Implied-In-Fact Contract Claims and Motions to Reconsider – Illinois Law

In 1801 W. Irving, LLC v. Splitt Architects, Ltd., 2013 IL App (1st) 121357-U (September 12, 2013) a plaintiff developer sued an architect for breach of an oral contract and for implied indemnity in connection with the construction of a condominium building. 

The trial court struck all counts of the developer’s amended complaint and the developer appealed.

Held: Affirmed in part; reversed in part. 

Reasoning:

Breach of Oral Contract Claim

The court found the claimed oral contract was too indefinite to be enforced.  

Illinois requires that a contract’s material terms be sufficiently definite and certain so that the court can determine what the parties agreed to. ¶¶ 30-31.  

While certain nonessential terms can be missing, the parties’ failure to agree upon an essential term signals that mutual assent is lacking.

The court found several key terms were missing from oral contract including basic compensation terms.  For support, the court cited the developer’s deposition admission that the contract terms were in constant flux. ¶ 31.

Motion to Reconsider

The Court sustained the trial court’s denial of the developer’s motion to reconsider summary judgment for the architect.  A motion to reconsider’s purpose is to bring to the court’s attention (1) newly discovered evidence, (2) changes in the law, or (3) errors in the court’s prior application of law.  ¶ 33;

“Newly discovered evidence” means evidence that was not in existence at the hearing which generated the order being attacked.

Since the developer supported its motion to reconsider with its agent’s affidavit – an affidavit that wasn’t filed with its summary judgment responsethe developer  didn’t meet the newly discovered evidence test and the Court correctly refused to consider the affidavit.  ¶¶ 28, 33-34.

Implied-in-fact contract

The Court did find there was an implied-in-fact contract between the developer and architect.

An implied-in-fact contract, unlike an express contract, results from the parties’ acts and conduct. 

A contract implied-in-fact is one where a contractual obligation is imposed by the court due to some “expression or promise that can be inferred from the facts and circumstances.”   ¶ 40

The Court found the developer adequately pled an implied-in-fact contract.  The allegations that the architect and developer worked together on the project for several years without incident reflected a tacit services-for-compensation arrangement. ¶ 22.

Take-aways: A valid breach of contract claim requires that material terms be sufficiently definite and that there is a meeting of the minds on them;

A motion to reconsider based on newly discovered evidence means that the evidence didn’t exist at the time the challenged order entered;

An implied-in fact contract can present a fallback theory to breach of an express contract (if no formal contract exists) where the parties’ conduct indicates a mutual relationship with reciprocal performance and compensation.

Seventh Circuit Summary Judgment Practice: the ‘Production’ and ‘Persuasion’ Burdens

The Seventh Circuit remarked that parties who respond to a summary judgment motion “often misconceive what is required of them” in Modrowski v. Pigatto, 2013 WL 1395696 (7th Cir. 2013).  The case amply illustrates that summary judgment misconceptions can have unfortunate consequences.

In Modrowski, a former employee sued two property management firms under the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030, after he was fired and  locked out of his personal Yahoo email account.

The defendants moved for summary judgment, arguing that plaintiff produced no evidence that he sustained at least $5,000 in monetary loss as required by the CFAA.  18 U.S.C. § 1030(c)(4)A)(i)(I); (g).  The District court agreed and granted defendants’ summary judgment motion.

The Seventh Circuit rejected plaintiff’s argument that the defendants failed to meet their summary judgment burden of production.  The Court noted that Federal Rule of Civil Procedure 56 imposes an initial burden of production on the summary judgment movant (here, defendants) to show the court why a trial isn’t necessary. 

The (summary judgment) moving party can meet the initial burden by either (1) producing affirmative evidence that negates an essential element of the plaintiff’s claim; or (2) asserting that the plaintiff failed to produce sufficient evidence to establish an essential element of his claim.  

The defendants opted for the latter, “trickier” path – pointing out a lack of evidence in support of plaintiff’s CFAA minimum monetary loss ($5,000) element.  Once the defendants made this initial showing, the burden shifted back to the plaintiff to point to admissible record evidence that established the $5,000 loss threshold.

Question: How does a summary judgment respondent do this? 

Answer:  The nonmovant doesn’t have to depose her own witnesses or produce evidence in a form that would be admissible at trial, but she must at least produce affidavits, deposition excerpts, interrogatory answers, or record admissions to demonstrate that there is evidence upon which a jury could potentially find in the nonmovant’s favor on the challenged element. 

The plaintiff in Modrowski miscalculated his summary judgment burden.  Instead of citing evidence to support his claim that he suffered at least $5,000 in monetary loss, plaintiff opted to attack perceived flaws in defendants’ summary judgment motion.  Plaintiff argued that defendants failed to file a Local Rule 56.1 Statement, failed to cite to the evidentiary record in support of their factual statements and didn’t support their arguments with supporting case law.  (p. 4). 

Plaintiff claimed that these motion defects were so major, his burden to produce evidence on his CFAA loss element didn’t trigger.

The Seventh Circuit disagreed.  On the defendants’ failure to file a Local Rule 56.1 Statement, the Court said that while a failure to provide the Statement can result in the denial of a summary judgment motion, the district court has wide discretion whether to require strict compliance with local court rules and can freely overlook a rules violation.

Substantively, the Court emphasized that the plaintiff bore the burden of persuasion on the $5,000 damages element of a colorable CFAA claim.  Because of this, the plaintiff had to produce admissible evidence in support of this element to survive summary judgment. 

The court even gave examples of the type of evidence plaintiff could have offered such as (1) affidavits from prospective business partners who were unable to contact plaintiff after defendants hijacked his Yahoo account, (2) receipts and expense documents relating to amounts paid by plaintiff to replicate the lost emails and billing records, or an (3) affidavit signed by plaintiff attesting to the number of hours he spent trying to recover his erased emails.  

On this last point, the Court noted that self-serving affidavits in response to summary judgment are proper if they are fact-specific and based on personal knowledge. 

Take-aways: Summary judgment is the “put up or shut up” moment of the lawsuit and the time in which the respondent must marshal admissible evidence to prove his case.  

Modrowski‘s clear lessons are that if you have the burden of proof on an issue at trial and you’re served a summary judgment motion, you must do more than point out facial defects in your opponent’s motion (like a failure to file a LR 56.1(a) statement).  You must also do more than simply rely on your pleadings.  Instead, you should comb the record for evidence in support of each element of your cause of action.