Ron & Mark Ward, LLC v. Bank of Herrin

NOTICE
2024 IL App (5th) 230274
Decision filed 03/20/24. The
text of this decision may be NO. 5-23-0274
changed or corrected prior to
the filing of a Petition for IN THE
Rehearing or the disposition of
the same.
APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT
______________________________________________________________________________

RON & MARK WARD, LLC; RLW & MLW, ) Appeal from the
LLC; WARD CHRYSLER CENTER, INC.; ) Circuit Court of
RONALD L. WARD; and MARK L. WARD, ) Williamson County.
)
Plaintiffs-Appellees, )
)
v. ) No. 21-MR-107
)
BANK OF HERRIN, ) Honorable
) John William Sanders,
Defendant-Appellant. ) Judge, presiding.
______________________________________________________________________________

JUSTICE WELCH delivered the judgment of the court, with opinion.
Justices Cates and McHaney concurred in the judgment and opinion.

OPINION

¶1 The defendant, Bank of Herrin (defendant or Bank), appeals from the order of the circuit

court of Williamson County, granting the plaintiffs—Ron & Mark Ward, LLC, RLW & MLW,

LLC, Ward Chrysler Center, Inc., Ron Ward, and Mark Ward—a preliminary injunction, which

enjoined the defendant from pursuing its default remedies on certain loan documents executed by

the plaintiffs. On appeal, the defendant contends that the trial court abused its discretion in granting

the preliminary injunction where (1) the plaintiffs’ request for injunctive relief in their third

amended complaint was dismissed, (2) they had no clearly ascertainable right in need of protection

because the loan matured on October 30, 2022, (3) they have suffered no irreparable harm because

they had the financial ability to pay off the loan and await the outcome of the trial on the merits,

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(4) they had an adequate remedy at law because they only requested money damages in their

complaint, (5) they did not have a likelihood of success on the merits, and (6) the balance of

equities favored the defendant. For the reasons that follow, we affirm.

¶2 I. BACKGROUND

¶3 Ron Ward and Mark Ward owned and operated two car dealerships in Southern Illinois: a

Chrysler dealership located in Carbondale, Illinois, and a Chevrolet dealership located in

Metropolis, Illinois. The defendant was an Illinois state banking corporation with offices in

Southern Illinois. From 2016 through 2018, the plaintiffs and the defendant entered into business

loan agreements requiring the defendant to issue loan disbursements for the dealerships to purchase

vehicles to sell. The vehicles were collateral for the loans.

¶4 In 2017, employees of the Chrysler dealership began double-booking loans with the

defendant; the employees requested multiple loans for the same vehicle. Consequently, the

defendant loaned money to them twice (or more) for the same vehicle. These double-booked loans

were part of a scheme in which the employees sold new vehicles at a reduced rate, one-half of the

price, in exchange for payments that were made under the table. Then, to cover the losses, the

employees requested advances from the defendant under the business loan agreements entered into

between the parties, even though those agreements only permitted Ron and Mark to authorize any

monetary advances. The employees used this money to hide the losses that the dealerships were

taking on the discounted sales. The plaintiffs discovered this scheme in December 2018. However,

by then, the plaintiffs owed the defendant approximately $2.8 million for the double-booked loans.

¶5 In October 2020, the plaintiffs sought to refinance several loans that were held by the

defendant. On October 30, 2020, as part of the refinancing, Ward Chrysler Center and RLW &

MLW, LLC executed a promissory note pursuant to a loan from the defendant in the amount of

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$2,573,874.45. Ron and Mark executed personal guarantees related to the note, and it was secured

by, among other things, a blanket Uniform Commercial Code (UCC) (810 ILCS 5/1-101 et seq.

(West 2020)) lien on the plaintiffs’ business assets, a mortgage on Mark’s home, and a mortgage

on Ron’s farm. The note had a maturity date of October 30, 2022.

¶6 On April 8, 2021, the plaintiffs initiated this suit by filing a five-count complaint against

the defendant. The plaintiffs then filed a first amended complaint and a second amended complaint.

On May 28, 2021, the trial court entered a docket entry, which stated that the defendant agreed it

would not seek to enforce its UCC lien or foreclose on its mortgages without court order.

¶7 Thereafter, on August 16, 2022, the plaintiffs filed a third amended complaint, which

brought the following causes of action against the defendant: breach of contract (count I), violation

of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West

2020)) (count II), unjust enrichment (count III), negligent misrepresentation (count IV),

declaratory judgment (count V), violation of the Racketeer Influenced and Corrupt Organizations

Act (RICO) (18 U.S.C. § 1961 et seq. (2018)) (count VI), fraudulent inducement (count VII),

breach of contract for a breach of the 2016 business loan agreement entered between the parties

(count VIII), breach of contract for a breach of the 2017 change in terms agreement (count IX),

breach of contract for a breach of the 2018 business loan agreement (count X), breach of contract

for a breach of the 2018 dealer operating agreement (count XI), fraud for the double-booking

scheme (count XII), unjust enrichment for the double-booking scheme (count XIII), and lender

liability (count XIV). In the complaint, the plaintiffs acknowledged that the trial court had

previously dismissed with prejudice counts I and II.

¶8 Regarding the double-booking scheme, the plaintiffs alleged that the defendant was aware

of the scheme and knowingly issued loans for which it had no collateral. The plaintiffs contended

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that, by June 2018 at the latest, a Bank director knowingly issued multiple loans for the same new

vehicles and was aware that certain dealership employees recorded those new vehicles as being

sold to generate the extra loans. Instead of revealing this information to the plaintiffs, the defendant

made a conscious and deliberate decision to join the scheme. Specifically, the defendant backdated

the double-booked loans, which allowed the double-booking and reduced sales to remain

undetected. The defendant conducted monthly inventories of the vehicles at the dealerships and,

by April 2017, became aware that certain vehicles were not physically present on the lots. The

plaintiffs also recorded the vehicle information for each disbursement made, which included each

vehicle’s identification number.

