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Zabaneh Franchises, LLC, An Illinois Limited v. Terri M. Walker

July 17, 2012


Appeal from Liability Circuit Court of Sangamon County No. 11CH233 Honorable John Schmidt, Judge Presiding.

The opinion of the court was delivered by: Justice Appleton

JUSTICE APPLETON delivered the judgment of the court, with opinion. Justices Steigmann and Cook concurred in the judgment and opinion.


¶ 1 Plaintiff, Zabaneh Franchises, LLC, appeals from the circuit court's order dismissing the case with prejudice because plaintiff had failed to prove it would likely succeed on the merits of its complaint in enforcing the restrictive covenants contained in an employment agreement (Agreement) signed by defendant Terri M. Walker. The court entered an oral judgment on February 23, 2011, at the conclusion of the hearing on plaintiff's motion for a temporary restraining order (TRO). Plaintiff appealed the court's oral judgment. This court docketed the appeal as case No. 4-11-0215.

¶ 2 The circuit court subsequently entered a written judgment consistent with its oral pronouncement. Plaintiff appealed from the court's written judgment as well. This court docketed plaintiff's subsequent appeal as case No. 4-11-0309. We consolidated the appeals and now reverse and remand for further proceedings.


¶ 4 Plaintiff, which has its principal place of business in Quincy, is a firm providing income-tax-form preparation services. In July 2010, plaintiff purchased the franchise of H&R Block, Inc., in Springfield, including all interest in the employment and non-competition agreements with H&R Block's employees, of which defendant was one. Defendant had signed an employment agreement with H&R Block in November 2009, as she had done every year since 2003, and agreed to work during "tax season," or January 2, 2010, through April 15, 2010. The Agreement included an "assignability" clause, wherein defendant agreed that the non-competition and nonsolicitation covenants would survive the termination of the Agreement and that H&R Block could assign the contract "without notice to, consent by, or approval by" defendant. Plaintiff alleged in its complaint that defendant, within a few months of leaving the firm in April 2010, started her own tax-preparation business, solicited clients, and hired employees of H&R Block in violation of the employment agreement.

¶ 5 In February 2011, plaintiff filed its complaint for injunctive relief, wherein it sought a permanent injunction, a preliminary injunction, and a TRO. Plaintiff also filed a separate motion for a TRO and preliminary injunction. Defendant filed a motion to dismiss, denying that she had entered into an employment agreement with plaintiff or was ever employed by plaintiff. (There was no allegation in the original complaint explaining the relationship between plaintiff and H&R Block.)

¶ 6 On February 23, 2011, the circuit court conducted a hearing on plaintiff's motion for temporary relief. We have no record of that hearing: no transcript, bystander's report (Ill. S. Ct. R. 323(c) (eff. Dec. 13, 2005)), or agreed statement of facts (Ill. S. Ct. R. 323(d) (eff. Dec. 13, 2005)). According to the docket entry, the following occurred:

"Matter called for hearing. Present the plaintiff by attorney Andrew Mays. Present the defendant Terri Walker with attorney Patrick Smith of Delano Law Office. Defendant's motion to dismiss denied, plaintiff's motion to file amended complaint allowed. Matter now called for hearing on the TRO. Plaintiff's motion for a TRO denied, see written order. Copy of this docket to all parties of record."

Five days after the hearing, plaintiff filed a first amended complaint, adding the allegation that plaintiff had purchased the H&R Block franchise in July 2010.

¶ 7 On March 9, 2011, plaintiff filed a notice of appeal (without citing a rule governing the appeal), indicating it was appealing the oral judgment entered on February 23, 2011, "denying motion for injunction and dismissing the case." On March 18, 2011, plaintiff intended to file a motion to correct the circuit court's docket entry, but the motion was received by the Sangamon County State's Attorney's Office and not filed with the circuit clerk until March 23, 2011. Nevertheless, plaintiff's motion requested the docket entry dated February 23, 2011, be amended to "accurately reflect the ruling of the court" by stating that the court had dismissed the lawsuit because the underlying contract was "not enforceable." Plaintiff also asserted that "[t]his was to be a 'final and appealable order.' "

¶ 8 On March 23, 2011, plaintiff filed with the circuit court a motion to voluntarily dismiss appeal No. 4-11-0215 pursuant to Illinois Supreme Court Rule 309 (eff. Feb. 1, 1981). No action was taken on this motion and the appeal remained pending. Also on March 23, 2011, the circuit court entered a written order as follows:

"Plaintiff is an H & R Block franchise in the business of preparing tax returns. Defendant is a former employee of the franchise. As a condition of her employment[,] she was required to enter into a contract where[]by she agreed that[,] upon termination of her employment[,] to not engage in the business of tax preparer for a period of 2 years. Plaintiff's exhibit A. Plaintiff believed the defendant was doing tax returns under a new business name. Plaintiff brought this motion for a temporary restraining order claiming defendant was in violation of her contract and requested this court to enforce the contract, enter an order prohibiting her from soliciting business from any former or current H & R Block customers.

A temporary restraining order is an extraordinary measure and should be granted with caution. A party is entitled to a temporary restraining order where they show a clear ascertainable right that needs protection, will suffer irreparable harm without relief, has no other adequate remedy at law, and is likely to succeed on the merits. Prairie Eye Center v. Butler, 305 Ill. App. 3d 442 (4th Dist. 1999)[.] Finally, the court must balance the equities in granting the ...

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