My Baps Constr. Corp. v. City of Chi.

• Decision Date: 29 September 2017
• Docket Number: No. 1-16-1020,1-16-1020
• Parties: MY BAPS CONSTRUCTION CORPORATION, an Illinois Corporation, and Gina Krol, as Bankruptcy Trustee of the Estate of My Baps Construction Corporation, Plaintiffs-Appellants, v. The CITY OF CHICAGO, an Illinois Municipal Corporation; The City of Chicago Department of Procurement Services; Jamie L. Rhee, Chief Procurement Officer for the City of Chicago Department of Procurement Services; The City of Chicago Department of Transportation; and Gabe Klein, Commissioner, the City of Chicago Department of Transportation, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

2017 IL App (1st) 161020

87 N.E.3d 987

MY BAPS CONSTRUCTION CORPORATION, an Illinois Corporation, and Gina Krol, as Bankruptcy Trustee of the Estate of My Baps Construction Corporation, Plaintiffs-Appellants,

v.The CITY OF CHICAGO, an Illinois Municipal Corporation; The City of Chicago Department of Procurement Services; Jamie L. Rhee, Chief Procurement Officer for the City of Chicago Department of Procurement Services; The City of Chicago Department of Transportation; and Gabe Klein, Commissioner, the City of Chicago Department of Transportation, Defendants-Appellees.

No. 1-16-1020

Appellate Court of Illinois, First District, FIFTH DIVISION.

September 29, 2017

Thomas G. Griffin and Ryan M. Henderson, of Walker Wilcox Matousek LLP, of Chicago, for appellants.

Edward N. Siskel, Corporation Counsel, of Chicago (Benna Ruth Solomon, Myriam Zreczny Kasper, and Kerrie M. Laytin, Assistant Corporation Counsel, of counsel), for appellees.

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

¶ 1 The plaintiffs, My Baps Construction Corporation and Gina Krol,¹ bankruptcy trustee for the estate of My Baps Construction Corporation (collectively My Baps), filed a three-count complaint in the circuit court of Cook County against the defendants, the City of Chicago, the City of Chicago Department of Procurement Services (DOPS), Jamie L. Rhee, Chief Procurement Officer (CPO) for the City of Chicago's Department of Procurement Services (CPO Rhee), the City of Chicago Department of Transportation (CDOT), and Gabe Klein, Commissioner of the City of Chicago Department of Transportation (collectively the City). Count I sought a writ of certiorari to challenge CPO Rhee's decision denying My Baps' claims. Counts II and III sought damages for breaches of two contracts the City awarded My Baps. The circuit court granted the City's section 2-615 of the Code of Civil Procedure ( 735 ILCS 5/2-615 (West 2012) ) motion to dismiss counts II and III of the complaint for failure to state a cause of action and quashed the writ of certiorari sought in count I of the complaint.

¶ 2 My Baps appeals contending that the circuit court erred when it (1) dismissed counts II and III of the complaint for failure to state causes of action for breach of contract, (2) ruled that the administrative proceeding did not violate the automatic stay in force after My Baps filed for bankruptcy protection, (3) denied My Baps' request to supplement the administrative record, and (4) affirmed the decision of CPO Rhee. For the reasons stated below, we confirm the decision of CPO Rhee and affirm the orders of the circuit court.

¶ 3 BACKGROUND

¶ 4 I. Facts

¶ 5 The City solicited bids for its "Green Alley" construction project. The project was for the construction of new alleys and included removal of existing alley pavement, installation of new sewer structures and mainlines, and installation of new pavement, driveways, and ramps. The bid package included a pricing schedule, which contained line items for each type of work to be performed, specified the quantity of material and how the material was to be measured, i.e., square feet, cubic feet, or feet. The contract bidder inserted the price per the applicable measurement in order to arrive at the amount per line item. Bidders were instructed to submit balanced bids for each line item and cautioned not to submit bids nominally pricing some line items and enhancing the pricing for other line items.

¶ 6 Three line items are pertinent to the issues on appeal. Line item 2 was described as "EARTH EXCAVATION" and provided for the clearing, grading, or excavating of "the alley DEFINED AREAS." Line item 3 was described as "SPECIAL EXCAVATION," and provided for "the excavation or removal and satisfactory disposal of only that volume of material regardless of its nature" necessary to the construction of the improvements. Line item 49 was described as "ALLEY PAVEMENT REMOVAL AND SUBGRADE PREPARATION FOR GREEN ALLEY."

¶ 7 My Baps bid on two contracts: the South Area contract and the North Area contract. Under the South Area contract, line item 49 specified 7500 square yards.

Under the North Area contract, line item 49 specified 4,800 square yards. For line item 49, My Baps' bid provided a unit price of $72, for a total of $540,000 for the South Area contract and $345,600 for the North Area contract.

