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DT Boring, Inc. v. Chicago Public Building Commission

United States District Court, N.D. Illinois, Eastern Division

March 8, 2017

DT BORING, INC., Plaintiff,
THE CHICAGO PUBLIC BUILDING COMMISSION, HARBOUR CONTRACTORS, INC., an Illinois corporation, ENVIRONMENTAL DESIGN INTERNATIONAL, INC., an Illinois corporation, and JOHN DIMOS, an individual, [1]Defendants.


          Robert W. Gettleman United States District Judge

         Plaintiff DT Boring, Inc. ("DT Boring") filed a ten-count amended complaint against defendants The Chicago Public Building Commission ("PBC"), Harbour Contractors, Inc. ("Harbour"), Environmental Design International, Inc. ("EDI"), and John Dimos, alleging that Harbour, EDI, and Dimos violated the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962 ("RICO"), (Counts I, II, and III), PBC and Harbour engaged in common law fraud (Counts IV and V), and PBC and Harbour tortiously interfered with contractual relations (Counts VI, VII, and VIII). Plaintiff also asserts claims for unjust enrichment (Count IX) and promissory estoppel (Count X) against PBC and Harbour. Harbour filed a motion to strike certain allegations in the amended complaint and PBC filed two motions to dismiss Counts IV and VI-X of the amended complaint; one for lack of supplemental jurisdiction and one for failure to state a claim. For the reasons discussed below, the court denies all of defendants' motions.


         I. Procedural History

         The issues and parties before the court are not new. On January 18, 2013, plaintiff filed an action in this court against essentially identical parties, [3] alleging most of the same causes of action presently before the court. See DT Boring, Inc v. Chicago Pub. Bldg. Comm'n, No. 13-C-450 (“DT Boring I”). On October 28, 2013, this court dismissed DT Boring I pursuant to Rule 12(b)(1) for lack of RICO standing because plaintiff was pursuing collateral sources of recovery. DT Boring, Inc v. Chicago Pub. Bldg. Comm'n, 2013 WL 5835703 (N.D. Ill. Oct. 28, 2013). After dismissing the RICO claim, the court declined to exercise jurisdiction over plaintiff's remaining state law claims.

         Plaintiff filed its first complaint in the instant case on December 14, 2015, alleging counts nearly identical to those currently before the court. Harbour, PCB, and EDI each filed motions to dismiss for, among other things, failure to exhaust other sources of recovery, and cited this court's October 28, 2013, memorandum opinion and order in DT Boring I to support their argument. The court determined that, because plaintiff had settled its state court case, it was no longer seeking relief from another source, and that it had sufficiently pled a RICO claim under 18 U.S.C. § 1962(d). Accordingly, the court denied defendants' motions with respect to Count III.[4] Harbour also argued that plaintiff's RICO claims should be dismissed for failure to plead fraud with particularity, as required by Rule 9(b), and for failure to comply with Rule 8(a). The court found Harbour's arguments unconvincing and denied those motions. Plaintiff's amended complaint followed, as did the new round of defendants' motions.

         II. Facts

         Plaintiff is an Illinois corporation that consults on geothermal energy, as well as designs, drills, and installs geothermal well fields and geothermal heating and ventilation systems for governmental, commercial, and residential structures. Tom Shelton and his wife own plaintiff in joint tenancy. In October 2010, Shelton received from Optimal Energy, LLC (“Optimal”) an abbreviated version of bid documents produced by defendant PBC, a municipal corporation that controls and oversees the construction and renovation of public buildings in Chicago, for construction of the 12th District Police Station in Chicago, Illinois (the “12th District Project”). Optimal subsequently sent Shelton a draft subcontractor's agreement, under which plaintiff would act as a subcontractor for Optimal on the 12th District Project, performing the drilling of 88 geothermal boreholes and other related work.

         Included with the draft subcontractor agreement were revised plans for the geothermal portion of the 12th District Project taken from PBC's bid documents. The revised bid documents stated that the property on which the police station was to be built had previously contained Chicago Housing Authority (“CHA”) residential buildings that had been removed from the site in 2009. In addition, the bid documents stated that “[r]emaining subsurface structures were removed in April 2010 [from the property] as a part of the site preparation for the construction of the 12th District Police Station.” Plaintiff alleges that it relied on these statements when preparing and submitting its revised bid to Optimal. Plaintiff subsequently entered into a contract with Optimal to perform the above referenced work for the 12th District Project. Optimal in turn entered into a subcontract with defendant Harbour, which served as the general contractor for the 12th District Project.

         Plaintiff alleges that the revised bid documents fraudulently asserted that the “remaining subsurface structures” from the residential housing on the project site had been removed. According to the complaint, “numerous, steel rebar-reinforced, concrete foundations from those [residential] buildings remained buried on the site several feet below grade.” The complaint further alleges that “buried several feet below ground . . . were numerous asbestos-wrapped steam pipes.”

