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Power v. Smith

March 28, 2003

THOMAS J. POWER, INDIVIDUALLY AND ON BEHALF OF T.R. EQUIPMENT, INC., AND R.J. POWER PLUMBING AND HEATING, PLAINTIFFS-APPELLEES,
v.
ROBERT L. SMITH, DEFENDANT-APPELLANT, AND CLOYCE "TURK" SMITH, DEFENDANT.



Appeal from Circuit Court of Sangamon County No. 99CH134 Honorable Patrick W. Kelley, Judge Presiding.

The opinion of the court was delivered by: Justice Cook

UNPUBLISHED

The trial court entered judgment in favor of plaintiffs, Thomas J. Power and R.J. Power Plumbing & Heating (Power Plumbing), and against defendant Robert L. Smith, on the basis that Smith was guilty of fraudulent misrepresentation. Smith appeals. Because we conclude that any misrepresentation was not a misrepresentation of fact, but a mere statement of opinion, we reverse.

I. BACKGROUND

Power is the owner of Power Plumbing. Smith previously owned Smith Construction, which did water and sewer jobs in California. Smith and Power met in 1995 while Smith and Power Plumbing were doing work on a construction project in Taylorville. Smith and Power entered into a verbal agreement under which Power Plumbing bid on a number of jobs, Smith received an hourly wage for his work, and the remaining profits were divided equally between Smith and Power.

Smith and Power then formed T.R. Equipment, Inc., a subchapter S corporation, to do water and sewer jobs. Each was a 50% shareholder. Smith would do the work on the jobs and be paid an hourly wage. T.R. Equipment did not have a bonding license, and consequently, Smith and Power agreed that Power Plumbing would submit bids for water and sewer jobs to be performed by T.R. Equipment. Power Plumbing would do the administrative work on the projects. There was no written agreement between T.R. Equipment and Power Plumbing, and there was some dispute as to how profits and losses would be divided among the various entities and individuals.

Power testified that he and Smith met at Power Plumbing to review and discuss the bid on a job called the South Fork job. He and Smith reviewed and discussed the bid in detail, line item by line item. Smith was then to rewrite the bid so that it would be more legible, then take it to Power Plumbing the next day to be typed by the office manager, Debbie Aiken, and to be signed by Power's brother, Dennis Power, the vice president of Power Plumbing. Smith, however, testified that he and Power discussed the bid over the telephone and he was not aware that Power would be out of town when the bid was typed.

Power testified he returned to work on the Monday following the Friday they were awarded the South Fork job. At that time, Power learned the bid had been changed from the one he had approved. According to Power, Smith had changed several of the line items, and the bid submitted was $207,188.90 less than the bid approved by Power. Power immediately called Smith, who came to his office. According to Power, Smith admitted that he had changed the bid, but assured Power that the job would make a profit. Smith said he had made the change because he was positive that they could lay 300 feet of pipe per day, instead of 200 feet as previously discussed.

Smith testified that he and Power discussed only the fact that the bid they had submitted was significantly lower than any of the other bids. The bid was $280,783.40 less than the next lowest bid. The bid, however, was close to the estimates prepared by the South Fork Sanitary District engineers. Smith denied changing the bid for the project and denied there was any conversation about the bid being different from that to which Smith and Power had agreed. Smith may have told Power that he was sure that they could make a profit on the South Fork job on the bid which had been submitted.

Power testified that he relied on Smith's assurances that the job would make a profit as it was bid; consequently, Power did not consider withdrawing the bid, seeking legal advice whether the bid could be withdrawn, or bringing up to the South Fork Sanitary District the fact that the bid had been changed without his knowledge.

Smith was paid $52,500 in hourly wages for working on the South Fork job. Smith's father, Cloyce Smith, was paid $38,512.06, plus $29,883 for sand, for working on the South Fork job. Smith's cousin, Danny Vidmar, was paid $48,050 for working on the South Fork job.

Power's count V, the count that went to trial, charged Smith with fraud, in that Smith stated to Power that he had the expertise to determine a price for the project which would cover all expenses for the job and allow a profit, that "in reliance on Smith's statements Power agreed to allow Smith to determine the bid price," and that after Smith determined the bid price Smith without the knowledge or consent of Power reduced the bid price by approximately $200,000. Count V alleged that Smith's statements were false statements of fact in that he knew he did not have the expertise to determine a bid price, he knew the price he determined was not sufficient, he did not intend to supervise the project to completion, he did not intend to have the necessary equipment, and "he intended to determine the bid price so that a profit could not be made on the project."

Power's theory of fraud is not entirely clear. At some points he appears to be accusing Smith of incompetence. At other points he appears to be accusing Smith of intentional harm. Count V alleges "false statements of fact" made by Smith, but changing the bid is not alleged to be one of those statements. Count V does not contain the allegation that Power, in deciding to go ahead with the project, relied upon Smith's assurances. Cf. Prime Leasing, Inc. v. Kendig, 332 Ill. App. 3d 300, 309, 773 N.E.2d 84, 92 (2002) ...


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