Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Dancor Construction, Inc. v. FXR Construction, Inc.

Court of Appeals of Illinois, Second District

September 29, 2016

DANCOR CONSTRUCTION, INC., Plaintiff and Counterdefendant-Appellant and Cross-Appellee,
v.
FXR CONSTRUCTION, INC., and DENNIS E. VITA, Defendants-Appellees and Cross-Appellants FXR Construction, Inc., Counterplaintiff.

         Appeal from the Circuit Court of Kane County. No. 12-L-487 Honorable James R. Murphy, Judge, Presiding

          JUSTICE SPENCE delivered the judgment of the court, with opinion. Presiding Justice Schostok and Justice McLaren concurred in the judgment and opinion.

          OPINION

          SPENCE, JUSTICE.

         ¶ 1 Plaintiff, Dancor Construction, Inc. (Dancor), brought suit against defendants, FXR Construction, Inc. (FXR), and its owner, Dennis E. Vita, in Kane County pursuant to the forum-selection clause in the parties' contract. Dancor brought breach-of-contract and tort claims against defendants, related to a construction project in New York. Meanwhile, in a New York court, FXR filed a mechanic's lien on the property and brought suit for breach of contract and unjust enrichment against Dancor, among others. The New York case was later dismissed.

         ¶ 2 Defendants moved to dismiss or transfer the Kane County case, arguing in part that New York was the better forum for the dispute. The circuit court denied defendants' motion, finding that the forum-selection clause designating Kane County was valid and enforceable.

         ¶ 3 Dancor filed amended and second amended complaints. Defendants moved to dismiss each, and the circuit court granted their motions in part, dismissing Dancor's tort counts for injurious falsehood and slander of title related to the construction project.

         ¶ 4 FXR then moved to dismiss or transfer the case or to reconsider the circuit court's prior order denying the motion to dismiss or transfer the case. FXR argued that New York law rendered the forum-selection clause void and unenforceable and that New York was the only proper forum. The circuit court agreed and dismissed the case to allow the action to be refiled in New York. This appeal followed. We affirm.

         ¶ 5 I. BACKGROUND

         ¶ 6 Dancor filed its complaint in Kane County on September 10, 2012. The complaint alleged as follows. Dancor was the general contractor for the construction of an AutoZone store (the Project) in Bronx County, New York, and it employed FXR as a subcontractor on the Project. The subcontract was for $169, 826.61. Dancor removed FXR from the Project and brought in a replacement subcontractor to complete construction. After paying FXR, FXR's replacement, and other subcontractors, Dancor had spent a total of $176, 481.88, or about $6600 more than the agreed-upon contract price. FXR recorded a mechanic's lien against the Project property on August 29, 2012, seeking $104, 544.11.

         ¶ 7 Dancor attached the parties' contract to the complaint. Section XXIX of the contract, titled "Venue and Choice of Law" (the forum-selection clause), provided that the parties agreed that the contract was executed in Kane County and that it would be governed by Illinois law. Further, it stated that "[a]ny claims, lawsuits, disputes or claims arising out of or relating to this agreement shall be litigated in Kane County, Illinois."

         ¶ 8 Dancor's three-count complaint alleged breach of contract (count I) and two torts, injurious falsehood (count II) and interference with prospective business advantage (count III). In count I, Dancor alleged that FXR failed to meet reasonable deadlines, provide sufficient manpower, and timely complete tasks on the Project. Consequently, Dancor removed FXR and hired another firm to complete the Project. In count II, Dancor alleged that defendants recorded a lien against the Project site for unpaid work completed. Dancor alleged that the lien's statement regarding the amount unpaid ($104, 544.11) was not true, that defendants made the statement knowing that it was false, and that they made the statement with the intent that others rely on it. Dancor further alleged that a reasonable person or company would be "highly offended" by an accusation that it failed to pay in excess of $100, 000, and that defendants intended the publication of the lien to result in pecuniary harm to Dancor.

