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Kanter & Eisenberg v. Madison Assoc.

OPINION FILED FEBRUARY 18, 1986.

KANTER & EISENBERG, PLAINTIFF-APPELLEE,

v.

MADISON ASSOCIATES ET AL., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Cook County; the Hon. David J. Shields, Judge, presiding.

JUSTICE STAMOS DELIVERED THE OPINION OF THE COURT:

Rehearing denied April 17, 1986.

Defendants are appealing from an order of the chancery court enjoining them from instituting a forcible entry and detainer action against the plaintiff and requiring them to remit plaintiff's disputed rental payments to an escrow account.

On June 30, 1980, the law firm of Kanter & Eisenberg (K&E) entered into a lease agreement with Madison Associates (Madison). K&E agreed with Madison's managing partner, Hines Chicago Associates, Ltd., to rent a full floor in the Three First National Plaza building. The lease provided that the tenant must pay both a "Base Rental" and an "Additional Rental." The base rental is a fixed annual sum, payable in monthly installments, and the additional rental is the tenant's proportionate share of increases in the operating expenses of the building in excess of an amount stipulated in the lease. The stipulated amount or initial basic cost in K&E's lease is $4.50. Therefore, K&E is required to pay its proportionate share of the building's annual operating expenses to the extent that those expenses exceed $4.50 per square foot of space rented.

According to K&E, at the time that it entered into the lease, an agent for Madison assured a K&E partner that an initial basic cost of $4.50 was adequate to cover the operating expenses of the building for the first year of plaintiff's tenancy. Therefore, it was K&E's expectation that it would not have to pay any additional rental for that period.

Although K&E's tenancy was to commence on June 1, 1981, it did not begin until February 1, 1982. Since that time, K&E has paid its base rental without protest. However, the plaintiff has refused to pay the additional rental demanded by the defendants. Madison determined that the plaintiff owed $170,352.34 in additional rental costs for the first year of its tenancy. When the plaintiff refused to pay this amount, the defendants served K&E with a five-day notice in accordance with the forcible entry and detainer statute (Ill. Rev. Stat. 1983, ch. 110, par. 9-209).

K&E paid the additional rental as demanded in the five-day notice but filed an action against the defendants, alleging that they fraudulently represented that an initial basic cost of $4.50 would be adequate to cover the building's operating expenses for the first year of K&E's tenancy. Plaintiff also alleged that it was denied access to Madison's accounts in violation of the lease agreement. As one of its remedies, plaintiff sought a reformation of its lease to reflect an initial basic cost equal to its proportionate share of the building's operating expenses. Reformation of the parties' agreement in this manner would relieve plaintiff of the obligation to pay any additional rental, at least for the first year of its tenancy.

After the plaintiff had filed its complaint, additional rental costs accumulated for the second year of its tenancy, and plaintiff refused to pay them. Accordingly, on June 7, 1984, Madison served upon the plaintiff another five-day notice, this time demanding $275,906.93 in additional rental. K&E refused to pay the amount demanded in the notice and petitioned the court for a temporary restraining order, asking that Madison be enjoined from initiating an eviction action. Plaintiff also asked the court to enjoin defendants from attempting to collect any future additional rental payments. In support of its request, K&E asserted that it did not owe the rent demanded in Madison's five-day notice because the defendants had misrepresented the adequacy of the initial basic cost.

The court held a hearing on plaintiff's petition and issued an order which provided the following: (1) Madison was temporarily enjoined from filing an eviction action; (2) all additional rental payments made by K&E were to be paid into an escrow account; (3) the deadline in Madison's five-day notice was extended by one week. Several days later, the plaintiff asked the court for clarification and for an additional order. The court then issued a second order, which provided as follows: (1) payment by K&E of the sum of $275,906.93 as demanded in the five-day notice cured or satisfied the terms of the notice; (2) defendants were temporarily enjoined from initiating an eviction action; (3) defendants were ordered to pay an escrowee that portion of K&E's additional rental payment that would not be due if the initial basic cost in the lease were $7.07 instead of $4.50; (4) defendants were ordered to pay an escrowee that portion of all future additional rental payments that would not be due if the initial basic cost were $7.07. (The figure of $7.07 represented a compromise between plaintiff's contention that the initial basic cost should be $9.65 and defendants' assertion that the cost should remain at $4.50.) The defendants now appeal from the court's order.

Defendants' first contention on appeal is that the court erred in temporarily enjoining them from initiating an eviction action against the plaintiff for nonpayment of rent. Absent an injunction, the defendants would have been entitled to terminate the plaintiff's lease if plaintiff failed to pay its rent within five days of having received a notice that it was due. Then the defendants could have sued for possession of the leased premises. (Ill. Rev. Stat. 1983, ch. 110, par. 9-209.) As a result of the court's order, however, the defendants were precluded from pursuing their statutory remedy, and they argue that the present situation is an inappropriate one for injunctive relief.

• 1 The grant of a preliminary injunction rests within the sound discretion of the trial court. An appellate court must uphold that decision unless it finds that the trial judge abused his discretion. (Frank B. Hall & Co. v. Payseur (1979), 78 Ill. App.3d 230, 236, 396 N.E.2d 1246.) Although the lower court's judgment is accorded great deference, it must still be exercised within the established legal framework for injunctive relief. Alexander v. Standard Oil Co. (1977), 53 Ill. App.3d 690, 698, 368 N.E.2d 1010.

In order for a preliminary injunction to issue, the moving party must show the following: (1) that he possesses a clear ascertainable right in need of protection; (2) that he will suffer irreparable harm without protection; (3) that he has no adequate remedy at law; (4) that he is likely to be successful on the merits of the suit. In re Marriage of Schwartz (1985), 131 Ill. App.3d 351, 354, 475 N.E.2d 1077.

• 2 Notwithstanding the deference paid to the trial court's judgment, the present case is ill-suited to the type of injunctive relief granted. The defendants could have been properly restrained from instituting an eviction action in another court. Where two actions between the same parties, on the same subject, and to test the same rights, are brought in different Illinois courts having concurrent jurisdiction, the court first acquiring jurisdiction retains it and may dispose of the entire controversy, to the exclusion of coordinate courts. (Cousins Club, Inc. v. USA I Lehndorff Vermoegensverwaltung GmbH & Cie (1976), 39 Ill. App.3d 227, 228, 353 N.E.2d 169.) Since the trial court in this case was the first to acquire jurisdiction of the parties' dispute over rental payments, it had the power to restrain the defendants from instituting an eviction action in another court. (See Wells v. Wells (1976), 36 Ill. App.3d 91, 93, 343 N.E.2d 215.) This course of action would have left the defendants free to file their eviction action in the trial court as part of the present controversy.

Although the trial judge could have enjoined the defendants from filing an eviction action in another court, he erred in enjoining them entirely from instituting eviction proceedings against the plaintiffs. The defendants should not be completely barred from bringing an eviction action because the plaintiff is unlikely to suffer irreparable harm. If K&E simply paid the rent demanded by defendants, its tenancy would remain unaffected. ...


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