¶9 The plaintiffs contended that the defendant was well aware that it was issuing double loans

on up to 75 vehicles at any one time. However, the defendant never disclosed this information to

the plaintiffs, even when the plaintiffs entered into new and subsequent loan agreements and

guarantor agreements with the defendant. Instead, the defendant only discussed this information

with two of the plaintiffs’ clerical employees, both of whom were part of the scheme. Although

the loan agreements only permitted two people, Ron and Mark, to authorize loans from the

defendant, the defendant issued the double loans at the request of these employees.

¶ 10 The plaintiffs argued that the excess money from the double-booked loans was essential to

the scheme because it allowed the dealerships to have enough cash on hand to cover the losses for

the reduced vehicle sales. After Ron and Mark discovered the scheme, the defendant required them

to personally pay more than $2.8 million to rectify the double-booked loans. The defendant also

collected interest from the plaintiffs on those loans.

¶ 11 On September 15, 2022, the defendant filed a motion to dismiss the third amended

complaint, along with a memorandum in support of the motion. In the motion, the defendant noted

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that counts I through V of the third amended complaint were predicated on the defendant’s conduct

in 2020-21 and related to an exchange of e-mails between the plaintiffs’ agents and the defendant’s

agents; the e-mails were exchanged in an effort to amend the various written loan agreements.

Thus, the defendant contended that the Credit Agreements Act (Act) (815 ILCS 160/3 (West

2020)), which required that any amendment to a loan agreement be signed by both parties,

controlled the validity of those five counts. The defendant argued that, since the plaintiffs failed to

present the trial court with a document reflecting an agreement that was signed by both parties,

those counts should be dismissed.

¶ 12 With regard to the remaining counts, the defendant contended that the plaintiffs failed to

allege sufficient facts to sustain a RICO claim and the plaintiffs’ factual allegations regarding the

fraud claims failed to establish that the defendant obtained “operational control” over the car

dealerships to the point of creating a fiduciary duty. The defendant also contended that the

plaintiffs’ unjust enrichment claims were based on the same allegations as made in a previously

dismissed complaint and should be similarly dismissed. As for the lender liability count, the

defendant argued that it could find no support for a lender liability cause of action and that this

count should be dismissed because there was no fiduciary duty between the parties.

¶ 13 On October 21, 2022, before the refinanced loans matured, the plaintiffs filed a motion for

a temporary restraining order (TRO) and preliminary injunction, seeking to enjoin the defendant

from foreclosing on the collateral that secured the refinanced loans once the loans matured. The

plaintiffs indicated that this collateral included the Ward Chrysler inventory and building, the

inventory and assets of RLW & MLW, LLC, Mark’s home, and Ron’s farm. The plaintiffs

contended that they would suffer permanent, irreparable harm if the defendant was allowed to

pursue its default remedies under the loan agreement; they would lose a multigenerational

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business, Mark would lose his home, and Ron would lose his farm. The plaintiffs also contended

that they had protectable rights in their personal and business property and assets, and they had

claims against the defendant that had survived a motion to dismiss.

¶ 14 The plaintiffs argued that a monetary damages award would not adequately protect their

interests because it would not return their land or business. They argued that they had a strong

likelihood of success on the merits, as the trial court’s partial denial of the defendant’s motion to

dismiss demonstrated that they had at least raised a fair question as to their rights. They indicated

that the defendant flagrantly breached its contract and, consequently, imposed millions of dollars

of debt on them; the defendant defrauded them into agreeing to personal guarantees; and they

should never have incurred the debt that the defendant claimed was owed. They also contended

that the balance of harms favored entering a preliminary injunction as the harm to them absent an

injunction would be substantial and permanent. However, if the defendant ultimately prevailed in

the litigation, it could then pursue its default remedies. Attached to the motion were, among other

things, (1) Mark’s October 21, 2022, affidavit, in which he stated that the factual statements in the

motion were true and correct, and (2) the October 30, 2020, promissory note evidencing the

refinanced loans.

¶ 15 On October 26, 2022, the defendant filed a motion to continue the hearing on the motion

for TRO and preliminary injunction. In the motion, the defendant agreed, without the entry of a

TRO, not to initiate any collection action against the plaintiffs until after the hearing on the motion

for preliminary injunction. On October 31, 2022, the defendant filed a response to the motion for

preliminary injunction, in which it argued that the plaintiffs had failed to demonstrate a protectable

interest as the relevant promissory notes had already matured.

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¶ 16 In a November 15, 2022, docket entry, the trial court noted that count I of the third amended

complaint was previously dismissed. On November 22, 2022, the court entered an order on the

defendant’s motion to dismiss, dismissing counts II through V of the third amended complaint

because the Act barred the plaintiff from the relief sought in those counts. The court then noted

that its rulings on the remaining counts remained as previously ordered; the plaintiffs were

permitted to proceed on those counts with necessary amendments. On December 12, 2022, the

court entered an order via docket entry, denying the defendant’s motion to dismiss with regard to

count XIV (lender liability), and found that the plaintiffs had alleged sufficient facts setting forth

this cause of action.

¶ 17 On February 14, 2023, the plaintiffs filed a fourth amended complaint, which set forth the

following causes of action that had not been previously dismissed: a violation of RICO (count I),

breach of contract for breaching the 2016 business loan agreement (count II), breach of contract

for breaching the 2017 change in terms agreement (count III), breach of contract for breaching the

2018 business loan agreement (count IV), breach of contract for breaching the 2018 dealer

operating agreement (count V), and lender liability (count VI). These causes of action were based

on the double-booking loan scheme. Essentially, the plaintiffs argued that the defendant breached

the various loan agreements by issuing loans with no collateral and issuing loans that were not

authorized by Mark or Ron.

¶ 18 At the February 27, 2023, hearing on the motion for preliminary injunction, the defendant’s

counsel agreed that the defendant would not seek to enforce its lien on the plaintiffs’ assets until

the trial court issued its decision on the request for preliminary injunction. After the court heard

the parties’ arguments on the preliminary injunction, it ordered them to submit affidavits in support

of their positions in lieu of holding an evidentiary hearing. On March 1, 2023, the plaintiffs filed

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a corrected fourth amended complaint, which set forth the same causes of action but made some

corrections to the previous complaint.

