrook had  not only          to cease marketing  group life and  health insurance through  the          NGA  distribution  system,  but  also  through  all  distribution          systems in  Benefit's territory  as well, including  Equinet, the          Equitable distribution system.  Benefit argues that the Notice of          Withdrawal and Suspension and accompanying letter dated March 18,          1988  represented  that  "Northbrook was  ceasing  and suspending          marketing group  life and health insurance  policies in Benefit's          territory,"  which  notice,  Benefit   says,  was  false  because          Northbrook maintained an ongoing  contract with Equitable to sell          the same products  in Benefit's  territory.7  In  support of  its                                              ____________________             6  The  Withdrawal  and  Suspension clause  of  the  Amended             General Agency Agreement states:                    The  Company [Northbrook]  may withdraw  all or                    any part of the authority granted to the  Group                    Agency  [Benefit] in  Sections 1 and  2 hereof,                    with respect to any line or lines of  insurance                    which the Company has decided to cease or  sus-                    pend writing  in any or all  of the location(s)                    in which  the Group Agency has  been authorized                    hereunder.  The Company will give not less than                    one hundred eighty (180) days advance notice to                    the Group  Agency prior  to  such cessation  or                    suspension.          App. I at 105.             7 Prior to trial in the District Court, Benefit's counsel at             various times had pointed to  other oral statements as being             allegedly false.  These  other promissory estoppel and fraud                                         -15-                                          15          argument,  Benefit has  provided  us with  numerous citations  to          documents and  testimony by  Allstate and Northbrook  officers to          show  that the  Withdrawal  and Suspension  was  not intended  to          affect the Equinet distribution system.                            Where,  as  here, the  District Court  has ruled          that  the  evidence  is  insufficient  to  sustain  a  particular          proposition, our standard of review is well settled:                    [W]e  must find  that, viewing the  evidence in                    the  light most  favorable  to  the  non-moving                    party, reasonable  jurors could come to but one                    conclusion.    We  must  give  [Benefit]  every                    benefit   of    every   legitimate   inference.                    However,  such  inferences   may  not  rest  on                    conjecture  or  speculation,  but   rather  the                    evidence  offered must  make 'the  existence of                    the fact to be  inferred more probable than its                    nonexistence.'          DiPalma v.  Westinghouse Electric Corp., 938 F.2d 1463, 1464 (1st          _______     ___________________________          Cir. 1991) (quoting Goldstein  v. Kelleher, 728 F.2d 32,  39 [1st                              _________     ________          Cir. 1984], cert.  denied, 469 U.S. 852 [1984])  (other citations                      _____  ______          omitted).   Where a plaintiff must establish each of the elements          of  its claim  by clear  and convincing  evidence, a  trial judge          necessarily   must  be  guided  by  this  heightened  evidentiary                                              ____________________             theories were dismissed  on summary judgment.  Supp. App. at             pp. 11-13.  Benefit has not appealed the granting of summary             judgment  on  any fraud  claims.   In  its Brief  on Appeal,             Benefit relies only  on the single  alleged theory of  fraud             discussed above.  Appellant's Brief at pp. 18-19 ("The false             statement  was the notice of withdrawal and suspension . . .             .").                                         -16-                                          16          standard in determining,  for purposes of  a motion for  directed          verdict,  whether  a  jury  could reasonably  conclude  that  the          plaintiff has met its  burden.  Anderson v. Liberty  Lobby, Inc.,                                          ________    ____________________          477 U.S. 242, 255 (1985).                            There  was  no  error in  the  District  Court's          analysis of Benefit's fraud  claim.  While it is true, as Benefit          claims,  that the Notice of  Withdrawal and Suspension states not          only  that   Northbrook  is  planning  to   discontinue  its  NGA          distribution system, of which Benefit was  a part, but goes on to          represent  that Northbrook  is  withdrawing  from "the  small-to-          medium  size employer group  life and health  insurance market in          certain market  territories," App. I at  227, this representation          was  not  false.   After an  exhaustive  trek through  the entire          record, we find no indication that Benefit presented any evidence          from  which it  could  be inferred  that  Northbrook or  Allstate          continued to sell  group policy insurance in Benefit's area after          March,  1988, when  Northbrook  represented that  it would  stop.          Much of the evidence presented by Benefit implies that Northbrook          intended  to  continue selling  products through  Equitable after          that  date, but Benefit has  not shown that  Northbrook ever made          any such  sales.  Since  no jury could reasonably  find that this          representation was false, an essential element of the fraud claim                                         -17-                                          17          is  absent.   