Compass Environmental v. Polu Kai Services, 1-06-2905.

• Citation: 882 N.E.2d 1149
• Decision Date: 31 January 2008
• Docket Number: No. 1-06-2905.,1-06-2905.
• Parties: COMPASS ENVIRONMENTAL, INC., a Delaware corporation, Plaintiff-Appellee, v. POLU KAI SERVICES, L.L.C., a Virginia limited-liability company, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

882 N.E.2d 1149

COMPASS ENVIRONMENTAL, INC., a Delaware corporation, Plaintiff-Appellee, v. POLU KAI SERVICES, L.L.C., a Virginia limited-liability company, Defendant-Appellant.

No. 1-06-2905.

Appellate Court of Illinois, First District, Fourth Division.

January 31, 2008.

Scott L. Howie, Pretzel & Stouffer, Chtd., Chicago, Blayne Scott Tucker, Grapevine, for Appellant.

William J. Broderick, Compass Environmental, Inc., Chicago, for Appellee.

Justice MURPHY delivered the opinion of the court:

Plaintiff, Compass Environmental Services, Inc., a Delaware corporation with its principal place of business in Chicago, filed suit against defendant, Polu Kai Services, L.L.C., a Virginia limited-liability company. After the trial court denied defendant's motion to quash pursuant to section 2-301(a) of the Code of Civil Procedure (735 ILCS 5/2-301(a) (West 2004)), defendant petitioned for leave to appeal pursuant to Supreme Court Rule 306(a)(3) (210 Ill.2d R. 306(a)(3)). For the following reasons, we affirm.

I. BACKGROUND

Shaw Environmental, Inc., entered into a contract with the Army Corps of Engineers for the installation of government-supplied sheeting and temporary roofing on residences in Louisiana damaged by Hurricane Katrina. Plaintiff agreed to be Shaw's subcontractor on this roofing work. Plaintiff performed a portion of the services in the contract and subcontracted a portion of the work to defendant.

In May 2006, plaintiff filed a four-count complaint in the circuit court of Cook County alleging that defendant breached its subcontract and two settlement agreements. Attached to plaintiff's complaint was an unsigned purchase order, numbered 1002680002 and dated October 12, 2005. The top of the purchase order showed plaintiff at a Chicago address; in the box below, it said "ship to: Compass Environmental, Inc.," in Sulpher, Louisiana. The bottom of both pages of the purchase order provided, "SEE TERMS AND CONDITIONS ON REVERSE SIDE. * * * Please sign this purchase order and return to purchasing department at the above address. For any questions of concerns please call (312) 432-3913."

The third page of the exhibit was a list of terms and conditions, including paragraph 21, which provides as follows:

"JURISDICTION AND ATTORNEY'S FEES — Venue for any litigation arising out of this Order, including suits for payment, shall be in the State of Illinois. The prevailing party in such litigation shall be entitled to reasonable attorney's fees. Any dispute regarding the terms and conditions of this Order, including suits for payments, shall be determined in accordance with the rules and laws of the State of Illinois without regard to its conflict of law provision."

Plaintiff also submitted an invoice of defendant's dated January 1, 2006, which showed a "bill to" and "ship to" address for plaintiff in Chicago.

Defendant filed a motion to dismiss the complaint for lack of personal jurisdiction alleging (1) the trial court lacked personal jurisdiction over defendant and (2) the forum-selection clause did not apply because the reverse side of the purchase order, which contained additional terms and conditions, was not included in the version that plaintiff e-mailed to defendant. Sean Jensen, defendant's president, averred in an affidavit that defendant initiated work on the subcontract before receiving the purchase order, which plaintiff sent via e-mail. The e-mailed copy did not contain the additional terms and conditions that were included in the exhibit to plaintiff's complaint. Defendant did not receive a copy of the purchase order via United States mail. Jensen calls the exhibit to plaintiff's complaint a "forgery" and alleges that "Compass did not present to me, nor did I sign or agree to the terms or conditions contained" on the attached purchase order. Furthermore, no one on behalf of either plaintiff or defendant executed the purchase order attached to the complaint.

Jensen further averred that defendant does not transact business in Illinois and has no property or employees in Illinois. None of defendant's employees had ever visited Illinois to negotiate with plaintiff regarding the purchase order, and it performed all of its obligations with respect to the purchase order outside Illinois. Defendant only communicated with plaintiff's Texas office regarding the events described in the complaint.