¶ 19 On March 13, 2023, the defendant filed an affidavit from Jason Henson, the president of

the Bank, in opposition to the plaintiffs’ motion for preliminary injunction. According to the

affidavit, the plaintiffs had two outstanding loans with the defendant: loan number 20, which had

a payoff amount of $609,519.61 as of March 3, 2023 (the original principal amount was $614,000)

and a maturity date of October 30, 2022, and loan number 30, which had a payoff amount of

$2,259,905.15 as of March 3, 2023 (the original principal amount was $2,573,874.45) with a

maturity date of October 30, 2022. Henson stated that, although these loans were secured by a

mortgage on the Ward Chrysler dealership, based on the dealership’s appraised value and the

estimated amounts due to the other lienholders who also held mortgages on the dealership, he

estimated that there was little to no equity for the defendant to foreclose on the property. However,

Ron and Mark also executed personal guaranty agreements on the two loans. Ron granted the

defendant a mortgage on certain real property, which was appraised at $347,000 on October 20,

2020, and Mark granted the defendant a mortgage on his home, which was appraised at $580,000

on September 28, 2011. Henson estimated that the total secured debt on the two properties was

$691,705. He also indicated that the January 31, 2022, financial statement from Ward Chrysler

Center showed a total net worth of $2,803,985.

¶ 20 That same day, the plaintiffs filed a supplemental memorandum in support of their motion

for preliminary injunction. In the memorandum, the plaintiffs contended that it was within the trial

court’s inherent equitable authority to enter an injunction maintaining the status quo pending

resolution of the parties’ disputes, even if the plaintiffs were not seeking a permanent injunction.

The plaintiffs observed that, although they no longer sought a permanent injunction to invalidate

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the note, their remaining causes of action were directed to the heart of the debt reflected in the note

and the debt obligation flowed entirely from the defendant’s involvement in and enabling of the

double-booked loan scheme. The plaintiffs argued that, as a result of this scheme, they owed

approximately $2.7 million for loans made on vehicles that did not exist, and they could not pay

these loans because the vehicles did not exist. Then, in October 2020, the defendant presented

them with the option to either execute the note or default and lose their business. Thus, the

obligation reflected in the note was a component of the damages that they incurred as a result of

the defendant’s conduct.

¶ 21 The plaintiffs argued that they had a clearly ascertainable right in need of protection.

Specifically, Mark would lose his home, Ron would lose the family farm that had been in operation

for 20 years, and a foreclosure on the UCC liens on their business assets would result in the loss

of their franchise. Although the defendant argued that the trial court had no authority to alter the

terms of a matured contract, the plaintiffs countered that the defendant had provided no case law

to support that position. The plaintiffs also pointed out that this litigation began before the note’s

maturity, and the question whether they would be required to pay the debt had been at issue since

shortly after the note was executed. They indicated that their claims had survived multiple rounds

of motions to dismiss and reconsideration, and the trial court found that their complaint stated

several valid and plausible causes of action against the defendant.

¶ 22 The plaintiffs contended that the defendant’s argument that they would face no irreparable

harm because they were able to pay off the loan ignored the reality that, because of the defendant’s

conduct, they had depleted their personal wealth and mortgaged their property and business “to

the hilt.” They indicated that the only reason they executed the note was because they had nowhere

else to turn; there were no other lenders and no more personal savings. Therefore, they argued that,

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if a preliminary injunction was not issued, they would lose their property and their livelihood, and

no money judgment would compensate for those losses.

¶ 23 The plaintiffs argued that the issuance of a preliminary injunction was necessary to

preserve the status quo. They noted that all of the collateral securing the loan still existed and could

not be disposed of because of the liens, and the defendant was presently charging default interest

on the note. The plaintiffs indicated that, if they were successful in the underlying lawsuit, their

damages would be offset by the loan amount and the accrued default interest; and if the defendant

won, it would be entitled to collect on the note. The plaintiffs argued that, either way, the defendant

would receive what it bargained for when it extended the loan in October 2020.

¶ 24 Attached to the memorandum was Mark’s March 13, 2023, affidavit, in which he indicated

that the loan refinance was necessary due to the double-booked loans scheme. He indicated that

the loans were not authorized by himself or Ron, and they were in violation of their floor-plan

financing agreements with the defendant. Because of these loans, the plaintiffs’ employees were

able to continue selling vehicles at a discounted rate for more than two years. Mark indicated that

he initially discovered the problem with the inventory in December 2018, when he was informed

about missing cars from the used car lots, cars for which they had borrowed money to purchase

but were no longer present to sell to pay back the borrowed money. He indicated that, when he

first learned of the issue, he did not know that the missing vehicles were the result of vehicles

having been double floor-planned and that the defendant’s unauthorized loans were essential to

the scheme. Instead, his primary concern was making sure that their relationship with the defendant

was secure.

¶ 25 Mark indicated that, when he initially asked the defendant what they needed to do about

the missing vehicles, the defendant’s director informed him that the defendant required a payment

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of $1.5 million to cover the loans on the missing cars. Therefore, he and Ron used their personal

funds to make that payment in December 2018. Throughout 2019, he continued to investigate the

issue and ultimately learned that the missing vehicles were not actually missing but had never

existed in the first place. He also learned that the $1.5 million that they paid was only a small

portion of the amount of money that had been loaned to them as part of the scheme. As a result of

the investigation, which included retaining a forensic accountant, they determined that

approximately 480-500 vehicles were double floor-planned.

¶ 26 Mark stated that, throughout 2019, they were in a constant struggle to have a positive cash

flow because they were required to make loan payments on vehicles that did not exist.

Consequently, he and Ron paid an additional $2.3 million of their personal funds into the business

to remain solvent and keep current on their obligations to various creditors. Their cash flow issues

continued into and throughout 2020.

¶ 27 Mark also stated that, although the defendant was only supposed to provide floor-plan

financing for used vehicles, they discovered that up to 10% of the vehicles involved in the scheme

were new vehicles. The defendant knew at the time it made those loans that the vehicles were new

because it used factory invoices to support their values.

