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Restore Construction Company, Inc. v. Board of Education of Proviso Township High Schools District 209

Court of Appeals of Illinois, First District, Sixth Division

June 28, 2019

RESTORE CONSTRUCTION COMPANY, INC., and RESTORE RESTORATION, INC., Plaintiffs-Appellants,
v.
THE BOARD OF EDUCATION OF PROVISO TOWNSHIP HIGH SCHOOLS DISTRICT 209, NETTIE COLLINS-HART, DANIEL J. ADAMS, TRAVELERS INDEMNITY COMPANY, GALLAGHER BASSET SERVICES, INC., MADSEN KNEPPERS AND ASSOCIATES, INC. and COLLECTIVE LIABILITY INSURANCE COOPERATIVE, Defendants (The Board of Education of Proviso Township High Schools District 209, Defendant-Appellee).

          Appeal from the Circuit Court of Cook County. 15 L 010904 Honorable Bridgid Mary McGrath, Judge Presiding.

          JUSTICE CONNORS delivered the judgment of the court, with opinion. Presiding Justice Delort and Justice Cunningham concurred in the judgment and opinion.

          OPINION

          CONNORS, JUSTICE

         ¶ 1 The dispute at issue here arose between plaintiffs, Restore Construction Company, Inc. (Restore Construction), and Restore Restoration, Inc. (Restore Restoration), [1] and defendant, the Board of Education of Proviso Township High Schools District 209 (the Proviso Board)[2], after the Proviso Board refused to pay for construction and restoration services rendered by plaintiffs after one of the high schools in the Proviso Township High Schools District 209 (District) was damaged by fire. Although plaintiffs were paid for a portion of their work, the Proviso Board refused to tender payment for the remainder after becoming aware that the contracts for restoration services were entered into without proper approval. The Proviso Board moved to dismiss plaintiffs' quantum meruit counts, arguing that a school district cannot be held liable under a theory of quantum meruit when the contracts purporting to bind the District were never properly approved and were void ab initio. The circuit court agreed with the Proviso Board and dismissed plaintiffs' complaint. Plaintiffs appeal, arguing that the court below improperly dismissed the complaint because a finding that the contract was void ab initio did not prevent a claim based on a contract implied in law for the value of the work performed in reliance on the presumed contract. For the following reasons, we reverse the circuit court's decision.

         ¶ 2 BACKGROUND

         ¶ 3 Facts Taken From Plaintiffs' Third Amended Complaint

         ¶ 4 Proviso East High School (Proviso East) is a public high school located within the boundaries of the District at 807 South First Avenue in Maywood. The District is an Illinois body politic and is governed by the Proviso Board, which is comprised of seven members and is subject to the authority of a financial oversight panel (FOP) appointed by the State of Illinois. During the time period relevant to this case, Todd Drafall was the FOP's chief financial officer. Defendant Nettie Collins-Hart was the superintendent of the District from approximately July 1, 2008, to June 30, 2016. She was also the District's chief executive officer responsible for the administration and management of the District's schools in accordance with its policies and state and federal law. Defendant Daniel J. Adams was a member of the Proviso Board until April 11, 2017. [3] Adams was the Proviso Board president from approximately January 15, 2013, to April 30, 2015, and his duties included presiding over the business of the Proviso Board at official meetings and signing official District documents.

         ¶ 5 The District, at all times relevant, was a member of the Collective Liability Insurance Cooperative, which was insured by Travelers Indemnity Company (Travelers). The excess property policy issued by Travelers to the District stated, "in return for the payment of the premium, [Travelers] agrees with [the District] to provide the insurance afforded by this policy." After the loss payment of $1 million by the underlying lead insurer, Travelers was responsible for the 100% share of the next $1 billion of the loss.

         ¶ 6 On May 10, 2014, a fire broke out at Proviso East, causing significant property damage and dangerous conditions within the school. The upcoming school year was to begin on August 13, 2014, and the District was in need of prompt remediation and repairs. The District had previously contracted with plaintiffs for flood damage in April 2013. At that time, the District and plaintiffs entered into a contract for plaintiffs' restoration services "without concern, repudiation, dispute or a recorded Board vote, as was [the District's] customary practice for the repair and payment of losses covered by its property loss insurance." Promptly after the fire, the District's representatives contacted Restore Restoration and asked it to provide emergency mitigation services to the District. Plaintiffs were advised that the District would approve a contract with Restore Restoration to mitigate and remediate damage from the fire and with Restore Construction to repair the property loss damage to Proviso East. Immediately thereafter, Restore Restoration provided emergency mitigation services. The District hired Legat Architects, Inc. (Legat), to prepare plans and work specifications for the fire damage and to act as contract administrator for the District on the renovation project.

