Lake in the Hills Aviation Group, Inc. v. Village of Lake in the Hills

No. 2--98--0045



IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

LAKE IN THE HILLS AVIATION ) Appeal from the Circuit Court
GROUP, INC., GARY MEISNER, ) of McHenry County.
HOWARD SEEDORF, and GERALD )
FINEFIELD, )
)
Plaintiffs-Appellees, )
)
v. ) No. 97--MR--282
)
VILLAGE OF LAKE IN THE HILLS, ) Honorable
) James C. Franz,
Defendant-Appellant. ) Judge, Presiding.

PRESIDING JUSTICE GEIGER delivered the opinion of the court:
The defendant, Village of Lake in the Hills (Village), appeals
from the December 19, 1997, order of the circuit court of McHenry
County preliminarily enjoining it from taking possession of the
Lake in the Hills Airport from the plaintiffs, Lake in the Hills
Aviation Group, Inc., Gary Meisner, Howard Seedorf, and Gerald
Finefield. On appeal, the Village argues that the entry of a
preliminary injunction was improper because the plaintiffs failed
to present sufficient evidence demonstrating that they were
entitled to such relief. We reverse and remand.
The facts relevant to the disposition of this appeal are as
follows. The Village is a municipal corporation which owns the
Lake in the Hills Airport (airport). In February 1992, the Village
entered into an Airport Operating Agreement (operating agreement)
with Lake in the Hills Aviation Group, Inc. (the Av Group). Gary
Meisner, Gerald Finefield, and Howard Seedorf each own a one-third
share of the Av Group. The term of the operating agreement was
from February 12, 1992, through February 11, 2004.
Under the provisions of the operating agreement, the Av Group
was designated as the "operator" of the airport and took possession
of the airport premises on February 12, 1992. As operator, the Av
Group was required to provide certain services at the airport,
including aircraft sales, aircraft maintenance, charter services,
and flight training facilities. The operating agreement permitted
the Av Group to provide these services directly or by subcontract.
In addition, the Av Group was obligated to collect all revenues and
pay all expenses associated with the operation of the airport. The
operating agreement also required the Av Group to pay the Village
$6,000 per month plus a percentage of the gross revenue it received
from its operation of the airport.
Additionally, the operating agreement required the Av Group to
operate the facility as a public airport at all times. The Av
Group was also required to comply with all applicable municipal,
federal, and state laws and regulations relating to airports. In
the event that the Av Group failed to abide by the terms of the
operating agreement, the Village had the right to terminate the
operating agreement and to reenter the airport premises.
In 1992, the Av Group subcontracted the aircraft sales,
aircraft maintenance, charter, and flight school services to
various companies individually owned by Meisner, Finefield, and
Seedorf. The aircraft sales service was subcontracted to Meisner
Aircraft Sales, which was owned by Meisner. The aircraft
maintenance service was subcontracted to Finefield Aviation, which
was owned by Finefield. The charter and flight school services
were subcontracted to Northern Illinois Flight Center, which was
owned by Seedorf. These subcontract agreements provided for a
monthly lease payment to the Av Group and were automatically
renewable on a yearly basis. Although the Av Group paid the
Village a percentage of these lease amounts, the Village did not
receive a percentage of the gross revenues of Meisner Aircraft,
Finefield Aviation, or Northern Illinois Flight Center.
On May 10, 1996, the Village was notified that the Illinois
Department of Transportation (IDOT) had received a formal letter of
complaint concerning the operation of the airport. The complaint
had been made by Fred Shay, president of Blue Skies Flying Services
(Blue Skies). Shay operated a flight school out of the airport.
Shay complained that Seedorf had refused to sell him airplane fuel
and had assaulted and harassed his employees. Shay also complained
that the Av Group would not provide him with an agreement to
operate at the airport unless he complied with certain
requirements, including an EPA storm water protection permit, $5
million in insurance coverage, and the payment of other monthly
fees.
