Opinion ID: 2995627
Heading Depth: 2
Heading Rank: 2

Heading: Facts Relating to UCH’s Counterclaim

Text: UCH paid Quantum under Section IV(A), which states that UCH shall reimburse Quantum for all expenses, to the extent that such expenses were within the scope of the Budget included within the Business Plan or within the scope of a later Budget . . . in effect at the time the expense was incurred by Quantum. The Business Plan allowed for $25,000 per month for Fey’s services from April through December 1997. A December 17, 1996 modification to the budget allowed for an increase in consulting fees as well as an additional $26,000 per month for Morrow’s services. Morrow resigned in July 1997. Quantum continued to charge and accept the $26,000 per month for five months thereafter. That is, it received a total of $130,000 for services it did not provide. Also, as consideration for the December 17 modification, Quantum agreed to split equally the increase in fees; UCH would initially pay Quantum’s share, as a draw against future payments. Quantum’s share of the increase equaled $148,690. It has not repaid UCH. Section III(E) of the Agreement provides that Quantum shall recommend and assist in the selection, development, and/or integration of information and internal communication systems, which shall include a management information system (MIS) for the gathering, synthesis, storage and retrieval of data required for the plan. . . . [T]he MIS shall be designed for the purpose[ ] of . . . making required reporting to regulatory agencies. Quantum selected an MIS that failed to make the required reporting to the Illinois Department of Public Aid. Due to this failure, the Plan did not comply with the State Contract. UCH retained another consultant to achieve compliance with the reporting requirements at a cost of $166,945. Finally, when Fey moved to Chicago to begin working for the Plan, UCH paid a $2,026 security deposit required by the landlord of his apartment. When Fey moved out, he instructed the landlord to refund the deposit to him. He never reimbursed UCH. Pursuant to U.S.C. sec.636(c) and Fed. R. Civ. P. 73, the parties consented to the exercise of jurisdiction by Magistrate Judge Ashman for the limited purpose of ruling on UCH’s summary judgment motion. Judge Ashman granted the motion, holding that Quantum failed to raise a genuine issue of material fact as to whether the Plan achieved an operating gain during any given month, or as to whether the Plan ever reached 120% of the enrollment level of any supposed breakeven month. The court also awarded UCH $447,661.37, holding that Quantum breached the Agreement by collecting fees earmarked for Morrow’s services after his resignation, by failing to return its half of the additional consulting fees advanced by UCH, by failing to return the security deposit on Fey’s apartment, and by failing to select an appropriate MIS.