Buzz Barton & Associates, Inc. v. Giannone

• Decision Date: 03 October 1985
• Docket Number: No. 60609,60609
• Citation: 483 N.E.2d 1271,108 Ill.2d 373,91 Ill.Dec. 636
• Court: Illinois Supreme Court
• Parties: , 91 Ill.Dec. 636 BUZZ BARTON & ASSOCIATES, INC., Appellee, v. Charles Cannon GIANNONE, et al. (Charles Cannon Giannone, Appellant).

Page 1271

483 N.E.2d 1271

108 Ill.2d 373, 91 Ill.Dec. 636

BUZZ BARTON & ASSOCIATES, INC., Appellee, v. Charles Cannon GIANNONE, et al. (Charles Cannon Giannone, Appellant).

No. 60609.

Supreme Court of Illinois.

Oct. 3, 1985.

Botti, Marinaccio & Maksym, Ltd., Oak Brook, for defendant-appellant; Aldo E. Botti, Walter P. Maksym, Jr., John N. Pieper, Oak Brook, of counsel.

Stephen J. Culliton, Civinelli, Bakalis & Culliton, Bloomingdale, for plaintiff-appellee.

RYAN, Justice:

This is a direct appeal from an order of the circuit court of Du Page County, brought pursuant to our Rule 302(a) (94 Ill.2d R. 302(a)). The circuit court found section 11-110 of the Code of Civil Procedure (Ill.Rev.Stat.1983, ch. 110, par. 11-110) unconstitutional as applied to the facts in the present case.

The present case involves a claim for damages arising out of the wrongful issuance of a preliminary injunction. The preliminary injunction was issued to enforce a restrictive covenant contained in an employment contract. The plaintiff, Buzz Barton & Associates, Inc., is the former employer of the defendant, Charles Cannon Giannone (Giannone). The employment contract between plaintiff and defendant Giannone stated that upon termination of the contract Giannone would:

"[R]efrain from soliciting business from any customers of the Employer, whether or not they were brought to the employer by the employee, for a period of one year, and in a territory within the area of Oak Brook of [sic ] the offices of the Employer in Oak Brook; and during that period of time the employee shall not directly or indirectly, as principal, agent or employee, deal with any person, firm or corporation which may solicit business from such clients of the Employer * * *."

The employment relationship ended on May 1, 1981. Immediately thereafter the defendant began working for Bernard Shank Associates, Inc., the codefendant in this action. Bernard Shank Associates is located in Oak Brook and is a competitor of Buzz Barton & Associates.

On June 3, 1981, Buzz Barton & Associates filed its complaint in the circuit court of Du Page County against Giannone and Bernard Shank Associates. The complaint requested that the defendants be "temporarily and permanently" enjoined from soliciting business from plaintiff's clients for a period of one year from the date of the termination of the employment contract. Plaintiff's complaint also sought to enjoin Bernard Shank Associates from employing Giannone in violation of the employment contract and sought judgment against the defendants for all pecuniary losses proved.

On June 25, 1981, the plaintiff filed a motion for a preliminary injunction seeking to enjoin the defendants from "engaging in the conduct complained of in plaintiff's complaint." The motion specifically requested that Giannone be enjoined from soliciting business from plaintiff's clients until a hearing could be held on the merits. The motion further requested that Bernard Shank Associates be enjoined from employing Giannone to call on and service any clients of the plaintiff which Giannone served while employed by the plaintiff.

The defendants filed a motion, in lieu of an answer, to dismiss the complaint as being insufficient as a matter of law. The parties then engaged in various discovery activities and depositions were taken.

On September 14, 1981, a hearing was held on the defendant's motion to dismiss the complaint and the plaintiff's motion for a preliminary injunction. The defendant's motion to dismiss was heard first and denied. The court then proceeded to a hearing on the motion for a preliminary injunction. Each side presented arguments and called witnesses. After hearing the evidence the judge continued the matter until September 22, 1981, for closing arguments.

On September 22, 1981, the trial judge orally granted the motion for a preliminary injunction. A written order incorporating the judge's oral ruling was signed on October 21, 1981. The preliminary injunction prohibited defendant Giannone from engaging in any business in the area of Oak Brook that was the same or similar to the business of the plaintiff. The injunction also prohibited Giannone from dealing with any person, firm or company that might solicit business from clients of the plaintiff with the purpose of securing their business. The injunction enjoined the defendant from engaging in such activities pending further order of the court, but in no event beyond May 1, 1982. The defendants were granted 28 days within which to plead or answer to the complaint.