IDOT warned the Village that, under the terms of a $200,000
development grant the Village had received from the state, it was
required to control and operate the airport "for the rightful,
fair, equal, and uniform use and benefit of the public." IDOT
explained that the Village could not deny access to the airport or
its facilities to any individual or company desiring to do business
at the airport unless there were compelling reasons justifying such
a denial. IDOT also suggested that there was a conflict of
interest in permitting the primary service providers at the airport
to serve in the capacity of operator. IDOT recommended that the
Village create a set of operating rules and regulations and develop
separate agreements, leases, or contracts for the airport operator
and the various subcontractors. Although the Village apparently
spoke with IDOT about these problems, it took no formal action to
remedy them.
On October 9, 1996, the Village was notified that IDOT had
received another complaint about the Av Group. This complaint was
made by a teacher at Prospect High School who used the airport to
teach his physical science and aeronautics class. Apparently,
Seedorf refused to sell the teacher fuel once he began renting
planes from Blue Skies. IDOT warned the Village that the airport
would not be considered for further state and federal airport
funding until these discriminatory practices were remedied. Under
IDOT s Proposed Airport Improvement Program, the airport had
previously been designated to receive $8.5 million in federal and
state funds between 1996 and 1999.
On October 10, 1997, the Village sent the Av Group notice that
it was in default on the operating agreement. The notice provided
the following specific violations of the covenants contained in the
operating agreement:
"1. Failing to pay the Village the applicable percentage
of gross revenues received by Messrs. Seedorf, Meisner and
Finefield and their business entities as 'subcontractors' of
[the Av Group];
2. Arbitrarily and discriminatorily refusing to sell
fuel and lease unoccupied hangar space to Blue Skies Flight
Services, Inc. *** or its clients;
3. Arbitrarily and discriminatorily refusing to allow
other commercial enterprises to operate at the Airport;
4. Arbitrarily and discriminatorily refusing to offer
a tie-down agreement to Blue Skies on terms equally applicable
to others;
5. Operating as the exclusive Fixed Base Operator at the
Airport in violation of 49 U.S.C.  40103(e), applicable to
the Airport by reason of paragraph 10.2 of the Agreement and
state grant assurances; and
6. Violating, by virtue of the foregoing actions, the
FAA regulations regarding airport use ([14] C.F.R. [Pt.] 152,
App. D), applicable to the Airport by reason of paragraph 10.2
of the Agreement and state grant assurances."
The notice further provided that the operating agreement would be
terminated on December 10, 1997, and that the Village would re-
enter the airport premises on that date.
On December 3, 1997, the Av Group, Meisner, Finefield, and
Seedorf (collectively, plaintiffs) filed the instant declaratory
judgment action. The plaintiffs alleged that they had fully
performed their obligations under the operating agreement and that
they had not breached any of its conditions or terms. The
plaintiffs requested a judgment declaring them to be in compliance
with the terms of the operating agreement and that the Village was
not entitled to reenter the airport and remove them from the
premises.
Also on December 3, 1997, the plaintiffs filed motions for the
entry of a temporary restraining order and a preliminary
injunction. On December 8, 1997, the trial court entered a
temporary restraining order prohibiting the Village from reentering
the airport to remove the Av Group and from taking possession of
the premises.
On December 18, 1997, the trial court held a hearing on the
motion for preliminary injunction. At the hearing, Seedorf
testified that the Av Group had made every single monthly payment
due to the Village under the agreement, including a monthly
percentage of Av Group s gross receipts. These payments totaled
over $500,000. He testified that the Village did not receive a
percentage of the gross revenues of Meisner Aircraft, Finefield
Aviation, or Northern Illinois Flight Center because they were not
the "operator" of the airport. Rather, these businesses had
contracted with the Av Group to provide services at the airport.
On cross-examination, Seedorf testified that any prospective
businesses that wished to rent hangar space at the airport were
required to execute a rental agreement. This agreement prohibited
the business from conducting any commercial activity in the hangar
without the express written permission of the Av Group. At no time
did the Av Group ever permit any individual or business to conduct
commercial activities in the airport hangars. However, Seedorf
acknowledged that the Av Group waived this prohibition for Northern
Illinois Flight Center. Therefore, Seedorf s business was
permitted to conduct commercial activities in the airport hangars.
