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Patrick Engineering, Inc v. the City of Naperville

September 9, 2011

PATRICK ENGINEERING, INC.,
PLAINTIFF-APPELLANT,
v.
THE CITY OF NAPERVILLE, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Du Page County. No. 09-L-114 Honorable John T. Elsner,Judge, Presiding.

The opinion of the court was delivered by: Justice Schostok

JUSTICE SCHOSTOK delivered the judgment of the court, with opinion. Justices Zenoff and Burke concurred in the judgment and opinion.

OPINION

¶ 1 The plaintiff, Patrick Engineering, sued the City of Naperville, alleging that the City breached a contract and also was unjustly enriched by the work Patrick performed for it. The trial court dismissed Patrick's third and fourth amended complaints, and Patrick appealed. We reverse and remand.

¶ 2 The following facts are taken from the allegations of the relevant pleadings, which, at this stage of the proceedings, we must take as true (Kehoe v. Saltarelli, 337 Ill. App. 3d 669, 675 (2003)), and from the exhibits to those pleadings. If there is a conflict between an allegation in a complaint and an exhibit to that complaint, the exhibit controls. Id. at 676.

¶ 3 In March 2007, the parties entered into a contract under which Patrick was to provide consulting services to the City in connection with the development of a stormwater asset management system and geographic information system (GIS). According to recitals of the contract, the City was in the midst of a project to develop a stormwater management system over its entire 45-square-mile service area. The first part of the project, which covered slightly more than half of the total area (Area A), was largely complete, and the purpose of the contract was to commence work necessary to complete the project in the remaining 23.5-square-mile area (Area B). The scope of the work, detailed in exhibit A to the contract, included among other things (1) performing a stormwater GIS needs analysis; (2) developing a detailed project plan and specifications for Area B; (3) collecting and scrubbing office and field data and performing data attribution and conversion for Area B based on "data accuracy and completion requirements defined within RFP [Request for Proposals]"; and (4) configuring and implementing Azteca Cityworks systems for managing stormwater operations and maintenance activities and other maintenance activities in certain City departments. As part of the specifications for the data collection and conversion for Area B, the contract required Patrick to collect, convert, and correct the data for a one-square-mile pilot area first. Under the contract, the pilot data and any necessary process changes were required to be "completed and accepted by the City prior to the vendor proceeding with the remainder of the data collection in Area B." The acceptance of the pilot area data was not listed as a prerequisite for proceeding with any other aspect of the work under the contract.

¶ 4 On April 23, 2007, Debbie Kresl, the project manager for the City's transportation and traffic engineering department, sent an e-mail to Michael Blalock, one of Patrick's employees, stating:

"Please take this e-mail as limited 'Notice to Proceed' with work related to the 'Field Data Collection and Conversion of Area B.' I have spoken with Mike Bevis, Purchasing Manager, and he authorized the limited Notice to Proceed."

A week later, the City issued a purchase order for the contract. The purchase order listed a cost for each of the various aspects of the contract, including $35,580 for the stormwater needs analysis; $73,420 for the pilot area data conversion; $244,306 for the remaining Area B data collection and conversion; $37,454 for the configuration and implementation of Azteca Cityworks for the stormwater maintenance system; and $44,432 for the project management and overhead costs. The total cost authorized under the purchase order was $436,392.

¶ 5 Patrick began work under the contract. It delivered the stormwater needs analysis to the City on July 3, 2007. On July 17, 2007, Patrick employee Scott Stocking met with Beth Lang, the City's strategic services manager, and "several other representatives from Naperville." Stocking told the others that the "feature count" (a basic rule for calculating costs) under the contract would be reached prior to the completion of the contract, and that a change order would be needed. Stocking e-mailed Lang on July 23, 2007, with the same message. One week later, the City informed Patrick that it would not issue a change order. Patrick then ceased work on the project.

¶ 6 On August 10, 2007, Lang wrote Stocking. In her letter, which was attached as an exhibit to the third amended complaint, Lang gave various reasons why the City staff did not believe that an increase in project costs was supported. Lang stated that the City would pay only a total of $85,728 for pilot area data that met the RFP specifications: the original $73,420 contained in the purchase order for that task; $11,108 for project management for the pilot area data collection; and $1,200 set aside in the purchase order for "proposed technical alternatives."