         Plaintiff alleges that PBC, Harbour, and EDI, which was hired to complete pre-construction environmental testing on the project site, knew about both the underground concrete obstructions and asbestos prior to PBC preparing the project's bid documents. Months before the residential housing buildings were demolished, PBC and EDI allegedly received site plans from the CHA identifying the asbestos-wrapped steam lines. The complaint alleges that in April 2009, PBC and EDI “agreed that EDI would do environmental test borings around the Project site looking for contaminated soil, but that the test borings would deliberately avoid coming near the underground, asbestos-wrapped steam lines.” Plaintiff further alleges that EDI hired a subcontractor during its environmental testing that identified 36 underground anomalies during testing on the project site, and therefore recommended further testing on each anomaly. EDI and PBC, however, “agreed that EDI would do test borings near only 17 of the 36 ‘anomalies' . . . to avoid ‘discovering' the underground, asbestos-wrapped steam lines.” According to the complaint, EDI, “in order to satisfy PBC, a major customer, . . . states whatever is necessary to protect PBC's position” with respect to the environmental conditions of PBC's projects.

         A. Drill Rig Relocation

         The complaint alleges that “within days” of beginning work on the 12th District Project site in May 2011, plaintiff “encountered the first of the underground steel rebar-reinforced underground obstructions.” After finding the obstruction, plaintiff alleges that Shelton immediately notified Harbour's project manager, “explaining that the obstruction had not been disclosed on any of the bid documents given to Shelton.” Plaintiff alleges that an “on-site meeting” between Harbour, PBC, and plaintiff then occurred, during which Harbour and PBC agreed to have plaintiff “relocate its drilling rigs anywhere within a 2-foot radius of the original, specified location for the borehole.”

         According to the complaint, the day after the on-site meeting, Shelton spoke with PBC's assistant project manager Andy Horn, who inquired about how much it would cost PBC for plaintiff to relocate its drilling rigs when it encountered the previously undisclosed underground obstructions. Shelton told Horn that plaintiff would charge a flat three hours of time at a cost of $1, 650 for each drill rig plaintiff had to relocate, plus the additional cost of removing excess soil. Horn allegedly agreed to pay plaintiff at this rate. The complaint alleges that on May 26, 2011, “Shelton received an email over the interstate wires that contained another email, also sent over the interstate wires, dated May 17th, 2011, and sent from Horn to [James] Harrell [PBC's project manager], and other PBC staff members expressly authorizing [plaintiff] to relocate its drilling rigs a maximum of 2 feet in any direction in order to avoid undisclosed, underground obstructions.” Plaintiff alleges that in early June 2011 Shelton inquired with Harbour's project manager, Sam Rae, as to why plaintiff had not received written field orders from Harbour for the drill rig relocations. Rae allegedly informed Shelton that “Harbour had not issued any Field Orders because Harbour had to ‘package' [plaintiff's] drill rig relocation costs as change orders with other subcontractors' change orders, before submitting them all to the PBC for payment.” According to the complaint, “Rae told Shelton again that [plaintiff] would be paid for its drill rig relocation costs, and he also told Shelton to have [plaintiff] continue with its work including relocating the drill rigs when necessary.” As a result, plaintiff alleges that it continued drilling the remaining 88 boreholes for the 12th District Project.

         The complaint alleges that PBC's and Harbour's statements to plaintiff orally authorizing the drill relocation and agreeing to pay plaintiff for the extra work “were all intentionally false and fraudulent when made.” Plaintiff alleges that the statements were intended to induce it to continue drilling the boreholes, but that PBC and Harbour had no intention of paying for the work. According to the complaint, “Rae, on behalf of Harbour, and Harrell, on behalf of the PBC, had already made a secret agreement [that] when [plaintiff] encountered the first of the undisclosed, underground obstructions that the PBC and Harbour would deliberately withhold all payments for [plaintiff's] drill rig relocations until [plaintiff] had completed all of its work on the geothermal portion of the Project . . . in the hope that no payment would be necessary because of a credit owed to PBC by Optimal.” Plaintiff alleges that “Harbour and the PBC hoped that Optimal's credit owed to the PBC would fully offset the amount owed to [plaintiff] for the drill rig relocations so that the PBC would not have to pay [plaintiff] anything” for the extra work.

         Unaware of this agreement, plaintiff alleges that it continued to submit timely invoices for the extra work to Optimal as directed by Rae. “In reality, Rae and Harbour directed [plaintiff] to submit its invoices to Optimal for transmission to Harbour simply to ensure that payments for [plaintiff's] drill rig relocation costs had to pass through Optimal so that those payments could be offset by Optimal's credit owed to the PBC.” The complaint alleges that into September 2011 Harbour continued to assure plaintiff that it would be paid for the extra work, but that it was still “packaging” plaintiff's change orders. Specifically, plaintiff alleges that Rae sent Shelton an email on September 14, 2011, stating that “Harbour was waiting for the necessary backup and documentation for each change order, ” and that it was “Harbour's ...

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