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Coles-Moultrie Electric Cooperative v. City of Sullivan

March 02, 1999

COLES-MOULTRIE ELECTRIC COOPERATIVE, AN ILLINOIS NOT-FOR-PROFIT CORPORATION, PLAINTIFF-APPELLANT,
v.
THE CITY OF SULLIVAN, ILLINOIS, AN ILLINOIS MUNICIPAL CORPORATION, DEFENDANT-APPELLEE



Appeal from Circuit Court of Moultrie County No. 97CH9 Honorable Dan L. Flannell, Judge Presiding

The opinion of the court was delivered by: Justice Knecht

Plaintiff, Coles-Moultrie Electric Cooperative (Co-operative), appeals the dismissal of a September 1997 action brought to enjoin defendant, City of Sullivan (Sullivan), from providing electrical service to specifically described tracts outside its corporate city limits. Plaintiff offered as a bar to the city's attempt to service these areas a June 1992 written agreement (Agreement) that was intended to settle disputed service areas and provide for reimbursement of plaintiff for providing services to areas annexed to the city. In December 1997, the trial court denied the injunction, finding the Agreement to be a waiver by plaintiff of the entitlement to service the areas in question within the meaning of section 11-117-1 of the Illinois Municipal Code (Ill. Rev. Stat. 1991, ch. 24, par. 11-117-1 now 65 ILCS 5/11-117-1 (West 1996))). Plaintiff appeals. We affirm.

I. BACKGROUND

The Cooperative is an Illinois not-for-profit corporation engaged in the distribution of electrical energy in and around Moultrie County, Illinois. Sullivan is an Illinois municipal corporation operating an electrical generation and distribution system pursuant to the Illinois Municipal Code. 65 ILCS 5/11-117-1 et seq. (West 1996).

On June 29, 1992, the Cooperative and Sullivan entered into an agreement designed to provide for a resolution of territorial disputes relating to property in and near Sullivan. The Agreement makes certain acknowledgements about Sullivan's legal right to serve a property re-ferred to as the "Elder Tract or Old Peadro Farm," defines the "existing service territory" of the respective parties, and provides for the purchase of stranded facilities of the Cooperative by Sullivan.

The Agreement, which was attached to plaintiff's complaint, includes three attachments. Appendix A is the legal description of the area described as the "Elder Tract or Old Peadro Farm." Appendix B is a map designating the "existing service territories" of the parties as agreed to in paragraph 3 of the Agreement. Appendix C is a list of electric facilities located on the "Elder Tract or Old Peadro Farm" that were to be acquired from the Cooperative by Sullivan pursuant to paragraph 4 of the Agreement.

The complaint alleges Sullivan notified the Cooperative of its intent to provide electric service to two specifically defined areas, described in counts I and II respectively, which are not located within the corporate limits of Sullivan. The Cooperative alleges the servicing of these areas without prior annexation by Sullivan is in direct violation of the terms and conditions of the Agreement. Plaintiff contends Sullivan by the terms of the Agreement is required to annex the disputed properties before it can exercise its right to provide electric service. Defendant Sullivan argues both of the disputed areas are with-in its "existing service territory" as designated in the Agreement and, therefore, do not require annexation for it to exercise its right to service these areas per the terms of the Agreement.

Plaintiff filed its complaint on September 19, 1997, asserting breach of contract by Sullivan with respect to the planned electric service to the two disputed areas and requesting a permanent injunction. On October 27, 1997, Sullivan filed a motion to dismiss in two counts. Count I of the motion to dismiss was pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 1996)) and argued failure to include certain essential parties to the cause of action. Count II argued the Agreement was a resolution of a territorial dispute over service rights that was "clear and unambiguous," foreclosing plaintiff's cause of action.

In reply to Sullivan's motion to dismiss, the Cooperative filed the affidavit of John W. Dooley, who served as administrative assistant to the general manager of the Cooperative in 1992 and was instrumental in negotiating the Agreement with Sullivan. In his affidavit, Dooley provides information as to the Cooperative's purpose and intent with respect to the Agreement executed with Sullivan.

The trial court denied count I of Sullivan's motion to dismiss for failure to join a necessary party. With respect to count II of Sullivan's motion to dismiss, the trial court found the Agreement was "clear and unambiguous" in its terms and in so doing disregarded parol evidence, in this case the affidavit of John W. Dooley offered by the plaintiff. Pursuant to this finding, the trial court entered a memorandum order December 17, 1997, dismissing the complaint with prejudice pursuant to section 2-619 of the Code. 735 ILCS 5/2-619 (West 1996). The trial court denied plaintiff's motion for reconsideration, and plaintiff appeals.

II. ANALYSIS

When faced with a motion to dismiss, the court must accept as true all well-pleaded factual allegations and disregard mere Conclusions of law or Conclusions of fact unsupported by specific allegations of fact. Capitol Indemnity Corp. v. Stewart Smith Intermediaries, Inc., 229 Ill. App. 3d 119, 123, 593 N.E.2d 872, 875 (1992); Washington v. Chicago Board of Education, 204 Ill. App. 3d 1091, 1094, 562 N.E.2d 541, 543 (1990).