¶ 7 The letter continued, "the City is requesting that work on the pilot area resumes immediately and that Patrick Engineering delivers a completed 3 sq. mi. pilot [area report] *** no later than September 10, 2007." Lang then stated:

"Upon delivery and review of the pilot data, the City will work with Patrick to determine if a change in scope to complete the remainder of Area B is required. At that time, the project specifications, feature count projections, and budget will undergo thorough review and any necessary changes will be made.

Please note, until the pilot area [data] receives formal acceptance by the City, work performed in the remainder of Area B without prior authorization from the city's assigned Project Manager is at your own risk."

Patrick alleged that, "[b]ased on Lang's assurances that Naperville would make any necessary adjustments to the [p]roject budget, Patrick returned to work." Patrick also alleged that, during the last half of 2007, various "representatives" of the City, including Lang and Larry Gunderson, the City's information technology team leader, told Patrick employees working on the project that the City would issue a change order once the pilot area data was accepted.

¶ 8 In count I of its third amended complaint, Patrick sought to recover both for work it performed under the contract and for additional work the City required it to do. As to the first, Patrick stated that it performed project management services, performed and delivered the stormwater needs analysis, performed and delivered the pilot area data conversion, converted data for Area B, and configured and implemented Azteca Cityworks. It sought to recover the contract price for those services.

¶ 9 Patrick also sought in count I to recover for its costs associated with extra work that it alleged the City required it to perform. The extra work consisted of: additional plans to be included in the GIS data; additional categories of plans to be converted and placed in the GIS; adjusting the data received from as-built drawings based on information identified in the field; and a change to the size of the area to be included in the GIS. Patrick also performed additional work that became necessary due to flaws in the data the City provided to Patrick, including improperly catalogued plans, as-built drawings that were incomplete or missing necessary data, and incorrect elevations on as-built drawings that required correction before they could be included in the GIS.

¶ 10 Patrick alleged that its president, Dan Dietzler, wrote the city manager, Robert Marshall, regarding the additional work it was performing. In February 2008, two vice presidents of Patrick met with William Novack, the city engineer and engineering services team leader, showed him Dietzler's letter, and discussed "the fact that Patrick was performing additional work at the direction of" the City. According to the complaint, Michael Bevis, the City's chief procurement officer, also knew no later than February 2008 that Patrick was performing additional work. Marshall, Novack, and Bevis did not instruct Patrick to stop working. Patrick alleged that it reasonably relied on the representations of Lang and Gunderson "that adjustments would be made to the project budget," and the knowledge of Marshall, Novack, and Bevis that it was performing additional work, in incurring hundreds of thousands of dollars in labor costs for the additional work.

¶ 11 Patrick alleged that the City made the changes and additions to the project outlined above, and alleged generally that it did so pursuant to section 2 of the contract. That section states as follows:

"Section 2-Additional Services

2.1 If the representative of the City responsible for the Project verbally requests the Consultant [Patrick] to perform additional services, the Consultant shall confirm in writing that the services have been requested and that such services are additional services. Consultant shall be under no obligation to provide said services until a period of thirty (30) days has elapsed or until the City has authorized those services in writing, whichever is earlier. Failure of the City to respond to the Consultant's confirmation of said services within thirty (30) calendar days of receipt of the notice shall be deemed rejection of, and refusal to pay for[,] the Additional Services. ***

2.2 The City may, upon written notice, and without invalidating this Agreement, require changes resulting in the revision or abandonment of work already performed by the Consultant, or requires [sic] other elements of the work not originally contemplated and for which full compensation is not provided in any portion of the Agreement. Any additional services, abandonment of services which were authorized by the City, or changes in services directed by the City which result in the revision of the scope of services provided for in Exhibit A that cause the payment due to the Consultant to exceed the amount set forth *** shall be addressed in an amendment to this Agreement."

ΒΆ 12 Patrick did not allege that the City gave Patrick written authorization for the additional work or that the City council approved an amendment to the contract to cover the additional work. Rather, Patrick alleged that the representations and conduct of City agents described in its complaint gave rise to equitable estoppel ...


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