Wilson v. Wilson

• Decision Date: 07 August 1991
• Docket Number: No. 1-90-1812,1-90-1812
• Citation: 577 N.E.2d 1323,160 Ill.Dec. 752,217 Ill.App.3d 844
• Parties: , 160 Ill.Dec. 752 John G. WILSON, Plaintiff and Counterdefendant-Appellee, v. Francis S. WILSON III, et al., Defendants (Thomas S. Wilson, Intervenor-Plaintiff; Francis S. Wilson III, et al., Counterplaintiffs and Third-Party Plaintiffs; JGT Company, Counterplaintiff and Third-Party Plaintiff-Appellant; Thomas S. Wilson, et al., Third-Party Defendants; Evanston Partners, Ltd., et al., Third-Party Defendants-Appellees).
• Court: United States Appellate Court of Illinois

Page 1323

577 N.E.2d 1323

217 Ill.App.3d 844, 160 Ill.Dec. 752

John G. WILSON, Plaintiff and Counterdefendant-Appellee, v. Francis S. WILSON III, et al., Defendants (Thomas S. Wilson Intervenor-Plaintiff; Francis S. Wilson III, et al Counterplaintiffs and Third-Party Plaintiffs; JGT Company Counterplaintiff and Third-Party Plaintiff-Appellant Thomas S. Wilson, et al., Third-Party Defendants; Evanston Partners, Ltd., et al., Third-Party Defendants-Appellees).

No. 1-90-1812.

Appellate Court of Illinois,

First District, Third Division.

Aug. 7, 1991.

Bell, Boyd and Lloyd, Chicago, for appellant.

Burke, Wilson and McIlvaine, Chicago, for appellee.

Presiding Justice CERDA delivered the opinion of the court:

Plaintiff, John Wilson, brought an action seeking equitable remedies arising out of a business break-up. Defendants, Francis Wilson, Gregory Matic, and Highland Company n/k/a JGT Company ("Highland/JGT"), filed a counterclaim, third-party complaints, and a motion for a temporary restraining order and a preliminary injunction to enjoin John Wilson and Evanston Partners from developing a medical office building without them. After a hearing, the trial court denied the motion for a preliminary injunction. On appeal, Highland/JGT argues that (1) the trial court erred in denying its motion for a preliminary injunction; and (2) the trial court erred in ruling that the 90-day termination notice of the Consulting Agreement effectively terminated the subsequent Development Agreement.

On July 8, 1985, John Wilson and Gregory Matic entered into a Development Consulting Agreement ("Consulting Agreement") for the purpose of working together on the proposed development of an Evanston, Illinois, medical office building and other projects. In September 1985, John Wilson, his brother, Francis Wilson, and Gregory Matic formed Highland Development Company ("Highland"), an Illinois corporation, for the management and development of several real estate properties. On October 24, 1985, the three men organized Evanston Partners, Ltd., an Illinois limited partnership, and Evanston Partners, Inc., an Illinois corporation, which was to act as the general partner of Evanston Partners, Ltd., to organize the ownership of the proposed medical center. They initially proposed to sell limited partnership interests in Evanston Partners, Ltd. to obtain the equity capitalization needed to construct and develop the center. However, they were unable to sell any interests in the project.

On October 31, 1985, John Wilson assigned all of his rights and obligations under the July 1985 Consulting Agreement to Evanston Partners, Ltd., and Gregory Matic assigned all of his rights and obligations in the Consulting Agreement to Highland. On December 1, 1986, Evanston Partners, Ltd. and Highland entered into an agreement entitled "Amended and Restated Development Agreement" ("Development Agreement"), which was to be effective retroactive to July 8, 1985, the date of the Consulting Agreement. The 1986 agreement detailed Highland's expanded responsibilities, and corresponding remuneration. By that time, Highland had located the property, negotiated terms of its purchase and of an architectural agreement, and assisted in obtaining financing for the medical center. Completion of the medical center was projected for December 31, 1988.

In the summer of 1988, the relationship between the three men had deteriorated and they decided to formally separate their interests in the project. On August 19, 1988, John Wilson and Francis Wilson entered into a written Separation Agreement in which John Wilson acquired all of Francis Wilson's interest in Evanston Partners, Ltd. and in Evanston Partners, Inc. In return, John Wilson conveyed to Francis Wilson all of his interests in various corporations where they held joint interests. At the same time, John Wilson entered into a similar Separation Agreement with Gregory Matic. Matic conveyed all of his interest in Evanston Partners, Ltd. and in Evanston Partners, Inc. in exchange for a $300,000 payment. John Wilson remained an officer of Highland until November 1988 and continues to be a director.