Seedorf also acknowledged that, on December 12, 1995, he sent
Fred Shay a letter indicating that, in order for Blue Skies to
operate at the airport, he would have to comply with certain
requirements, including (1) the execution of a commercial operating
agreement; (2) $5 million in liability insurance coverage; and (3)
the payment of an annual $2,500 fee for an Illinois EPA storm water
protection and pollution prevention plan. Appended to this letter
were purported excerpts of a document entitled "Lake in the Hills
Airport Policy." The document detailed additional monthly fees due
to the Av Group for each instructor or mechanic that would be
working at the airport. Similar demands were made to the other
businesses that sought to operate out of the airport.
Seedorf acknowledged that these requirements had not been
officially approved by the Village. He also acknowledged that none
of these fees were ever paid by Meisner Aircraft, Finefield
Aviation, or Northern Illinois Flight Center. Additionally, none
of the plaintiffs businesses carried $5 million in insurance
coverage. Seedorf acknowledged that, under the terms of the
operating agreement, only $1 million in coverage was required.
Finefield also testified at the hearing. Included in his
testimony was an explanation of the content of certain
conversations among Meisner, Seedorf, and Finefield at the time the
operating agreement was executed. He testified that, based upon
these conversations, it was his understanding that only Meisner
Aircraft would be permitted to provide aircraft sales service at
the airport, only Finefield Aviation would be permitted to provide
maintenance services at the airport, and only Northern Illinois
Flight School would be permitted to provide flight instruction.
Maureen Cousins testified that she is one of the owners of
Valley Service, Inc. (Valley Air). Valley Air is an executive air
charter company that has been operating at the airport since May
1995. Cousins testified that Valley Air encountered significant
difficulties from Seedorf in setting up operations at the airport.
Seedorf told her that the airport was private and that there was no
space for commercial hangars. In an effort to commence operations
at the airport, Cousins was required to speak with her attorney,
IDOT, and the Village. Although she was eventually permitted to
operate at the airport, she has never been given an operating
agreement despite repeated attempts to obtain one. Additionally,
although Valley Air has a hangar at the airport where it stores its
aircraft, it has not been permitted to conduct any commercial
operations out of the hangar. Cousins testified that Valley Air
has continually refused to comply with Av Group s requirement that
it purchase $5 million in insurance.
Fred Shay testified that he is the president of Blue Skies.
Blue Skies is a flying school and aircraft dealership. Shay
testified that his company operates out of an office outside of the
airport because it has not been permitted to conduct any commercial
operations out of its hangar on the airport premises. Shay
explained that when he first approached Seedorf about operating at
the airport, Seedorf advised him of the insurance and fee
obligations described above. Shay refused to pay these fees and
hired an attorney to contact the Village directly. Eventually,
Shay was permitted to begin operations at the airport in February
1996. After Shay commenced operations, Seedorf refused to sell him
fuel to operate his planes. On one occasion, Seedorf told Shay
that the "airport was [Seedorf's]" and that "[Seedorf] could do
whatever he wanted." Shay reported these incidents to IDOT. The
Av Group later terminated Shay s hangar lease and commenced
litigation to evict him. This litigation was later settled, and
Blue Skies was permitted to continue its operations at the airport.
Lynn Hadler testified that he operates Motive Services
Company, an aircraft maintenance company. Hadler has operated his
business out of two hangars at the airport since 1982. In 1996, he
received a notice from Av Group indicating that his lease was being
terminated because he was conducting commercial activities in his
hangars. The Av Group also initiated litigation against Motive
Services, seeking to evict it from the airport. Once again, the
litigation was settled, and Motive Services was permitted to
continue its operations at the airport.
