Smart Elevators Co. v. Board of Trustees of the University of Illinois

This cause returns to the Court on the Respondent’s Motion to Dismiss the First Amended Complaint, pursuant to 735 ILCS 5/2-615. The Claimant filed a response, and the Respondent filed a reply. The Court having read the pleadings and being fully advised in the premises finds as follows:

Background

This is a breach of contract claim concerning various elevator repair services performed on behalf of the Respondent (the “University”) at its University of Illinois Chicago campus.

On March 8, 2019, we dismissed Claimant’s initial complaint, which sought payment of $699,154.96 for some 695 individual claims for elevator repair services from 2013-2016, for failure to meet certain specificity requirements in pleading. However, we noted that Claimant may be able to refile its complaint if it could plead facts that would establish the emergency nature of each particular claim for reimbursement and the basis for the apparent authority of the University employee who ordered the service for that particular claim.

On April 11, 2019, Claimant filed a First Amended Complaint (the “Amended Complaint”), alleging a revised amount owed of $516,724.50 for some 552 individual claims for elevator repair services that occurred during 2015-2016. The Amended Complaint states that all of the elevator repair services set forth the Bill of Particulars attached are of an emergency nature, with descriptions of the work performed for each service call provided in estimates attached to the Bill of Particulars. It also names specific individuals, including the University’s Executive Director of Facilities Management and five maintenance personnel, as having had either the actual or apparent authority to bind the University to the requests at issue.

On May 17, 2019, the Respondent filed a Motion to Dismiss under Section 2-615. Specifically, Respondent argues that the Amended Complaint fails to cure the defects set forth in our March 8, 2019, Order.

Analysis

As set forth in our March 8, 2019, Order, claims against the State based on an oral or implied contract are greatly disfavored. Black Night Productions, Inc. v. The University of Illinois at Chicago, Black Student Association, 50 Ill. Ct. Cl. 406 (1998). One reason for [*231] this is to preserve the state coffers from unnecessary and unauthorized expenditures. While a vendor may be able to recover for services provided absent a written contract in certain circumstances where the services provided were of an “emergency nature”, such cases by definition would have to be for unexpected occurrences or events.

Here, the Claimant has filed an amended complaint that includes some additional specifics that shed more light on the claims set forth in the original complaint. It includes some 150 pages of invoices for each of the 552 individual repair jobs, with the dates of service and descriptions for each call, while eliminating claims for routine maintenance, inspection and other similar services. It also includes the name of Clarence Bridges, the University Executive Director of Facilities Management, as well as five specific UIC elevator mechanics who allegedly placed the work orders for each of the service calls at issue.

We find the First Amended Complaint still fails to plead adequate specifics to establish the emergency nature for the vast majority of individual claims. However, we have identified 23 claims involving specific allegations of either entrapment of passengers or some emergent circumstances that satisfy the pleading standards to set forth a cognizable claim. We also find the Claimant has alleged sufficiently the actual authority of Bridges and the apparent authority of the five named UIC mechanics to avoid dismissal on such basis.

We analyze each of the prongs as follows:

The Emergency Repairs

In our March 8, 2019, Order, we held that the Claimant may be able to advance its claims if it could plead facts that would establish the emergency nature of each particular claim for reimbursement. While the Bill of Particulars states that all of the repairs for which they seek payment for “urgently required emergency elevator repair services,” it does not provide specifics. The corresponding attached estimates contain short descriptions of the work performed in each service call, but we find nothing in the Bill of Particulars or the vast majority of these descriptions to establish why these services were of an “emergency” nature sufficient to warrant an exception to the rule that a written contract from a person with authority is required to bind the state.

For example, Estimate #1918 dated January 15, 2016, contains the following work order: 12/1/2015 Ticket 13154: Car 1. Troubleshoot, found car blowing fuses. Checked circuitry, replaced fuses. Need to test operation to RTS. $1520.

