Second District Reverses Ruling on Injunctive Equitable Attachments
The Second District Appellate Court of Illinois recently discussed the application of injunctive equitable attachments with respect to two consolidated cases brought by the same plaintiff, Hensley Construction, LLC against defendants Pulte Home Corporation and Del Webb Communities of Illinois, Inc. In each case, Hensley entered into contracts by which the defendant would provide and install underground utilities in residential home communities. The plaintiff’s complaints alleged that each defendant owed the plaintiff money for the work performed and filed a motion to compel deposit of retention funds into an escrow account. In each case, the trial court granted the plaintiff’s motion and ordered each defendant to deposit funds into an escrow account. Each defendant appealed claiming that the trial court’s rulings amounted to prejudgment equitable attachment and the plaintiff had failed to establish the requisite elements for those injunctions.
The Second District, in overturning the trial court’s order in each case, reiterated that Illinois courts have consistently forbade such injunctions and, further, the only exception is when the claimant has an interest in the specific funds (known as the “specific funds exception”). In these cases, plaintiff Hensley did not show that the specific funds exception applied because the funds that were ordered deposited were not specific to the underlying dispute. The court also noted that the plaintiff failed to earn the remaining 3% of the retainage because it failed to establish that municipalities gave their approval of the projects (a condition precedent to recovering the remaining retainage) and failed to show the irreparable harm requirement of injunctive relief.
The most compelling aspect of the testimony in these cases was that of the defendants’ affidavits. Defendants in both cases stated that funds for the project were not held in segregated accounts or earmarked for the specific project. Therefore, plaintiff could not state that the specific funds that were to be placed in escrow were directly related to the project at issue.
This seems to be a very convenient way for a defendant-debtor to avoid equitable attachment. However, it is also noted that these types of equitable attachment are frowned upon in the law because the equitable attachment is a restraint of the defendant’s control over property in its possession to satisfy a claim not yet reduced to judgment.