In response, plaintiff filed an affidavit by Martin Battistoni, plaintiff's chief operating officer. He averred that plaintiff maintains satellite offices throughout the country, including Texas. All of plaintiff's purchase orders are printed in Chicago with its Chicago address and phone number. All of plaintiff's checks are printed with its Chicago address and all payments to its subcontractors are made through its Chicago headquarters. The Compass personnel who were primarily involved with defendant are located throughout the country, including Chicago, Indianapolis, and Texas, and travel frequently.

Battistoni also stated that it is plaintiff's policy that all purchase orders are printed with terms and conditions on the back side and mailed to vendors. The copy of purchase order 1002680002 that he maintained in his files is a "copy of what I would have mailed to the vendor and it includes the standard `Terms and Conditions' on the reverse side." In addition, he said, "I believe" that plaintiff mailed defendant a copy of the purchase order that contained the standard terms and conditions on the reverse side. A letter dated May 5, 2006, from Battistoni to Jensen, which is also included in the record, was written on plaintiff's Texas letterhead.

John Markoff, plaintiff's procurement manager, averred that he prints all purchase orders and mails them to the vendor. While he had no specific recollection of mailing purchase order 1002680002, he had no reason to believe that he did not follow standard procedure for that purchase order. The copy of purchase order 1002680002 that he maintained in his files is a "copy of what I would have mailed to the vendor and it includes the standard `Terms and Conditions' on the reverse side." In addition, he said, "I believe that I mailed" defendant a copy of the purchase order that contained the standard terms and conditions on the reverse side.

A letter in the record dated May 9, 2006, from defendant's attorney to plaintiff states that Jensen received a telephone call from John Weber requesting that defendant "deploy to Sulfur Louisiana to commence work, further representing the contract would meet him there." It further provides, "On or about October 14, 2005, Mr. Jensen received a FedEx package containing a purchase order dated October 12, 2005 * * *. Polu Kai had already been working, in good faith, for 4 days." The parties do not acknowledge this letter in their briefs. At oral argument, defendant admitted that it received a hard copy of the entire purchase order via FedEx.

On September 15, 2006, the trial court denied defendant's motion to quash service and dismiss the complaint without an evidentiary hearing. This appeal followed.

II. ANALYSIS

A. Forum-Selection Clause

The purchase order attached to the complaint had a page of additional terms and conditions, which included an Illinois forum-selection clause. Defendant contends that the forum-selection clause was not part of the contract and, alternatively, that the clause is unenforceable.

Defendant contends that it has offered "legitimate evidence that it did not receive the version of the purchase order that Compass now proffers as the genuine article." It is undisputed that the electronic version of the purchase order that defendant received did not include the reverse side. Defendant also points to the affidavits of plaintiff's executives that they "think the reverse side of the purchase order was" sent to defendant using United States mail (emphasis added). In addition, in his affidavit Jensen states that defendant did not receive the purchase order via United States mail.

During oral argument, this court drew the parties' attention to a letter from defendant's attorney, which neither party acknowledged in its briefs, even though it was included in defendant's appendix and the short supporting record that it prepared in support of its petition for leave to appeal. The letter provides that on October 10, 2005, the parties orally agreed that defendant would begin work in Louisiana and that on October 14, 2005, Jensen "received a FedEx package containing a purchase order dated October 12, 2005." Defendant therefore admitted at oral argument before this court that it received the purchase order, complete with the terms and conditions on the reverse side, via FedEx. It then shifted its argument, claiming that when it received the hard copy via FedEx, it had no reason to believe that it superseded the e-mailed copy.

We disagree. We find that, by its course of conduct, defendant assented to the "terms and conditions" on the reverse side of the purchase order, including the forum-selection clause. See Landmark Properties, Inc. v. Architects International-Chicago, 172 Ill.App.3d 379, 383, 122 Ill.Dec. 344, 526 N.E.2d 603 (1988) (a party can indicate assent to the terms of a contract through its acts or conduct even when it has not signed it); Amelco Electric Co. v. Arcole Midwest Corp., 40 Ill.App.3d 118, 351 N.E.2d 349 (1976). It is undisputed that defendant began work pursuant to the contract before receiving the purchase order via e-mail. When it received the electronic version of the purchase order, it did not inquire as to the "terms and conditions on reverse side" but, rather, continued working. Defendant argues that it was reasonable to conclude that the "reverse side" of the purchase order was actually page two of the purchase order. We reject defendant's argument. If that were the case, both sides of the purchase order would be in the same format and nothing would provide for the "terms and conditions."...