Trustees of the Springfield Police Pension Board v. State of Illinois

ORDER

BURNS, J.

This cause coming before the Court on the Respondent's Motion to Dismiss the Amended Complaint. The Claimant filed a response, and the Respondent filed a reply. The Court having read the pleadings and being fully advised, finds as follows:

[*91] BACKGROUND

This case is based on an alleged settlement agreement between the Claimant and the Illinois Department of Insurance (the "Department") in an underlying administrative review case pending in the circuit court of the Seventh Circuit, Sangamon County, Illinois.

The relevant facts are set forth in our Order of January 14, 2015, in which we granted the Respondent's Motion to Dismiss, with respect to the Respondent, without prejudice. In that Order, we held that the Claimant's Complaint had failed to plead sufficient facts to sustain a cause of action for breach of the settlement agreement. Specifically, we held that the Complaint failed to plead facts sufficient to show that the Claimant had accepted the Department's settlement offer, set forth in a January 13, 2014 letter from the Illinois Attorney General, as counsel for the Department, to the Claimants, such that a valid contract was formed.

On January 22, 2015, the Claimants filed the instant Amended Complaint. The Claimants attached to the Amended Complaint an affidavit from Richard Dhabalt, Chairman of the Board of Trustees of the Springfield Police Pension Board (the "Board"), attesting that the Board had unanimously agreed to accept the terms of the Department's settlement offer at a January 27, 2014 meeting of the Board. This affidavit, the Amended Complaint argues, establishes that the Claimants accepted the Department's offer and, therefore, a valid and enforceable contract existed.

As it did with the original Complaint, the Respondent filed a motion to dismiss under Section 2-619.1 of the Illinois Code of Civil Procedure on numerous grounds, including that 1) the Complaint fails to allege facts sufficient to state a cause of action upon which relief can be granted; 2) there exists another action pending in the circuit court between the same parties for the same cause; and 3) the Claimants have failed to exhaust all other remedies.

In support of its argument that the Complaint fails to state a claim, Respondent argues, once again, that the Claimants fail to allege facts demonstrating the existence of a valid settlement agreement. First, Respondent states, a February 4, 2014 letter from the Claimants to the Department that included a "draft" Release and Settlement Agreement not "formally approved" by the Board and presented for the Department's "consideration" does not constitute a valid acceptance of the Respondent's alleged offer. Second, the Claimants' proposed Release and Settlement Agreement constitutes a counteroffer because it contains new terms. Finally, the Claimants' alleged acceptance on January 27, 2014, set forth in the affidavit attached to the Amended complaint, is not valid because it was not communicated to the Department prior to Claimants' counter-offer or prior to the Department's rejection of the counter-offer.

To this last point, Respondent cites to the cases of Beard Implement Co. Inc. v. Krusa, 208 Ill.App.3d 953 (1991), and Sementa v. Tylman, 230 Ill.App.3d 701 (1992). In Beard, the Illinois Appellate Court held that in order to be effective an acceptance must be communicated to the offerer. Beard, 208 Ill. App.3d at 961. In Sementa, the Court declined to find an "agreed order" signed by both parties to be a valid agreement because the alleged acceptance was not communicated to the plaintiff prior to the plaintiffs rejection of a counter-offer made by the defendant's attorney. Sementa, 230 Ill.App.3d at 706. Respondent argues that since Claimants here have not pleaded facts to show Claimants communicated any acceptance prior to the February 4, 2014 counter-offer, the Complaint must be dismissed pursuant to Section 2-615.

[*92] In response, Claimants first distinguish Beard on the basis that it was a case involving the Uniform Commercial Code ("UCC") and, thus, not dispositive here. As for Sementa, they argue that its holding stands only for the proposition that a rejected offer cannot be revived by a later acceptance. Indeed, Claimant argues, the linchpin of Sementa’s holding is a citation from the Restatement (Second) of Contracts, found in another contract case, Rothenbuecher v. Tockstein, 88 Ill.App.3d 968, 970 (1980), that states "Unless the offer provides otherwise, (a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, without regard to whether it ever reaches the offeror." Restatement (Second) of Contracts, §64(a) (1973).

Thus, Claimants argue, the January 27, 2014 board meeting made the acceptance operative without regard to whether notification ever reached the Department. By directing their counsel to communicate the unconditional acceptance to the Department, they argue the Board used a "manner and medium invited by the offer" and the acceptance was complete by such "manifestation of mutual assent as soon as put of the offerees' possession." The February 4, 2014, letter, Claimants state, is thus irrelevant as to the issue of acceptance.

In reply, Respondent notes that it never suggested the UCC applies to this case when it cited Beard, and other cases, for the well-settled contract law rule that an acceptance is not valid until communicated to the offeror. Moreover, it points out that the Rothenbuecher court rejected Claimant's reasoning and held that no contract existed in that case because the acceptance was not timely communicated by the seller's agent to the buyer.