James Bildilli testified that he was the bureau chief of
aviation, education, and safety for the aeronautics division at
IDOT. He testified that it was improper for an airport operator to
request a business to pay the fee necessary to obtain an EPA storm
water permit. He also testified that $5 million in insurance
required by the Av Group was unnecessary for the type of business
that Shay was operating. In a letter to the Village, Bildilli
noted that it was unsafe for Seedorf to refuse to sell fuel to the
businesses at the airport, as it would require pilots to fly
aircraft to other airports for the purposes of fueling. Finally,
Bildilli testified that the airport was not eligible to receive
federal or state funds because of the Av Group s discriminatory
practices and the "exclusive rights" situation created as a result
of the operating agreement.
At the close of the hearing, the trial court granted the
plaintiffs motion for a preliminary injunction. The injunction
provided as follows:
"The Village *** [is] prohibited and enjoined from re-
entering the airport premises of the Lake in the Hills Airport
*** for the purpose of removing the [p]laintiffs from all
publicly owned property and [is] also enjoined from taking
possession of the airport premises and any property, books,
records, and things associated therewith during the pendency
of this cause."
The trial court also denied the Village s request that the
plaintiffs be required to post a bond. The Village had argued that
such a bond was necessary to protect its interests, particularly in
light of the fact that it might lose $8.5 million in federal and
state grant funds. On January 12, 1998, the Village filed a timely
interlocutory appeal. On February 5, 1998, we granted IDOT leave
to file an amicus brief urging reversal of the preliminary
injunction.
On appeal, the Village argues that the trial court abused its
discretion in granting the preliminary injunction. Specifically,
the Village contends that the plaintiffs failed to prove that they
have no adequate remedy at law and that they are likely to succeed
on the merits of the case. The Village also argues that there is
a substantial public interest in removing the Av Group from the
airport premises, as the Village could potentially lose millions of
dollars in federal and state funds. Finally, the Village contends
that the trial court erred in refusing to require the plaintiffs to
post a bond.
In order to grant preliminary injunctive relief, the trial
court must find that (1) the plaintiff has demonstrated a clearly
ascertained right in need of protection; (2) irreparable injury
will occur without the injunction; (3) no adequate remedy at law
exists; and (4) there is a probability that the plaintiff will
succeed on the merits of the case. Lindholm v. Holtz, 221 Ill.
App. 3d 330, 333 (1991). It is not the purpose of a preliminary
injunction to determine any controverted rights or to decide the
merits of the case. Grillo v. Sidney Wanzer & Sons, Inc., 26 Ill.
App. 3d 1007, 1011 (1975). Rather, a preliminary injunction is
granted prior to trial on the merits for the purpose of preventing
a threatened wrong and to preserve the status quo with the least
injury to the parties concerned. Bojangles, Inc. v. City of
Elmhurst, 39 Ill. App. 3d 19, 26 (1976).
The issuance of a preliminary injunction is within the sound
discretion of the trial court upon a prima facie demonstration that
there is a fair question as to the existence of the right claimed
and that the circumstances lead to a reasonable belief that the
moving party will be entitled to the relief sought. City of
Chicago v. Airline Canteen Services, Inc., 64 Ill. App. 3d 417, 432
(1978). The reviewing court will not set aside the trial court s
determination unless there has been a manifest abuse of discretion.
Russell v. Howe, 293 Ill. App. 3d 293, 295 (1997).
Based upon our review of the record, we do not believe that
there is a probability that the plaintiffs will succeed on the
merits of their declaratory judgment action. Rather, we believe
that the evidence adduced at the hearing demonstrates that the
plaintiffs have committed numerous violations of the operating
agreement and that they have failed to operate the airport in
compliance with the applicable laws and regulations. Under the
express terms of the operating agreement, the plaintiffs were
obligated to operate the airport for the benefit of the public and
in compliance with all applicable federal and state laws and
regulations relating to airports.
For example, as an airport receiving state funding, the
plaintiffs were required to keep the airport open to all types of
aeronautical uses and were prohibited from discriminating against
others desiring to operate out of the airport. 620 ILCS 5/34 (West
1996); see also 14 C.F.R. Pt. 152, App. D (18), (19), (20) (1996).