A. Contract Interpretation

Plaintiff first contends the trial court erred in dismissing the complaint pursuant to section 2-619 of the Code based on its finding the contract at issue was clear, unambiguous, and subject to no other reasonable interpretation than that the Agreement grants the city the right to provide electric service to the areas in dispute. Count II of defendant's motion to dismiss attacked plaintiff's complaint on the grounds the claim asserted was barred by an affirmative matter avoiding the legal effect of or defeating the claim. 735 ILCS 5/2-619(a)(9) (West 1996). The complaint sounded in breach of contract. The issue presented to the trial court was one of contract construction.

The standard of review on appeal from the granting of a motion to dismiss under section 2-619 of the Code is de novo. Kedzie & 103rd Currency Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 116, 619 N.E.2d 732, 735 (1993). Upon review, the appellate court must evaluate whether the trial court ruled correctly in finding no genuine issue of material fact was raised and whether, as a matter of law, dismissal was proper. Kedzie, 156 Ill. 2d at 116-17, 619 N.E.2d at 735.

The purpose of involuntary dismissal of actions pursuant to section 2-619(a)(9) of the Code based on an affirmative matter is to provide a mechanism to dispose of issues of law or easily proved issues of fact at the outset of litigation. Meyers v. Rockford Systems, Inc., 254 Ill. App. 3d 56, 61, 625 N.E.2d 916, 920 (1993). Since contract construction is a question of law for the court, an action may be dismissed under section 2-619 of the Code (735 ILCS 5/2-619 (West 1996)) based on the court's interpretation of the contract at issue. Corluka v. Bridgford Foods of Illinois, Inc., 284 Ill. App. 3d 190, 195, 671 N.E.2d 814, 818 (1996).

In this case, plaintiff contends the trial court erred in dismissing its complaint. Specifically, plaintiff argues the Agreement is ambiguous on its face and the trial court failed to consider the Cooperative's interpretation of the contract based on the parties' intent and past practices.

Plaintiff's contention focuses on the interpretation of the langauge in paragraphs 1 through 3 of the Agreement and the boundary map attached thereto. The relevant provisions are as follows:

"1.The Cooperative agrees that in exchange for the covenants contained herein, that it will not contest the right of Sullivan to provide electric service to the property referred to as the Elder Tract or the old Peadro Farm and specifically described in Appendix 'A' attached hereto. It is specifically understood and agreed when any territory included in the aforesaid property is annexed into the City of Sullivan, that if the customers who reside in the area annexed to the City of Sullivan desire to have electric service from the City of Sullivan that the Cooperative agrees that Sullivan has the legal right to provide such service and that the customers located therein have the legal right to take such service from Sullivan. "2.Sullivan and the Cooperative agree that as any other property located outside the City limits of Sullivan which becomes annexed into Sullivan that the City of Sullivan has the legal right to serve that territory once it is annexed into the City of Sullivan and that the customers whose property is annexed into Sullivan have the right to receive electric service from Sullivan. "3.Sullivan and the Cooperative have agreed as to the existing service territories as of the date of the execution of this Agreement and the map which is attached hereto as Appendix 'B' truly and accurately represents said existing service areas. Sullivan has no objection to the Cooperative providing service to the Hillard property so long as said property is not annexed to the City." (Emphasis added.) A boundary map is attached to the Agreement, which shows the boundary line between the existing service territories of Sullivan and the Cooperative. The legend identifies the designated areas as the respective "existing service territories."

In interpreting a contract, meaning and effect must be given to every part of the contract including all its terms and provisions, so no part is rendered meaningless or surplusage unless absolutely necessary. Martindell v. Lake Shore National Bank, 15 Ill. 2d 272, 283, 154 N.E.2d 683, 689 (1958). A contract is to be construed as a whole, giving meaning and effect to every portion thereof, if possible, and not resorting to detached portions thereof standing alone. Home & Automobile Insurance Co. v. Scharli, 10 Ill. App. 3d 133, 136, 293 N.E.2d 914, 916 (1973). It is presumed the provisions are purposefully inserted and the language is not employed idly. State Farm Mutual Automobile Insurance Co. v. Schmitt, 94 Ill. App. 3d 1062, 1065, 419 N.E.2d 601, 603 (1981).

In interpreting the contract language, plaintiff argues the contract language is ambiguous. Therefore, parol evidence should be considered to ascertain the parties' intent with respect to the Agreement. As a general rule, when a contract provision is unambiguous, the court must give effect to the plain language of the provision and cannot consider extrinsic evidence to determine whether the parties have intended another meaning. Agribank, FCB v. Whitlock, 251 Ill. App. 3d 299, 309, 621 N.E.2d 967, 974 (1993).

Plaintiff emphasizes the "annexation" language in paragraphs 1 through 3. In short, plaintiff argues it intended Sullivan be required to annex before servicing any areas outside the corporate boundaries, including those areas within Sullivan's designated "service territory." Plaintiff further argues the multiple references to annexation contained in the Agreement were intended to impose an annexation requirement upon Sullivan as demonstrated by the affidavit of John W. Dooley, which provides information as to the Cooperative's intent and past practices with Sullivan. Defendant interprets the agreement otherwise.

The trial court properly accepted defendant's interpretation as the clear and unambiguous meaning of the agreement and disregarded Dooley's affidavit as parol evidence. Defendant correctly explains the annexation language in both paragraphs 1 and 3 expressly requires annexation for specific tracts of property rather than the entire "existing service territory." Paragraph 1 discusses annexation only with respect to the "Elder Tract or the old Peadro Farm," not the entire "existing service territory" of Sullivan. Likewise, paragraph 3 plainly references annexation only with respect to a ...


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