The  District  Court thus  appropriately  granted a          directed verdict.8                       4.   Breach of Contract9                       4.   Breach of Contract                            __________________                            Benefit   argues   that  the   District   Court,          misinterpreting and misapplying Illinois law, improperly directed          a verdict for Allstate and Northbrook on its claims for breach of          the two  1988 Service Agreements  and breach of the  duty of good          faith and fair dealing.                            Since we  here review a  diversity case  brought          in the United States District Court for the District of Maine, we          must determine the applicable law as  would a court of the  state          of Maine.   Klaxon v. Stentor  Electric Mfg.  Co., 313 U.S.  487,                      ______    ___________________________                                              ____________________             8 In  his opinion, the  District Judge stated  that Allstate             and Northbrook could not have marketed group life and health             insurance  in Maine after January 1,  1988, because they had             sold  this portion of the business to Metropolitan.  Even if             there were evidence  to the contrary, as Benefit says, i.e.,             that the  Equitable business was exempted  from the transfer             to Metropolitan, Benefit still has shown no  actual sales by             Equitable, only the potential  for sales.  Any error  by the             trial judge regarding this matter is therefore harmless.             9  Benefit also argues on this point that the District Court             improperly characterized the  testimony of Benefit's damages             expert as contrary to the evidence.   We need not reach this             issue since it was not a ground  on which the District Court             based  its directed  verdict,  viz., "[The  weakness of  the             expert  testimony]  is  not  an independent  ground  of  the             Court's   granting  the   motion   for   directed   verdict,             nevertheless  it's a factor.  It's sort of a background con-             sideration  which the Court has not felt it should ignore. .             . ."                                         -18-                                          18          496-97 (1941).   Each of  the 1988  Service Agreements  contained          choice of law  provisions stating that Illinois law  would govern          each  contract.     Since   a  Maine  court,   under  established          principles, would  honor contractual choice of law  and apply the          law of the state of Illinois in  this case, we shall do the same,          as did the trial  court.  Lincoln Pulp & Paper Co., Inc. v. Dravo                                    ______________________________    _____          Corp.,  436 F. Supp. 262, 268 (D. Me. 1977).          _____                            Benefit's  Amended Complaint  asserted  separate          claims for breach of contract (Counts I and II) and breach of the          duty  of good  faith and  fair dealing  (Counts V  and VI).   The          District  Court consolidated  the breach  of fair  dealing counts          with  the breach of contract counts, ruling that Illinois did not          recognize an independent cause  of action for breach of  the duty          of good faith.                            The District Court then  directed a verdict  for          Northbrook and  Allstate  on  the contract  claims.    The  court          reasoned  (1) that  where independent  business people  knowingly          enter into  a contract,  they must  bear  responsibility for  its          terms,  (2) that  the Northbrook  Service Agreement  provided for          termination  upon  90  days   notice  and  the  Allstate  Service          Agreement likewise  provided for termination, albeit  on 180 days          notice,  (3) that the requisite  notices had been  given, and (4)          that,  even in the context of a franchise agreement, the covenant                                         -19-                                          19          of  good  faith  and  fair  dealing does  not  supervene  express          contractual terms.   Benefit here challenges the decision  of the          District Court to fold the issue  of good faith and fair  dealing          into the  two contract counts (thus dismissing  those counts that          asserted  that issue as an  independent cause of  action) and its          ultimate  legal  conclusion  that,  notwithstanding  the  implied          covenant of good  faith, the  express terms of  the 1988  Service          Agreements governed and were fulfilled.                            Benefit relies on  P&W Supply Co., Inc. v.  E.I.                                               ____________________     ____          DuPont de Nemours & Co., Inc., 747 F. Supp. 1262, 1268 (N.D. Ill.          _____________________________          1990)  for the  proposition that  Illinois recognizes  a separate          cause  of action  for bad  faith termination  of a  franchisee in          violation of state law.  P&W Supply Co., however, held  only that                                   ______________          an independent  cause of action  exists pursuant to  the Illinois          Franchise Disclosure  Act ("Franchise Act"), Ill.  Rev. Stat. ch.          815,   705/1 et seq. (1993) (formerly ch. 121 ,    1701 et seq.).                       _______                                    __ ____          See 747  F. Supp. at 1267-68.  The instant action was not brought          ___          under the Franchise Act,  but under common law.   Indeed, Benefit          could  not  have  brought this  action  under  the Franchise  Act          because  that  statute  applies  only  to  Illinois  dealerships.          Highway Equipment Co. v.  