People ex rel. Hartigan v. E & E Hauling, Inc.
| Decision Date | 24 July 1991 |
| Docket Number | 1-89-2792 and 1-90-0173,Nos. 1-89-1763,s. 1-89-1763 |
| Citation | 218 Ill.App.3d 28,577 N.E.2d 1262 |
| Parties | , 160 Ill.Dec. 691 The PEOPLE of the State of Illinois, ex rel. Neil F. HARTIGAN, Attorney General of Illinois and the Illinois Department of Transportation, Plaintiffs-Appellants, v. E & E HAULING, INC.; American Environmental Construction Company; Edward F. Heil, individually and as President and a Director of E & E and as a Director of American Environmental; George R. Schiewe, individually and as an agent of E & E; Leininger-Mid-States Paving Co., Inc., Peter A. Palumbo, individually and as an agent of Leininger; Richard Zawacki, individually and as an agent of Leininger; Joseph L. Palumbo, individually and as President and a Director of Leininger; Dan L. Tessarolo, individually and as an agent of Leininger; Coke Contracting Company, Inc.; Sam Alberto, individually and as President of Coke Contracting; Tom Alberto, individually and as a former agent of Coke Contracting; T.C. Schreiner, individually and as Vice-President of Nu-Way Contracting Corporation; Lo-Mar Contracting Corporation; Ruben Melesio, individually and as President of Lo-Mar, Highway Safety Corporation, and Hi-Gate Erectors, Inc.; James R. Nugent, individually and as an agent of Lo-Mar and as a former Vice-President of Robert R. Anderson Company Lois A. Nugent, individually and as an officer of Lo-Mar; Betty Kitterman, individually and as an agent of Lo-Mar; Hi-Gate Erectors, Inc.; Gateway Construction Company, Inc.; George N. Weiland, Jr. individually and as an officer of Hi-Gate Erectors, Inc. and Gateway Construction Company, Inc.; and Highway Safety Corporation, Defendants-Appellees. |
| Court | United States Appellate Court of Illinois |
Daniel S. Mathless, Chicago, for defendants-appellees Hi-Gate Erectors, Inc., Highway Safety Corp., Lo-Mar Contracti Corp., Ruben Melesio and Betty Kitterman.
Jenner & Block (Thomas W. McNamara, Thomas K. McQueen, Norman M. Hirsch and Robert P. Zapinski, of counsel), Chicago, for defendants-appellees E & E Hauling, American Environmental Const. Co., Edward F. Heil, George R. Schiewe, James R. Nugent and Lois Nugent.
McNeela & Griffin (Gary L. Griffin, of counsel), Chicago, for defendants-appellees Peter A. Palumbo, Joseph L. Palumbo, Richard Zawacki, Dan L. Tessarolo and Leininger-Mid-States Paving.
Hopkins & Sutter (William J. McKenna, Jr. and David B. Goroff, of counsel), for defendants-appellees Gateway Const. Co. and George F. Weiland, Jr.
Gomberg & Sharfman, Ltd. (Ray Ostler, of counsel), Chicago, for defendant-appellee Tom Alberto.
This case involves three appeals from orders of the circuit court dismissing plaintiffs' 21 count complaint and denying leave to file an amended complaint. Plaintiffs are the Illinois Attorney General and the Illinois Department of Transportation ("IDOT"). They argue that the trial court's orders were erroneous and constituted an abuse of discretion.
Although this case is before us on motions to dismiss the complaint, its procedural history is somewhat complicated and must be set forth at length.
There are 23 defendants in this action: E & E Hauling, Inc.; its successor, American Environmental Construction Company; Edward Heil, individually and as a director of E & E and American Environmental; George Schiewe, individually and as an agent of E & E; Leininger Mid-States Paving Company; Peter Palumbo, individually and as an agent of Leininger; Richard Zawacki, individually and as an agent of Leininger; Joseph Palumbo, individually and as a director of Leininger; Dan Tessarolo, individually and as an agent of Leininger; Coke Contracting, Inc.; Sam Alberto, individually and as a president of Coke; Tom Alberto, individually and as an agent of Coke; T.C. Schreiner, individually and as vice-president of Nu-Way Contracting Corporation; Lo-Mar Contracting Corporation; Highway Safety Corporation; Gateway Construction Corporation; Hi-Gate Erectors, Inc.; Ruben Melesio, individually and as president of Lo-Mar, Highway, and Hi-Gate; Lois Nugent, individually and as an officer of Lo-Mar; Betty Kitterman, individually and as an agent of Lo-Mar; George Weiland, individually and as an officer of Gateway and Hi-Gate; Robert R. Anderson Company; and James Nugent, individually and as an agent of Lo-Mar and the Anderson Company. Paschen Contractors International; Paschen Contractors, Inc.; Gust K. Newberg Construction Company, Inc. and Paschen-Newberg Joint Venture also were named as defendants. However, they entered into a settlement agreement with plaintiffs and are not parties to this appeal.