¶ 28 Mark noted that, in December 2019, he and Ron met with the Bank’s president and

demanded that the debt be wiped clean. However, the defendant refused. In August or September

2020, the defendant told Mark that it would not renew the floor-plan financing and that the

plaintiffs needed to make payments in full. However, the defendant was never able to provide a

consistent amount of what was owed. On October 30, 2020, the defendant ultimately presented

them with a “take it or leave it” offer to enter into a new promissory note for $2,569,665.45. With

no other recourse, and to avoid default and the loss of their business, they signed the promissory

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note. They later discovered that, even though the defendant had agreed to release its UCC filings

on the business assets, the promissory note included a blanket UCC lien on those assets as part of

its collateral. As additional collateral, the defendant demanded that they provide a first-lien

mortgage on Ron’s farm and a junior mortgage on Mark’s home. Mark indicated that Ron’s farm

was a working family farm that provided employment for numerous family members. Also, Mark

and his family had resided in their home for 15 years, and his children were raised there.

¶ 29 Mark stated that the promissory note matured on October 30, 2022, and the defendant

expressed its intention to initiate foreclosure proceedings on the collateral, which would be

devastating for him, Ron, and their families. Although the UCC liens on the business assets were

not first-position liens, the defendant’s foreclosure would cause them to default on their floor-plan

financing and their franchise agreement with Chrysler, which could not be recovered.

¶ 30 On March 20, 2023, the defendant filed a response to the plaintiff’s supplemental

memorandum, which argued that the plaintiffs were barred from requesting injunctive relief

because their fourth amended complaint contained no such request. The defendant contended that

the plaintiff’s motion for preliminary injunction was predicated on the e-mail agreements between

the parties, but the causes of action that were based on those agreements were dismissed. Thus,

the defendant argued that the request for preliminary injunction should be similarly dismissed.

¶ 31 In the alternative, the defendant contended that the plaintiffs did not establish the essential

elements for a preliminary injunction. Specifically, the defendant argued that the plaintiffs had no

clearly ascertainable right in need of protection since the loans matured on October 30, 2022; they

were effectively seeking a mandatory injunction requiring the defendant to enter into a new loan

agreement extending their already-matured loans; and the status quo that should be preserved was

that the loans were mature, and the plaintiffs were obligated to pay the loans. The defendant argued

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that the relevant case law indicated that injunctive relief was only available when a contract

between the parties was still in effect (executory), which was not the case here as there was no

valid, enforceable contract that was currently in effect (since the loan had already matured).

¶ 32 The defendant also contended that the plaintiffs had suffered no harm where they had the

financial ability to pay off the debt without suffering irreparable harm. The defendant indicated

that the plaintiffs, through Mark’s affidavit, had misrepresented their financial ability to pay the

debt. The defendant also indicated that Mark’s affidavit was comprised of conclusory allegations

and opinions, not statements of fact, and did not provide any support for the allegation that they

were unable to pay the debt and await the outcome of the trial on the merits.

¶ 33 The defendant then noted that its attached affidavit evidenced the plaintiffs’ financial

ability to pay off the loan. Specifically, the defendant noted that the plaintiffs’ January 2022 dealer

financial statement revealed the total net worth of Ward Chrysler Center was $2,803,985. Further,

the combined net worth of the plaintiffs totaled $19 million. Thus, the defendant argued that the

plaintiffs could not, in good faith, allege that their failure to obtain injunctive relief would put them

out of business. The defendant also argued that the plaintiffs had an adequate remedy at law where

they were seeking monetary damages, not equitable relief. The defendant further argued that the

plaintiffs did not have a likelihood of success on the merits where they did not have a legal right

to require the defendant to extend the note beyond the maturity date and that they had no ability to

establish irreparable harm based on their considerable financial resources.

¶ 34 Lastly, the defendant contended that the balance of equities favored denying injunctive

relief where it would resurrect expired loan agreements and force the defendant to enter into a new

loan agreement that would presumably continue until the underlying litigation was resolved. The

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defendant noted that, in the meantime, it would lose contractually accrued interest and the ability

to minimize the loss of its principal.

¶ 35 At the April 3, 2023, hearing, the trial court made the following findings about the

preliminary injunction request. The court refused to accept the defendant’s argument that the

plaintiffs were unable to obtain a preliminary injunction because they did not request injunctive

relief in their fourth amended complaint. The court noted that, even though the plaintiffs’ request

for injunctive relief in their third amended complaint was ultimately dismissed, they had filed a

motion requesting a preliminary injunction. The court found that, as a court of general jurisdiction,

it could consider this motion, even without a request for injunctive relief in the underlying

complaint. The court then found that the status quo of this case was when the lawsuit was filed; at

that time, there was a viable contract that had not yet matured; and the controversy arose before

the maturity of the promissory note. Thus, the court also did not accept the defendant’s argument

that the status quo was an unenforceable contract that had matured. Instead, the court found that

the last actual peaceable, uncontested status that preceded the pending controversy was the

existence of a viable, enforceable contract. The court then took the decision whether to grant or

deny the preliminary injunction under advisement. That same day, the trial court entered an order,

via docket entry, denying the defendant’s motion to dismiss the plaintiffs’ fourth amended

complaint, reiterating its findings about the preliminary injunction, and noting that the request for

injunctive relief was still under advisement.

¶ 36 On April 12, 2023, the trial court entered an order, granting the plaintiffs’ motion for

preliminary injunction. In the order, the court noted that the defendant agreed not to enforce its

contract with the plaintiffs until a decision was made on the preliminary injunction, and the parties

agreed that the preliminary injunction hearing would be by argument rather than witness testimony

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since one of the plaintiffs was unable to attend due to illness. The court then stated that it accepted

the plaintiffs’ argument that they were not required to pray for injunctive relief in their complaint

to be successful with their motion for injunctive relief. The court noted that the plaintiffs brought

a motion for injunctive relief, even though their underlying complaint no longer contained such a

request, and the court, as a court of general jurisdiction, could consider that motion.

¶ 37 The trial court then found unpersuasive the defendant’s argument that the status quo was

one in which there was no existing, enforceable contract because the debt obligation had matured.