Caterpillar Inc., 908 F.2d 60,  64 (6th          _____________________     ________________                                         -20-                                          20          Cir. 1990)  (Franchise Act enacted to  benefit Illinois residents          only).10                            We  agree  with  the  District  Court  that  the          Franchise Act  is inapplicable and, further,  that no independent          cause of action exists under the common law of Illinois.   "Under          Illinois  law, a  covenant  of good  faith  and fair  dealing  is          implied  in  every contract."    Capital  Options Investments  v.                                           ____________________________                                              ____________________             10    Allstate and  Northbrook  also assert  that  their re-             lationships with  Benefit did  not satisfy the  requirements             for  a franchise  agreement under  the Franchise  Act.   The             Franchise Act defines a franchise as a contract or agreement             by which --                    (a) a franchisee is granted the right to engage in                    the business of offering, selling, or distributing                    goods  or  services,  under  a  marketing  plan or                    system prescribed or suggested in substantial part                    by a  franchisor; and  (b)  the operation  of  the                    franchisee's business pursuant to  such plan                          or  system is  substantially  associated with  the                    franchisor's trademark, service mark,  trade name,                    logotype,  advertising,  or  its other  commercial                    symbol designating the  franchisor its  affiliate;                    and (c) the person granted  the right to engage in                    such business is required to pay, directly or  in-                    directly, a franchise fee of $500 or more.          Ill.Rev.Stat.  ch. 815,     705/3 (1993)  (formerly  ch. 121 ,             1703(1)).                            We need not  decide whether  the District  Court          correctly determined that a reasonable jury could have found that          the  1988 Service  Agreements  between Benefit  and Allstate  and          Northbrook respectively were franchise agreements.  Even if these          agreements were franchise agreements  under the Franchise Act, as          they pertain to businesses outside Illinois they are entitled  to          no more  protection than other agreements.  Highway Equipment Co,                                                      ____________________          908  F.2d at  64 (extraterritorial  franchise agreements  are not          protected by the Franchise Act).                                         -21-                                          21          Goldberg Bros., 958  F.2d 186,  189 (7th Cir.  1992); P&W  Supply          ______________                                        ___________          Co., 747  F. Supp.  at  1267.   Breach of  the implied  covenant,          ___          however,  does not create an independent cause of action.  Beraha                                                                     ______          v. Baxter Health Care Corp., 956 F.2d 1436, 1443 (7th Cir. 1992);             ________________________          Williams  v. Jader Fuel Company,  Inc., 944 F.2d  1388, 1394 (7th          ________     _________________________          Cir. 1991).  Claims  for breach of the  implied covenant of  good          faith  and fair dealing are,  therefore, considered as  part of a          claim for breach of  contract.  See e.g., LaScola  v. U.S. Sprint                                          ___ ____  _______     ___________          Communications, 946 F.2d 559, 565 (7th Cir. 1991) (no independent          ______________          action  sounding in contract for breach of an implied covenant of          good faith  and fair dealing in  the employment-at-will setting);          Harrison v. Sears, Roebuck & Co.,  546 N.E.2d 248, 256 (Ill. App.          ________    ____________________          Ct. 1989) (same);  Gordon v. Matthew  Bender & Co., Inc.,  562 F.                             ______    ___________________________          Supp. 1286, 1290 (N.D. Ill. 1983) (same); Foster Enters., Inc. v.                                                    ____________________          Germania Fed. Sav. and Loan Ass'n, 421 N.E.2d 1375, 1380-81 (Ill.          _________________________________          App. Ct. 1981)  (discretion authorized under a contract but exer-          cised  in bad faith results in an actionable breach of contract).          But see BA Mortgage and  Int'l Realty Co. v. American Nat'l  Bank          _______ _________________________________    ____________________          and  Trust Co.  of Chicago,  706 F. Supp.  1364, 1373  (N.D. Ill.          __________________________          1989)  (limiting  the holding  of  Gordon  v.  Matthew Bender  to                                             ______      ______________          employment at will situations).                                          -22-                                          22                            Unlike  the  result  which   obtains  under  the          Franchise   Act,11    we    conclude   that,    absent    special          circumstances,  the duty of good  faith implied at  common law in          Illinois may not  supplant the express terms  of a contract.   In          Illinois, the term "good faith" refers to "an implied undertaking          not to take opportunistic  advantage in a way that could not have          been contemplated at  the time of  drafting, and which  therefore          was not resolved explicitly by the parties."  Kham & Nate's Shoes                                                        ___________________          No. 2,  Inc. v. First Bank  of Whiting, 908 F.2d  1351, 1357 (7th          ____________    ______________________          Cir. 1990); see  also Capital  Options Investments,  988 F.2d  at                      _________ ____________________________          189.   