Indeed, state law specifically provides that "the public will not
be deprived of its rightful, fair, equal and uniform use" of the
airport. 620 ILCS 5/34 (West 1996); see also 49 U.S.C.  40103(e)
(1996). The purpose of such provisions is to prohibit monopolies
and combinations in restraint of trade or commerce and to promote
and encourage competition in civil aeronautics. See Niswonger v.
Amercian Aviation, Inc., 411 F. Supp. 763, 766 (E.D. Tenn. 1975).
The evidence presented at the hearing demonstrates that the
plaintiffs attempted to prevent other businesses from operating at
the airport. The Av Group imposed numerous "minimum requirements"
to operate at the airport, including fees for an EPA storm water
permit and $5 million in insurance coverage. As noted by IDOT
employee James Bildilli, many of these fees and insurance
requirements were either improper or excessive. Additionally, none
of these requirements had been imposed upon the operations of
Meisner Aircraft, Finefield Aviation, or Northern Illinois Flight
Center. The obvious result of these "requirements" was to delay
and frustrate other businesses, such as Blue Skies and Valley Air,
from competing at the airport. Such conduct would appear to be
discriminatory and violative of state and federal law. See City of
Pompano Beach v. Federal Aviation Administration, 774 F.2d 1529,
1544 (11th Cir. 1985) (city improperly discriminated against
potential airport operator by imposing unreasonable standards and
lease requirements).
Additionally, as noted above, all of the hangar lease
agreements executed by the Av Group contained provisions that
prevented any business from conducting commercial operations within
the hangars. While the plaintiffs apparently waived this
prohibition for their own businesses, they vigorously enforced the
prohibition against Blue Skies and Motive Services. On several
occasions, the Av Group sent notices to these businesses warning
them that they were operating in violation of this lease provision.
Indeed, the Av Group terminated both of these leases and commenced
litigation against both Blue Skies and Motive Services to evict
them from the premises. Such conduct had a clear discriminatory
effect and would appear to be an illegal attempt to gain exclusive
control of the airport. See Pompano Beach, 774 F.2d at 1544;
Niswonger v. American Aviation, Inc., 411 F. Supp. 769, 770-71
(E.D. Tenn. 1975).
The plaintiffs also appear to have violated state and federal
regulations by refusing to sell fuel on the airport premises.
State aviation regulations specifically require that every airport
must provide fuel and oil facilities. 92 Ill. Adm. Code 
14.675(c) (1996). Additionally, federal regulations require the
operation and maintenance of all facilities necessary to serve the
aeronautical users of an airport and prohibit the interference with
the use of such facilities. 14 C.F.R. Pt. 152, App. D(22) (1996).
During the hearing on the plaintiff s motion, Seedorf acknowledged
that he refused to sell fuel to Shay on several occasions.
According to Bildilli, such a practice was unsafe because it would
force a pilot to fly an aircraft that was low on fuel.
The plaintiffs argue that they have not unreasonably prevented
other businesses from operating at the airport. In support of
their contention, the plaintiffs contend that Blue Skies, Motive
Services, and Valley Air all successfully commenced operations at
the airport and continued operations throughout the time in
question. Such an argument is without merit. That plaintiffs were
ultimately unsuccessful in their attempts to prevent other
businesses from operating at the airport does not negate their
discriminatory and illegal conduct.
Rather, the plaintiffs failure to operate the airport in
conformity with the applicable laws and regulations appears to be
a clear breach of their operating agreement with the Village.
Under the terms of the operating agreement, the Village would
therefore be permitted to terminate the operating agreement and
reenter the premises. Although we are mindful that the purpose of
a preliminary injunction is to preserve the status quo between the
parties and not to determine the ultimate factual issues, such
relief is not warranted where there is no possibility of success on
the merits. See Ajax Engineering Corp. v. Sentry Insurance, 143
Ill. App. 3d 81, 84 (1986). Based on the record before us at the
present time, the Av Group s right to the permanent relief it seeks
is doubtful. We are therefore compelled to conclude that the trial
court abused its discretion in entering the preliminary injunction.