The court noted that Gold v. Ziff Communications Co., 196 Ill. App. 3d 425, 431 (1989), explained

that the status that was sought to be preserved was the last known, peaceful position prior to the

controversy. The court here found that the position of the parties before any controversy and at the

time of the alleged controversy was an existing enforceable contract. The court noted that the

plaintiffs filed their complaint and motion seeking injunctive relief before the maturity of the

promissory note. Thus, the court found that the status quo that was to be preserved was the position

the parties had prior to the maturity of the loan agreement in question.

¶ 38 The trial court then found that the plaintiffs possessed a protectable right in the alleged

breach of the loan agreements, which the defendant had not sought to dismiss; the alleged RICO

violations; and the claimed liability due to the defendant’s alleged control over the plaintiffs’

employees. The court also found that there was a sufficient likelihood of success on the merits

where the plaintiffs had sufficiently raised an issue as to whether the defendant properly acted

under the terms of the loan agreements by entering into loans with unauthorized persons, as well

as sufficiently raised issues regarding actions taken by the defendant’s employees.

¶ 39 The trial court further found that there would be irreparable injury absent injunctive relief

where the plaintiffs, as part of the refinanced loans, agreed to pledge their homes and certain

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business assets as collateral. The court noted that the defendant intended to proceed in enforcing

its liens on the plaintiffs’ assets, which would include foreclosing on the plaintiffs’ homes and

certain inventory of the plaintiffs’ business. The court then noted that it was well settled law that

real estate was unique, and once a home was foreclosed upon, the owner lost the right to peacefully

enjoy that asset, especially a residence the owner possessed for a considerable time period. Further,

the court noted that the enforcement of the UCC liens could severely damage the plaintiffs’ ability

to conduct their longtime business.

¶ 40 As for whether there was an adequate remedy at law, the trial court admitted that it

struggled with this element since the plaintiffs were seeking monetary relief and, therefore, there

was a relief at law for them. However, the court noted that the question was whether that relief

was adequate. The court stated that it was concerned whether—given the extent of potential harm

absent an injunction, i.e., the loss of one or two of the plaintiffs’ residences and the possible

cessation of a longtime business—that remedy was adequate. Moreover, the court noted that it was

reasonably concerned that, even if successful, it could be quite some time before the plaintiffs

would receive the remedies awarded to them, given the length of time already expended for this

litigation to progress. Therefore, although the court noted that a remedy at law existed, it concluded

that the remedy was not sufficiently adequate.

¶ 41 Regarding balancing the equities, the trial court found that the hardships the plaintiffs

would incur absent an injunction would be much harsher than the hardships the defendant would

incur if granted. The court noted the harm caused to the plaintiffs could be irreparable, whereas, if

they were unsuccessful in their lawsuit, they would still be bound by the terms of the loan

agreements and susceptible to the default remedies under those agreements. In contrast, the

overriding hardship the defendant would incur if the injunction was granted was time lost in its

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ability to enforce the parties’ agreement. Thus, based on the above, the court granted the

preliminary injunction. The defendant subsequently filed a notice of interlocutory appeal pursuant

to Illinois Supreme Court Rule 307(a)(1) (eff. Nov. 1, 2017).

¶ 42 II. ANALYSIS

¶ 43 On appeal, the defendant contends that the trial court erred in granting the preliminary

injunction where (1) the plaintiffs had no clearly ascertainable right in need of protection, (2) they

suffered no irreparable harm, (3) they had an adequate remedy at law, (4) they did not have a

likelihood of success on the merits, and (5) a balancing of the equities favored the defendant.

¶ 44 A preliminary injunction preserves the status quo until the merits of the case are decided.

Clinton Landfill, Inc. v. Mahomet Valley Water Authority, 406 Ill. App. 3d 374, 378 (2010). This

is an extraordinary remedy that is applicable only in extreme emergency situations or where

serious harm would result if it was not issued. Id. To obtain a preliminary injunction, the moving

party must demonstrate (1) a clear, ascertainable right in need of protection, (2) irreparable injury

in the absence of an injunction, (3) no adequate remedy at law, and (4) a likelihood of success on

the merits of the case. City of Kankakee v. Department of Revenue, 2013 IL App (3d) 120599,

¶ 17. “The trial court may also deny a preliminary injunction where the balance of hardships does

not favor the moving party.” Clinton Landfill, Inc., 406 Ill. App. 3d at 378. The moving party must

raise a fair question as to each element required to obtain the injunction. Id.

¶ 45 Generally, an abuse of discretion standard of review applies to the trial court’s decision to

grant or deny a preliminary injunction. Smith v. Department of Natural Resources, 2015 IL App

(5th) 140583, ¶ 22. A trial court abuses its discretion where its ruling is arbitrary, fanciful, or

unreasonable or where no reasonable person would adopt the court’s view. Id. However, where

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the trial court does not make any factual findings and, instead, rules on a question of law, the

standard of review is de novo. Id. ¶ 23.

¶ 46 A. Clear, Ascertainable Right in Need of Protection

¶ 47 The defendant first contends that the plaintiffs had no clearly ascertainable right in need of

protection where their request for injunctive relief in their complaint was dismissed. Specifically,

the defendant argues that count V of the plaintiffs’ third amended complaint, which requested

injunctive relief, and motion for preliminary injunction were predicated on e-mail agreements

between the parties. However, the counts in the complaint based on those e-mail agreements were

ultimately dismissed by the trial court. Because the plaintiffs’ fourth amended complaint failed to

request injunctive relief, and the allegations in the motion for preliminary injunction were entirely

based on the e-mail agreements, the defendant contends that the plaintiffs no longer had a

protectable interest sufficient to grant preliminary injunctive relief.

¶ 48 In granting the preliminary injunction, the trial court accepted the plaintiffs’ argument that

they were not required to pray for injunctive relief in their complaint in order to obtain such relief.

