Souza v. City of Chi.
Decision Date | 09 March 2021 |
Docket Number | 2-20-0047 |
Citation | 181 N.E.3d 276,2021 IL App (2d) 200047,450 Ill.Dec. 276 |
Parties | David SOUZA, Jeffrey Posadzy, Atcherson Association, and All Others Similarly Situated, Plaintiffs-Appellants, v. The CITY OF WEST CHICAGO and Water Resources, Inc., Defendants-Appellees. |
Court | United States Appellate Court of Illinois |
George L. Acosta, of Acosta & Associates, of St. Charles, for appellants.
Sean Conway, Mary E. Dickson, and Patrick K. Bond, of Bond, Dickson & Conway, of Wheaton, for appellee City of West Chicago.
Jeffrey A. Risch and Steven W. Jados, of SmithAmundsen LLC, of St. Charles, and Michael Resis, of SmithAmundsen LLC, of Chicago, for other appellee.
¶ 1 Plaintiffs, David Souza, Jeffrey Posadzy, and Atcherson Association, on behalf of themselves and all others similarly situated, appeal the trial court's decision granting the motion for judgment on the pleadings under section 2-615(e) of the Code of Civil Procedure (Code) ( 735 ILCS 5/2-615(e) (West 2018)) filed by defendant the City of West Chicago (City), as well as its earlier decision granting the motion to dismiss under section 2-619(a)(9) of the Code (id. § 2-619(a)(9)) filed by defendant Water Resources, Inc. (Water Resources). At issue on appeal, generally, is whether the court correctly determined that the City's home rule authority permits it to exempt itself, via an amended ordinance passed after the amended complaint in this case was filed, from statutory requirements concerning water-utility billing. In addition, we are asked to consider whether the City's ordinance may be applied retroactively. Finally, plaintiffs challenge the court's dismissal of the counts against Water Resources. For the following reasons, we affirm.
¶ 4 On February 14, 2019, Souza and Posadzy filed a three-count class action complaint against defendants, alleging that plaintiffs Souza, Posadzy, and all potential class members were residential water-service customers and that the City, a municipality formed under the Illinois Municipal Code ( 65 ILCS 5/1-1-1 et seq. (West 2018)),1 had engaged in unlawful billing practices, charging them for water and sewer services outside of the 12-month period prescribed by the water-utility billing provision of the Municipal Code, section 11-150-2 (id. § 11-150-2).2 Specifically, the complaint alleged that the City owned a water and sewage system that provided services to residential and commercial properties within City boundaries. In July 2011, defendants contracted with Water Resources to replace residential water meters, update meter equipment, and implement electronic advancements that would benefit customers by allowing electronic access to monitor water consumption. Shortly after the equipment installation, the City learned that numerous customers were experiencing deficient, inaccurate, and/or missing water meter readings. After experiencing years of these errors, the City terminated its contract with Water Resources, effective July 30, 2016. However, despite the water-meter and software malfunctions, the City attempted to bill and collect water-usage charges from affected residents.
¶ 5 The complaint's first two counts sought declaratory and injunctive relief and economic damages from the City, based on the City's attempt to bill more than 12 months after the alleged usage, in contravention of section 11-150-2's restriction, effective August 18, 2017, that billing must occur within 12 months of the service provided. Plaintiffs alleged that, since 2013, the City issued bills for services that were provided several years prior to the invoice. In the third count, plaintiffs sought economic damages from Water Resources, for breach of its contract with the City, premised upon plaintiffs’ alleged status as third-party beneficiaries of that contract. Plaintiffs alleged that, to the extent that the City's billing was based on a breach of contract occasioned by Water Resources, plaintiffs, as third-party beneficiaries to that contract, were entitled to recover all service charges wrongfully billed and/or collected by the City. A few days later, plaintiffs moved for class certification.
