Direct Energy Bus., LLC v. City of Harvey

2021 IL App (1st) 200629

192 N.E.3d 591

455 Ill.Dec. 762

DIRECT ENERGY BUSINESS, LLC, and Direct Energy Business Marketing, LLC, Plaintiffs-Appellees,

v.The CITY OF HARVEY, Defendant-Appellant.

No. 1-20-0629

Appellate Court of Illinois, First District, Second Division.

Filed May 18, 2021

Modified upon denial of rehearing July 20, 2021

Emanuel C. Welch and ShawnTe Raines, of Ancel Glink, P.C., of Chicago, for appellant.

Nicholas R. Lawson (pro hac vice) and Jason A. Richardson, of McDowell Hetherington LLP, of Houston, Texas, for appellees.

JUSTICE COBBS delivered the judgment of the court, with opinion.

¶ 1 This appeal involves a dispute over payment for electricity provided to defendant, the City of Harvey (City), by plaintiffs, Direct Energy Business, LLC, and Direct Energy Business Marketing, LLC (collectively, Direct Energy). When the City refused to pay for some of the electricity it was provided, Direct Energy filed a complaint alleging one count of breach of contract and one count of quantum meruit. The circuit court granted summary judgment for Direct Energy on the breach of contract claim and ordered the City to pay in excess of $1 million. The City now appeals, and for the following reasons, we reverse the grant of summary judgment and remand the matter for further proceedings.

¶ 2 I. BACKGROUND

¶ 3 The following facts are taken from the parties’ pleadings, motions, and exhibits.

¶ 4 Direct Energy is a retail energy provider that supplies gas and power to customers nationwide, including in Illinois. The City is an Illinois municipality of approximately 25,000 residents located south of Chicago. Prior to 2016, the City contracted with Commonwealth Edison Company (ComEd) to provide its electricity. In June 2016, Direct Energy began delivering electricity to the City.

¶ 5 On August 1, 2018, Direct Energy filed a two-count complaint seeking to recover under a theory of breach of contract (count I) or alternatively, quantum meruit (count II). The complaint alleged that the City's switch from ComEd to Direct Energy occurred pursuant to a written contract between the parties executed in November 2015. A copy of the purported contract, which was attached to the complaint, reflects that the City agreed to purchase its electricity from Direct Energy for a two-year period beginning in May 2016. The document bears the name and signature of Rufus A. Fisher Jr., identified as the City's "Director of Public Utilities." The complaint also alleged that Direct Energy sent the City monthly invoices for the electricity, which the City paid without protest until December 2016. However, the City did not pay for electricity that Direct Energy provided from December 2016 through April 2017.

¶ 6 The City filed an answer, denying all substantive allegations in Direct Energy's complaint.

¶ 7 On November 1, 2019, Direct Energy filed a motion for summary judgment. Attached to the motion were transcripts from the depositions of Fisher and Louis Williams, the City's comptroller.

¶ 8 According to the transcripts, Fisher testified that in November 2015 he was employed as the director of public works for the City, a position he had held since approximately 2011. For some period prior to November 2015, Fisher had the authority to "sign off on contracts" for the City, but lost that ability when Williams became comptroller around 2014. When Williams took over, he informed Fisher that "all contracts for the [C]ity need to go through him." Fisher further testified that he had no discussions with Direct Energy or any conversations with City officials about Direct Energy until the filing of the instant lawsuit. The only conversation Fisher had about the City's utility providers was in response to an inquiry from an energy broker he knew as "Mr. Bob." Fisher merely explained to "Mr. Bob" that he did not have the authority to enter into an agreement and referred him to Williams. Fisher denied signing the written agreement attached to the complaint and denied authorizing anyone to do so on his behalf.¹

He did not know who was providing the City's electricity or if the City had ever disputed any charges for electricity.

¶ 9 Williams testified that he was not a City employee but became an "independent contractor" in 2014 when the City "outsourced its comptroller function" to his firm. As comptroller, he did not have the authority to enter into utilities contracts on the City's behalf. Instead, those contracts "would have to be approved by the City Council." Williams believed that the City had always received its electricity from ComEd until his office started receiving monthly invoices from Direct Energy in the middle of 2016. Upon receiving those invoices, Williams contacted Direct Energy and requested a copy of their contract with the City, which was provided. Williams paid the Direct Energy invoices for five or six months and did not notify Direct Energy that the City disputed any of the charges. At some point, the City requested that Direct Energy close its account, as there was no valid contract between the parties.