As a court of general jurisdiction, the court could consider their motion for injunctive relief, even

though their underlying complaint no longer requested that relief. In support of this decision, the

court relied on In re Marriage of Schweihs, 222 Ill. App. 3d 887 (1991), and In re Marriage of

Elliott, 265 Ill. App. 3d 912 (1994). In Schweihs, 222 Ill. App. 3d at 895, the appellate court

concluded that the trial court was authorized to enjoin a bank from initiating foreclosure

proceedings on marital property in any other court, other than the court hearing the dissolution

action. There, the request for preliminary injunction was raised in a motion. Id. at 889-90.

¶ 49 Here, although we recognize that the plaintiff did not make a request for injunctive relief

in their fourth amended complaint, they did file a motion requesting that relief. A request for TRO

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or preliminary injunction may be included in the original complaint or it may be requested by

motion filed at the same time or later and supported by proper affidavits. Kolstad v. Rankin, 179

Ill. App. 3d 1022, 1029 (1989). Thus, we find that the plaintiffs here properly requested injunctive

relief in their motion, even though they did not request such relief in their fourth amended

complaint.

¶ 50 In making this decision, we note that the defendant seems to agree with this conclusion in

its arguments made on appeal. In its appellate briefs, the defendant acknowledges that the trial

court has jurisdiction and the power to enter preliminary injunctive relief in this matter. However,

the defendant argues that the trial court has wrongly conflated jurisdiction to enter a preliminary

injunction with the pleading and proof requirements to establish preliminary injunctive relief. The

defendant then argues that the plaintiffs failed to plead facts establishing a protectable interest in

need of injunctive relief where the motion relied on the dismissed allegations concerning the e-

mail agreements. Thus, the question is whether the plaintiffs’ motion for preliminary injunction

pled sufficient facts to establish a protectable interest.

¶ 51 After carefully reviewing the plaintiffs’ motion for preliminary injunction, we disagree

with the defendant’s contention that the motion was entirely based on the e-mail agreements.

Although the facts concerning those e-mails were discussed in the motion, the plaintiffs also

alleged facts supporting its claims surrounding the double-booking loan scheme. Specifically, the

plaintiffs set forth facts about how the scheme worked; the defendant’s alleged part in the scheme;

the execution of the October 30, 2020, promissory note that was secured by certain real estate,

including Mark’s home and Ron’s family farm; the loan maturing on October 30, 2022; the

plaintiffs’ anticipation that the defendant would initiate collection proceedings on the collateral;

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and the permanent, irreparable harm they would suffer if the defendant was allowed to pursue its

default remedies.

¶ 52 As for the plaintiffs’ arguments to each of the preliminary injunction elements, the

plaintiffs argued that they had protectable rights in their personal and business property and assets;

they had claims against the defendant that had already survived dismissal, which included claims

that were based on the double-booking scheme; they would suffer permanent harm as Mark would

lose his family home, Ron would lose the family farm, and they would have to close down their

dealerships; and an award of damages would not adequately protect their interests as a monetary

award would not return their land or business. They further argued that they had a strong likelihood

of success on the merits as demonstrated by the trial court’s partial denial of the defendant’s motion

to dismiss. They contended that the defendant flagrantly breached the loan agreements and

imposed millions of dollars of debt on them, and they were defrauded into agreeing to execute

personal guarantees.

¶ 53 Lastly, the plaintiffs argued that the balance of harm favored entering the preliminary

injunction, as their harm would be substantial and permanent and would include the loss of home,

land, and business. However, there would be no irreparable harm to the defendant if prevented

from foreclosing on the collateral during the course of the litigation. If the defendant ultimately

prevailed, it could then pursue its default remedies. Thus, based on the above, we conclude that

the plaintiffs’ motion for preliminary injunction was not entirely based on the e-mail agreements,

and it alleged sufficient facts to set forth the elements for injunctive relief.

¶ 54 The defendant next contends that the plaintiffs failed to establish a clearly ascertainable

right because the loan agreements were fully executed as they matured on October 30, 2022. The

defendant argues that the plaintiffs are effectively seeking a mandatory injunction, requiring the

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defendant to enter into a new loan agreement extending the maturity date until the completion of

the litigation. In support of this position, the defendant cites S&F Corp. v. American Express Co.,

60 Ill. App. 3d 824, 830 (1978), in which the appellate court held that the trial court erred in

granting a mandatory injunction requiring a party to continue performing under a contract that

contained a valid at-will termination provision. Specifically, the court concluded that, since the

contract contained a valid termination provision, the party seeking the injunctive relief did not

establish a clear right to the relief sought. Id. Moreover, the court found that the preliminary

injunction did not preserve the status quo; instead, it altered the status quo by requiring the parties

to continue with the contract until further court order. Id. Similarly, the defendant here argues that

the plaintiffs have no protectable right to insist on an extension of the loan agreements where the

loans had already matured.

¶ 55 In response, the plaintiffs contend that the defendant’s argument is without merit since their

motion for preliminary injunction was filed before the loan matured, and the defendant essentially

consented to the entry of a TRO prior to the maturity of the loan. Thus, the plaintiffs argue that the

last, peaceable status of the parties prior to the filing of the motion was that of an unmatured

promissory note with no basis upon which it could be enforced by the defendant.

¶ 56 Also, the plaintiffs deny that they are requesting a mandatory injunction and instead argue

that their request and the court’s order was wholly prohibitory—specifically, to prohibit

enforcement of the promissory note. The plaintiffs indicate that they did not request that the note

be cancelled, that the maturity date be changed, or that the interest not accrue by the higher default

rate. Thus, they argue that, unlike in S&F Corp., the trial court here did not mandate that the

defendant continue performing under the parties’ agreement; it simply prohibited the defendant

from enforcing a promissory note during the parties’ litigation. The plaintiffs also argue that they

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do have a clearly ascertainable right in need of protection as they risk the loss of Mark’s home,

Ron’s family farm, and their businesses.

¶ 57 The purpose of a preliminary injunction is to preserve the status quo in property or rights

at issue until a final hearing on the merits can be held. Gold, 196 Ill. App. 3d at 431. Status quo is

defined as the last, actual, peaceable, uncontested status that preceded the pending controversy. Id.

A mandatory preliminary injunction does not preserve but alters the status quo. Halvorsen v.

