Handy Andy Home Improvement Centers, Inc. v. American Nat. Bank & Trust Co. of Chicago

• Decision Date: 22 December 1988
• Docket Number: Nos. 2-88-0257,2-88-0258,s. 2-88-0257
• Parties: , 126 Ill.Dec. 852 HANDY ANDY HOME IMPROVEMENT CENTERS, INC., Plaintiff-Appellant, v. AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Trustee, et al., Defendants-Appellees. Frank SAJTAR et al., Plaintiffs-Appellees, v. AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Trustee, et al., Defendants-Appellants.
• Court: United States Appellate Court of Illinois

Page 537

532 N.E.2d 537

177 Ill.App.3d 647, 126 Ill.Dec. 852

HANDY ANDY HOME IMPROVEMENT CENTERS, INC., Plaintiff-Appellant, v. AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as

Trustee, et al., Defendants-Appellees.

Frank SAJTAR et al., Plaintiffs-Appellees, v. AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as

Trustee, et al., Defendants-Appellants.

Nos. 2-88-0257, 2-88-0258.

Appellate Court of Illinois Second District.

Dec. 22, 1988.

Craig E. Anderson, Charles J. Corrigan (argued), Jacobson Brandvik & Anderson, Chicago, for Handy Andy Home Improvement Centers, Inc.

Arnold H. Landis, Chicago, for American Nat. Bank & Trust and First Nat. Realty & Development Co.

Carrane, Zwirn, Newman & Freifeld, Chicago, for plaintiffs-appellees.

JUSTICE REINHARD delivered the opinion of the court:

Plaintiff, Handy Andy Home Improvement Centers, Inc. (Handy Andy), in cause No. 88-CH-47 filed a one-count complaint in the circuit court of McHenry County seeking a preliminary injunction against defendants, American National Bank and Trust Company of Chicago, as trustee (ANB), legal title owner of a shopping center where Handy Andy was a tenant, and First National Realty and Development Company, Inc. (First National), developer and leasing representative for the shopping center, to prevent them from interfering with its exclusive right to sell home improvement items in the shopping center pursuant to a written lease agreement between the parties executed on September 10, 1986. On March 17, 1988, the circuit court denied Handy Andy's request for a preliminary injunction.

In a separate action, cause No. 88-CH-28, plaintiffs, Frank Sajtar and Cabinet Wholesalers, Inc., filed a six-count complaint in the circuit court of McHenry County seeking, inter alia, a preliminary injunction against the same defendants as in cause No. 88-CH-47, ANB and First National, to prevent them from interfering with development, opening, and operation of a franchise in the same shopping center as Handy Andy pursuant to a written lease agreement between the parties executed on December 13, 1987. The circuit court, on March 8, 1988, granted the preliminary injunction against ANB and First National. Handy Andy, in cause No. 88-CH-47, and ANB and First National, in cause No. 88-CH-28, bring these interlocutory appeals pursuant to Supreme Court Rule 307 (107 Ill.2d R. 307(a)(1)). This court, upon motion of ANB and First National, consolidated both cases for purposes of appeal.

The two issues raised in these appeals are whether the trial court abused its discretion in granting Sajtar and Cabinet Wholesalers' motion for preliminary injunction and whether the trial court abused its discretion in denying Handy Andy's request for a preliminary injunction.

The following undisputed facts appear in the record. On September 10, 1986, Handy Andy and ANB entered into a written lease agreement for the 30-year lease of space located at the Commons Shopping Center (Commons) in Crystal Lake, Illinois. The lease provides, in pertinent part:

"9. Tenant's Exclusive Right.

So long as Tenant (or its sublessees or assigns as permitted herein) is operating a home improvement center at the Shopping Center, Tenant shall have the exclusive right, and Landlord shall not allow any other party (except for Venture or its successors and assigns), during the Lease Term, to operate a home improvement center at the Shopping Center (except as provided below with regard to the Jewel space as identified on Exhibit B (the 'Jewel Space')) * * *, Landlord further covenants that no other tenant in or occupant of the Shopping Center shall be permitted to have 10 percent (10%) or more of its shelf or other display space devoted to any one of the following (the 'Designated Uses'): (i) lumber and building materials, (ii) home (including, without limitation, kitchen and bath) decorating or improvement materials, (iii) energy saving, plumbing and electrical supplies, (iv) hardware, (v) paint and decorating supplies, (vi) wall, floor and ceiling coverings, and (vii) seasonal products such as lawn and garden and Christmas 'trim-a-tree' products (as those terms are commonly used in the retail trade)." (Emphasis added.)