¶ 6 On March 19, 2019, plaintiffs filed an amended complaint, adding Atcherson Association as a nonresidential plaintiff and adding two counts relating to section 11-150-2's requirement that nonresidential customers be billed within 24 months of the service. Counts III and VI of the amended complaint pertained to Water Resources, again alleging third-party beneficiary breach-of-contract claims related to the City's contract with Water Resources.
¶ 7 On March 26, 2019, the court granted the City's earlier-filed motion for an extension of time to answer the complaint, ordering a response by May 22, 2019.
¶ 8 Between the court's March 26, 2019, order, and the May 22, 2019, response due date, the City amended its local ordinance concerning billing practices. Specifically, on April 15, 2019, the City amended section 18-37 of the West Chicago Code of Ordinances (City Code) with ordinance No. 19-O-0010 (Ordinance). See West Chicago Ordinance No. 19-O-0010 (eff. Apr. 15, 2019) (West Chicago Code of Ordinances § 18-37) . (The amended ordinance is summarized in the next section).
¶ 10 On April 5, 2019, Water Resources filed a section 2-619(a)(9) ( 735 ILCS 5/2-619 (a)(9) (West 2018)) motion to dismiss the amended complaint, arguing that plaintiffs lacked standing to bring claims against it, as plaintiffs were not parties to its contract with the City. Attaching the contract to its motion, Water Resources argued that a third party may sue for breach of contract only if the actual parties to the contract intended to confer upon the third party a "direct benefit" and that mere incidental benefits were insufficient to sustain a cause of action. Water Resources disagreed with plaintiffs’ conclusory complaint allegation that they were third-party beneficiaries of the contract, noting that nothing in the contract expressed any intent to protect plaintiffs from improper billing practices that the City might perform. Rather, the intent of the contract was for Water Resources to upgrade almost 7000 water meters managed by the City, as well as its hardware and software, and, therefore, any benefit to plaintiffs from the contract was merely incidental. In short, Water Resources argued, the contract "simply does not address any intent to provide a benefit to [p]laintiffs with respect to the alleged harm at issue in the instant lawsuit." On June 5, 2019, the court agreed, and it dismissed counts III and VI against Water Resources. In so doing, it noted that virtually every contract into which a city enters is for the benefit of its citizens but that those contracts do not all provide citizens third-party beneficiary status. Here, the court found, the contract's purpose was to provide good working water meters and technology for the City and its citizens but the benefit to citizens was incidental, not direct.
¶ 11 On May 22, 2019, the City filed its section 2-615(e) motion for judgment on the pleadings as to counts I, II, and V of the amended complaint. The City conceded that, since 2013, it had to delay issuing water bills to many of its customers. It explained that, in 2011, the City contracted with Water Resources to implement an "Advanced Metering Infrastructure," which required installation of new smart water meters, radio signal transmission devices, and other infrastructure that could deliver "real time" meter reads to the City through installed software. According to the City, Water Resources was to ensure that the software (which compiled meter-usage data) interfaced with the City's billing software, so as to allow the City to automatically issue bills. Almost immediately, numerous problems ensued with the installed hardware, and significant software-interfacing and hardware errors impacted the City's ability to provide timely billing to its customers. Accordingly, as the meter issues persisted for years, the City agreed that some water bills were issued to customers more than one year after the water service was provided. The City noted that it continued to attempt to bring its customer accounts current.
¶ 12 However, even assuming that the amended complaint's allegations were true, the City argued that it was, nevertheless, entitled to judgment on the pleadings, i.e. , as a matter of law, for two reasons. First, it argued, its exercise of home rule authority under section 18-37 of the City Code (West Chicago Code of Ordinances § 18-37 (amended Apr. 15, 2019)), as amended by the Ordinance, controlled over section 11-150-2 of the Municipal Code. Alternatively, the City argued that the procedural commands in section 11-150-2 of the Municipal Code are merely directory, precluding plaintiffs’ requested relief. It further explained:
¶ 13 The Ordinance provides, in sum:
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