Richter, 37 Ill. App. 3d 344, 346 (1976). In general, a mandatory preliminary injunction is not

favored; the only justification for such relief is to maintain the status quo where necessary to

prevent irreparable injury. Gold, 196 Ill. App. 3d at 431. Thus, the court must find that there exists

great necessity for a mandatory preliminary injunction, and the need for such relief must be free

from doubt to justify it. Id. Usually, the status quo is maintained by keeping everything at rest and

in its present condition. Id. at 432. However, sometimes the status quo is not a condition of rest

but of action because the condition of rest will inflict irreparable injury on the party seeking

injunctive relief. Id.

¶ 58 In this case, the trial court found that the position of the parties at the time of the

controversy, and before the controversy, was an existing, enforceable contract. The court noted

that the plaintiffs filed their complaint against the defendant and their motion for injunctive relief

before the maturity of the note. Thus, the court found that the status quo that was to be preserved

was the position the parties had prior to the maturity of the loan agreement in question.

¶ 59 We agree with the trial court that the last, actual, peaceable, uncontested status that

preceded the pending controversy was that of an unmatured note. Also, even though the note

matured in October 2022, during the pendency of these proceedings, we note that the defendant

agreed to not pursue its default remedies until the court ruled on the preliminary injunction request.

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Thus, the issuance of a preliminary injunction prohibiting the defendant from pursuing any default

remedies until the litigation was resolved preserved the status quo by keeping everything at rest

and in that condition to prevent irreparable harm, i.e., the foreclosure of the plaintiffs’ properties.

The preliminary injunction did not mandate that the defendant continue performing under the

parties’ agreement. Instead, it simply prohibited the defendant from enforcing the note while the

litigation was ongoing to prevent the defendant from foreclosing on the plaintiffs’ property during

this time.

¶ 60 Moreover, the trial court found, and we agree, that the plaintiffs did possess a protectable

right, that being an alleged breach of the loan agreements, which the defendant has not sought to

dismiss; the alleged RICO violations; and the claimed liability due to the defendant’s alleged

control over the plaintiffs’ employees (even though the defendant disagrees with the viability of

these causes of actions). Also, the plaintiffs have established a clearly ascertainable right in their

personal and business property and assets that need protection. Thus, we find that the trial court

properly determined that the plaintiffs have demonstrated an ascertainable right in need of

protection.

¶ 61 B. Irreparable Harm and Adequate Remedy at Law

¶ 62 The second and third elements for a preliminary injunction are closely related. Happy R

Securities, LLC v. Agri-Sources, LLC, 2013 IL App (3d) 120509, ¶ 36. An alleged injury is defined

as irreparable when it is of such nature that the injured party cannot be adequately compensated

with monetary damages and damages cannot be measured by pecuniary standards. Id. The mere

existence of a remedy at law, or the fact that a monetary judgment may be the ultimate relief, does

not deprive the trial court of its power to grant injunctive relief if that remedy is inadequate. K.F.K.

Corp. v. American Continental Homes, Inc., 31 Ill. App. 3d 1017, 1021 (1975). An adequate

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remedy at law is one that is “clear, complete, and as practical and efficient to the ends of justice

and its prompt administration as the equitable remedy.” Id. The trial court must look at the entire

record to determine if irreparable harm would occur absent a preliminary injunction. Gold, 196 Ill.

App. 3d at 434. “Where the only remedy sought at trial is damages, the two requirements—

irreparable harm, and no adequate remedy at law—merge. The question is then whether the

plaintiff will be made whole if he prevails on the merits and is awarded damages.” Roland

Machinery Co. v. Dresser Industries, Inc., 749 F.2d 380, 386 (7th Cir. 1984).

¶ 63 In arguing that the plaintiffs here have failed to establish irreparable harm and no adequate

remedy at law, the defendant relies on Kanter & Eisenberg v. Madison Associates, 116 Ill. 2d 506

(1987). There, the trial court granted a law firm tenant’s request for a preliminary injunction,

restraining its landlord from filing an eviction action during the pendency of the underlying

proceedings where the firm challenged the additional rental amounts that the landlord claimed

were owed. Id. at 508-09. On appeal, the supreme court concluded that the firm failed to establish

irreparable harm and an inadequate remedy at law where it was financially able to pay the disputed

rent and then proceed with its action for damages in the underlying lawsuit. Id. at 514-15. In fact,

the firm actually paid the demanded amount in dispute with a portion of the second payment being

escrowed pursuant to the trial court’s order. Id. at 515.

¶ 64 The defendant here contends that, like in Kanter, the plaintiffs had the financial ability to

pay off the loan and await the outcome of the trial on the merits. Specifically, the defendant notes

that Henson’s affidavit outlined the plaintiffs’ considerable financial ability and undermined their

claim that they would suffer irreparable harm of being put out of business if the defendant collected

on the indebtedness. For instance, the defendant noted that the plaintiffs’ 2022 dealer financial

statement revealed that the total net worth of the Ward Chrysler Center was $2,803,985. Further,

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the defendant noted that the combined net worth of Ron and Mark exceeded $19 million. Thus,

the defendant contends that the plaintiffs cannot, in good faith, allege that their failure to obtain

injunctive relief will put them out of business. Moreover, the defendant argues that Mark’s

affidavit did not contain any financial information that would demonstrate that they were

financially unable to pay off the indebtedness.

¶ 65 In response, the plaintiffs argue that their financial worth is almost entirely tied up in the

business, their homes, and Ron’s farming operation with virtually no liquid assets, much less $2.7

million to pay off the promissory note. The plaintiffs contend that, because of the defendant’s

conduct, they have depleted their personal wealth and mortgaged their property and their

businesses “to the hilt,” and they were forced to execute the promissory note with the defendant

because they had no personal savings to pay off the debt.

¶ 66 In applying the deferential abuse of discretion standard applicable to our review, we

conclude that the trial court did not err in finding that the plaintiffs raised a fair question as to the

second and third elements for a preliminary injunction. After evaluating the parties’ written

submissions, which included Henson’s and Mark’s affidavits, and the defendant’s arguments and

comparison to Kanter, the court concluded that the plaintiffs had demonstrated irreparable harm

and no adequate legal remedy.