Handy Andy sells a variety of home improvement products, including kitchen cabinets. After entering into the lease with ANB, it expended approximately $600,000 to $700,000 in preparation for opening its store in the Commons. The Handy Andy store eventually opened on March 17, 1988.

On January 28, 1988, Handy Andy became aware that Cabinet Wholesalers was planning to open a franchise store in the Commons. Handy Andy, on January 29, 1988, through its general counsel, contacted First National, the developer of the Commons, both by telephone and letter regarding the opening of the Cabinet Wholesalers' store.

Sajtar, as franchisee, and Cabinet Wholesalers had entered into a franchise agreement whereby Sajtar would open a franchise store selling kitchen cabinets and bathroom fixtures. On December 13, 1987, Sajtar entered into a written lease agreement with ANB for a five-year lease of retail space at the Commons.

In January 1988, Sajtar began preparations to open the Cabinet Wholesalers franchise at the Commons, which was to be opened on or about February 15, 1988. On February 5, 1988, all preparations were completed, except painting and installation of displays. On or about February 5, 1988, First National changed the locks on the store, and Sajtar was no longer able to gain access. On February 12, Sajtar received a letter from First National indicating that there would be a delay in his taking possession of the store. On February 15, 1988, ANB, through its agent, First National, sent Sajtar written notice of termination of the lease based on his failure to provide plans and specifications pursuant to the lease.

On February 16, 1988, Sajtar and Cabinet Wholesalers filed a six-count complaint against ANB and First National. The complaint sought the following: (1) temporary, preliminary and permanent injunctive relief; (2) specific performance under the lease; (3) damages for breach of contract; (4) damages for breach of the covenant of quiet enjoyment; (5) damages suffered by Cabinet Wholesalers as a third-party beneficiary under the lease; and (6) compensatory and punitive damages for tortious interference with prospective business advantage. Also, on February 16, 1988, Sajtar and Cabinet Wholesalers filed a motion for a temporary restraining order and a preliminary injunction seeking to prohibit ANB and First National from interfering with their development, opening, and operation of the Commons store. No issue was raised as to Cabinet Wholesalers' standing in the suit.

On March 8, 1988, the trial court held an evidentiary hearing on the motion for a temporary restraining order and preliminary injunction. After hearing testimony from Sajtar, Patrick E. Corry of Cabinet Wholesalers, Kenneth Smith, building commissioner for the City of Crystal Lake, and Robert Mullen of First National, and after considering other evidence including the Handy Andy lease and the Sajtar lease, the trial court issued the preliminary injunction prohibiting ANB and First National from interfering with Sajtar and Cabinet Wholesalers' access and use of the store. The court further ordered Sajtar and Cabinet Wholesalers to post a $5,000 bond and stayed the order for three days.

On March 10, 1988, ANB and First National filed an emergency motion for reconsideration of the March 8, 1988, order and for an extension of the stay of the preliminary injunction order. The trial court stayed the injunction order through March 17, 1988, and continued the hearing on the motion for reconsideration to that same date.

On March 11, 1988, the same date that the trial court entered the stay and continuance order in the Sajtar action, Handy Andy filed its one-count complaint seeking to enjoin ANB and First National from interfering with its exclusive right to sell home improvement items at the Commons pursuant to its lease agreement with ANB. Following an evidentiary hearing on March 17, 1988, the trial court denied Handy Andy's request for a preliminary injunction, even though ANB and First National supported a preliminary injunction against them. Also, on March 17, 1988, the trial court, in the Sajtar and Cabinet Wholesalers action, denied ANB and First National's motion for reconsideration and extended the stay until March 31, 1988. Sajtar retook possession of the store on April 1, 1988, and the store opened for business on or about April 13, 1988.

We address first ANB's and First National's appeal of the preliminary injunction against them. ANB and First National contend that the trial court erred in granting Sajtar's and Cabinet Wholesalers' request for a preliminary injunction for several reasons. First, they argue that it was improper to change the status quo by permitting Sajtar and Cabinet Wholesalers to take possession of the store. Second, they maintain that Sajtar and Cabinet Wholesalers have an adequate remedy at law based on the damages they can recover for breach of their lease. Third, they contend that the trial court abused its discretion in issuing the preliminary injunction because the harm to themselves and third parties far outweighs any harm to Sajtar and Cabinet Wholesalers. Fourth, they raise "several other reasons" why the preliminary injunction should not have been issued: that, as a matter of law, a preliminary injunction cannot change the status quo; that the trial court failed to allow the parties adequate time to prepare for the evidentiary hearing; that the trial court erred in entering the preliminary injunction order without having a necessary party, Handy Andy, before it; and that Sajtar and Cabinet Wholesalers failed to establish a right entitled to protection because the lease had been terminated due to their failure to provide plans and specifications...