Thus,  while  principles  of  good  faith  --  such  as  a          requirement of good  cause for termination  -- may  be imposed to          fill the  gap where  a  contract is  silent, see  e.g., Dayan  v.                                                       _________  _____          McDonald's  Corp.,  466 N.E.2d  958,  973  (Ill. App.  Ct.  1984)          _________________          (stating  in dicta  that  where a  franchise  contract is  wholly          silent on the issue of termination, "the implied covenant of good          faith restricts franchisor discretion  in terminating a franchise          agreement  to   those  cases  where  good   cause  exists"),  "no          obligation can be  implied which would  be inconsistent with  the          explicit terms of  the contract."   Williams, 944  F.2d at  1394.                                              ________                                              ____________________             11 Under  the  Franchise Act  the implied  covenant of  good             faith may override  the express  terms of a  contract.   P&W                                                                      ___             Supply  Co,  747  F.  Supp.  at  1268  (franchisor  may  not             __________             terminate absent  good cause  even though contract  provided             for termination on 30 days notice with or without cause).                                         -23-                                          23          "Firms  that have  negotiated contracts  are entitled  to enforce          them to the letter, even to the great discomfort of their trading          partners,  without being mulcted for lack of 'good faith.'"  Kham                                                                       ____          & Nate's Shoes, 908 F.2d at 1357; Highway Equipment Co., 908 F.2d          ______________                    _____________________          at  64,  n.3 (at  common law  "no case  in  ... Illinois  ... has          applied  a  good  cause  obligation"  to  contravene  an  express          termination at will provision);  Hentze v. Unverfehrt, 604 N.E.2d                                           ______    __________          536,  539  (Ill.  App. Ct.  1992).    Thus,  compliance with  the          explicit terms  of a termination agreement is, absent actual "bad          faith" or "opportunistic advantage-taking," Hentze, 604 N.E.2d at                                                      ______          539 (citing  Kham & Nate's Shoes,  908 F.2d at  1357), good faith                       ___________________          conduct  notwithstanding the  economic consequences  imposed upon          the terminated party.                            The    present     case,    though     factually          distinguishable from both  express and silent  termination clause          cases,  falls  comfortably  within  the ambit  of  the  former.12                                              ____________________             12  It must be candidly recognized, however, that in each of             the  cases   cited  by  Allstate  and   Northbrook  for  the             proposition that  where a  contract  expressly provides  for             termination without cause  there is no  room for implying  a             requirement of good cause,  the termination clause was some-             what  more  explicit than  that in  the  present case.   See                                                                      ___             Highway Equipment Co., 908 F.2d at 64  (right   to terminate             _____________________             "without   cause");  Valley   Liquors,   Inc.  v.   Renfield                                  ________________________       ________             Importers,  Ltd., 822 F.2d  656, 669 (7th  Cir. 1987), cert.             ________________                                       _____             denied, 484 U.S. 977 (1987) (right to terminate "at any time             ______             and for  any reason");  see also  Corenswet,  Inc. v.  Amana                                     ___ ____  ________________     _____             Refrigeration,  Inc., 594  F.2d  129, 132  (5th Cir.  1979),             ____________________             cert. denied, 444  U.S. 938 (1979)  (right to terminate  "at             ____________                                         -24-                                          24          Here, each of  the 1988  Service Agreements  contains an  express          termination-upon-notice provision which may be exercised "without          regard  to the terms above"  -- terms which  detailed the grounds          for  termination for cause.13   We agree with  the District Court          and rule that the  contract language adopted by the  parties here          authorized termination at will upon notice and that this language          may not, under the common law of Illinois, be vitiated absent bad          faith.                            Under  Illinois   law,  "bad  faith"  has   been          described   as   "opportunistic  advantage-taking   or   lack  of          cooperation  depriving   the  other  contracting  party   of  his          reasonable expectations," Hentze, 604  N.E.2d at 539 (citing Kham                                    ______                             ____          &  Nates Shoes,  908 F.2d  at 1357),  or as  conduct "violat[ing]          ______________          community standards of decency, fairness or reasonableness," Zick                                                                       ____                                              ____________________             any time for any reason").             13 The  termination provisions provided that:   "Termination             of  the  Agreement at  the  option of  either  party without             regard  to the terms  set out above may  be effected by such             party providing the  other with one hundred  and eighty days             (180)  written  notice"   [ninety days  in  the case  of the             Northbrook Service Agreement].  