Articles Posted in Preliminary Injunctions


Our Chicago business emergency attorneys were interested to read an appellate opinion in which the Fourth District Court of Appeal reversed a Sangamon County judge for the second time in the same case. The Rochester Buckhart Action Group v. Young, No. 4-09-0037 (Ill. 4th Sept. 8, 2009) is a lawsuit filed by a community group attempting to stop Robert Young from building a hog farm on his property. The Rochester Buckhart Action Group, a nonprofit that opposes activities it feels decreases the quality of life in its area, sued to stop Young, arguing that the hog farm should be regulated as a new farm rather than an extension of Young’s existing dairy farm. The trial court granted the group’s request for a preliminary injunction, but the Fourth District Court of Appeal reversed it. On remand, Young asked for costs and damages stemming from that injunction, but the trial court denied it — only to be reversed again by the Fourth.

Young’s property already had a 40-cow dairy farm, and had once had a 2,300-animal hog confinement operation that was demolished in 2004. He notified the Illinois Department of Agriculture of his intention to add a 3,750-hog finishing operation, which is where piglets are grown into adult pigs. In that notification, he told the state that this would be an expansion of an existing operation, not a new operation. The Rochester Buckhart Action Group disagreed and sued for a declaratory judgment under the Livestock Management Facilities Act, which requires public notice, comment and hearing for new facilities. The lawsuit also included counts for nuisance and public nuisance. It moved for a preliminary injunction stopping construction of the hog farm. That order also required the plaintiff to post a $60,000 bond. The trial court then declined to vacate its decision and the defendant successfully appealed to the Fourth.

On remand, the defendant requested costs and damages, pursuant to the Code of Civil Procedure on a “wrongfully entered injunction.” He requested the proceeds of the $60,000 bond to set off the $294,159.01 that he said the injunction cost him. The plaintiff moved to strike that motion, claiming there was no adjudication of the injunction as “wrongful.” The trial court granted that motion to strike, saying it did not believe the injunction was wrongful and thus, the defendant could not recover costs. This appeal followed, arguing that the defendant’s situation met the definition of “wrongful” in the Code of Civil Procedure.

The Fourth agreed. It noted that Illinois Supreme Court precedent allows damages only when judgment has been entered that a preliminary injunction or temporary restraining order was entered wrongfully. The plaintiff argued that there was no such adjudication, but the Fourth was not convinced. It said its prior opinion was a legal determination that the injunction was wrongfully issued. “It is hard to fathom what the appeal in Rochester I was all about if it was not a determination of whether the trial court rightfully or wrongfully enjoined defendant from continuing the construction on his hog farm. The sole issue in Rochester I was whether the trial court erred in declining to vacate the preliminary injunction.” Furthermore, the court noted, Jefco Laboratories, Inc. v. Carroo, 136 Ill. App. 3d 826, 829, 483 N.E.2d 1004, 1006 (1985) specifically said there was only a semantic distinction between “in error” and “wrongfully issued.”
The plaintiffs next argued that the preliminary injunction order was the law of the case because the defendant did not appeal that order — he appealed the trial court’s refusal to vacate it. However, the Fourth said, the issue of the injunction itself was before the court when the issue of whether to vacate the order for an injunction was before it. Thus, it wrote, the defendant cannot be said to have waived the issue of whether the injunction was properly issued.

Finally, the plaintiffs said damages should not be awarded because it is a nonprofit “seeking to vindicate public rights.” It supported that argument by citing Save the Prairie Society v. Greene Development Group, Inc., 338 Ill. App. 3d 800, 801, 789 N.E.2d 389, 390 (2003), in which the First District Court of Appeal found that the trial court should not have imposed a $200,000 bond on a nonprofit seeking to serve the public interest. It is true that the Code of Civil Procedure gives trial courts discretion not to impose bond if it would be a hardship, the Fourth said, but no rule of law says this must be done in every case. The plaintiff did not object to the bond as a hardship at the time, it noted. And the state Supreme Court noted in Buzz Barton & Associates, Inc. v. Giannone, 108 Ill. 2d 373, 384, 483 N.E.2d 1271, 1276 (1985) that it would be “inequitable and would invite spurious litigation” to allow parties to interfere with legal activities without being held liable for wrongful interference.

That is the situation in this case, the Fourth said. It reversed and remanded the trial court, saying the defendant is entitled to damages and the trial court must allow him an opportunity to prove any damages.

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Any business owner should keep abreast of laws and court rulings that can affect the way they conduct their operation and interact with employees. The law constantly evolves, and that is why our lawyers are vigilant in tracking changes that affect our clients. Citadel Investment Group v Teza Technologies is one such ruling that provides clarity regarding noncompetition agreements between employees and employers.

In this case, Defendants Malyshev and Kohlmeier worked for Plaintiff Citadel Investment Group until February of 2009, when they resigned. When Malyshev and Kohlmeier were initially hired by Citadel, they each signed a nondisclosure agreement and an employment agreement containing a noncompetition clause. The noncompetition clauses contained language giving Citadel the discretion to set the length of the restrictive period at zero, three, six, or nine months. Citadel elected for a nine month restricted period for both Malyshev and Kohlmeier upon their resignation.

Malyshev and Kohlmeier formed Defendant Teza Technologies two months after leaving Plaintiff Citadel in April of 2009. When Citadel discovered the existence of Teza and its status as an entity performing similar high frequency trading in July of 2009, the present legal proceedings began. Plaintiffs initially sought a preliminary injunction against Defendants based upon the noncompetition agreements signed by Malyshev and Kohlmeier. This injunction was granted in October 2009 for relief through November of 2009. The trial court made its decision based upon the agreed upon nine month period contained in the noncompete and calculated the time from February of 2009 when Malyshev and Kohlmeier resigned.

Citadel appealed the decision, and asked the appellate court to grant the injunction for nine months from October until July of 2010. Citadel argued that they had not received the benefit of the restricted period prior to the preliminary injunction being entered, and the Court should adjust the start date of the restricted period accordingly. The Court did not find the Plaintiff’s argument persuasive and denied the appeal because the plain language of the agreements signed by Malyshev and Kohlmeier contained no provision allowing for an extension of time or modification of the commencement date. Thus, the restrictive covenant properly ended in November as was required by the agreement signed by both parties.

Citadel Investment Group v. Teza Technologies serves as a warning to business owners who utilize noncompetition agreements and a potential boon to employees who sign them. Whether you are a business already in a dispute over a noncompetition agreement or a former employee seeking employment with a new company in the same field, you should contact a Chicago business litigation attorney to be apprised of your rights.

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