¶ 10 Also attached to Direct Energy's motion was an affidavit from Holly Fuller, the head of receivables management for Direct Energy. Fuller averred that the City owed Direct Energy a total of $1,037,149.54, which represented the sum of (1) $285,383.17 in unpaid invoices for electricity provided by Direct Energy, (2) $360,383.38 in City debt that Direct Energy purchased dollar-for-dollar from ComEd, and (3) $391,027.99 in interest.

¶ 11 The City filed a response to Direct Energy's motion, arguing that summary judgment was inappropriate because Direct Energy had not shown the existence of a valid contract between the parties. Specifically, the City contended that any agreement was void because it was not agreed to by the city council as the municipal corporate authority or by someone who had been delegated the power to act on behalf of the city council. The City also argued that Direct Energy was not entitled to summary judgment on its quantum meruit claim because, as the City was unaware of the change in electricity providers, it did not knowingly accept Direct Energy's services. Additionally, the City contended that there remained a question as to the measure of damages because (1) Direct Energy charged the City for certain facilities that ComEd previously provided for free and (2) Direct Energy charged the City for a parking lot owned by Metra rather than the City.

¶ 12 On January 31, 2020, the circuit court entered an order granting Direct Energy's motion for summary judgment on the breach of contract claim and entered judgment against the City in the amount of $1,037,146.54. This appeal followed.

¶ 13 II. ANALYSIS

¶ 14 This court reviews an order granting summary judgment de novo , meaning that we perform the same analysis as a trial judge would. Direct Auto Insurance Co. v. Beltran , 2013 IL App (1st) 121128, ¶ 43, 376 Ill.Dec. 182, 998 N.E.2d 892. Summary judgment is a " ‘drastic means of disposing of litigation and, therefore, should be granted only when the right of the moving party is clear and free from doubt.’ " Id. (quoting Mashal v. City of Chicago , 2012 IL 112341, ¶ 49, 367 Ill.Dec. 223, 981 N.E.2d 951 ). Nevertheless, summary judgment is appropriate where the pleadings, depositions, and affidavits on file establish that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Id. This court may affirm a trial court's grant of summary judgment on any basis appearing in the record, regardless of the trial court's reasoning. Flores v. Westmont Engineering Co. , 2021 IL App (1st) 190379, ¶ 24, 451 Ill.Dec. 142, 183 N.E.3d 188.

¶ 15 Where the plaintiff is the party moving for summary judgment, it must show that the materials relied upon establish the validity of its factual position on all the contested elements of the cause of action. Direct Auto , 2013 IL App (1st) 121128, ¶ 43, 376 Ill.Dec. 182, 998 N.E.2d 892. Only if the plaintiff satisfies its initial burden of production does the burden shift to the defendant to present evidence that there is a genuine issue of material fact or that the moving party is not entitled to judgment as a matter of law. Performance Food Group Co. v. ARBA Care Center of Bloomington, LLC , 2017 IL App (3d) 160348, ¶ 18, 416 Ill.Dec. 757, 86 N.E.3d 1042. The burden of persuasion remains with the moving party at all times. Id.

¶ 16 As a preliminary matter, we note that the City does not dispute the part of the circuit court's judgment representing the debt that Direct Energy purchased from ComEd, which totaled $360,383.38. Accordingly, we affirm that portion of the judgment. See Young v. Lemons , 266 Ill. App. 3d 49, 51, 203 Ill.Dec. 290, 639 N.E.2d 610 (1994).

¶ 17 Direct Energy's remaining claims, which the City does dispute, sounded in breach of contract, the elements of which are that (1) there was a valid and enforceable contract between the parties, (2) the plaintiff performed the contract, (3) the defendant breached the contract, and (4) the plaintiff suffered damages as a result. Id. ¶ 19. "In order to form a valid contract, there must be an offer and acceptance, consideration, and valid and certain contractual terms." Lindy Lu LLC v. Illinois Central R.R. Co. , 2013 IL App (3d) 120337, ¶ 21, 368 Ill.Dec. 701, 984 N.E.2d 1171.

¶ 18 The dispute in this case is focused on the first element: formation. To that end, we first address Direct Energy's contention that the City waived its ability to contest that a valid contract was formed between the parties. Direct Energy argues that, although the City maintains that it never agreed to purchase electricity from Direct Energy, the City's "real argument" is that Fisher lacked the capacity to bind the City to the written agreement, which Direct Energy asserts is an affirmative defense that must be affirmatively plead. We find that the City did not waive its challenge to the enforceability of the...