Best Coin-Op, Inc. v. Paul F. Ilg Supply Co., Inc.

• Decision Date: 29 September 1989
• Docket Number: INC,No. 1-88-0727,COIN-O,1-88-0727
• Citation: 189 Ill.App.3d 638,545 N.E.2d 481,136 Ill.Dec. 957
• Parties: , 136 Ill.Dec. 957 BEST, Plaintiff-Appellee, v. PAUL F. ILG SUPPLY COMPANY, INC., Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 481

545 N.E.2d 481

189 Ill.App.3d 638, 136 Ill.Dec. 957

BEST COIN-OP, INC., Plaintiff-Appellee, v. PAUL F. ILG SUPPLY COMPANY, INC., Defendant-Appellant.

No. 1-88-0727.

Appellate Court of Illinois,

First District, Fifth Division.

Sept. 29, 1989.

Dawn M. Langer, Nancy R. Cass, Marshall N. Dickler, Marshall N. Dickler, Ltd., Arlington Heights, for defendant-appellant.

Glenn Seiden, James A. Graham, Glenn Seiden & Associates, Chicago, for plaintiff-appellee.

Justice COCCIA delivered the opinion of the court:

This appeal is from Judge Berman's order denying defendant's motion to dismiss plaintiff's action at law, charging defendant with tortious interference with its contract to operate a laundry room facility in the Loch Lomond Apartments, on the basis of res judicata. Defendant appeals pursuant to Supreme Court Rule 304. 107 Ill.2d R. 304(a).

Although the sole issue before us is the propriety of that ruling, a review of the very convoluted procedural history of the legal relationship of these parties, which gave rise to two previous appeals, is pertinent to the disposition of the issues raised herein.

Plaintiff, Best Coin-Op, Inc. (Best Coin), pursuant to a written agreement, operated laundry room facilities in a 176-unit residential building. The agreement provided for a ten-year initial term, from November 1977 to March 1988, with an optional seven-year extension. In 1979, the apartments were converted to condominiums under the name Old Willow Falls Condominium Association (Old Willow Falls). Plaintiff continued to operate the laundry room under the terms of the agreement. On March 31, 1983, Old Willow Falls notified plaintiff On June 29, 1983, plaintiff filed a complaint against Old Willow Falls in the circuit court of Cook County, chancery division, requesting injunctive relief and specific performance of the "lease" agreement. Plaintiff alleged that by its express terms, the contract was binding upon Old Willow Falls, as successor in interest to the original lessor, and that plaintiff had been illegally evicted from the premises. Best Coin sought a mandatory order requiring reconnection of its equipment, preliminary and permanent injunctions prohibiting Old Willow Falls from interfering with its rights under the agreement, an order directing Old Willow Falls to perform according to the terms of the lease, and lost profits sustained during the interruption of its possession of the laundry room. Plaintiff also filed an emergency motion seeking reconnection of its equipment, a temporary restraining order, and a preliminary injunction to preserve the status quo pending a final hearing on the merits.

[136 Ill.Dec. 959] that the agreement had terminated by operation of law when the condominium conversion occurred. It ordered plaintiff to remove its equipment within ten days. Plaintiff refused, and notified Old Willow Falls, through its attorney, that legal action would be taken if plaintiff were ousted from the premises. Sometime between June 1 and June 27, 1983, Old Willow Falls disconnected the machines.

In July 1983, Paul F. Ilg Supply Company, appellant herein, petitioned the court to intervene in the case. Ilg had been operating the same laundry room facilities under a May 19, 1983, lease (effective June 1, 1983), with Old Willow Falls. Plaintiff objected to Ilg's intervention, in part on grounds that it would confuse and delay the proceedings and also because the merits of the case were to be heard in arbitration by the express terms of the contract, making the petition to intervene "irrelevant." On August 5, 1983, the court entered an order granting Ilg leave to intervene as an additional party.

Old Willow Falls moved to dismiss plaintiff's complaint on the following alternative grounds: (1) that the agreement in question was not a lease, and the complaint therefore failed to state a cause of action; and (2) that if it was a lease, plaintiff was itself in breach and not entitled to equitable relief. Ilg filed its own motion to dismiss, alleging that (1) Best Coin's complaint failed to state a cause of action for breach of a lease; (2) the agreement by its terms required any dispute to be first submitted to arbitration, which had not been done, and (3) plaintiff had breached its own agreement and was not entitled to equitable relief. In its memorandum in support of this motion, Ilg argued that by bringing this lawsuit in contravention of the arbitration clause, plaintiff was guilty of "unclean hands" and could not avail itself of injunctive relief. Ilg also maintained that the alleged lease was in reality a license because it was expressly assignable and because it did not manifest the lessee's "exclusive possession" or specify the exact "extent and bounds" of the premises.

