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Delta Consulting Group, Inc. v. R. Randle Construction

February 5, 2009


Appeal from the United States District Court for the Southern District of Illinois. No. 06 C 504-Michael J. Reagan, Judge.

The opinion of the court was delivered by: Bauer, Circuit Judge.


Before BAUER, WOOD, and TINDER, Circuit Judges.

R. Randle Construction, Inc., and Ronald S. Randle (collectively, "Randle") entered into two construction contracts with Belleville Township High School District 201 (School District) to perform work as a general contractor on the Belleville East High School Project (Project). Disputes over the Project arose between Randle and the School District, which caused delays, which in turn, caused Randle to suffer financial losses. Randle hired Delta Consulting Group, Inc. (Delta) to prepare and present a Request for Equitable Adjustment (REA) to the School District, to recover the damages attributable to the School District. Delta expressed that the REA's preparation, which included the necessary services, could typically be accomplished with the approximate preliminary budget of $34,000.00. Delta's proposal stated that the figure represented an estimate of the amount normally required for these types of jobs. Randle paid Delta a $5,000.000 retainer.

Using documents and information provided by Randle, Delta produced an REA representing damages for approximately $1.6 million. The REA consisted of three phases: (1) Familiarization and Initial Assessment, which included a review of Randle's documentation, site visits, key personnel interviews and assessment of claim issues; (2) Detailed Analysis and Report, which included extensive analysis of issues, a schedule analysis and a calculation of damages reflected in an REA; and (3) Dispute Resolution, which included Delta's attendance at dispute resolution proceedings.

Delta submitted the REA to the School District in an effort to recover Randle's damages. The School District, through its representative, Landmark Contract Management, Inc. (Landmark), reviewed the REA and concluded that the accompanying documents and analysis did not support $1.6 million in damages. At Randle's request, Delta undertook additional services to revise the REA using additional documentation from Randle; Delta submitted a second REA for approximately $1.7 million.*fn1

On February 25, 2004, Delta and Randle met with Landmark to discuss the resubmitted REA. Landmark reviewed the claims with Delta and questioned the lack of documentation to support the School District's liability for Randle's damages. Although Delta attempted to address Landmark's concerns, Landmark again found that the documentation did not adequately support the REA claim.

On March 5, 2004, Randle met with Landmark to discuss the resubmitted REA; frustrated with Delta's previous interactions with Landmark, Randle did not invite Delta to this meeting. Landmark repeated its concerns that the documentation submitted by Delta did not support the REA claim. Randle abruptly ended the meeting and claimed that he would sue the School District.

Throughout this process, Randle received Delta's invoices for the REA services and continuously paid the invoices through March 9, 2004. Delta ultimately billed*fn2 Randle $144,174.35; Randle paid $62,622.19 without objection (excluding the $5,000 retainer).

Randle hired a private firm and sued the School District for damages caused by the delay of the Project. Delta accepted Randle's request that Delta refrain from pursuing immediate collection on the unpaid invoices until Randle's claim had been litigated. Ultimately, Randle settled its claim with the School District for $450,000.00.

In October 2004, Randle's accountants conducted an audit of Randle's financial statements. As part of the audit, Randle, through its agent, sent Delta a letter to confirm that $89,302.16 was the amount due to Delta as of September 30, 2004. Delta responded that the correct amount due was $81,552.16. Randle did not object after receiving Delta's response until roughly a year later.

When Delta sought payment on the unpaid invoices, Randle responded that it was not satisfied with Delta's performance and should not be charged for inadequate work. Delta sued Randle to recover $81,552.16 in unpaid invoices (ultimately seeking $76,552.16 after applying the initial retainer), plus 9% interest as permitted by law. Randle claimed that Delta failed to adequately present the REA and counterclaimed for breach of contract.

On August 23, 2007, the district court granted Delta's summary judgment motion in its entirety. Specifically, the district court held that the communications between Delta and Randle, which included Randle's failure to object to Delta's statement of account within a reasonable time and Randle's partial payment of the account over the preliminary estimate, established an account stated. The district court also awarded summary judgment in favor of Delta on Randle's counterclaim; Randle impliedly waived its right to damages for Delta's alleged breach by paying, and not contesting, $62,622.19.

On October 25, 2007, the district court further ordered: (1) that prejudgment interest at the Illinois statutory rate of 5% be awarded to Delta; and (2) that postjudgment interest at the Illinois statutory rate of ...

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