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Patrick Engineering, Inc v. the City of Naperville

September 20, 2012

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



The opinion of the court was delivered by: Justice Theis

JUSTICE THEIS delivered the judgment of the court, with opinion.

Chief Justice Kilbride and Justices Freeman, Thomas, Garman, Karmeier, and Burke concurred in the judgment and opinion.

OPINION

¶ 1 This case involves an agreement between Patrick Engineering, Inc., and the City of Naperville for a stormwater management system. When the City refused to pay Patrick Engineering, Patrick Engineering terminated the agreement and sued the City. The trial court dismissed Patrick Engineering's third and fourth amended complaints, and the appellate court reversed and remanded for further proceedings. 2011 IL App (2d) 100695.

¶ 2 The primary issue before us, according to the City, is whether the doctrine of equitable estoppel may apply against a municipality based upon the alleged apparent authority of its employees. We hold that equitable estoppel does not apply against a municipality when a plaintiff has alleged that a municipal official possessed apparent authority, but only when a plaintiff has alleged specific facts to show that a municipal official possessed express authority and that the plaintiff reasonably relied upon statements or conduct by the official.

For the reasons that follow, we reverse and remand for further proceedings.

¶ 3 BACKGROUND

¶ 4 In early 2007, the City had partially completed a project to manage its stormwater, and accepted bids to finish it. The City, through its department of public works, its transportation, engineering and development business group, and its information technology department, published a "General Scope of Services" for interested vendors. According to the City, the remaining work included a "Stormwater Needs Analysis" for the entire city, as well as several tasks in a 23.5-square-mile area called Area B, which would begin with data collection and conversion for a three-square-mile "pilot area" selected by the City. The City notified vendors that the pilot area data collection and "any required process changes" would have to be completed and accepted by the City before proceeding with the data collection and conversion in Area B. The City offered vendors a worksheet on which they could list proposed costs for the various areas of the project. Patrick Engineering completed and submitted the worksheet as part of its bid. This table shows Patrick Engineering's proposed cost for each project area, as well as its total proposed cost:

Project Area Proposed Cost Project Management $44,432 Stormwater Needs Analysis $35,580 Pilot Area Data Conversion $73,420 Area B Data Conversion $244,306 Software Configuration $37,454 Other Costs $1,200 TOTAL $436,392

The City accepted Patrick Engineering's offer, and on March 29, 2007, the parties signed a "Consultant Services Agreement." Patrick Engineering agreed to provide the City with a "Stormwater Asset Management and GIS Information System," and in return the City agreed to pay Patrick Engineering $436,392.

¶ 5 Section 2.1 of the agreement provided a procedure under which the City could request and authorize "Additional Services" beyond those listed in the scope of services:

"If the representative of the City responsible for the Project verbally requests [Patrick Engineering] to perform additional services, [Patrick Engineering] shall confirm in writing that the services have been requested and that such services are additional services. [Patrick Engineering] 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 [Patrick Engineering'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."

¶ 6 Shortly after the parties signed the agreement, the City asked

Patrick Engineering what additional services would cost. On April 2, 2007, Patrick Engineering's manager of enterprise solutions, Michael Blalock, wrote a letter to Debbie Kresl, a City employee, outlining the "cost per feature," which would be used if the City decided "to create a change order." No change order was made at that time.

¶ 7 Several weeks later, Blalock and Kresl exchanged emails regarding the project. On April 20, 2007, Blalock told Kresl that Patrick Engineering wanted to begin its work, and asked her for a purchase order from which he could generate invoices for the City. Kresl asked him for a list of tasks that Patrick Engineering would start because her superiors likely would demand more details. She explained why a purchase order was necessary, and referred to "sign off and reviews" within the City decisionmaking process. She stated, "I realize that we need to get started ASAP and am working through the various internal steps to expedite the Notice to Proceed. I have queried the appropriate folks within our organization and have asked if I can give the okay to start ***. *** I am awaiting a response from the Finance Director."

¶ 8 That response came quickly. On April 23, 2007, Kresl sent a message to Blalock: "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." Although the City instructed Patrick Engineering to proceed generally in Area B, Kresl added, "I am also working to identify preliminary 1 square mile areas, to select from, for the 3 square mile pilot area." Shortly thereafter, the City issued a purchase order, and Patrick Engineering began its work under the contract.

¶ 9 On July 3, 2007, Patrick Engineering delivered the stormwater needs analysis to the City. On July 17, Patrick Engineering's project manager, Scott Stocking, met with Beth Lang, the strategic services manager for the City's department of public works, and informed her that the "feature count" under the contract would be reached before Patrick Engineering completed its work, and that a change order would be necessary. On July 23, Stocking sent a follow-up email to Lang reiterating Patrick Engineering's belief that the City would need to issue a change order. The City notified Patrick Engineering that it would not do so, and Patrick Engineering stopped its work.

¶ 10 On August 10, 2007, Lang sent a letter to Stocking. Lang stated that City representatives had reviewed Stocking's email, as well as the agreement and its attachments. Lang further stated that the City's worksheet had instructed vendors to include all costs for data collection and conversion in the pilot area. According to Lang, "given the accepted contract language for the pilot area," the City would pay only the amount specified in the agreement for Patrick Engineering's work there. Lang requested that Patrick Engineering resume its work on the pilot area and complete that work within a month. She continued:

"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 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."

The letter did not identify the project manager, but it was copied to several city officials, including "Debbie Kresl, Technology Project Manager."

¶ 11 Patrick Engineering returned to work. Between May 2007 and September 2008, Patrick Engineering sent five invoices to the City.

This table shows the dates and amounts of these invoices: Invoice Date Invoice Amount May 31, 2007 $6,910 September 5, 2007 $136,326.10 February 6, 2008 $259,232.67 May 22, 2008 $12,253.40 September 9, 2008 $21,660.66

This table shows Patrick Engineering's proposed cost and invoiced amount for each project area, as well as its total ...


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