________________________________________________________________________

________________________________________________________________________ 2019 IL App (5th) 190337-U NOTICE NOTICE Decision filed 11/18/19. The This order was filed under text of this decision may be Supreme Court Rule 23 and NO. 5-19-0337 changed or corrected prior to may not be cited as precedent the filing of a Peti ion for by any party except in the IN THE Rehearing or the disposition of limited circumstances allowed the same. under Rule 23(e)(1). APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT

DEVELOPMENTAL DISABILITY SERVICES ) Appeal from the OF METRO EAST, ) Circuit Court of ) St. Clair County. Plaintiff and Counterdefendant-Appellant, ) ) v. ) No. 19- CH -153 ) ILLINOIS DEPARTMENT OF HUMAN SERVICES; ) GRACE B. HOU, Secretary of Illinois Department of ) Human Services; ) DIVISION OF DEVELOPMENTAL DISABILITIES; ) KATHLEEN R. WARD, Acting Director of the ) Division of Developmental Disabilities; ) GARY KRAMER, Chief Accountability Officer ) of the Division of Developmental Disabilities , ) ) Defendants and Counterdefendants-Appellees ) ) Honorable (P rairieland Service Coordination, Inc., Third-Party ) Julie K. Katz, Defendant and Counterplaintiff-Appellee). ) Judge, presiding.

JUSTICE CATES delivered the judgment of the court. Justices Moore and Boie concurred in the judgment. ORDER ¶ 1 Held : The circuit court properly denied the plaintiff’s request for a preliminary injunction where the plaintiff failed to establish a fair question as to the existence of a clearly ascertainable right in need of protection.

1¶ 2 The plaintiff, Development al Disability Services of Metro East (DDSME) , sought a preliminary injunction to require the d efendants to maintain funding to DDSME and to prevent the d efendants from entering into a contract with the third-party defendant , Prairieland Service Coordination, Inc. (Prairieland). The circuit court of St. Clair County entered an order denying DDSME’s motion for preliminary injunction. For the reasons that follow, we affirm the decision of the circuit court. ¶ 3 BACKGROUND ¶ 4 DDSME is a nonprofit, independent service coordination (ISC) agency that provides services to individuals with developmental and intellectual disabilities. DDSME

was founded in 1986 and s erved as the sole ISC agency in St. Clair and Madison

C ounties for 32 years. During this time, the State funded ISC services through a noncompetitive, annual fiscal year renewal contract process. Each year, DDSME entered into annual contracts with the Illinois Department of Human Services (DHS) and its Division of Developmental Disabilities (DDD) to provide ISC services. The final contract entered into between DDSME and DHS was for fiscal year 2019, and was effective from July 1, 2018, until June 30, 2019. The contract included a provision governing renewal , which provided that the contract may be renewed for additional periods by mutual consent of the parties but that the current contract did “ not create any expectation of

renewal.” ¶ 5 On September 10, 2018, DHS and DDD posted a Notice of Funding Opportunity (NOFO) for ISC services for fiscal year 2020. This was the first time DHS sought to fund ISC services through a competitive bidding process. On November 12, 2018, DDSME 2submitted a timely application to DH S and DDD for funding under the ISC NOFO for St. Clair and Madison Counties, identified as region K in the NOFO. ¶ 6 On January 2, 2019, DHS and DDD notified DDSME that it had not be en selected to receive the ISC NOFO grant funding for region K for fiscal year 2020. Instead, DHS and DDD had selected another ISC provider, Prairieland, to service the region. On January 16, 2019, DDSME filed a timely appeal with DHS and DDD. On February 15, 2019, DDSME received an email from Kathleen Ward, acting direct or of DDD, advising

DDSME that the result of the NOFO had been upheld. Attached to the email was a letter

from Gary K ramer, the Chief Accountability Officer for DHS , who was also acting as an appeal review officer. In his letter, Kramer stated he agreed wi th the initial NOFO determination made by DHS and DDD , and that he recommended that a notice of

nonselection be issued to DDSME be upheld. ¶ 7 On March 11, 2019, DDSME filed a timely petition for judicial review of DHS’s final administrative decision in the St. Clair County circuit court, ca se number 19