ANALYSIS

In ruling on a motion to dismiss under Section 2-615, it must be determined whether the allegations of the complaint, when viewed in a light most favorable to the plaintiff, are sufficient to state a cause of action upon which relief can be granted. Ottawa Savings Bank v. JDI Loans, Inc., 374 Ill.App.3d 394, 401 (2d Dist. 2007).

A Section 2-615 motion admits as true all well-pleaded facts, but not conclusions of law or factual conclusions that are unsupported by allegations of specific facts. Id. at 401. In the case of a contract breach claim in which there is no valid contract attached to the Complaint, generalities will not suffice. "[T]he pleader must allege facts sufficient to indicate offer, acceptance, and consideration." See Pollack v. Marathon Oil Co., 34 Ill.App.3d 861, 864 (5th Dist. 1976).

Under Illinois law, "a settlement agreement is a contract, and construction and enforcement of settlement agreements are governed by principles of contract law." Law Offices of Colleen M. McLaughlin v. First Star Financial Corp., 2011 Ill. App (1st) 101849, ¶18. "It is well-settled that in order to constitute a contract by offer and acceptance, the acceptance must conform exactly to the offer." Finnin v. Bob Lindsay, Inc., 366 Ill.App.3d 546, 548 (3d Dist. 2006). Under Illinois contract law, an acceptance requiring any modification or change in terms constitutes a rejection of the original offer and becomes a counter-offer that must be accepted by the original offeror before a valid contract is formed. Id.

In the instant case, there is no dispute that the Department made an offer to the Claimants in the January 13, 2014 letter. The issue, as before, remains whether the [*93] Claimants here can plead facts sufficient to establish that they accepted the Department's offer. The Claimants claim they have done so by attaching to their Complaint the uncontroverted affidavit from the Board Chairman stating that, on January 27, 2014, the Board agreed to accept the terms of the Department's settlement offer.

Unfortunately for the Claimants, however, more than mere acceptance was needed to form a valid agreement. The acceptance had to be communicated to the Department. The Claimants have not pleaded any facts to show that this was accomplished prior to the Board's February 4, 2014 letter that contained the counter-offer.

In Rothenbuecher, the defendant offered to purchase property contingent on approval by the seller within one day, by July 10, 1979. Rothenbuecher, 88 Ill.App.3d at 969. The plaintiff seller testified that he signed the proposed contract on July 10, 1979. However, no communication of acceptance was sent as of that date. The seller's agent testified that actual notice of the seller's "interest" was given to the prospective buyer by telephone on July 11, 1979. The buyer revoked her offer on July 15, 1979. The seller sued for specific performance on July 17, 1979. Physical delivery of the prospective acceptance did not occur until July 23, 1979. Id. The court held that there was no valid acceptance on July 10, 1979 because the acceptance was not timely communicated to the buyer. Id. at 970. Rather, acceptance was communicated after the designated time and after the buyer had revoked the offer. Id.

The court rejected the argument that the seller's tender of the signed contract to his agent on July 10, 1979 constituted "put[ting] the manifestation of assent out of the offeree's possession," and, therefore, a valid acceptance. Id.

The Court reasoned:

[i]t is the essence of a valid acceptance that it be objectively manifested by or

on behalf of the offeree. Otherwise an offeree's assent could remain undisclosed

and while he might find the terms of an offer agreeable, he could, for example,

hold assent in reserve while other offers were entertained. No meeting of the

minds would in fact occur. At best, the signed agreement constituting a

purported acceptance was given to the seller's agent on the evening of July 10.

However, this was inadequate to communicate acceptance since it cannot be

said that as a matter of legal effect this put the manifestation of assent out of

the offeree's possession. While still in the hands of his agent, and without

notice to the offeror, the seller could have at any time during the period of the

condition given instructions that his acceptance be revoked. Id.

In this case, as in Rothenbuecher, Claimants allegedly communicated their acceptance to their agent, the Board's counsel. However, the Board's counsel did not communicate that alleged unequivocal acceptance to the Department in a timely manner. Rather, the Board's counsel sent the Department the February 4, 2014 letter that we already have held was insufficient alone to establish an agreement and that, instead, included a counteroffer.

We hold, therefore, that whether or not the Claimants accepted the Department's offer on January 27, 2014, the Claimants still have not pleaded, and cannot plead, sufficient facts to show that any such acceptance was communicated to the Department prior to the Department's rejection of the agreement. Without communication of the acceptance to the offeror, the Claimants cannot meet the elements for a valid contract formation. Therefore, the Claimants' Amended Complaint must be dismissed with prejudice, pursuant to Section 2-615, for failure to state a claim.

[*94] Because we have dismissed the case for failure to state a claim, we need not address the Respondent's alternative arguments for dismissal.

IT IS HEREBY ORDERED that Respondent's Motion to Dismiss the Amended Complaint is GRANTED and the Complaint is DISMISSED with prejudice.