We also believe that the entry of a preliminary injunction was
improper in the instant case because the plaintiffs have an
adequate remedy at law. Illinois courts have consistently held
that money damages are the appropriate remedy for breach of
contract. Northrop Corp. v. AIL Systems, Inc., 218 Ill. App. 3d
951, 954-55 (1991). In cases involving breach of contract, a
monetary damage award is more complete, practical, and efficient
than injunctive relief. Northrop Corp., 218 Ill. App. 3d at 955.
In the instant case, if an improper termination of the
operating agreement occurred, the plaintiffs damages would be
their lost profits for the duration of the agreement. See
Rivenbark v. Finis P. Ernest, Inc., 37 Ill. App. 3d 536, 538-39
(1976). At the hearing, Seedorf testified that such profits are
driven by the relatively "constant" monthly revenues received by
the Av Group. Such revenues are generated from monthly hangar and
tie-down lease payments and consistently total $17,100.
Additionally, Seedorf acknowledged that the Av Group s financial
records specifically detail the monthly income received since the
onset of the operating agreement. We therefore believe that it
would be a relatively simple task for the trial court to determine
the plaintiffs damages in the event that an improper termination
of the operating agreement should occur.
The plaintiffs argue that a monetary remedy would be
speculative because of the difficulty in calculating future lost
profits. However, the plaintiffs fail to provide any convincing
reason why its future profits may suddenly increase or decrease.
Although there certainly is the possibility of an increased demand
for hangar space and use of the airport s other facilities, such
factors may be taken into account by the trial court in making a
determination as to future lost profits. See Kessler v.
Continental Casualty Co., 132 Ill. App. 3d 540, 546 (1985) (lost
profits can be measured on the basis of past performance and
present predictions of future performance).
The plaintiffs also argue that a monetary remedy is inadequate
because they will lose possession and use of the airport. They
argue the airport is a unique piece of real estate and that they
will have difficulty finding another location where they could
conduct their business. However, the plaintiffs have failed to
cite any authority for the proposition that the Av Group s removal
from the airport, in and of itself, would be a compensable loss.
Rather, as noted above, the plaintiffs sole basis for recovery
would be its lost future profits. See Northrop, 218 Ill. App. 3d
at 954-55.
Additionally, although it is possible that the Av Group may
ultimately be required to cease operations at the airport, there is
no question that Meisner Aircraft, Finefield Aviation, and Northern
Illinois Flight Center will be able to continue their individual
business operations. These businesses have leases with the
airport, and the Village has indicated that it has no intention of
attempting to remove them from the premises. We therefore believe
it disingenuous for plaintiffs to argue that they will not be
permitted to use the airport or operate their businesses there.
Finally, the plaintiffs assert that the operating agreement
conveys a possessory interest in the airport premises and that they
cannot be removed absent an action by the Village pursuant to the
Forcible Entry and Detainer Act (the Act) (735 ILCS 5/9--101 et
seq. (West 1996)). See generally City of Chicago v. Airline
Canteen Service, Inc., 64 Ill. App. 3d 417, 435 (1978). We decline
to consider the merits of this contention because it is not ripe
for our determination. The plaintiffs filed the instant
declaratory judgment action before the date that the operating
agreement was to be terminated and before the Village made any
attempt to reenter the property. As there has been no attempt to
remove the Av Group from the premises, we decline the parties
invitation to determine the nature of Av Group s possessory
interests under the operating agreement or the necessity to
initiate proceedings under the Act.
In closing, we note that our discussion herein is offered
solely for the purposes of explaining our determination to reverse
the preliminary injunction. The discussion should not be taken as
a resolution on the ultimate merits of the case. Rather, that
determination is to be made by the trial court on the basis of the
evidence presented at trial.
For the foregoing reasons, the judgment of the circuit court
of McHenry County is reversed and the cause remanded.
Reversed and remanded.
THOMAS and RATHJE, JJ., concur.