Delta Consulting Group, Inc. v. R. Randle Const.

Decision Date05 February 2009
Docket NumberNo. 07-3660.,07-3660.
Citation554 F.3d 1133
PartiesDELTA CONSULTING GROUP, INCORPORATED, Plaintiff-Appellee, v. R. RANDLE CONSTRUCTION, INCORPORATED and Ronald S. Randle, Defendants-Appellants.
CourtU.S. Court of Appeals — Seventh Circuit

Boris A. Kaupp (argued) Reinert & Rourke, St. Louis, MO, for Plaintiff-Appellee.

John E. Hilton, Carmody MacDonald, St. Louis, MO, D. Lynn Whitt (argued), Pollack & Whitt, Mountain Grove, MO, for Defendants-Appellants.

Before BAUER, WOOD, and TINDER, Circuit Judges.

BAUER, Circuit Judge.

R. Randle Construction, Inc., and Ronald S. Randle (collectively, "Randle") entered into two construction contracts with Belleville Township High School District 201 (School District) to perform work as a general contractor on the Belleville East High School Project (Project). Disputes over the Project arose between Randle and the School District, which caused delays, which in turn, caused Randle to suffer financial losses. Randle hired Delta Consulting Group, Inc. (Delta) to prepare and present a Request for Equitable Adjustment (REA) to the School District, to recover the damages attributable to the School District. Delta expressed that the REA's preparation, which included the necessary services, could typically be accomplished with the approximate preliminary budget of $34,000.00. Delta's proposal stated that the figure represented an estimate of the amount normally required for these types of jobs. Randle paid Delta a $5,000.00 retainer.

Using documents and information provided by Randle, Delta produced an REA representing damages for approximately $1.6 million. The REA consisted of three phases: (1) Familiarization and Initial Assessment, which included a review of Randle's documentation, site visits, key personnel interviews and assessment of claim issues; (2) Detailed Analysis and Report, which included extensive analysis of issues, a schedule analysis and a calculation of damages reflected in an REA; and (3) Dispute Resolution, which included Delta's attendance at dispute resolution proceedings.

Delta submitted the REA to the School District in an effort to recover Randle's damages. The School District, through its representative, Landmark Contract Management, Inc. (Landmark), reviewed the REA and concluded that the accompanying documents and analysis did not support $1.6 million in damages. At Randle's request, Delta undertook additional services to revise the REA using additional documentation from Randle; Delta submitted a second REA for approximately $1.7 million.1

On February 25, 2004, Delta and Randle met with Landmark to discuss the resubmitted REA. Landmark reviewed the claims with Delta and questioned the lack of documentation to support the School District's liability for Randle's damages. Although Delta attempted to address Landmark's concerns, Landmark again found that the documentation did not adequately support the REA claim.

On March 5, 2004, Randle met with Landmark to discuss the resubmitted REA; frustrated with Delta's previous interactions with Landmark, Randle did not invite Delta to this meeting. Landmark repeated its concerns that the documentation submitted by Delta did not support the REA claim. Randle abruptly ended the meeting and claimed that he would sue the School District.

Throughout this process, Randle received Delta's invoices for the REA services and continuously paid the invoices through March 9, 2004.2 Delta ultimately billed Randle $144,174.35; Randle paid $62,622.19 without objection (excluding the $5,000 retainer).

Randle hired a private firm and sued the School District for damages caused by the delay of the Project. Delta accepted Randle's request that Delta refrain from pursuing immediate collection on the unpaid invoices until Randle's claim had been litigated. Ultimately, Randle settled its claim with the School District for $450,000.00.

In October 2004, Randle's accountants conducted an audit of Randle's financial statements. As part of the audit, Randle, through its agent, sent Delta a letter to confirm that $89,302.16 was the amount due to Delta as of September 30, 2004. Delta responded that the correct amount due was $81,552.16. Randle did not object after receiving Delta's response until roughly a year later.

When Delta sought payment on the unpaid invoices, Randle responded that it was not satisfied with Delta's performance and should not be charged for inadequate work. Delta sued Randle to recover $81,552.16 in unpaid invoices (ultimately seeking $76,552.16 after applying the initial retainer), plus 9% interest as permitted by law. Randle claimed that Delta failed to adequately present the REA and counterclaimed for breach of contract.

