Quake Const., Inc. v. American Airlines, Inc.

• Decision Date: 29 March 1989
• Docket Number: No. 88-0043,88-0043
• Citation: 130 Ill.Dec. 534,537 N.E.2d 863,181 Ill.App.3d 908
• Parties: , 130 Ill.Dec. 534 QUAKE CONSTRUCTION, INC., Plaintiff-Appellant, v. AMERICAN AIRLINES, INC., a corporation, and Jones Brothers Construction Corporation, a corporation, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 863

537 N.E.2d 863

181 Ill.App.3d 908, 130 Ill.Dec. 534

QUAKE CONSTRUCTION, INC., Plaintiff-Appellant, v. AMERICAN AIRLINES, INC., a corporation, and Jones Brothers Construction Corporation, a corporation Defendants-Appellees.

No. 88-0043.

Appellate Court of Illinois First District, Third Division.

March 29, 1989.

Bruce W. Plattenberger, Chicago, for plaintiff-appellant.

Katten, Muchin & Zavis, Chicago (Peter Petrakis and Barbara J. Steutzer, of counsel), for defendant-appellee American Airlines.

Justice WHITE delivered the opinion of the court.

Plaintiff, Quake Construction, Inc., appeals from an order of the circuit court of Cook County dismissing its Third Amended Complaint with prejudice. We affirm in part, reverse in part and remand for further proceedings.

The facts alleged in the Third Amended Complaint follow. In Count I, plaintiff seeks damages for breach of contract. Plaintiff alleged that defendant American Airlines, Inc., hired defendant Jones Brothers Construction Corp., to prepare bid specifications, accept bids, and award contracts for American's employee facilities and auto shop expansion project at O'Hare Airport (hereinafter "the Project"). ¹ By letter dated March 19, 1985, Jones Brothers solicited bids for the Project. On or about April, 1985, plaintiff submitted its bid for the Project. Thereafter, Jones Brothers notified plaintiff orally that it had been awarded the contract for the Project. Jones Brothers requested that plaintiff provide license numbers for the subcontractors that it would use on the Project. Plaintiff advised Jones Brothers that its subcontractors would not allow it to use their license numbers until they received a signed subcontractors agreement. Jones Brothers informed plaintiff that it would prepare a written contract for the Project in the form set forth in the bid solicitation materials. On April 18, 1985, Jones Brothers sent a "Letter of Intent" to plaintiff in which it advised plaintiff that it had elected to award plaintiff the contract for the Project. Sometime in April, 1985, plaintiff and Jones Brothers reviewed a contract for the Project and agreed upon certain changes in the form contract. Jones Brothers then told plaintiff that it would prepare a written contract and submit it to plaintiff for signature. Plaintiff secured all subcontractors necessary to perform the work required for the Project. On April 25, 1985, plaintiff and its subcontractors attended a preconstruction meeting for the Project. At the meeting, Jones Brothers announced that plaintiff was the general contractor for the Project. Immediately after the meeting, however, Jones Brothers advised plaintiff that it was terminating plaintiff's involvement with the Project. Plaintiff alleged that it was damaged by the breach of the contract because it had expended substantial funds in procuring the contract and in preparing to perform under the contract. Plaintiff also alleged that it lost its profit under the contract.

Count II of the Third Amended Complaint is based upon the theory of promissory estoppel. In Count II, plaintiff alleged that Jones Brothers orally notified plaintiff that it had elected to award plaintiff the contract for the Project. Jones Brothers then sent the "Letter of Intent" (described above) to plaintiff. Plaintiff alleged that, both before and after the date of the "Letter of Intent," Jones Brothers informed plaintiff that: (1) a written agreement in addition to the "Letter of Intent" was not necessary for plaintiff to begin work on the Project; (2) a written agreement was being prepared by Jones Brothers and would be given to plaintiff for its signature; (3) execution of the written agreement was a mere formality; (4) the "Letter of Intent" was a binding contract; and (5) performance of the contract was required immediately. Plaintiff also alleged that Jones Brothers demanded that it: (1) expand its office space; (2) hire a Project manager; (3) secure all subcontractors necessary for the Project; (4) provide Jones Brothers with the license numbers of the plumber and mason who were to act as subcontractors on the Project; and (5) prepare itself to perform under the contract. Plaintiff acceded to Jones Brothers' demands and incurred substantial expenses to comply with these demands. Plaintiff alleged that Jones Brothers knew that compliance with its demands would require a substantial expenditure of time and money. Plaintiff then alleged that, on April 25, 1985, Jones Brothers terminated plaintiff's involvement with the project. Plaintiff was damaged because it had expended substantial funds in procuring the contract, and in preparing to perform under the contract. In addition, plaintiff lost its profit under the contract.