Prior to a hearing on the petition for a preliminary injunction, the trial court ruled that the matter would be held in abeyance pending arbitration. However, at the parties' request, Judge Joseph M. Wosik, the chancery judge presiding, heard arguments on that issue as well as on the issue of whether plaintiff had established its entitlement to preliminary injunctive relief. On August 15, 1983, the following colloquy occurred:

"MR. STONE [Counsel for plaintiff]: Finally, Paragraph 13 only says that any controversy or dispute should go to arbitration. We contend, your Honor, that they haven't followed the arbitration provision themselves. They have just thrown us out on the street. Now, they are raising arbitration against us. We merely want to be restored to possession, your Honor.

THE COURT: It is this Court's opinion, because of the facts and circumstances and diversions of opinion of you lawyers as well as in my mind, the law that is applicable herein is that a TRO should not be granted in this matter. It should be referred to an arbitration MR. O' BRIEN [Counsel for plaintiff]: Is there a ruling on their Motion to Dismiss, your Honor? We need that ruling. Are you sustaining the Motion to Dismiss?

[136 Ill.Dec. 960] board. I will continue the case until that matter [189 Ill.App.3d 643] has been disposed of.

THE COURT: I'll sustain their Motion to Dismiss."

Judge Wosik declined a request by Mr. O'Brien to explain the grounds upon which the complaint was dismissed. On August 17, 1983, the following order was entered:

IT IS HEREBY ORDERED:

"1. That the Motion for [a] Temporary Restraining Order is denied.

2. That the matter is referred to arbitration for proceedings consistent with the agreement.

3. That this matter is continued until the conclusion of the arbitration and the matter set for status October 15."

At plaintiff's insistence, the order further provided:

"4. That plaintiff's complaint is dismissed and Plaintiff's [sic ] make no request to file an amended complaint."

Plaintiff, pursuant to Supreme Court Rule 307 (107 Ill.2d R. 307), appealed to this court only that portion of Judge Wosik's August 17 order denying its request for a temporary restraining order. (Best Coin-Op, Inc. v. Old Willow Falls Condominium Association (1983), 120 Ill.App.3d 830, 76 Ill.Dec. 344, 458 N.E.2d 998 (hereinafter Coin-Op I ).) Old Willow Falls filed a petition to dismiss the appeal, arguing, inter alia, that the dismissal of plaintiff's complaint operated as a final judgment on the merits and that there was no longer an underlying complaint on which the motion for a preliminary injunction was based and from which an interlocutory appeal could be taken. The motion to dismiss the appeal was taken with the case.

Plaintiff argued that the trial court's denial of preliminary injunctive relief was based on an erroneous interpretation of the contract as precluding a preliminary injunction pending arbitration. Paragraph 13 of the agreement between Best Coin and Loch Lomond Apartments provided:

"In the event of any dispute or controversy arising out of the operation or alleged breach of this Lease Agreement, such dispute or controversy shall be submitted to and be governed by the rules of the American Arbitration Association, and the decision rendered thereunder, whether legal or equitable in nature, shall be final and binding upon the parties. No litigation shall be instituted between the parties hereto except to enforce the award or the order of the arbitrators."

[189 Ill.App.3d 644] Paragraph 10 of the agreement in pertinent part provided:

"In the event of a breach of this lease * * * (including * * * the unauthorized disconnection of Lessee's laundry equipment * * *) the parties * * * agree that at the option of the Lessee, either (a) Lessor shall pay to Lessee [liquidated damages] * * * or (b) Lessor consents to the entry of a temporary or permanent injunction to restrain any violation of this agreement * * *."

Plaintiff maintained that Paragraph 10 gave it a right to a temporary restraining order to maintain the status quo until a decision of the arbitrators. Ilg, also a party to the appeal, filed a separate brief in which it argued that (1) the denial of the temporary restraining order was not erroneous because the contract provided for arbitration as the exclusive remedy for disputes arising therefrom and (2) Best Coin did not meet the legal requirements for a preliminary injunction, including a showing of irreparable injury and of an inadequate remedy at law. Inter alia, Ilg maintained that plaintiff's loss of profits could be easily measured on the basis of either the liquidated damages clause of the contract or past intake from the machines, should the arbitrator determine that Old Willow Falls was in breach, and that an arbitrator's award of money damages would be enforceable by court order.

In Coin-Op I, this court found it unnecessary to resolve the apparent contradiction between the two contractual provisions in order to dispose of the question before it on interlocutory appeal, i.e "Here, should plaintiff ultimately prevail on the merits, any monetary loss which it suffers in the brief period...