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Tuesday, May 2, 2023

Appellate Court Lifts Preliminary Injunction Requiring Businesses Without Licenses to Close

In a recent case, the Illinois Appellate Court lifted the trial court's injunction that closed three businesses for failure to comply with a municipal business licensing ordinance. Riverdale v. American Transloading Services, et al.

A municipality enacted an ordinance to authorize it to deny a business license if the business had any outstanding village fines, taxes, or property taxes, with an exemption for businesses that made a down payment to the municipality and entered into a payment plan with the county on deliquent property taxes. In 2019, the municipality refused to renew three businesses' licenses because they were past due on their property taxes. The businesses continued to operate their businesses without a license and the municipality filed lawsuits asking the court to issue an injunction to force the businesses to cease operations without a license. The businesses countersued claiming the ordinance was unconstitutional. 

The trial court first ruled that the exemption was unconstitutional because it encroached on county authority to collect property taxes. However, the trial court upheld the remainder of the ordinance finding it was a valid exercise of the municipality's home rule powers, and issued a preliminary injunction against businesses operations while the remainder of the case continued.

The businesses appealed, and the Appellate Court lifted the injunctions, finding that the municipality did not meet the requirements for preliminary injunctive relief. Specifically, the Court held that the trial court failed to balance the "equities and relative hardships" of the parties, and the Village failed to show it would suffer more harm without a preliminary injunction than the businesses would suffer if the injunction were granted. The Court recognized that the municipality's government interest in enforcing its ordinance was legitimate, and that it could ultimately prevail in the remainder of the case. However, the Court concluded that issuance of the preliminary injunction would cause irreparable loss to the businesses by requiring them to close for the remainder of the lawsuit that outweighed the municipality's interest. The Appellate Court did not weigh in on the challenge to the ordinance itself, leaving that to the trial court to resolve.


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