Opinion ID: 222490
Heading Depth: 2
Heading Rank: 2

Heading: Breach of Oral & Implied Contract Counterclaims

Text: Multiut and Draiman assert that the relationship between Dynegy and Multiut ran deeper than the pages of their written agreement. According to Multiut and Draiman, Dynegy and Multiut were also bound by three unwritten contracts: two oral and one implied in fact. Pursuant to the first alleged oral contract, Dynegy agreed to offer Multiut most-favored-nations pricing. That is, it agreed to charge Multiut (i) a price equal to or ½ cent per therm higher than the index price, or (ii) the lowest price contemporaneously being charged by Dynegy to any of Multiut's competitors. Pursuant to the second alleged oral contract, Dynegy agreed to lock-in the price it charged Multiut for gas such that the fixed price Multiut was obligated to pay Dynegy was less than the fixed prices Multiut's customers were obligated to pay it. Pursuant to the alleged implied-in-fact agreement, Dynegy implicitly agreed to waive Multiut's obligation to pay interest on its arrearage, as evidenced by the omission of interest charges from several months' worth of invoices. The district court concluded that there was no evidence establishing the existence of the alleged agreements and granted summary judgment in Dynegy's favor on all three counterclaims. We review these decisions de novo, drawing every reasonable inference in Multiut and Draiman's favor. E.g., India Breweries, Inc. v. Miller Brewing Co., 612 F.3d 651, 658 (7th Cir.2010). We apply the substantive law of the state of Illinois. See id. (citing Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)).
Multiut claims that it had an understanding, dating back to the mid-1990s, that Dynegy would charge it either (i) a price equal to or ½ cent per therm higher than the index price, or (ii) the lowest price contemporaneously being charged by Dynegy to any of Multiut's competitors. It alleges that Dynegy fostered this understanding by repeatedly assuring one of Multiut's employees that Multiut was getting the best price there is, though it acknowledges that Dynegy refused its requests to include a most-favored-nations clause in either the 1988 or 1994 agreements. Multiut claims that Dynegy violated part (i) of the understanding by charging Multiut five to twelve cents more than the index price per therm, and violated part (ii) by charging Multiut's competitor Nicor Energy lower prices than it charged Multiut. Unilateral understandings are not enough to give rise to an enforceable oral contract in Illinois. A feeling of certainty. . . that a party in position to contract would surely agree to terms present in the situation disclosed, does not evoke a contract from a plausible situation for contract. The agreement must actually be made by the parties to the alleged contract. It must be shown that those parties selected and concurred in the terms of the contract, or no contract exists. Richton v. Farina, 14 Ill.App.3d 697, 303 N.E.2d 218, 223 (1973) (quoting Bartlett v. Lauff, 271 Ill.App. 551, 554 (Ill.App.Ct.1933)). In order for there to be a contract between parties there must be a meeting of the minds or mutual assent as to the terms of the contract. Midland Hotel Corp. v. Reuben H. Donnelley Corp., 118 Ill.2d 306, 113 Ill.Dec. 252, 515 N.E.2d 61, 65 (1987). No reasonable jury could find any such meeting or mutual assent here. Although Multiut has asserted that the essential terms of the alleged contract were definite and certain, id., it has not pointed to any evidence from which a jury could infer that Dynegy assented to them. Vague statements about best prices do not an agreement make, particularly where the proponent of the contract cannot pinpoint even the year in which the agreement was purportedly reached. Nor does the parties' course of conduct tally with the existence of such an agreement; if Multiut were guaranteed a per-therm price of index plus ½ cent, there would have been no reason for it to get price quotes from Dynegy or repeatedly seek fixed pricing. Summary judgment was properly entered in Dynegy's favor on this counterclaim.
