OATES ASSOCIATES v. STATE OF ILLINOIS (2016)

ORDER

This matter is before the Court by stipulation of the parties for the Court to rule on this matter based upon motions, pleadings, affidavits and depositions to date including Respondents Motion for Summary Judgment dated September 30, 2011 and Claimants Response thereto. In August 2001, Claimant was hired by Respondent to provide engineering services in connection with the relocation of utilities for the 1-255 extension. The total amount of the original contract was $500,000.00.

There were five supplemental agreements to the original contract. The fifth supplemental agreement is the subject of this dispute. Each of four prior supplemental agreements stated “[t]his work can be accomplished within the existing budget” and “[t]herefore the total agreement amount will remain at $500,000.””

In the fifth supplement, Respondent retained Claimant to perform utility coordination services for a stretch of 1-255 that was not part of the original contract or the parties prior supplemental agreements. In the Prior Approval Authorization for the Fifth Supplemental Agreement (“Prior Approval Authorization”), Respondent stated that “The Department has identified the need to supplement the existing agreement for the subject improvement” and that “this change is in the best interest of the State and is authorized by law.” The negotiated cost for the additional services between Claimant and Respondent was $104,000.00. The Prior Approval Authorization stated that its purpose was “to authorize [Claimant] to continue work and accrue costs up to a maximum amount of $50,000.00 towards the completion of this work.” Respondent assured Claimant that there would be a written supplemental agreement between the parties, and that “[a]ll costs accrued under this authorization letter will be included in, and this letter of authorization superseded by, the supplemental agreement.” In the interim, Respondent assured Claimant that if it accepted the terms, it could “accept this as your authorization to proceed.”

The Prior Approval Authorization is printed on IDOT letterhead. It is signed by the Deputy Highway Director and Region Five Engineer, Mary Lamie. Respondent admits that Ms. Lamie authorized the work at issue. In the cover letter transmitting the Prior Approval Authorization, IDOT specifically directed Claimant to “proceed with work covered under this approval.” Claimant signed the Prior Approval Authorization indicating its acceptance. Claimant also timely submitted its fifth supplemental proposal package to Respondent as requested in the Prior Approval Authorization.

Claimant began performing the requested work. However, before a formal fifth supplemental agreement was signed, Claimant received a stop work notice. Claimant stopped work and invoiced Respondent $34,327.29 for the additional work performed through the date of the stop work notice.

Respondent admits that Claimant timely and satisfactorily performed additional services with a total value of $34,327.29. Respondent paid Claimant $13,783.24 representing the balance remaining on the original contract. However, it has refused to pay the balance of $20,544.05 at issue here alleging that Claimant is limited to a maximum contract amount of $500,000.00.

Respondent, through the Deputy Highway Director Mary C. Lamie, authorized the expenditure at issue. Claimant performed the requested additional services timely and satisfactorily. Those services had an uncontroverted value of $34,327.29. Claimant performed these services relying on the Prior Approval Authorization. In the Prior Approval Authorization, Respondent recognized a need to “supplement the existing agreement” that was “in the best interest of the State and is authorized by law.” Respondent promised that “[a] 11 costs accrued under this authorization letter [up to $50,000.00] will be included in, and this letter of authorization superseded by, the supplemental agreement.” Claimant was told it could accept the letter as authorization to proceed with the additional work. The evidence is that Respondent has a history of increasing the amounts of its contracts with Claimant pursuant to Prior Approval Authorizations and subsequently executed supplemental agreements.

Respondents Amended Departmental Report filed on March 21, 2014 indicates that the appropriation from which this claim would have been paid, 011-49405-7700-0026, contained an unexpended balance of $4,755,798.89.

A valid contract requires only an offer, acceptance and consideration. LaSalle National Bank v. Vega, 167 Ill.App.3d 154, 160 (2d Dist. 1988). Here, IDOT offered to increase the contract amount by $104,000.00 with guaranteed advancement of up to $50,000.00 in costs in exchange for Claimants performance of agreed additional services. Claimant signed the Prior Approval Authorization indicating its acceptance and began performing.

Claimant reasonably relied on Deputy Director Lamies apparent authority to authorize an additional $50,000.00 of interim work pending execution of a formal fifth supplemental agreement. This Court has held that vendors may reasonably rely on representations of state employees who have apparent authority. See Malcolm Eaton Enterprises, Inc. v. State, 59 Ill.Ct.CL. 216 (2007) and Genie Construction Co., Inc. v. State, 51 Ill.Ct.Cl. 153 (1999).

Respondent asserts that this Court lacks jurisdiction to enter an award in excess of the written contract amount, citing BroMenn Health Care d/b/a Brokaw Hospital v. State, 46 Ill.Ct.Cl. 260 (1993). However, BroMenn is distinguishable as it concerned a claim for payment of services within the terms of the contract but in an amount in excess of the contract—a contractual “over-run.” In the instant case the issue is Claimants right to be compensated for additional work beyond the original contract for an additional amount where Claimant relied on the representations of Respondent that it had authority to engage Claimant to perform the additional work.

Respondent requested Claimant perform additional work in the Prior Approval Authorization. This Court finds a clear distinction between a contractor requesting more money than previously agreed upon because the agreed upon work was costlier than predicted, and a contractor requesting more money because the parties had agreed to the performance of additional work.

IT IS THEREFORE ORDERED that because Claimant reasonably relied on Respondents request to perform additional work, and because Claimant properly performed this work, Respondent must pay Claimant the remaining amount of $20,544.05.

Claimant is awarded damages in the amount of $20,544.05.

BIRNBAUM, C J.