All of the defendants are engaged in the contracting business. During 1984 and 1985, defendants performed work on several State construction projects. All of the contracts for these projects contained minority business enterprise ("MBE") provisions, requiring the use of minority contractors.
In June 1988, plaintiffs commenced this action against defendants charging them with fraud, misrepresentation, breach of contract, unjust enrichment, and violations of the Consumer Fraud and Deceptive Business Practices Act ("CFA") (Ill.Rev.Stat.1987, ch. 121 1/2, par. 261 et seq.) and the Uniform Deceptive Trade Practices Act ("UDTPA") (Ill.Rev.Stat.1987, ch. 121 1/2, par. 311 et seq.). Plaintiffs alleged that defendants wrongfully and fraudulently attempted to avoid compliance with the MBE provisions contained in the contracts as well as State and federal policy requiring the use of MBEs.
Counts I through XV of the complaint concern work done for the Metropolitan Fair and Exposition Authority ("MFEA") in connection with the McCormick Place expansion project. Counts XVI through XVIII concern repairs to the Eisenhower and Lincoln expressways. Counts XIX through XXI charge certain defendants with violations of the Racketeer Influenced and Corrupt Organizations ("RICO") Act. 18 U.S.C. sec. 1961 et seq.
Several of the defendants filed motions to dismiss the complaint pursuant to section 2-615. (Ill.Rev.Stat.1985, ch. 110, par. 2-615.) On November 29, 1988, a hearing was held on the motions filed by E & E, American Environmental, Gateway, Lo-Mar, Schiewe, Heil, Melesio, Kitterman, and James and Lois Nugent. After hearing arguments, the trial court ordered the dismissal of counts I through IX and counts XIV through XVII on the ground that they failed to state a cause of action and because the attorney general lacked standing to assert the claims they contained. Counts XIX through XXI, brought under the RICO Act, were dismissed on the ground that Illinois courts lacked jurisdiction to enforce the Act.
In oral comments accompanying its dismissal of the complaint the court noted that the claims in counts I through IX and counts XIV and XV arose from contracts between the MFEA and certain defendants and that the attorney general was not a party to those contracts. Pointing out that the MFEA was a government unit with the At the close of the hearing, plaintiffs requested leave to file an amended complaint. Leave was granted and plaintiffs' first amended complaint was filed on January 31, 1989. Although the attorney general had represented at the November 29 hearing that the MFEA would be joining in the action, the attorney general and IDOT were the only plaintiffs named in the second amended complaint.
[160 Ill.Dec. 696] power to sue and be sued on its own behalf and that the MFEA had made no effort to file suit or join in the present litigation, the court stated that the attorney general should not be allowed to "second guess" the MFEA's decision not to sue. These comments were incorporated into a written order entered December 1, 1988.
Over the next several months, motions to dismiss the amended complaint were filed by all of the defendants, with the exception of the Anderson Company. At a hearing on defendants' motions, held May 30, 1989, the trial court ordered the dismissal of all of plaintiffs' claims, except those asserted against Anderson. In granting the motions to dismiss, the court stated that it was unable to discern any meaningful differences between the amended complaint and the original complaint, which it had found the attorney general did not have standing to bring.
In addition to finding that the attorney general had failed to cure the standing defect, the trial court found that defects remained with respect to the fraud and misrepresentation claims. The court stated that the claims against Leininger, Gateway, and Weiland failed to state a cause of action because there were no allegations that they had any duty to correct the alleged misrepresentations made by Lo-Mar and Hi-Gate. The court also found that no damages arose from the alleged fraud because defendants satisfactorily completed the work they contracted to perform. The court added that allegations that defendants' actions prevented bona fide MBEs from receiving public work were insufficient to establish damage.
The trial court also found that plaintiffs again failed to state a claim for relief under an unjust enrichment theory because there were express contracts between the parties and because the claims in those counts could not be asserted by the attorney general. The statutory fraud counts were also found to be lacking because none of the alleged wrongful practices affected consumers and there were no allegations of injury.
Finally, the trial court found that the validity of the MBE set-aside provisions, was seriously compromised by the United States Supreme Court's decision in City of Richmond v. J.A. Croson (1989), 488 U.S. 469, 109 S.Ct. 706, 102 L.Ed.2d 854. The trial court noted that under the City of Richmond case, set-asides must be in response to a pattern and practice of discrimination by the agency of...
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