- MR

0067, in accordance with 735 ILCS 5/3 -103 (West 2018). On March 20, 2019, DDSME

filed a three- count complaint seeking a temporary restraining order and preliminary injunctive relief against DHS ; DDD; Ward ; Kramer ; and Grace B. Hou, the Secretary of

DHS . In count I, DDSME alleged that the d efendants violated 2 C.F.R. § 200.101 of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance) because the Uniform Guidance did not apply to block grants awarded under the Omnibus Budget Reconcil i ation Act of 1981 , and some of the funding for the NOFO came from federal block grants

. In count II, DDSME 3alleged that the defendants violated the Illinois Administrative Procedure Act (the IAPA) ( 5 ILCS 100/5 -5 et seq . (West 2018)) , by failing to properly promulgate rules relating to the NOFO funding as required by the Grant Accountability and Transparency Act ( 30

ILCS 70 8/1 et seq . (West 2018) ) . DDSME also allege d that the d efendants acted arbitrarily, capriciously, and contrary to the law in violation of the I APA when they denied DDSME’s application and that the d efendants failed to provide DDSME with a fair and meaningful appeal process in violation of DDSME’ s due process rights. In count III, DDSME sought a temporary restraining order and a preliminary injunction ordering

the d efendants to maintain funding to DDSME and barring the d efendants from entering

into or taking action to implement any contracts pursuant to the N O FO for ISC services for fiscal year 2020 until such time as the circuit court render ed a decision in case number

19-MR-0067. In support of its request for injunctive relief, DDSME alleged it had a clearly ascertainable right “in the form of a legally protected property interest in the continuation of its funding from the State.” ¶ 8 On March 20, 2019, DDSME filed a separate motion for temporary restraining order and preliminary injunction. In the motion, DDSME alleged that it was entitled to an injunction because the d efendants “deprived it of a legally protected property interest in the continuation of its funding from the State.” Citing the Illinois Supreme Court’s

decision in Bio- Medical Lab oratories , Inc. v. Trainor , 68 Ill. 2d 540 (1977), DDSME asserted it had an “expectation interest” based upon its mutual and ongoing financial relationship with the State, of which it could not be deprived without due process. On March 20, 2019, the circuit court denied DDSME ’s motion for a temporary restraining 4order, finding DDSME failed to allege a valid basis for ex parte injunctive relief , and set a hearing on DDSME’s request for a preliminary injunction. ¶ 9 On April 1, 2019, the d efendants filed a response to DDSME ’s motion for preliminary injunction, arguing that DDSME fail ed to meet the required elements for

such relief. The d efendants asserted th at DDSME did not have a clearly ascertainable right in need of protection because it did not have a property right in a future contract

with the State. The d efendants argued the Illinois Supreme Court decision in Polyvend,

Inc. v. Puckorius , 77 Ill. 2d 287 (1979), support ed a finding that DDSME did not have a protectable property interest in obtaining a future contract. Also on April 1, 2019, the circuit court held a hearing on DDSME’s request for preliminary injunction. At the hearing, the d efendants argued that Prairieland should be given the right to intervene in the action because Prairieland’s interests could be adversely affected by the issuance of DDSME’s requested relief. 1 ¶ 10 On April 10, 2019, the circuit court entered an order finding Prairieland was a necessary part y and order ed DDSME to file an amended complaint adding Prairieland as a party. On April 23, 2019, DDSME complied with circuit court’s order and filed a n amended complaint adding Prairieland as a third-party defendant. ¶ 11 On May 20, 2019, Prairieland filed an answer to DDSME’s amended c omplaint, a response to DDSME ’s motion for preliminary injunction, and a three -count countercomplaint. In its countercomplaint, Prairieland brought a claim for anticipatory breach against the d efendants (count I) ; for tortious interference with a contract against