         ¶ 7 On May 22, 2014, Collins-Hart signed two contracts on behalf of the District-one with Restore Restoration to mitigate and remediate fire damage and the other with Restore Construction to repair the fire-damaged school. This agreement did not go through the typical competitive bidding process. Further, the Proviso Board was never presented with a copy of the agreement for approval and never conducted a vote to approve it. The value of plaintiffs' work stemming from the initial agreement was $331, 109.83.

         ¶ 8 On June 24, 2014, Legat published the District's project manual, identified as project No. IN14-0001 and titled "Fire Damage Renovations at Proviso East High School for the Board of Education Proviso Township High School District 209" (Specifications Manual). The Specifications Manual set forth the responsibilities of the District, Legat, plaintiffs, and Travelers. On July 9, 2014, Collins-Hart affirmed the hiring of Legat by the District and the adoption of the Specifications Manual.

         ¶ 9 Thereafter, Drafall attended fire loss project construction meetings regarding the remediation, restoration, and repair of the school in accordance with the Specifications Manual. In addition to Drafall, the following attended these meetings: plaintiffs' personnel; the District's project manager, Ron Anderson; the District's buildings and grounds manager, L.T. Taylor; representatives from Legat, Gallagher Bassett Services, Inc., Madsen Knepper and Associates, Inc., Travelers; and various subcontractors.

         ¶ 10 On August 12, 2014, Adams, who was then the president of the Proviso Board, signed an amended agreement with Restore Construction to repair the school on behalf of the District. The amended agreement signed by Adams was represented by him to be on behalf of the District. Like the initial agreement, the amended agreement was never presented to the Proviso Board for approval and a vote. Pursuant to the amended agreement, plaintiffs performed emergency mitigation and repair work valued at $6, 939, 890.17.

         ¶ 11 Between the two agreements, the total value of plaintiffs' work was $7, 271, 000. Plaintiffs expected to be paid in full for their work through the Travelers policy. Gallagher Bassett Services, Inc., acted as a claims administrator on behalf of Travelers by issuing payments to the District and plaintiffs using funds supplied by Travelers.

         ¶ 12 On February 20, 2015, Legat issued its cumulative certificate for payment, which certified that Restore Construction[4] had, to date, completed $5, 816, 223.08 of work. The total value of the mitigation, remediation, and repairs performed by plaintiffs was $7, 271, 000. In total, plaintiffs were paid $5, 816, 223.08 by Travelers. The outstanding balance owed plaintiffs was $1, 428, 553.90 when the District ceased payment.

         ¶ 13 Procedural History

         ¶ 14 On October 28, 2015, plaintiffs filed their initial complaint, which contained a single count for breach of contract. Subsequently, on April 11, 2016, plaintiffs amended their complaint to include equitable claims against the Proviso Board for equitable estoppel, unjust enrichment, and quantum meruit. Plaintiffs filed a second amended complaint, but that pleading is not contained in the record.[5] On November 4, 2016, the Proviso Board filed a motion to dismiss plaintiffs' second amended complaint pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2016)). The Proviso Board's motion asserted that plaintiff's unjust enrichment and quantum meruit counts should be dismissed for failure to set forth sufficient well-pled facts.

         ¶ 15 On June 7, 2017, the court granted the Proviso Board's motion with prejudice as to all counts of plaintiffs' second amended complaint, except plaintiffs' counts for unjust enrichment, which the court granted without prejudice. The court stated that it was dismissing plaintiffs' breach of contract counts because "the contracts with [the District] are void ab initio because a board vote was required to be taken before any sort of expenditure, even in an emergency. But no board vote was taken." The court explained its decision to dismiss plaintiffs' counts for unjust enrichment and quantum meruit as follows:

"First, the quantum meruit counts are duplicative of the unjust enrichment claims. Under Illinois law, quantum meruit is used as an equitable remedy to ...

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