“Non-Renewal Is Not Impairment” – Seventh Circuit Clarifies Evidence Threshold for Contracts Clause and Tort-Interference Claims

1. Introduction

Alarm Detection Systems, Inc., Illinois Alarm Service, Inc., Nitech Fire & Security Industries, Inc., and SMG Security Systems, Inc. (collectively “the Alarm Companies”) challenged a 2016 Village of Schaumburg ordinance that mandated all commercial and multifamily properties transmit fire-alarm signals directly to a regional dispatch center—effectively funneling the business to Tyco/Johnson Controls.

The plaintiffs claimed:

A Contracts Clause violation: the ordinance allegedly forced customers to breach existing monitoring contracts.
Tortious interference with both existing contracts and prospective economic advantage.

After initial motion-practice remands, the district court entered summary judgment for the Village. The Seventh Circuit (Judges Scudder, St. Eve, and Jackson-Akiwumi; opinion by Judge St. Eve) affirmed on 22 July 2025, finding a total failure of proof on contractual impairment and on the intent element of the tort claims.

2. Summary of the Judgment

The Seventh Circuit held:

No evidence of contractual breach. Plaintiffs produced only conclusory statements in their verified complaint and one letter showing non-renewal—not early termination. Those materials cannot, as a matter of law, demonstrate impairment of vested rights.
At-will renewals are not “contracts” for impairment analysis. Because customers could cancel freely before renewal dates, the Alarm Companies had no vested contractual rights in future periods.
No tortious interference. The Village acted for safety and fiscal motives, not with the purpose of injuring the Alarm Companies—a prerequisite for the Illinois tort of interference with prospective economic advantage.
Accordingly, summary judgment for the Village is affirmed.

3. Analysis

3.1 Precedents Cited and Their Influence

Alarm Detection Sys., Inc. v. Orland Fire Prot. Dist., 929 F.3d 865 (7th Cir. 2019) – Provided factual context about Tyco’s proprietary radio frequency; illustrated recurring disputes in Illinois fire-alarm regulation.
ADT Sec. Servs., Inc. v. Lisle-Woodridge Fire Prot. Dist., 724 F.3d 854 (7th Cir. 2013) & 672 F.3d 492 (summary-judgment standard) – Addressed similar municipal regulations and guided the de novo review framework.
Sveen v. Melin, 584 U.S. 811 (2018) & Energy Reserves Group v. Kansas Power & Light, 459 U.S. 400 (1983) – Articulated the modern two-step Contracts Clause test (“substantial impairment” & “reasonableness”).
Cody v. Harris, 409 F.3d 853 (7th Cir. 2005) – Stands for the proposition that at-will agreements create no vested rights.
HPI Health Care Servs. v. Mt. Vernon Hosp., 545 N.E.2d 672 (Ill. 1989) – Set the elements for Illinois tortious interference claims.
Weaver v. Graham, 450 U.S. 24 (1981) & Dodge v. Bd. of Educ., 302 U.S. 74 (1937) – Distinguished vested rights from contingent interests under constitutional analysis.
Jones v. Van Lanen, 27 F.4th 1280 (7th Cir. 2022); Osborn v. JAB Mgmt. Servs., 126 F.4th 1250 (7th Cir. 2025); Foster v. PNC Bank, 52 F.4th 315 (7th Cir. 2022); King v. Ford Motor Co., 872 F.3d 833 (7th Cir. 2017) – Collectively tightened evidentiary requirements for affidavits/verified complaints at the summary-judgment stage, directly controlling the court’s treatment of plaintiffs’ conclusory assertions.

3.2 The Court’s Legal Reasoning

a) Contracts Clause.
Step 1 – Substantial impairment? Only a breach of an existing contract can satisfy this prong. Plaintiffs offered no admissible proof of early termination. A mere refusal to renew is outside the Clause’s protection.
Step 2 – (not reached) Because step 1 failed, the court did not evaluate reasonableness or public purpose.

b) Tortious interference with contract. The tort likewise requires an actual breach of a valid contract. Same evidentiary failure doomed the claim.

c) Tortious interference with prospective economic advantage. Even assuming a legitimate expectancy and damages, plaintiffs had to show the purpose of Schaumburg’s ordinance was to injure them. Uncontroverted affidavits and legislative history showed safety and cost-savings motives; plaintiffs offered nothing beyond speculation. Therefore, intent/justification element was absent.

d) Evidentiary standards. The court emphasized that:

Verified complaints may substitute for affidavits only when non-conclusory and sufficiently specific.
Statements such as “many customers breached their contracts” without identifying who, when, or how are too conclusory to create a triable fact.

3.3 Potential Impact of the Decision

Contracts Clause Litigation – Plaintiffs challenging state or municipal regulation must marshal clear evidence of premature contractual breaches; non-renewals or at-will arrangements will not suffice.
Tort-Interference Claims in Illinois – The decision reinforces the high bar for establishing intent against governmental actors; policy justifications negate “purposeful interference.”
Municipal Ordinances & Alarm-Service Market – Municipalities now have clearer precedent supporting direct-connect mandates, provided they articulate public-safety objectives.
Summary-Judgment Practice – The case underscores courts’ growing impatience with conclusory verified pleadings; litigants must detail who, what, when, where, and how.

4. Complex Concepts Simplified

Contracts Clause – A constitutional bar (Art. I §10) preventing states from substantially impairing pre-existing contracts unless the law is reasonable and serves an important public purpose.
Verified Complaint – A pleading sworn under oath; it can function like an affidavit at summary judgment but only if it contains specific, admissible facts.
At-Will Renewal – A contract that automatically extends unless either party cancels. Because cancellation is unfettered before the renewal date, no “vested” right exists until the new term begins.
Tortious Interference – Contract vs. Prospective Advantage – The former requires an existing contract; the latter involves future business expectancies but demands proof the defendant purposefully sought to prevent the relationship.
Summary Judgment – A procedural device to resolve a case without trial when no genuine dispute of material fact exists and the movant deserves judgment as a matter of law.

5. Conclusion

Alarm Detection Systems, Inc. v. Village of Schaumburg cements a straightforward but powerful rule: only actual, provable contractual breaches constitute “impairment,” and plaintiffs must provide concrete, specific evidence—conclusory averments will not suffice.

Beyond its immediate effect on Illinois’ fire-alarm industry, the opinion tightens evidentiary expectations across the Seventh Circuit for both constitutional and tortious interference claims, particularly when municipal regulation is at issue. Future litigants should heed the clarity of this precedent: gather hard proof of breach, or risk dismissal at summary judgment.