1 Notably, the defendants did no t file any pleading requesting leave to add Prairieland as a party. 5DDSME (count II) ; and for a preliminary injunction against all counterdefendants to prevent the counterdefendants from entering into any contracts, including settlement agreements, that would negatively affect Prairieland’s interest in the grant award beginning on July 1, 2019 (count III). ¶ 12 On May 31, 2019, DDSME and the d efendants entered into a settlement

a greement in which DHS agreed to issue a new N O FO of the ISC contract for region K for fiscal year 2020. DHS agreed to allow DDSME to continue serving as the ISC for region K until the new NOFO process wa s completed and a new contract was entered into by DHS and the successful NOFO applicant. In exchange, DDSME agreed to

dismiss with prejudice its lawsuits against the d efendants in this case and case number

19-MR-0067. ¶ 13 On June 7, 2019, DDSME filed a motion for voluntary dismissal of its claims in this case against the defendants. DDSME ’s motion d id not indicate a reason for the

dismissal or state that it had entered into the settlement agreement with the defendants. On June 17, 2019, the circuit court conducted a hearing on DDSME ’s motion for voluntary dismissal. At the hearing , the parties advised the court about the execution of the settlement agreement and DHS ’s reissuance of the NOFO for region K , subjecting the ISC contract for fiscal year 2020 to rebidding. At the conclusion of the hearing, the court

took the matter under advisement. ¶ 14 On July 12, 2019, the circuit court conducted a hearing on Prairieland’s countercomplaint and accompanying request for injunctive relief. At t he hearing,

DDSME advised the court that DDSME’s motion for voluntary dismissal was made 6pursuant to the settlement agreement. At that time, Prairieland requested that th e circuit court declare the settlement agreement void. ¶ 15 On July 17, 2019, the circuit court entered an order declaring the settlement agreement between DDSME and the d efendants void , and denied DDSME’s request for a preliminary injunction preventing the d efendants from entering into a contract with Prairieland to serve as the ISC agency for region K for fiscal year 2020. The court found

DDSME was not entitled to a preliminary injunction because DDSME had failed to

establish that it ha d a clearly ascer tainable right in need of protection, a requirement for issuing injunctive relief. The court found DDSME had only a unilateral expectation that it would receive future State funding based on its annual contracts with the State and that such an expectation d id not constitute a protectable property interest within the meaning of the due process clause. On August 6, 2019, DDSME filed a Rule 307(a)(1) (Ill. S. Ct. 307(a)(1) (eff. Nov

. 1, 2017) ) interlocutory appeal of the circuit court’s denial of its request f or preliminary injunctive relief. ¶ 16 ANALYSIS ¶ 17 The scope of a Rule 307(a) interlocutory appeal is limited. On appeal, we review only the circuit court’s decision granting or denying the interlocutory relief, not the merits of the plaintiff’s underlying case. Crain v. Lucent Tech nologies, Inc

. , 317 Ill. App. 3d 486, 491 (2000). ¶ 18 The purpose of a preliminary injunction is to preserve the status quo pending a

decision on the merits of a cause. Smith v. Dep artment of Nat ural Resources , 2015 IL App (5th) 140583, ¶ 21

. It is an extraordinary remedy, applicable only in an extreme 7emergency where serious harm would result if the injunction is not issued. Jones v. Department of Public Aid , 373 Ill. App. 3d 184, 192-93 (2007). ¶ 19 To establish entitlement to a preliminary injunction, the plaintiff must demonstrate: (1) a clearly ascertainable right in need of protection; (2) that they will suffer irreparable harm without the injunction; (3) an inadequate remedy at law for the injury; and (4) the likelihood of success on the merits. Smith , 2015 IL App (5th) 140583, ¶ 21. The party seeking the injunction does not carry the same burden of proof required to prevail on the ultimate issue and must only raise a fair question as to the existence of