¶ 8 The City accepted My Baps' bid and awarded it the South Area contract for a total of $5,562,150 and the North Area contract for a total of $3,211,690. Both contracts were to expire December 1, 2008, but both were extended through December 31, 2010. The contract amounts were adjusted upwards and resulted in a final contract value of $11,562,150 for the South Area contract and $9,211,690 for the North Area contract (hereinafter referred to as the Contracts).

¶ 9 II. Claims and Disputes Resolution Procedures

¶ 10 A. Section XX Claims and Disputes Provision of the Contracts

¶ 11 Section XX of the Contracts set forth the procedure for resolving claims and disputes arising during construction. Claimants were required to comply with the provisions of section XX as a precondition of seeking judicial review of an adverse decision by the CPO. In subsection B of section XX, a claimant was required to comply with the following:

"Within 14 days after a basis for claim arises, you must submit your claim in writing to the City's resident engineer or its project manager (‘Commissioner's Representative[’] ). This written claim to the Commissioner's Representative will constitute ‘notice’ to the City for purposes of determining initial timeliness of the claim; oral notice is insufficient. If you and the Commissioner's Representative are unable promptly (depending upon the complexity of the matter) to resolve the claim, you must forward your claim in writing to the Commissioner together with the documents listed *** below."

¶ 12 In the event the claimant disputed the CDOT commissioner's denial or resolution of its claim, the claimant was required to invoke the dispute resolution procedure set forth in subsection C of section XX and which provided as follows:

"you have 10 days to forward your claim and your documentation to the [CPO] indicating to him that you are requesting resolution of a dispute and showing you have complied with the preceding claims procedure. Your 10-day period to invoke dispute resolution by the [CPO] is counted from the date the Commissioner's written resolution was sent to you, or if he has not responded or forwarded the claim, from the date on which the time for the Commissioner's response lapsed."

The failure to file a request for resolution of the dispute within the 10-day period, waives the claim, as well as the right to make the claim later and the right to dispute the resolution or denial of the claim.

¶ 13 Once the dispute resolution procedures are invoked, the CPO "will proceed to a final and binding decision under such rules and regulations as he from time to time promulgates." If either the claimant or the commissioner disagrees with the CPO's decision, "the exclusive remedy is judicial review by a common law writ of certiorari. Unless such review is sought within 35 days of receipt of the [CPO's] decision, all rights to seek judicial review are waived."

¶ 14 B. DOPS Rules and Regulations

¶ 15 Pertinent to the issues on appeal are portions of the "REGULATIONS OF THE DEPARTMENT OF PROCUREMENT SERVICES FOR RESOLUTION OF DISPUTES BETWEEN CONTRACTORS AND THE CITY OF CHICAGO (DOPS regulations)." The DOPS regulations "establish the dispute resolution procedures for Contracts. These procedures apply to the resolution of a Contract dispute except to the extent that the subject Contract specifies different procedures." The DOPS regulations further provide that the request for resolution of a claim "must be submitted no later than 120 days after the expiration of the Contract. Failure to submit a Request either during the contract term or within the 120 day time period after expiration will constitute a waiver of the opportunity to initiate a dispute resolution."

¶ 16 The DOPS regulations specify the documentation and materials required to be submitted to the CPO in the request. In addition, the DOPS regulations provide that, in its request for resolution of the dispute, a party could submit "a statement explaining why the Requesting Party believes that prior to rendering a final decision, the [CPO] should meet with all or some of the Requesting Parties, the Responding Parties," or other parties necessary to the resolution of the dispute. The purpose of such a meeting "is to enable the [CPO] to obtain information that is not available in the written submissions of the Parties, or to better understand the positions of the Parties concerning the dispute." The responding party could submit supplemental documentation or written information comparable to the information the requesting party was required to submit.

¶ 17 In the event that the CPO agrees to hold a meeting, the DOPS regulations provide as follows:

"The [CPO] will preside over the meeting ***. Each party may be represented by an attorney. *** The [CPO] may question any party in any order. Each Party may be allowed to question another Party, but will be subject to the restrictions of the [CPO]. The formal rules of evidence will not apply, but the Parties must avoid the presentation of extraneous or irrelevant material."

¶ 18 The DOPS regulations provide that the CPO's final decision could be reached on the written submissions of the parties only. Finally, the DOPS regulations provide that "[n]either the [CPO's] determination, nor the continued performance by either party, constitutes an admission as to any factual and/or legal position in connection with the dispute or a waiver of any rights under the Contract."

¶ 19 My Baps commenced work on the project in 2007. It received its first payout on the Contracts in late 2007.

¶ 20 III. Dispute Resolution Proceedings on My Baps' Claims

¶ 21...