On August 23, 2007, the district court granted Delta's summary judgment motion in its entirety. Specifically, the district court held that the communications between Delta and Randle, which included Randle's failure to object to Delta's statement of account within a reasonable time and Randle's partial payment of the account over the preliminary estimate, established an account stated. The district court also awarded summary judgment in favor of Delta on Randle's counterclaim; Randle impliedly waived its right to damages for Delta's alleged breach by paying, and not contesting, $62,622.19.

On October 25, 2007, the district court further ordered: (1) that prejudgment interest at the Illinois statutory rate of 5% be awarded to Delta; and (2) that postjudgment interest at the Illinois statutory rate of 9% be awarded to Delta until Randle pays the judgment.

This timely appeal followed.

DISCUSSION

Randle argues that, as a matter of law, the district court erred in holding that an account stated existed against Randle, where genuine issues of material fact are present as to the amount owed to Delta. Randle also claims that genuine issues of material fact exist to preclude summary judgment on the waiver of its breach of contract counterclaim. Randle further argues that the district court improperly struck a portion of this counterclaim. Finally, Randle argues that the district court applied the incorrect rate to the postjudgment interest award. We review de novo the district court's decision to grant summary judgment, construing all the facts and inferences in favor of Randle, the nonmoving party. See Springer v. Durflinger, 518 F.3d 479, 483-84 (7th Cir. 2008). We also apply the substantive law of Illinois, the state in which this diversity case was filed. See Global Relief Found., Inc. v. New York Times Co., 390 F.3d 973, 981 (7th Cir.2004).

Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits, show that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). "The initial burden is on the moving party ... to demonstrate that there is no material question of fact with respect to an essential element of the non-moving party's case." Cody v. Harris, 409 F.3d 853, 860 (7th Cir.2005). If the moving party meets this burden, the non-moving party must submit evidence that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Ptasznik v. St. Joseph Hosp., 464 F.3d 691, 694 (7th Cir.2006). The existence of merely a scintilla of evidence in support of the non-moving party's position is insufficient; there must be evidence on which the jury could reasonably find for the non-moving party. Springer, 518 F.3d at 483-84.

We address each issue in turn.

A. Account Stated

Randle first claims that summary judgment was improper because the existence of an account stated was in dispute.

An "account stated" determines the amount of a preexisting debt when parties who previously have conducted monetary transactions agree that there truly is an account representing the transactions between them. Protestant Hospital Builders Club, Inc. v. Goedde, 98 Ill. App.3d 1028, 54 Ill.Dec. 399, 424 N.E.2d 1302, 1306 (1981). When a statement of account is rendered by one party to another and is retained by the latter beyond a reasonable time without objection, that statement constitutes an acknowledgment and recognition by the latter of the correctness of the account, together with a promise, express or implied, for the payment of such balance, and establishes an account stated. W.E. Erickson Construction, Inc. v. Congress-Kenilworth Corp., 132 Ill.App.3d 260, 87 Ill.Dec. 536, 477 N.E.2d 513, 520 (1985); Motive Parts Co. of Am., Inc. v. Robinson, 53 Ill.App.3d 935, 11 Ill.Dec. 665, 369 N.E.2d 119, 122 (1977). In this manner, the debtor and creditor have a meeting of the minds as to the accuracy of the account and have manifested their mutual assent to the agreement. Toth v. Mansell, 207 Ill.App.3d 665, 152 Ill.Dec. 853, 566 N.E.2d 730, 734-35 (1990). The manner of acquiescence is not critical, and the meeting of the minds may be inferred from the parties' conduct and the circumstances of the case. Id. at 735.

Randle repeatedly argues that it would not have entered into an agreement where it would pay over four times what it initially expected to pay. Delta's preliminary estimate stated that preparation and presentation of a typical REA would normally cost approximately $34,000.000; Randle continuously paid the invoices after it had reached the preliminary budget figure. Significantly, Randle ultimately paid $62,622.19, excluding the $5,000.00 retainer, almost twice the estimate. Although Randle suggests that the total amount billed should be roughly around the preliminary estimate, the parties did not contractually lock themselves into the preliminary estimate. The parties mutually assented to continuing services under the proposal because Randle continued to pay invoices for Delta's services. See In re Marriage of Angiuli, 134 Ill.App.3d 417, 89 Ill.Dec. 328, 480 N.E.2d 513, 518 (1985) ("Assent to an account stated may be...

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