each element. Jones , 373 Ill. App. 3d at 193. The court must also balance the hardships to the parties and consider whether the benefits of granting the injunction exceed any injury

to the defendant. Scheffel Fin ancial Service s, Inc. v. Heil , 2014 IL App (5th) 130600, ¶ 10. ¶ 20 At the preliminary injunction stage, the court should not consider contested issues of fact, nor should it decide the merits of the plaintiff’s case. Smith , 2015 IL App (5th) 140583, ¶ 22. Generally, we review the propriety of the circuit court’s ruling on a preliminary injunction for an abuse of discretion. Smith , 2015 IL App (5th) 140583, ¶ 22.

Howe ver, where the court’s ruling involves a question of law, the standard of review is

de novo

. Smith , 2015 IL App (5th) 140583, ¶ 23. ¶ 21 On appeal, DDSME first argues that the circuit court erred in denying its request for a preliminary injunction because it has a statutory right to an injunction based upon

the d efendants’ alleged violation of the I APA’s formal rule

- making procedures. DDSME also argues that it is entitled to injunctive relief because it has a procedural due process 8right that is independent of its right to receive the ISC contract. In support of its procedural due process claim, DDSME contends that Trainor , 68 Ill. 2d 540, supports a finding that DDSME has a protect a ble property interest which, in turn, bestows DDSME with a legally

- cognizable interest in the fairness of the bidding process. On appeal, DDSME points to isolated portions of its amended complaint to support its position that it

raised both a statutory claim and a procedural due process claim as a basis for an injunction in the circuit court. ¶ 22 DDSME ’s position on appeal, however, does not conform to its position in the circuit court. DDSME’s amended complaint indicates that it represented to the circuit

court that DDSME was entitled to injunctive relief because it had a clearly ascertainable right “in the form of a legally protected property interest in the continuation of its funding from the State.” DDSME repeated this position in its motion for a temporary restraining order and a preliminary injunction, arguing “DDSME contends that Defendants deprived it of a legally protected property interest in the continuation of its funding from the State.” To the extent that DDSME argued that it was entitled to an injunction because the

d efendants violated the I APA and DDSME’s rights to procedural due process, these

issues were raised in the conte xt of the other elements required for a preliminary injunction and not as a right or interest in need of protection

. Becaus e DDSME failed to raise these arguments in the circuit court, they have been f orfeited on a ppeal. See Mabry

v. Boler , 2012 IL App (1st) 111464, ¶ 15 (i n general, argument s not raised in the circ uit court are forfeited and cannot be raised for the first time on appeal).

9¶ 23 To the degree that DDSME continues to maintain on appeal that it ha s a protectable property interest based upon its ongoing relationship with the State, we reject DDSME’s argument. In the circuit court, DDSME argued that it had a protectable property interest due to its “current right to provide the services” under its contract with the State, which expired on June 30, 2019. Both in the circuit court and on appeal,

DDSME relied on the Illinois Supreme Court’s decision in Trainor , 68 Ill. 2d 540, to support its contention that it has a protectable property interest. DDSME’s reliance on

Trainor , 68 Ill. 2d 540, however, is misplaced. ¶ 24 DDSME is correct that Trainor involved a long

- time Medicaid provider who was able to obtain a preliminary injunction preventing the S tate from terminating its relationship because the provider had an expectation interest in continued participation in the Medicaid program. Trainor , 68 Ill. 2d 540. Trainor , however, involved a situation

where the S tate suspended the plaintiff’s current right to participate in the Medicaid

program. Trainor , 68 Ill. 2d at 544-45. Trainor is clear that it wa s the “ ‘ [i]nterruption of an existing relationship between the government and a contractor’ ” which distinguished the plaintiff in that case from those who are initially seeking government contracts.