On July 3, 1989, John Wilson, as president of Evanston Partners, Ltd., sent Highland a 90-day notice, pursuant to the 1985 Consulting Agreement, terminating the 1986 Development Agreement. On July 7, 1989, Highland's name was changed to the JGT Company. On August 1, 1989, John Wilson filed suit against Gregory Matic, Francis Wilson, and Highland/JGT seeking an accounting and other equitable relief. Subsequently, Francis Wilson, Gregory Matic, and Highland/JGT filed a counterclaim and a motion for a temporary restraining order and a preliminary injunction, in which they challenged John Wilson's right to develop the medical center without them. The motion sought to enjoin John Wilson, Evanston Partners, Inc., and Evanston Partners, Ltd. from: (1) attempting to develop, finance, or lease the medical center to the exclusion of Highland/JGT; (2) entering into development contracts, financing agreements, loans, leases, or any other development, financing documents, or leasing documents with respect to the medical center, without providing for and paying to Highland/JGT the fees and commissions to which it is entitled; and (3) representing to other persons that Highland/JGT is not the development, financing, or leasing agent for the medical center.

After a hearing, the trial court denied the motion for a temporary restraining order, finding that Highland/JGT did not prove that they had an ascertainable claim for relief to which they were likely to succeed on the merits, nor did they demonstrate irreparable harm or a lack of an adequate remedy at law. The trial court further ruled that the Consulting Agreement was incorporated by reference through the Development Agreement's Recitals and Preamble, or "therefore" clause, and that the "term" provisions in both agreements were not inconsistent. In addition, the trial court found that Highland/JGT's claims of harm to its goodwill did not state sufficient, specific, factual evidence to show irreparable harm and damage. There was no specific evidence of what Highland/JGT did since October 1988 to garner goodwill, the trial court indicated. Furthermore, the trial court ruled, the conclusory statements that John Wilson was unable to sell interests in the medical center were not enough to support its argument. In fact, prior to October 1988, Highland/JGT was unable to sell any interests in the medical center project to outside investors.

The trial court also ruled that Highland/JGT did not show that money damages for breach of contract would not be an adequate remedy. Finally, the trial court balanced the equities, concluding that there would be more harm done by entering the restraining order, thus preventing the medical center project from continuing, than would be done by not entering the order.

Subsequently, based on the evidence from the temporary restraining order hearing, the trial court denied the motion for a preliminary injunction. The trial judge stated that based on the Development Agreement, there was not a fair chance of succeeding on the merits and no irreparable harm or damage was demonstrated. Highland/JGT filed an interlocutory appeal pursuant to Supreme Court Rule 307(a)(1). 134 Ill.2d R. 307.

On appeal, Highland/JGT asserts that the trial court erred in denying its motion for a preliminary injunction. The purpose of a preliminary injunction is to prevent a threatened wrong or a continuing injury pending a full hearing on the merits of the case. (H.K.H. Development Corp. v. Metropolitan Sanitary District (1964), 47 Ill.App.2d 46, 53, 196 N.E.2d 494.) Because a preliminary injunction is an extraordinary remedy (Baal v. McDonald's Corp. (1981), 97 Ill.App.3d 495, 501, 52 Ill.Dec. 957, 422 N.E.2d 1166), the status quo, which is the last, actual, peaceable, uncontested status preceding the controversy (Baal, 97 Ill.App.3d at 502, 52 Ill.Dec. 957, 422 N.E.2d 1166), is to be preserved with the least injury to the parties. Grillo v. Sidney Wanzer & Sons, Inc. (1975), 26 Ill.App.3d 1007, 1011, 326 N.E.2d 180.

For a preliminary injunction to be granted, Highland/JGT must establish a protectable interest, a likelihood of success on the merits, an irreparable injury in the absence of injunctive relief, and no adequate remedy at law. (American National Bank & Trust Co. v. Chicago Title & Trust Co. (1985), 134 Ill.App.3d 772, 776, 89 Ill.Dec. 719, 481 N.E.2d 71.) Generally, the grant of the temporary relief should outweigh any possible injury which the defendant might suffer by its issuance. Greenspan v. Mesirow (1985), 138 Ill.App.3d 294, 300, 92 Ill.Dec. 953, 485 N.E.2d 1196.

Highland/JGT claims a protectable interest based on the Development Agreement between Highland and Evanston Partners. In reliance on that agreement, Highland/JGT asserts, Highland/JGT, Francis Wilson, and Greg Matic invested considerable time and substantial amounts of money, which they expected to recoup by earning fees and commissions under the agreement. Highland/JGT also asserts a legitimate interest in protecting its corporate goodwill arising from the medical center project's close identification with Highland/JGT, its reputation, and its future competitive position. Finally, Highland/JGT contends, it has a legitimate interest in preventing John Wilson, a director of Highland/JGT, from violating his fiduciary duties to Highland/JGT.

John Wilson and Evanston Partners respond that the Consulting Agreement was incorporated by reference into the Development Agreements. Once that agreement was terminated in July 1989, John Wilson and Evanston Partners claim, Highland/JGT no longer had an ascertainable right which must be protected.

Whether Highland/JGT has a protectable interest and would likely succeed on the merits of the case depends on whether the Development Agreement replaced and...