Estimate #1915 Dated January 15, 2016: 12/2/2015 Ticket 13160: East. Troubleshoot car out of service. Found car running on arrival. Need to test operation to RTS. $380.

Estimate #1951 dated January 22, 2016: 01/21/2016 Ticket 10359: Troubleshoot elevator out of service. $570.

Estimate #1844 dated January 29, 2016: 09/21/2015 Ticket 13035: Car 1. Check operation for intermittent door problems. Operation ok. Check automatic operation to RTS. $760 [*232]

Estimate #2004 dated February 26, 2016: 2/10/2016 Ticket 10573: All cars. Installed smart elevator test tags on elevators inspected by inspector. $380.

None of these descriptions standing alone allows for a reasonable inference of emergency. Rather they appear to be for ordinary repairs. The vast majority of the other work orders contain similar descriptions. In many cases they involve elevator cars that are already “down” or “out of service.” Sometimes these repairs were done over days or weeks. Estimate #1984 shows a car being serviced for over a 15-day period, with no reference to the car being returned to service during that entire time. In a few cases, the work orders describe a car that was checked out and found to be fully functional. In at least one case, the only repair performed was because a light was out.

Essentially, Claimant asserts that all these claims fall under the “emergency” exemption because a broken or malfunctioning elevator might create peril at any given time. This may well be true. Any elevator at any given time could stop working and leave a person stranded. However, Illinois pleading rules require more than speculation. They require a claimant to plead facts that, if proven, would establish the allegation. Here, in the vast majority of the work orders, there are no facts pleaded to show why the particular repair was an emergency.

Claimant points out, correctly, that in order to survive a 2-615 motion to dismiss a plaintiff is required to allege only the ultimate facts necessary to state a cause of action and is not required to set out all of the evidence. Mclean v. Rockford Country Club, 352 Ill.App.3d 229, 238 (2004). Once again, however, a plaintiff must plead facts as opposed to mere conclusory statements. Village of South Elgin v. Wast Management of Illinois, 348 Ill.App.3d 929, 930 (2004). Here, the work descriptions in all but a few cases contain only facts as to the repair itself. There is nothing to establish the requisite ultimate fact needed to sustain a claim in this case, namely that the repair constituted an emergency.

As mentioned above, not all of the descriptions fail to state a cognizable cause of action. We find 18 work orders that reference “entrapment”5 or passengers being stuck, four workers ordered that refer to cars in the process of being “flooded”6 with water or oil, and one additional work order that refers to “all cars out of service.”7 In these work orders, we find that Claimant has pleaded sufficient facts that, if proven, could establish the emergency nature of that particular repair, assuming the Claimant could also show that the work call was properly authorized.

A court may, on its own motion, dismiss any claim that fails to state a recognized cause of action. Rhodes v. Mill, 126 Ill. App. 3d 1024 (2nd Dist. 1984). We thus dismissed all claims other than the 23 emergency claims set forth above.

The Authority to Bind the University

In our March 8, 2019, Order, we held that the claimant may be able to advance its claims if it could plead facts that would establish the authority of the individual who

The Court finds the following estimates to be alleging emergencies based on entrapment of passengers: 1927; 1932; 1955; 1958; 1954; 1774; 1776; 1809; 1811 (Tickets 13818, 1322, 13023); 1827; 1878 (Tickets 13204, 13236); 1966; 2004; and 2007.

The Court find the following estimates to be alleging emergencies based on flooding: 1960; 2010; 1971; and 1979.

The Court finds estimate 1669 to be alleging an emergency based on all cars being out of service.

[*233] placed the call to bind the University. The First Amended Complaint provides the names of five individual UIC mechanics who conceivably made the service calls, though it does not state affirmatively which individual actually ordered any specific service. In some cases, the First Amended Complaint states that the call may have been made by some unnamed person “under the supervision or control” of the named person.