Trainor , 68 Ill. 2d at 547 (quoting Gonzalez v. Freeman , 334 F.2d 570, 574 (D.C. Cir. 1964)). I n finding that the Trainor plaintiff’s expectation of continuing to receive Medicaid payment s was a legal interest, the court relied on Hathaway v. Mathews , 546 F.2d 227, 230 ( 7th Cir. 1976). Trainor , 68 Ill. 2d at 547. Similar to t he plaintiff in

Trainor , the plaintiff in Hathaway successfully challenged the government’s termination

10of Medicaid payments for services she was providing under an existing contract with the government. Hathaway , 546 F.2d at 228, 230

. ¶ 25 At the hearing before the circuit court, DDSME argued the case sub judice was analogous to that in Trainor because DDSME had a long-term, ongoing relationship with

the State and , at th e time it filed its complaint , it was still providing services under its

contract with the State. The di fference between DDSME and the providers in Trainor and Hathaway , however, is that plaintiffs in those cases were seeking to enforce their current rights under an ongoing relationship or existing contract, while in this case , DDSME was seeking to acquire rights it did not possess under its contract, which is to say , a right to funding after the expiration of its contract on June 30, 2019. ¶ 26 The circuit court was correct that DDSME’s position was more analogous to the plaintiff in Polyvend , 77 Ill. 2d 287. In Polyvend , the s tate rejected the plaintiff’s bid to manufacture license plates for the S tate even though the plaintiff had received the contract the previous three years. Polyvend , 77 Ill. 2d at 293. The plaintiff argued that the

State’s rejection of the plaintif f’s bid based on an antibribery statute denied it procedural due process. Polyvend , 77 Ill. 2d at 292. Noting that procedural due process is only required when one has a protectable interest, the Illinois Supreme Court observed that a protectable property interest requires “ ‘more than a unilateral expectation ’ ” but, instead, the plaintiff must have a “ ‘ legitimate claim of entitlement .’ ” Polyvend , 77 Ill. 2d at 294 (quoting Board of Regents of State Colleges v. Roth , 408 U.S. 564, 570 (1972 )). The Court concluded that the plaintiff did not have a legitimate claim of entitlement or a protectable property interest in a future State contract despite having received the contract 11in previous years because each contra ct was independent from the other and a prior contractual relationship did not give the contractor a preferred status or a reasonable

belief that it would receive future contracts. Polyvend , 77 Ill. 2d at 296. The Court

concluded that the plaintiff’s “unilateral expectation” that it would receive the contract to manufacture the license plates in the future did not constitute a protectable property interest within the meaning of the due process clause. Polyvend , 77 Ill. 2d at 296. The Polyvend c ourt distinguished the Trainor decision as one involving a “right to continuing participation in an ongoing program” as opposed to a situation involving annual competitive bid ding. Polyvend , 77 Ill. 2d at 298. The c ourt specifically rejected the proposition that being awarded a S tate contract gave rise to a right or interest in a future

State contract. Polyvend , 77 Ill. 2d at 298. ¶ 27 Although DDSME had worked with DHS and DDD for many years, the relationship was based on annual contract s and not upon DDSME’s participation in an

“ ongoing program.” The terms of DDSME’s contract with DHS were clear ly stated. The

contract was an annual contract , ending on June 30, 2019, and there was no expectation of renewal. The Illinois Supreme Court’s ho lding in Polyvend dictates a finding that DDSME, as a party with a State contract , does not have a protectable property interest in

future State contracts. ¶ 28 Having found that DDSME failed to establish a fair question as to the existence of a clearly ascerta inable right in need of protection, there is no need to address the remaining elements necessary to obtain a preliminary injunction. As a caution to the

12parties, this ruling relates only to the denial of the preliminary injunction, and has not, in any way, analyzed the merits of DDSME’s remaining claims. ¶ 29 CONCLUSION ¶ 30 We find the circuit court did not err in finding that DDSME had not established a fair question that it has a clearly ascertainable right in need of protection. For the foregoing reasons, we affirm the judgment of the circuit court St. Clair County.

¶ 31 Affirmed.

13