         ¶ 9 Shortly after Dancor filed its complaint, FXR filed its complaint in New York on October 24, 2012, against, inter alios, Dancor, to foreclose its mechanic's lien (the New York action). FXR alleged that, as a subcontractor, it had agreed to provide certain services for Dancor on the Project. FXR continued that it completed its performance of the contract and was owed a total of $171, 926.61. It had received $67, 382.50 and alleged that Dancor still owed $104, 544.11. Dancor breached their contract and was unjustly enriched in the amount of $104, 544.11 by not paying FXR the full amount owed.

         ¶ 10 Back in the Kane County litigation, on December 26, 2012, defendants filed a motion to dismiss Dancor's complaint or transfer the case. In their motion, defendants alleged that New York law required that the action be brought in a New York court. Defendants further argued that the defendants in the New York action, aside from Dancor, did not have minimum contacts with Illinois sufficient to bring the case here. Finally, defendants argued that Bronx County in New York was the best forum to resolve the legal issues related to the Project and, under the doctrine of forum non conveniens, they sought that the case be transferred to New York.

         ¶ 11 Dancor responded by citing the forum-selection clause that designated Kane County. Dancor argued that both New York and Illinois public policy favor enforcement of forum-selection clauses in contracts and that the forum-selection clause here was reasonable and should be enforced.

         ¶ 12 The circuit court held a hearing on the motion to dismiss or transfer. Thereafter, on February 20, 2013, it denied the motion, finding that the forum-selection clause in the parties' contract was valid and that venue in Kane County was appropriate.

         ¶ 13 On April 26, 2013, defendants moved to dismiss counts II and III of the complaint. They argued that count II was based on insufficient conclusions by Dancor, not well-pled facts. They argued that count III, which was based on the allegations of count II, was likewise defective. On June 6, 2013, the circuit court granted defendants' motion to dismiss counts II and III and granted Dancor leave to amend its complaint.

         ¶ 14 Dancor filed an amended complaint on June 18, 2013. The amended complaint again contained three counts: count I for breach of contract; count II for injurious falsehood; and count III for interference with prospective business advantage. Under count III, Dancor alleged that defendants claimed they were owed $104, 544.11, that they knew they were not actually owed that amount, and that they declared they were owed that amount with intent that Dancor incur pecuniary harm.

         ¶ 15 Around this time, the New York court heard a motion to dismiss FXR's complaint in the New York action. On July 18, 2013, it entered an order dismissing the complaint, explaining as follows:

"Here, the Plaintiff contracted the venue for lawsuits and failed to meet its burden in establishing it was unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching, or it is shown that a trial in the selected forum would be so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court."

         The New York court continued that an action to determine the obligations under the mechanic's lien and to determine the appropriateness of the forum-selection clause in the parties' contract had been commenced in Kane County before the New York action was filed.

         ¶ 16 Back in Kane County, defendants moved to dismiss Dancor's amended complaint. On September 5, 2013, the circuit court dismissed count I as to Vita; dismissed count II without prejudice; informed Dancor that, if it repled count II, it should replead it as a "slander of title" claim; and dismissed count III with prejudice.

         ¶ 17 Dancor filed a second amended complaint on November 13, 2013. The second amended complaint contained six counts. Counts I and II were for breach of contract against FXR and Vita, respectively; counts III and IV were for slander of title against FXR and Vita, respectively; and counts V and VI were related to mechanic's-lien liability under New York law against FXR and Vita, respectively. In counts III and IV, Dancor alleged that FXR did not complete its contractual duties and that Dancor had to bring in a replacement subcontractor to complete the Project, costing Dancor $95, 106. Regarding defendants' mechanic's lien against the Project property for money they claimed they were owed under the contract, Dancor alleged that the statement of the amount owed was false. Dancor alleged that defendants knew or should have known that it was false, because they knew or should have known that they did not complete their work on the Project. Yet, Dancor alleged, defendants published the mechanic's lien when they knew or should have known that the lien would result in pecuniary damage to Dancor. The mechanic's lien clouded the title to $115, 000 of Dancor's funds.