¶ 67 In finding that there was irreparable injury, the trial court noted that, as part of the

refinanced loan, the plaintiffs agreed to pledge their homes as well as certain business assets as

collateral and that the defendant had expressed its intent to enforce the liens on those assets. The

court noted that it was well settled that real estate was unique, and once a home was foreclosed

upon, the owner lost the right to peacefully enjoy that asset. Further, the court noted that the

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enforcement of the UCC liens could irreparably damage the plaintiffs’ ability to adequately

conduct its longtime business.

¶ 68 As for whether the plaintiffs had an adequate remedy at law, the trial court acknowledged

that the plaintiffs were seeking monetary relief and, therefore, had a remedy at law. However, the

court noted that the question was whether that remedy was adequate. Given the extent of the

potential harm absent an injunction (i.e., the loss of one or two of the plaintiffs’ residences and

possible cessation of a longtime business), the court determined that remedy was inadequate. Also,

the court noted that, even if successful, it could be some time before the plaintiffs could receive

the remedies awarded to them, given the length of time already expanded for the underlying

litigation to progress. Thus, the court found that, although there existed a remedy at law, the

remedy was not sufficiently adequate. After carefully reviewing the record and the relevant case

law, we find that the court did not abuse its discretion in finding irreparable harm and no adequate

remedy at law.

¶ 69 C. Likelihood of Success on the Merits

¶ 70 The defendant contends that the plaintiffs clearly have no ability to establish a likelihood

of success on the merits because they cannot establish the other elements required for the issuance

of a preliminary injunction. In response, the plaintiffs note that they need only raise a fair question

as to their likelihood of success on the merits. They argue that they have satisfied this standard as

demonstrated by the fact that they have alleged six causes of action that have survived “incessant

pleadings motion practice” and the defendant did not challenge the validity of their contract claims

at the pleading stage.

¶ 71 First, we find the defendant’s argument that the plaintiffs cannot establish a likelihood of

success on the merits because they did not establish the other preliminary injunction requirements

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unpersuasive. To show a likelihood of success on the merits, a party must raise a fair question as

to the existence of the right claimed. Abdulhafedh v. Secretary of State, 161 Ill. App. 3d 413, 417

(1987). For this requirement, we look at whether the plaintiff will likely be entitled to the relief

requested in the underlying complaint, not whether the plaintiff has satisfied the other requirements

for a preliminary injunction. Second, as explained above, we have concluded that the plaintiffs

here have established the other requirements for the issuance of a preliminary injunction.

¶ 72 Turning to the issue of whether the plaintiffs raised a fair question as to the existence of

the right claimed, we note that, in finding that this element has been met, the trial court indicated

that there had been considerable argument by the parties as to the RICO action and whether the

defendant could be liable for the asserted claim of control over certain employees of the plaintiffs.

However, the court found that the plaintiffs sufficiently raised an issue as to whether the defendant

properly acted under the terms of the loan agreement by entering into loans with unauthorized

persons, as well as sufficiently raised issues regarding actions taken by the defendant’s employees.

After carefully reviewing the record, which reveals unsuccessful attempts by the defendant to

dismiss some of the plaintiffs’ remaining causes of action, we find that the record supports the trial

court’s conclusion that the plaintiffs have a likelihood of success on the merits. Thus, we conclude

that the court’s decision that the plaintiffs raised a fair question as to the likelihood of success on

the merits on the plaintiffs’ remaining causes of action set forth in their fourth amended complaint

was not an abuse of discretion.

¶ 73 D. Balance of Equities

¶ 74 The defendant contends that it is not equitable to reward the plaintiffs with a preliminary

injunction when they have the ability to pay their indebtedness and await the outcome of the trial

on their purely legal claims for monetary damages. The defendant also contends that enjoining it

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from collecting on the loans during the course of the litigation would impose undue hardship,

whether from the changes in the market value of the collateral or changes to the plaintiffs’ business.

The defendant noted that it was losing the contractually accruing interest on the loan agreements,

as well as the opportunity to stop the accrual of that interest, and the opportunity to minimize the

loss of its principal.

¶ 75 Once the trial court establishes the requirements for a preliminary injunction, the court

must then balance the equities to determine the relative inconvenience to the parties and whether

the burden on defendant should the injunction issue outweighs the burden on the plaintiff should

it be denied. Franz v. Calaco Development Corp., 322 Ill. App. 3d 941, 946 (2001). In balancing

the hardships, the trial court here found that the hardships the plaintiffs would incur absent an

injunction would be much harsher than the hardships on the defendant if the injunction were

granted. The court noted that the plaintiffs would suffer irreparable harm if the defendant was

permitted to foreclose on their homes and business assets, whereas, if the plaintiffs were

unsuccessful with their lawsuit, they would still be bound by the terms of the loan agreements and

susceptible to the defendant’s default remedies, which included an increase in the balance on the

loan’s interest provisions and the enforcement of the liens pledged as collateral. In contrast, the

hardship incurred by the defendant if the injunction were granted would be time lost in its ability

to enforce the loan agreements. As we conclude that the trial court’s decision was supported by

the record, we find that its decision on the balancing of the equities was not an abuse of discretion.

¶ 76 III. CONCLUSION

¶ 77 For the foregoing reasons, we affirm the judgment of the circuit court of Williamson

County.

¶ 78 Affirmed.

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 Ron & Mark Ward, LLC v. Bank of Herrin, 2024 IL App (5th) 230274

Decision Under Review: Appeal from the Circuit Court of Williamson County, No. 21-
MR-107; the Hon. John William Sanders, Judge, presiding.

Attorneys Mark S. Johnson, of Johnson, Schneider & Ferrell, LLC, of Cape
for Girardeau, Missouri, for appellant.
Appellant:

Attorneys Dan Twetten, of Loevy & Loevy, of Boulder, Colorado, Thomas
for M. Hanson, of Loevy & Loevy, of Grapevine, Texas, and Brian
Appellee: E. McGovern and W. Chris Jarvis, of McCarty, Leonard &
Kaemmerer, L.C., of Town & Country, Missouri, for appellees.

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