Count III of the Third Amended Complaint is based upon breach of contract and waiver of condition precedent. In Count III, plaintiff restated the allegations in Count II. In addition, plaintiff alleged that, along with its subcontractors, it attended a preconstruction meeting for the Project. At the meeting, Jones Brothers announced that plaintiff was the general contractor for the Project. However, immediately after the meeting, Jones Brothers terminated plaintiff's involvement with the Project. Plaintiff also alleged that Jones Brothers used the license numbers of plaintiff's subcontractors to obtain a construction permit from the City of Chicago. Plaintiff then claimed that he was damaged by the termination of the contract.

Count IV of the Third Amended Complaint is denominated Breach of Contract/Impossibility of Contract. We will not set forth the allegations in Count IV. Plaintiff has not raised the issue of impossibility of performance on appeal and that issue has thus been waived. Ill.Rev.Stat.1987, ch. 110A, par. 341(e)(7).

Prior to discussing the sufficiency of the remaining counts of plaintiff's Third Amended Complaint, it will be helpful to discuss the principles that apply to a motion to dismiss. Plaintiff's Third Amended Complaint was dismissed pursuant to a motion filed under Section 2-615 of the Illinois Code of Civil Procedure. (Ill.Rev.Stat.1987, ch. 110, par. 2-615.) Such a motion admits all well-pleaded facts in the complaint, and they must be taken as true. (Payne v. Mill Race Inn (1987), 152 Ill.App.3d 269, 273, 105 Ill.Dec. 324, 504 N.E.2d 193; Perlin v. Board of Education of City of Chicago (1980), 86 Ill.App.3d 108, 111, 41 Ill.Dec. 294, 407 N.E.2d 792.) Any reasonable inferences that can be drawn from those facts must also be taken as true. (Bolden v. General Accident, Fire & Life Assurance Corp., Ltd. (1983), 119 Ill.App.3d 263, 266, 74 Ill.Dec. 804, 456 N.E.2d 306; Interway, Inc. v. Alagna (1980), 85 Ill.App.3d 1094, 1097, 41 Ill.Dec. 117, 407 N.E.2d 615.) Conclusions of law or conclusions of fact unsupported by allegations of specific fact are not admitted. (Payne, 152 Ill.App.3d at 273, 105 Ill.Dec. 324, 504 N.E.2d 193; Yardley v. Yardley (1985), 137 Ill.App.3d 747, 751, 92 Ill.Dec. 142, 484 N.E.2d 873.) The complaint should not be dismissed unless the pleadings disclose that no set of facts could be proved that would entitle the plaintiff to relief. (Yardley, 137 Ill.App.3d at 752, 92 Ill.Dec. 142, 484 N.E.2d 873; Perlin, 86 Ill.App.3d at 111, 41 Ill.Dec. 294, 407 N.E.2d 792.) On review, the allegations of the complaint are to be interpreted in the light most favorable to the plaintiff. (Perlin, 86 Ill.App.3d at 111, 41 Ill.Dec. 294, 407 N.E.2d 792; Interway, 85 Ill.App.3d at 1097, 41 Ill.Dec. 117, 407 N.E.2d 615.) With these principles in mind, we turn to the substantive issues raised by the parties.

Count I of the Third Amended Complaint purports to state a cause of action for breach of contract. A complaint for breach of contract must allege the existence of a contract between plaintiff and defendant, performance by plaintiff of the conditions imposed on him or her by the contract, breach of the contract by defendant and the existence of damages as a result of the breach. (Payne, 152 Ill.App.3d at 273, 105 Ill.Dec. 324, 504 N.E.2d 193.) The existence of a contract must be shown by facts indicating an offer, acceptance, and consideration. Martin-Trigona v. Bloomington Federal Savings & Loan Association (1981), 101 Ill.App.3d 943, 946, 57 Ill.Dec. 348, 428 N.E.2d 1028.

In Count I of the Third Amended Complaint, plaintiff alleged that it submitted a bid for the Project, in response to Jones Brothers' invitation to bid. Jones Brothers then sent a "Letter of Intent" to plaintiff in which it advised plaintiff that it had elected to award plaintiff the Project contract. Plaintiff secured all subcontractors necessary for the Project, and attended a preconstruction meeting for the Project. Immediately after the meeting, Jones Brothers terminated plaintiff's involvement with the Project. Plaintiff alleged that it expended substantial funds in procuring the contract and preparing to perform under the contract, and that it was damaged by Jones Brothers' breach of the contract. Plaintiff maintains that these allegations are sufficient to state a cause of action for breach of contract.

Jones Brothers contends, however, that the "Letter of Intent" is not a valid contract because it contains a condition precedent which prevented the formation of a contract. In the "Letter of Intent," Jones Brothers stated: "Jones Brothers Construction Corporation reserves the right to cancel this letter of intent if the parties cannot agree on a fully executed subcontract agreement." Since a subcontract agreement was never executed by the parties, Jones Brothers argues that the condition precedent to the formation of a contract failed and the "Letter of Intent" cannot provide the basis for an action by plaintiff.

Whether a writing that contains all the essential terms of a contract but contemplates a later execution of a formal agreement is itself a contract or merely negotiation depends on the intent of the parties....