         ¶ 18 On December 20, 2013, defendants moved to strike and dismiss the second amended complaint. In part, the motion argued that counts III and IV failed to state a claim for slander of title, because the counts failed to allege facts showing that the lien was false or malicious, that Dancor incurred special damages, or that the lien made any statements about real property owned by Dancor. Rather, defendants argued, Dancor again relied on insufficient conclusions, not well-pled facts.

         ¶ 19 On February 14, 2014, the circuit court ruled on defendants' motion to strike and dismiss the second amended complaint. It denied the motion as to count I (breach of contract against FXR). It granted the motion with prejudice as to counts II through VI, and, pursuant to Illinois Supreme Court Rule 304(a) (eff. Feb. 26, 2010), found no reason to delay enforcement or appeal of its order.

         ¶ 20 On March 13, 2014, Dancor moved to (1) vacate the Rule 304(a) language in the February 14, 2014, order; and (2) grant Dancor leave to file an amended complaint to incorporate its previously dismissed injurious-falsehood count, which it had not included in the second amended complaint. On the same day, the court entered an order vacating the Rule 304(a) language. On March 26, after argument on the issue, the court denied leave to reassert the injurious-falsehood count.

         ¶ 21 FXR answered count I of the second amended complaint on April 25, 2014. Along with its answer, FXR filed a counterclaim, alleging that Dancor was unjustly enriched and breached their contract. The case proceeded to discovery, and a bench trial was eventually scheduled for August 26 and 27, 2015.

         ¶ 22 On May 15, 2015, FXR moved to dismiss or transfer the case pursuant to sections 2-619(a)(1) and (a)(9) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(1), (a)(9) (West 2014)). FXR argued that New York law rendered the forum-selection clause void and unenforceable. It also pointed out that Illinois law substantially mirrored New York law on the enforcement of forum-selection clauses in construction contracts. Accordingly, FXR requested that the circuit court transfer the case to New York or, in the alternative, dismiss the case without prejudice.

         ¶ 23 Dancor responded to the motion to dismiss or transfer by arguing, in part, that the enforceability of the forum-selection clause had already been decided in 2013, when the New York action was dismissed and the New York court held that the forum-selection clause was valid and enforceable. Dancor therefore argued that FXR was collaterally estopped from relitigating the issue of the forum-selection clause's validity and enforceability.

         ¶ 24 Before the circuit court ruled on FXR's motion to dismiss or transfer, FXR moved to reconsider the circuit court's February 20, 2013, order, which had denied defendants' first motion to dismiss or transfer. FXR argued that the court had erred in finding the forum-selection clause valid and enforceable.

         ¶ 25 On July 20, 2015, the circuit court entered an order addressing both FXR's motion to dismiss or transfer and its motion to reconsider. The court found that, with respect to the original motion to dismiss or transfer, it had not been advised by either party of section 757 of the New York General Business Law (N.Y. Gen. Bus. Law § 757 (McKinney 2012)), which declares void and unenforceable any choice-of-law or forum-selection provision requiring application of another state's law to a New York construction contract. It rejected Dancor's argument that the New York court's order collaterally estopped FXR's challenge to the forum-selection clause, stating that the order did not have a binding effect on this or any other action. Rather, it reasoned, the New York court deferred to Illinois and was similarly uninformed of section 757. The circuit court found that section 757 applied to the contract between Dancor and FXR and that consequently the forum-selection clause was void and unenforceable. While it found that the clause could be severed under the terms of the contract, it also found that the case would be more appropriately and conveniently litigated in New York.

         ¶ 26 The circuit court acknowledged that trial was set to commence within the next 60 days[1]and that the circuit court's local rules generally required dispositive motions to be filed no later than 60 days before trial. Here, both parties incurred costs preparing for trial in Illinois and therefore both sides would be prejudiced by further delay. Nevertheless, the court reasoned, its prior order was in error because of a misapplication, or lack of citation, of applicable law, and the order was interlocutory and could be corrected at any time before trial. Accordingly, the court granted FXR's motion to dismiss so that the case could be refiled in New York.

         ¶ 27 Dancor filed a timely notice of appeal on August 12, 2015, pursuant to Illinois Supreme Court Rule 301 (eff. Feb. 1, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.