The second alleged oral contract also involves the prices Dynegy promised to offer Multiut. During a September 2001 meeting with Dynegy employees, Draiman floated the idea of locking-in Multiut's pricing for an extended period of time. He testified that the Dynegy employees said something along th[e] lines of they would work on it or would get it done and requested a list of Multiut's customers and profit margins. Draiman testified that although Dynegy did not explicitly agree to lock-in a price, he walked away from the meeting with the impression and understanding that Multiut would be getting fixed prices for whatever period [its own fixed-price] contracts were. Based on that understanding, Multiut did not seek out other sources of natural gas for its fixed-price customers. On September 17, 2001, Draiman sent a letter to Dynegy in which he provided for Dynegy's review a list of the prices paid by Multiut's fixed-price customers and pointed out that if Multiut could lock-in a price of about 15 cents per therm below what its average customer was paying, it could increase its profits by $2 million. Dynegy's response to the letter did not mention fixed prices, and Draiman took no further steps to ensure that Multiut would actually receive locked-in prices. The district court concluded that this evidence was not enough to show that Dynegy agreed to provide gas at a set price and granted summary judgment. [1] We agree that summary judgment is warranted. The evidence Multiut and Draiman presented does not demonstrate the existence of an agreement between Dynegy and Multiut. Multiut was able to more precisely identify the timeframe in which the alleged agreement was reached, and the actors who allegedly made it, but there is no evidence as to what price the agreement locked in or how long the agreement was in effect. The essential terms of a contract must be definite and certain in order for a contract to be enforceable. Midland Hotel Corp., 113 Ill. Dec. 252, 515 N.E.2d at 65. Both price and duration are unquestionably essential terms, at least in this sort of contract. Even if a jury ignored Dynegy's oral use of prospective preliminary language, cf. Ocean Atl. Dev. Corp. v. Aurora Christian Schs., Inc., 322 F.3d 983, 995-96 (7th Cir. 2003) (applying Illinois law) ([A] letter of intent or a similar preliminary writing that reflects an agreement contingent upon the successful completion of negotiations that are ongoing, does not amount to a contract that binds the parties.), and concluded that an agreement had been reached during or after the September meeting, it would be unable to glean from the evidence presented the parameters or duration of that agreement. [I]f the essential terms are so uncertain that there is no basis for deciding whether the agreement has been kept or broken, there is no contract. Acad. Chi. Publishers v. Cheever, 144 Ill.2d 24, 161 Ill.Dec. 335, 578 N.E.2d 981, 984 (1991).
The third unwritten contract purportedly governing Dynegy and Multiut's relationship grew out of Dynegy's failure to invoice Multiut for interest during most of 1999 and 2000. Multiut and Draiman contend that through this conduct, Dynegy impliedly agreed to forgo the collection of interest, notwithstanding its subsequent submission to Multiut of corrected interest invoices and supporting schedules. The district court granted summary judgment for Dynegy after finding that Multiut and Draiman failed to demonstrate that any such agreement existed. We agree that summary judgment was proper. Contracts implied in fact arise under circumstances which, according to the ordinary course of dealing and the common understanding of men, show a mutual intention to contract. Mowatt v. City of Chicago, 292 Ill. 578, 127 N.E. 176, 177 (1920); see also Schivarelli v. Chi. Transit Auth., 355 Ill.App.3d 93, 291 Ill.Dec. 148, 823 N.E.2d 158, 165-66 (2005) (In a contract implied in fact, a contractual duty is imposed by reason of a promissory expression inferred from facts, circumstances and expressions by the promisor showing an intent to be bound. Such contract may be proved by circumstances showing that the parties intended to contract and by the general course of dealing between them. (citation omitted)). No such intention can be reasonably inferred from the evidence presented here. Despite its failure to invoice interest for many months, Dynegy sought to rectify its mistake by sending Multiut a letter and updated invoices as soon as it discovered the omission. (The parties' written agreement contained a provision allowing the parties up to 24 months to correct any billing errors.) It also invoiced Multiut for interest consistently both before and after the 1999-2000 period. These are not the actions of a party seeking to be bound. Moreover, and perhaps more damaging to this claim, Multiut met with Dynegy in March 2001 and agreed that it owed the amount Dynegy claimed it did; the agreed-upon amount included the interest Multiut now claims is waived. Perhaps Multiut hoped that Dynegy would overlook some of the interest it was accruing, but Dynegy's actions do not objectively indicate that it had any such intention.