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Capital Assoc. v. Roberts-ohbayashi Corp.





Appeal from the Circuit Court of Cook County; the Hon. Harold A. Siegan, Judge, presiding.


Rehearing denied December 18, 1985.

This proceeding was initiated by plaintiff, Capital Associates Development Corporation (Capital) *fn1, filing its action for declaratory judgment and injunctive relief. Defendant, James E. Roberts-Ohbayashi Corporation (Roberts), appeals from a temporary restraining order (TRO) issued by the circuit court of Cook County enjoining Roberts from seeking arbitration in California of a contract dispute it has with Capital.

On appeal, Roberts argues that to the extent any injunctive relief was granted to Capital by order of the circuit court of Cook County, that order was invalid and improper in that: (1) the trial court lacked in personam jurisdiction over Roberts; (2) the order was issued without notice; (3) the order was entered without an evidentiary hearing; and (4) the order lacked the specificity and formal detail required by the Illinois Injunction Act. Ill. Rev. Stat. 1983, ch. 110, par. 11-101 et seq.

We affirm the trial court's finding of in personam jurisdiction and remand for an immediate evidentiary hearing on whether a permanent injunction should issue.


In early 1980, Roberts and Capital executed a written agreement under which Roberts agreed to supply, and Capital agreed to pay for, construction services and materials necessary to build a multi-unit residential building in Oakland, California. The contract provided that Roberts would substantially complete the building by mid-1981 and that Capital would, through an installment plan, pay Roberts $9,412,500 for the completed work.

In July of 1982, Roberts accepted the final installment payment from Capital. At that time, E.F. Winthers, the president of Roberts, signed and delivered a "lien waiver and indemnity" agreement to Capital. The agreement purported to acknowledge that Roberts had been fully paid for the services and materials involved in the construction of the residential building. From this point on, however, the facts become disputed.

It is Roberts' position that in 1982, Winthers and Thomas Rosenberg, a general partner of Capital, entered into an oral agreement for extra work and materials to be supplied to the residential building. Under this alleged oral agreement, Rosenberg agreed to pay Roberts an additional $135,925 in one lump sum on January 1, 1983. Roberts thereafter completed its part of the agreement. When January 1, 1983, arrived, however, Capital failed to pay the additional monies owed.

As a result of Capital's failure to pay, Winthers phoned Rosenberg at his Chicago, Illinois, office. During this phone conversation, Winthers claims that Rosenberg informed him of Capital's inability to pay the money owed and asked for an installment schedule to be arranged. Winthers agreed to Rosenberg's proposal and a payment plan was arranged whereby Capital would pay the amount owed in three equal installments on April 1, 1983, 1984, and 1985. Roberts claims that although Capital paid the first installment, Capital has failed to make the remaining two payments. Consequently, in an effort to obtain the money Capital owed, Roberts filed, pursuant to a clause in the original written agreement, a petition with the American Arbitration Association (AAA) in California.

Capital, on the other hand, relates a completely different story. Capital denies that an oral agreement for extra work was ever reached between Winthers and Rosenberg. Capital also disagrees with Roberts' description of what occurred during the phone call between Winthers and Rosenberg. It is Capital's position that Winthers called to make an offer to Rosenberg; that the offer involved Capital paying additional money to Roberts; and that Rosenberg rejected Winthers' offer. Capital further claims, citing the "lien waiver and indemnity" agreement, that it has fully paid Roberts for its work on the residential building. Consequently, Capital contends that the arbitration Roberts seeks is unwarranted for there is, according to Capital, nothing to arbitrate.

Nevertheless, on November 26, 1984, Roberts' arbitration hearing before the AAA was set to begin. To stop that hearing from proceeding, Capital sought and obtained from the circuit court of Cook County an emergency TRO enjoining Roberts and the AAA from proceeding with the hearing. The trial court's order established December 6, 1984, as the date on which an evidentiary hearing would be held to determine if a preliminary injunction should issue. At that point in time, Capital was not required to supply a bond in connection with the TRO issued by the trial court.

On December 6, 1984, the parties appeared before the trial court. At that time, Roberts filed a special and limited appearance to contest jurisdiction and, during the hearing, moved to quash the service of summons. Roberts claimed that the trial court lacked in personam jurisdiction over it. Capital, however, had not received proper notification of Roberts' intent to raise the jurisdiction issue and asked the trial court for time to file a written response. The court found that because Capital failed to receive proper notice, it would be improper to hear the motion to quash instanter. Consequently, the court ordered Capital to file its response to Roberts' motion by December 12, and set December 14, 1984, as the hearing date for Roberts' motion to quash. In addition, to maintain the status quo, the trial court continued the force and effectiveness of the TRO until December 14, 1984.

The hearing on December 14, however, failed to resolve Roberts' motion to quash. During that hearing, Roberts filed, instanter, a memorandum in support of its motion to quash and also presented the court with additional affidavits supporting Roberts' position. In light of the presentation of this new material, the trial court felt that it was unable to properly rule on Roberts' motion until the new material had been considered. In addition, Capital requested an opportunity to respond to the issues raised in Roberts' memorandum. As a result of these new developments, the court extended the hearing on Roberts' motion to January 2, 1985. ...

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