The defendants took an interlocutory appeal from the order granting the preliminary injunction (see 87 Ill.2d R. 307). The defendants also filed a petition for a change of judges in the circuit court to have a different judge assigned to hear the underlying action, alleging a personal conflict between the judge and new counsel for defendants. The circuit court, on its own motion, reserved ruling on the petition pending the outcome of the interlocutory appeal.

On June 1, 1982, the appellate court, in a Rule 23 order (87 Ill.2d R. 23), reversed the order granting the preliminary injunction (106 Ill.App.3d 1156, 64 Ill.Dec. 520, 439 N.E.2d 1328). The appellate court found that the circuit court had abused its discretion in granting the preliminary injunction because the plaintiff failed to show that it possessed a clearly ascertained right which needed protection. The plaintiff failed to seek rehearing in the appellate court or leave to appeal to this court and thus the mandate was issued to the circuit court.

Upon receiving the mandate, the circuit court granted the defendant's petition for a change of judge and the matter was assigned to a different judge. The defendants then filed a petition for assessment of damages caused by the wrongful issuance of the preliminary injunction (see Ill.Rev.Stat.1983, ch. 110, par. 11-110) and a motion to dismiss the underlying complaint (see Ill.Rev.Stat.1983, ch. 110, par. 2-615) based on the appellate court's holding. The plaintiff responded with a motion for declaratory judgment asking the court to declare section 11-110 unconstitutional.

The circuit court, treating plaintiff's declaratory judgment motion as a motion to dismiss the petition for damages, found that section 11-110 was unconstitutional as applied to the facts in the present case.

The circuit court's ruling does not articulate which constitutional provision would be violated if section 11-110 were to be applied to the facts in the present case.

Section 11-110 provides:

"In all cases where a temporary restraining order or a preliminary injunction is dissolved by the circuit court or by the reviewing court, the circuit court, after the dissolution of the temporary restraining order or preliminary injunction, and before finally disposing of the action shall, upon the party claiming damages by reason of such temporary restraining order or preliminary injunction, filing a petition under oath setting forth the nature and amount of damages suffered, determine and enter judgment in favor of the party who was injured by such temporary restraining order or preliminary injunction for the damages which the party suffered as a result thereof, which judgment may be enforced as other judgments for the payment of money. However, a failure so to assess damages as hereinabove set out shall not operate as a bar to an action upon the injunction bond." (Ill.Rev.Stat.1983, ch. 110, par. 11-110.)

Plaintiff contends that the application of section 11-110 to the present case would violate its due process and equal protection rights. In Scherzer v. Keller (1926), 321 Ill. 324, 151 N.E. 915, this court rejected a similar argument and upheld the constitutionality of the predecessor of section 11-110. Plaintiff argues that the Scherzer decision is not totally dispositive of the statute's constitutionality because the injunction in Scherzer was issued without notice or hearing. Plaintiff contends that section 11-110 violates equal protection and due process rights when it is applied to cases where the temporary restraining order or preliminary injunction was issued with notice and after an evidentiary hearing. We disagree.

It is well established that "[t]he Equal Protection Clause does not mean that a State may not draw lines that treat one class of individuals or entities differently from the others. The test is whether the difference in treatment is an invidious discrimination." (Lehnhausen v. Lake Shore Auto Parts Co. (1973), 410 U.S. 356, 359, 93 S.Ct. 1001, 1003, 35 L.Ed.2d 351, 354.) The legislative classification is presumed to be valid and will not be set aside if any state of facts may reasonably be conceived to justify it. McGowan v. Maryland (1961), 366 U.S. 420, 425-26, 81 S.Ct. 1101, 1105, 6 L.Ed.2d 393, 399; Hoskins v. Walker (1974), 57 Ill.2d 503, 508, 315 N.E.2d 25.

Plaintiff contends that it is treated differently than other parties who seek relief through the courts in that it is being penalized if the relief initially granted is later dissolved as having been wrongfully issued. Holding a party who is granted a preliminary injunction liable for damages if the preliminary injunction is later dissolved as having been wrongfully issued does not constitute an invidious treatment. It is well established that "[o]n reversal of a judgment under which one of the parties has received benefits, he is under an obligation to make restitution." (3 Ill.L. & Prac. Appeal & Error sec. 1004 (1953); Restatement of Restitution sec. 74 (1937).) Thus, if a party has received benefits from an erroneous decree or judgment, he must, after reversal, make restitution, and if he has sold the property erroneously adjudged to belong to him, he must account to the true owners for its value. Barnard v. Michael (1945), 392 Ill. 130, 134, 63 N.E.2d 858; First National Bank v. Road District No. 8 (1945), 389 Ill. 156, 162, 58 N.E.2d 884; Loy v....