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Adkins Energy, LLC v. Delta-T Corp.

March 31, 2004

[5] ADKINS ENERGY, LLC, PLAINTIFF-APPELLANT,
v.
DELTA-T CORPORATION, DEFENDANT-APPELLEE.



[6] Appeal from the Circuit Court of Stephenson County. No. 01-MR-39 Honorable Barry R. Anderson, Judge, Presiding.

[7] The opinion of the court was delivered by: Justice Kapala

[8]  Plaintiff, Adkins Energy, LLC (Adkins), sought declaratory relief in response to alleged litigation threats by defendant, Delta-T Corporation (Delta-T), in connection with an ethanol plant that Adkins was building. The trial court granted summary judgment for Delta-T on count I of Adkins's amended complaint. It also granted Delta-T's motion to dismiss counts II and III, holding that the parties' rights were fixed and not subject to determination in a declaratory judgment action. Adkins timely appeals. We dismiss in part, reverse in part, and remand the cause.

[9]  BACKGROUND

[10]   Adkins owns a corn-to-ethanol processing plant, which, at all times pertinent to this cause, was being built in Lena, Illinois. Delta-T is a provider of technology and engineering services. Beginning in July 2001, a dispute arose between Adkins and Delta-T regarding whether a contractual or other relationship existed between them. In November 2001 Adkins filed a four-count complaint for declaratory relief. Delta-T moved to dismiss the complaint, and the trial court stayed discovery until it resolved the motion. The trial court denied the motion to dismiss count I but granted the motion to dismiss counts II through IV.

[11]   The trial court permitted Adkins to replead and ordered Delta-T to respond to Adkins's discovery request. Adkins submitted an amended complaint with three counts, seeking declarations that Delta-T was not and had no right to be a member of Adkins or an equity participant in Adkins in relation to the ethanol plant (count I); had no contractual rights against Adkins, including the right to be a subcontractor in the ethanol plant project (count II); and had no right to compensation from Adkins for expenses that Delta-T allegedly incurred in connection with the ethanol plant (count III).

[12]   Adkins attached to the complaint three letters it received from Delta-T. In a July 6, 2001, letter, Delta-T stated that, if a satisfactory subcontract agreement could not be arranged with Lurgi PSI, one of the entities comprising Adkins, then "Adkins is bound to enter into a contract directly with Delta-T, or to pay Delta-T a fair amount to compensate for Delta-T's efforts." Delta-T repeated this assertion in a letter dated July 12, 2001, stating, "[w]e firmly believe that Adkins, and one or more of its members, do have an obligation to Delta-T to include it in the project, or to compensate it for the services it has provided to Adkins and Adkins' predecessors since 1995." Finally, Delta-T's owner wrote in an October 26, 2001, letter, "[m]y attorneys feel we have a strong legal case to prove that we were wronged and financially damaged." He also stated that he had written the letter "to see if there was a way to work this situation out in a civilized manner" and hoped Adkins would "do the right thing" to avoid a "legal battle."

[13]   Delta-T's discovery response admitted the substance of count I. Delta-T moved for summary judgment on that count, admitting that it was not entitled to be an equity participant in Adkins or the ethanol plant. In its motion, Delta-T averred, "Count I involves no actual controversy for the Court to adjudicate and the Court should grant summary judgment in favor of Delta-T." Adkins filed a cross-motion for summary judgment. Delta-T also filed a motion to dismiss counts II and III pursuant to section 2--615 of the Code of Civil Procedure (735 ILCS 5/2--615 (West 2002)). The trial court granted Delta-T 's motion for summary judgment on count I. The trial court also granted Delta-T's motion to dismiss counts II and III, holding that Adkins was seeking a finding of non-liability for past conduct between the parties. The court determined that the parties' rights were fixed and not subject to determination in a declaratory judgment action.

[14]   Adkins appeals, arguing that the trial court (1) erred when it granted summary judgment for Delta-T on count I; (2) erred when it dismissed counts II and III, which, Adkins claims, sought the resolution of an actual controversy and did not seek a declaration of non-liability for past conduct; and (3) abused its discretion when it stayed discovery until it determined whether Adkins's initial complaint stated a cause of action.

[15]   ANALYSIS

[16]   A declaratory judgment action requires (1) a plaintiff with a tangible, legal interest; (2) a defendant with an opposing interest; and (3) an actual controversy between the parties concerning such interests. Beahringer v. Page, 204 Ill. 2d 363, 372 (2003); see 735 ILCS 5/2--701 (West 2002). For an actual controversy to exist, the case must present a concrete dispute admitting of an immediate and definitive determination of the parties' rights, the resolution of which will aid in the termination of the controversy or some part thereof. Howlett v. Scott, 69 Ill. 2d 135, 141-42 (1977), citing Underground Contractors Ass'n v. City of Chicago, 66 Ill. 2d 371, 375 (1977). The declaratory judgment process exists so that the court may address a controversy after a dispute has arisen but before steps are taken that would give rise to a claim for damages or other relief. Beahringer, 204 Ill. 2d at 372-73. In other words, a suit for declaratory judgment is premature if no actual controversy exists, but as long as the case is not one in which the controversy has progressed so far that there is nothing left for the parties to do except file suit for damages or other consequential relief, the controversy may still be resolved by declaratory judgment.

[17]   We first examine count I of the amended complaint, in which Adkins sought a declaration that Delta-T was not and had no right to be a member of Adkins or an equity participant in the ethanol plant. Adkins argues that the trial court erred when it granted Delta-T summary judgment on count I. Delta-T maintains that the issue is moot because Delta-T admitted the substance of count I.

[18]   Appellate jurisdiction is based upon the existence of a real controversy, and this court will dismiss an appeal involving only moot questions. La Salle National Bank, N.A. v. City of Lake Forest, 297 Ill. App. 3d 36, 42-43 (1998). An issue is moot if the interests and rights of the parties are no longer in controversy and the resolution of the issue will have no practical effect. La Salle National Bank, N.A., 297 Ill. App. 3d at 43. Even assuming, arguendo, that the trial court erred in entering summary judgment for Delta-T on count I, the issue is moot. The parties agree that Delta-T is not and has no right to be a member of Adkins or an equity participant in the ethanol plant.

[19]   Therefore, any resolution of the summary judgment issue would have no practical effect. Adkins contends that the issue is not moot because Delta-T's admissions apply only to this case, and Delta-T could later plead that it has an equity interest in Adkins. However, as both parties recognize, such a claim would be subject to the doctrine of judicial estoppel, which prohibits a party from taking inconsistent positions in separate legal proceedings. McDonald's Corp. v. American Motorists Insurance Co., 321 Ill. App. 3d 972, 986 (2001). Accordingly, we dismiss this portion of the appeal.

[20]   We next turn to counts II and III. In count II, Adkins sought a declaration that Delta-T has no contractual or other rights against Adkins, including the right to be a subcontractor. In count III, Adkins sought a declaration that Delta-T was not entitled to any compensation from Adkins for expenses that Delta-T allegedly incurred in connection with the ethanol plant. A trial court's grant of a section 2--615 ...


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