The terms "set out above" in             the 1988 Service Agreements provided a number of reasons why             Allstate  and Northbrook  could  terminate  for cause  (e.g.             bankruptcy  of  the  Administrator's  [Benefit's]  business,             gross    negligence,   fraud   or    embezzlement   by   the             Administrator,   etc.).    Indeed,  Benefit  refers  to  the             termination  provision  in the  1988  Service  Agreements as             "much  more favorable  to  Allstate" than  were the  cognate             provisions of the Amended General Agency Agreement.                                         -25-                                          25          v. Verson  Allsteel Press Co., 623  F. Supp. 927, 929  (N.D. Ill.             __________________________          1985), or "generally implying or involving actual or constructive          fraud, or a design to mislead or deceive another, or a neglect or          refusal to fulfill some duty or some contractual obligation,  not          prompted by an honest mistake as to one's rights or duties but by          some interested or sinister motive."  Valley Liquors, 822 F.2d at                                                ______________          670 (quoting Black's Law Dictionary 127 [5th Ed. 1979]).                       ______________________                            Here, Benefit  itself adduced  the evidence that          in 1988 Allstate needed  an infusion of $100,000,000 in  order to          remain competitive in this  market.  This evidence,  coupled with          the  fact that Northbrook and  Allstate treated all  the NGA's as          shabbily  as  they  had  Benefit  conclusively  demonstrates  the          absence of malice toward Benefit.  True, Allstate and  Northbrook          did not cover  themselves with  glory in their  retreat from  the          market  that sustained Benefit.  The "good hands" people are here          revealed as  much less  than the  cooperative partners they  held          themselves out  to  be.   Instead, this  record makes  abundantly          clear that  both Allstate and Northbrook  single-mindedly pursued          their economic advantage with  little regard for the consequences          to Benefit and the other NGA's and maneuvered in such a way as to          squeeze the  last bit of service  out of their soon  to be dumped          "partners."                                         -26-                                          26                            Their  conduct, however,  driven  as  it was  by          economic necessity, does not rise to the level of bad faith under          the law of Illinois.  Although this Court is aware of no Illinois          law directly on  point, it has  generally been  held that when  a          product  line is withdrawn from the market, good cause exists for          terminating the contract.   See Medina & Medina v.  Country Pride                                      ___ _______________     _____________          Foods,  Ltd., 858 F.2d 817, 824 (1st Cir. 1988) (following answer          ____________          of  the Supreme Court of  Puerto Rico to  certified question from          the First Circuit, good faith withdrawal from the market does not          violate Puerto Rico  franchise act); Lee  Beverage Co. v.  I.S.C.                                               _________________     ______          Wines of California, 623 F. Supp. 867, 868 (E.D. Wis. 1985) (good          ___________________          cause  for termination  where dealer  withdrew product  line from          market) (Wisconsin  state law);  St. Joseph Equipment  v. Massey-                                           ____________________     _______          Ferguson,  Inc.,  546 F.  Supp.  1245  (W.D. Wisc.  1982)  (same)          _______________          (Wisconsin state  law).14  Compare  Hentze, 604  F.2d at  539-540                                     _______  ______          (termination  of dealership  contract  amounted  to  "bad  faith"                                              ____________________             14 In Wright-Moore Corp.  v. Ricoh Corp., 908 F.2d  128, 138                   __________________     ___________             n.4 (7th Cir. 1990), the Seventh Circuit reserved the market             withdrawal issue for  another case but stated in  dicta that             other   courts   have  considered   market   withdrawals  to             constitute  good cause  since  they carry  little chance  of             unfair dealing.  The  Seventh Circuit rejected, however, the             broad  holding in American Mart Corp. v. Joseph E. Seagram &                               ___________________    ___________________             Sons, Inc., 824 F.2d  733, 734 (9th Cir. 1987), relied on by             __________             Allstate, that business considerations of a franchisor could             constitute good cause for termination.  Id. at 138.                                                     ___                                         -27-                                          27          because of tactics aimed at running  terminated dealership out of          business).                            Since  here there  was  good cause  to  withdraw          this insurance  product line from the market,  the District Court          was  correct  in  ruling  that   Benefit  presented  insufficient          evidence  for  a  jury  to  find  that  Allstate   or  Northbrook          terminated the 1988 Service Agreements in bad faith.                                      CONCLUSION                                      CONCLUSION                                      __________                            The District  Court having  dealt properly  with          the discovery  matter addressed  by the Magistrate  Judge, having          appropriately   declined  to  permit  further  amendment  of  the          complaint, and having justifiably directed  a verdict as to  both          the contract and fraud counts, its decision is, in all respects,                            Affirmed.                            ________                                         -28-                                          28
