Northrop Corp. v. AIL Systems, Inc.

578 N.E.2d 1208, 218 Ill. App. 3d 951, 161 Ill. Dec. 562, 1991 Ill. App. LEXIS 1477
CourtAppellate Court of Illinois
DecidedAugust 30, 1991
DocketNo. 1-91-0970
StatusPublished
Cited by7 cases

This text of 578 N.E.2d 1208 (Northrop Corp. v. AIL Systems, Inc.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Northrop Corp. v. AIL Systems, Inc., 578 N.E.2d 1208, 218 Ill. App. 3d 951, 161 Ill. Dec. 562, 1991 Ill. App. LEXIS 1477 (Ill. Ct. App. 1991).

Opinion

JUSTICE McNAMARA

delivered the opinion of the court:

Plaintiff filed this interlocutory appeal from an order of the circuit court of Cook County striking its prayer for injunctive relief and denying its motion for preliminary injunction.

Plaintiff, Northrop Corporation (Northrop), is primarily engaged in the design, development and manufacture of defense electronics systems for use in high technology aircraft, such as the B-1B bomber. Defendants in this action are Eaton Corporation and AIL Systems, Inc. (AIL, collectively), Eatons’s wholly owned subsidiary. Northrop and AIL entered into a contract (the Agreement) in December 1980, which provided that if AIL obtained a contract from the United States Air Force (the government) to develop the B-lB’s electronic countermeasures system (ECM system), then AIL would engage Northrop as a subcontractor for the development and initial production on the Bands 6, 7 and 8 transmitters, a part of the system. The Agreement also provided that AIL would retain Northrop as a subcontractor “subject to Government approval” if the government awarded AIL “follow-on development or production contracts.” The Agreement specifically provided for termination under certain circumstances, including: “[interruption of the team relationship *** at any time as a result of Government direction”; “[cancellation of the referenced program”; and “[t]he expiration of twelve (12) months from the date of this agreement.” AIL subsequently received the prime contract from the government, and pursuant to the Agreement, awarded Northrop contracts regarding the Bands 6, 7 and 8 transmitters for nearly 10 years, bringing in approximately $672 million in revenue to Northrop.

In the late 1980’s, in response to the government’s requests, AIL initiated an integrated program to correct deficiencies and increase the capabilities of the ECM system, which it referred to as “CORE” production effort. Pursuant to AIL’s request, Northrop submitted a proposal for $52 million for CORE effort affecting Bands 6, 7 and 8 transmitters. AIL subsequently informed Northrop that its “make/buy review” of the CORE effort, conducted “with Air Force concurrence” and required by its contract with the government, revealed that it would be more cost effective to perform the work in-house. As a result, AIL decided to perform all work itself rather than subcontracting it out. Northrop contested AIL’s decision, claiming that the Agreement required all work affecting the Bands 6, 7 and 8 transmitters be subcontracted to Northrop. AIL responded by letter dated August 9, 1990, that the work was not contemplated by or subject to the Agreement. AIL also stated that the work was performed pursuant to the correction of deficiency clause in its prime contract with the government.

On November 9, 1990, Northrop filed a complaint against AIL in the District Court for the Northern District of Illinois based upon AIL’s alleged obligation under the Agreement to subcontract CORE retrofit work to Northrop. On December 4, 1990, the Federal court dismissed Northrop’s complaint for lack of subject matter jurisdiction. AIL’s counsel informed Northrop at the hearing that it had filed a declaratory judgment action in New York seeking a judgment that the Agreement was terminated or, alternatively, that AIL had completely fulfilled its obligations under the Agreement. The New York court has stayed that suit pending the outcome of this case.

Later on the same day, Northrop filed this complaint against AIL in the circuit court of Cook County which was virtually identical to its Federal complaint and was based upon AIL’s alleged breach of the Agreement. The complaint contained causes of action for declaratory relief, promissory estoppel, breach of contract and breach of implied covenant of good faith and fair dealing. Northrop alleged that it would be irreparably harmed by AIL’s breach through loss of future business, harm from its competitors, and destruction of its technical work force. AIL subsequently moved to dismiss based upon the prior, pending New York action and on the ground that Northrop failed to properly state a claim for injunctive and other relief. On January 25, 1991, Northrop filed a preliminary injunction motion supported by six affidavits, which it maintains sets forth specific facts establishing a contract right, irreparable injury, likelihood of success on the merits and inadequacy of a monetary remedy.

On February 27, 1991, the trial judge denied injunctive relief, finding that Northrop had an adequate remedy at law for money damages for breach of contract, and that the complaint failed to contain a cause of action for specific performance. The judge did not read Northrop’s preliminary injunction motion or the supporting affidavits and refused to defer his ruling until he had done so. The court struck Northrop’s prayer for injunctive relief, denied its preliminary injunction motion, and transferred the case and the two pending motions to the law division, where they remain pending. Northrop filed an interlocutory appeal from this order on March 28, 1991. On March 8, 1991, the government terminated its CORE effort prime contract with AIL due to a lack of funding.

On appeal, Northrop argues that the trial court erred in striking its prayer for injunctive relief; in denying its preliminary injunction motion; and in failing to consider the preliminary injunction motion and supporting documents and affidavits.

We first consider whether the trial court improperly denied Northrop’s injunctive relief. Under the general principles of equity, a party seeking injunctive relief must establish a lawful right needing protection; an inadequate remedy at law; and that irreparable harm will be suffered without the protection sought. (Amigleo v. Bernardi (1988), 175 Ill. App. 3d 449, 529 N.E.2d 1020.) A party seeking a preliminary injunction must also establish a substantial likelihood of success on the merits. (American National Bank & Trust Co. v. Carroll (1984), 122 Ill. App. 3d 868, 462 N.E.2d 586.) Injunctive relief is an extraordinary remedy which should be used sparingly, with due restraint, and only when the circumstances clearly require it. (Hannan v. Watt (1986), 147 Ill. App. 3d 456, 497 N.E.2d 1307.) Finally, because the decision to grant or deny such relief lies in the trial court’s sound discretion and its findings may not be disturbed absent an abuse thereof (Instrumentalist Co. v. Band, Inc. (1985), 134 Ill. App. 3d 884, 480 N.E.2d 1273), our role on review is limited to considering whether the trial court abused its discretion (Hough v. Weber (1990), 202 Ill. App. 3d 674, 560 N.E.2d 5), or whether its judgment was against the manifest weight of the evidence. Jones v. Board of Fire & Police Commissioners (1984), 127 Ill. App. 3d 793, 469 N.E.2d 393.

We conclude that the trial court properly denied injunctive relief. First, the court specifically found that Northrop had an adequate remedy at law for money damages or breach of contract.

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578 N.E.2d 1208, 218 Ill. App. 3d 951, 161 Ill. Dec. 562, 1991 Ill. App. LEXIS 1477, Counsel Stack Legal Research, https://law.counselstack.com/opinion/northrop-corp-v-ail-systems-inc-illappct-1991.