More problematic for Claimant is the lack of any alleged facts to sustain its belief that any of these named employees had any authority to bind the University. The First Amended Complaint alleges that Bridges had the authority to and did approve Claimant for inclusion on the University’s approved vendor list. It also alleges that Bridges had the authority to contract for elevator repair services on behalf of the University and to delegate this authority to the named UIC mechanics.

The University’s act, through Bridges, in placing Claimant on the list of approved vendors is not the same as conferring authority on Bridges to enter into binding University contracts, even with those same vendors. Thus, it is limited relevance to the issue of whether Bridges or the individual UIC mechanics had been delegated authority. However, Claimant’s allegation that Bridges had been delegated the authority to enter into contracts for services and, in turn, could delegate such authority to the named UIC mechanics, is enough to survive outright dismissal. As Claimant notes its reply brief, Section 4(h) of the General Rules Concerning University Organization and Procedure, expressly allows for the comptroller and secretary to delegate to responsible members of the staff of the University authority to sign contracts in their names, as the case may require. Viewing the complaint in the light most favorable to plaintiff, as required on a motion to dismiss, we find that Claimant has sufficiently pleaded this allegation.

We also find the Claimant has sufficiently pleaded the “apparent authority” of the five UIC mechanics to place the emergency service calls. Under Agles, “the State is bound by the contracts entered into by those with apparent authority in (emergency) situations, since it is obvious that the only actual authority is in the hands of the purchasing departments rather than in the hands of the individuals who authorize the work.” Agles, 37 Ill. Ct. Cl. At 142. Thus, we recognized the basic principle that real-life needs must be met in real time, and that pre-approval is not always an option.

In Illinois, apparent authority arises where a principal creates, through words or conduct, the reasonable impression that the putative agent has been granted authority to perform certain acts. State Security Insurance Co. v. Burgos, 145 Ill.2d 423, 432 (1991). Apparent authority is that authority which a reasonably prudent person, in view of the principal’s words or conduct, would naturally suppose the agent to possess. Id; see also Landmark Am. Ins. Co. v. Deerfield Constr., Inc., 2018 WL 2072858 (N.D. Ill. May 3, 2018), add’d 933 F.3d 806 (7th Cir. 2019). In this case, Claimant alleges that the University’s established past practice of paying Claimant for services requested by these same five UIC elevator mechanics over a period of years created a reasonable belief that these individuals had been granted such authority. While we have doubts as to whether such a prior course of dealing could establish apparent authority, it is enough at this stage of the proceedings to survive a motion to dismiss.

In allowing the First Amended Complaint to go forward on the 23 alleged emergency claims, we make no judgment on the merits of the Claimant’s arguments for [*234] reimbursement. Claimant will still need to prove the “emergency” nature of each claim and the authority of the individual who placed the work order. Nor do we in any way intend to impose any bright-line rule regarding what constitutes an emergency for purposes of state procurement. We expressly disclaim any notion that “entrapment” of passengers is required for an elevator repair to be considered an emergency. We find only that in this case, under these circumstances, the only claims that could meet the “emergency” exemption to the normal procurement rules are those 23 that we have identified herein.

Given the limited scope of the 23 remaining claims, we will allow discovery only relating to those 23 claims, including the issues of whether Bridges had actual authority from the University to enter those particular oral contracts; whether Bridges delegated actual authority to the five named UIC mechanics for those particular oral contracts; whether those UIC mechanics exercised such actual authority in these cases; whether the UIC mechanics had apparent authority to request these particular services on behalf of the University; and whether those UIC mechanics exercised such apparent authority in these calls.

For the foregoing reasons, IT IS HEREBY ORDERED THAT the Respondent’s Motion to Dismiss is GRANTED IN PART and DENIED IN PART.

The motion to Dismiss is DENIED as to the 23 work orders properly alleged as “emergencies” as listed in this Order and GRANTED as to all other claims alleged in the First Amended Complaint. The case shall be referred back to a commissioner for further proceedings consistent with this Order.