383 F.3d 683 (7th Cir. 2004), 03-2453, Utility Audit, Inc. v. Horace Mann Service Corp.

Docket Nº:03-2453.
Citation:383 F.3d 683
Party Name:UTILITY AUDIT, INC., Plaintiff-Appellant, v. HORACE MANN SERVICE CORPORATION, Defendant-Appellee.
Case Date:September 13, 2004
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

Page 683

383 F.3d 683 (7th Cir. 2004)

UTILITY AUDIT, INC., Plaintiff-Appellant,



No. 03-2453.

United States Court of Appeals, Seventh Circuit

September 13, 2004

Argued Jan. 16, 2004.

Page 684

David A. Rolf, Edward Z. Dianrdo (argued), Sorling, Northrup, Hanna, Cullen & Cochran, Springfield, IL, for Plaintiff-Appellant.

Roger K. Heidenreich (argued), Sonnenschein, Nath & Rosenthal, St. Louis, MO, for Defendant-Appellee.

Before FLAUM, Chief Judge, and RIPPLE and ROVNER, Circuit Judges.

ROVNER, Circuit Judge.

Horace Mann Service Corporation wanted to save money on its telephone bills.

Page 685

To that end, it hired Utility Audit, Inc. in January 2000 to review past bills for possible overbilling and to recommend ways of saving money in the future. In exchange, Horace Mann agreed to pay to Utility Audit a percentage of any savings realized. But Horace Mann refused to pay Utility Audit any part of the $1.2 million it stood to save after switching long-distance carriers, a move Utility Audit takes credit for recommending. Utility Audit sued, but the district court granted summary judgment to Horace Mann, concluding that under the terms of the parties' contract, Utility Audit was not entitled to any of the savings that resulted from the switch in carriers. The court also denied Utility Audit's attempt to amend its complaint to add a claim of unjust enrichment. We affirm.


The parties' contract required Utility Audit to review the past five years of bills Horace Mann received from MCI for local and long distance telephone service. If Utility Audit's review resulted in a refund or credit, then Horace Mann was required to pay 43% of the refund or credit to Utility Audit. In addition, the contract required Utility Audit to "monitor" the bills Horace Mann would receive from MCI over the coming 12 months to identify any possible future savings. Specifically, the contract stated that:

[Horace Mann] retains Utility Audit Inc., to monitor all MCI Long Distance, Long Distance and Local Exchange Carrier(s) and/or all Phone related service bills for the period going forward for 12 months, beginning on the date [Horace Mann] implements audit savings. Utility Audit Inc. will ensure refunds/credits and/or savings are realized and/or obtained by [Horace Mann].

[Horace Mann] understands that Utility Audit Inc. will receive 40% of any future savings on a telecommunication bill for a period of One Year.

But under the terms of the contract, Horace Mann retained the right to "choose not to implement a Utility Audit Inc. recommendation," in which case "there is no charge for future savings."

Over the next few months Utility Audit submitted a number of reports to Horace Mann. In the first, Utility Audit advised Horace Mann that its current contract with MCI was "inferior," but that Utility Audit was "very confident" it could obtain a better proposal from MCI before the contract expired on November 30, 2000. The report also advised Horace Mann to obtain pricing proposals from the other "most capable carriers today," specifically Qwest, Claricom, AT & T, McLeod USA, and Sprint.

A couple of weeks later, Utility Audit submitted to Horace Mann a second report, this one entitled "Home Office Report." In it, Utility Audit again recommended that Horace Mann renew its contract with MCI before it expired in November, although Utility Audit had not yet obtained better rates from MCI. In a third report submitted in April--entitled "New Long Distance Pricing Home Office Report"--Utility Audit provided Horace Mann with rate proposals from Qwest, Claricom (aka Staples), MCI, and AT & T. Based upon the new proposals, Utility Audit estimated in a fourth report that Horace Mann stood to save the following amounts each year over its current contract with MCI:

Qwest $712,856.37
Staples $672,805.35
MCI $653,876.44
AT & T $418,198.91

Despite other carriers' cheaper rates...

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