SIS Pittsburgh, LLC v. Pace Systems, Inc., No. 1:2015cv10971 - Document 31 (N.D. Ill. 2016)
Court Description: MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 8/22/2016:Mailed notice(wp, )
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SIS Pittsburgh, LLC v. Pace Systems, Inc. Doc. 31 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHER DISTRICT OF ILLINOIS EASTERN DIVISION SIS PITTSBURGH LLC, Plaintiff, Case No. 15 C 10971 v. Judge Harry D. Leinenweber PACE SYSTEMS, INC., Defendants. MEMORANDUM OPINION AND ORDER I. BACKGROUND In this lawsuit the Plaintiff, SIS Pittsburgh, LLC (“SIS”), seeks damages from Defendant, Pace Systems, Inc. (“Pace”), for breach of a Professional Services Agreement (the “Agreement”) between the two. Pace has counterclaimed for breach of contract, complaining that SIS failed to provide the services for which it submitted invoices and is seeking payment. Pace seeks return of the money it paid under the contract as well as consequential damages for the cost of another consultant. The services the to be provided under the Agreement were installation and implementation of accounting software. Paragraph 1 of the Agreement provides for the services to be performed as outlined in a separate document referred to as a “work order.” The paragraph includes, in addition to the work Dockets.Justia.com described in the work order, “any support services that may be provided with or without existing work order” and “any other reasonable services that the company asks consultant to perform and Consultant agrees to perform with or without a work order. Compensation was to be determined in accordance with an Exhibit A which was attached and incorporated into the Agreement by reference. With the exception of a $15,000.00 retainer, the services were to be billed on a time and material basis. The problem that gives rise to this lawsuit is Paragraph 3 “Billing Procedures.” This paragraph states as follows: 3. Billing Procedures. (a) Consultant shall submit an invoice to the Company on a weekly basis following the complete execution of this Agreement detailing the professional fees and related expenses incurred during the previous week (in accordance with the rates set forth in Exhibit A). The Company agrees to pay Consultant the amount of the invoice within twenty (20) days of receipt of such invoice. (b) In the event that Consultant initiates collection proceedings in connection with this Agreement and it is determined by a court or other like body of competent jurisdiction that the Company’s failure to pay amounts sought by Consultant constitute a breach of this Agreement, Consultant shall be entitled to receive its reasonable costs (including attorneys’ fees) incurred in connection with such proceeding. (c) Customer shall the date of the invoice provided said dispute is writing, identifying the have fifteen (15) days from to dispute any invoiced item, communicated to Consultant in specific item being disputed, - 2 - and reasons for said dispute. Upon receipt of the notice of billing dispute by Consultant, both Consultant and Company shall attempt to resolve said dispute in good faith within 15 days of the date of the notice of billing dispute. In the event that an invoice presented to Company by Consultant is not disputed within the period of time specified in this paragraph, any and all items on the invoice shall be considered an undisputed and valid invoice for the services performed by the parties hereto. The Agreement also provided that either party could cancel and terminate the Agreement upon delivery of ten days written notice. The Agreement further provided that Georgia law would govern the interpretation of the Agreement. SIS proceeded to perform services under the contract for which it periodically invoiced Pace. Pace, however, paid some invoices, partially paid some others, and did not pay anything on still others. The result is that there is a balance due SIS on the invoices in the amount of $85,244.46, plus interest and late fees, for which SIS is seeking in this suit. Pace admits that it did not follow the procedure in Paragraph 3 and did not provide a writing disputing any invoiced item within 15 days as required. Pace also admits that SIS performed the hours for which it invoiced Pace. Further, since there was no written dispute, there was no attempt to resolve any such dispute in good faith. - 3 - Pace, in its defense, points to the estimate contained in the work order which indicated that the total estimate of fees and expenses was $95,000, totaled $175,141.03. while the invoices sent to Pace Pace also argues that there was a great deal of e-mail exchanges which contained a list of issues that were cropping up and certain tasks that SIS needed to complete. Pace further contends that it had to retain another consultant to complete the work. II. A. Both parties DISCUSSION Count I – Account Stated cite Eastview Healthcare, LLC v. Synertx, Inc., 296 Ga. App. 393 (2009) in support of their positions. In this case, Synertx had a written agreement to provide a variety of therapists at the facilities operated by Eastview and its affiliates “on an as-needed basis or as otherwise requested by the [facilities].” In exchange Eastview agreed to pay Synertx’s monthly invoices. Further the contracts stated that “[if question the] facility has any or issue regarding any invoice from [Synertx, the] facility shall so notify [Synertx] in writing within fourteen (14) days of receiving the invoice, or such invoice shall be deemed accurate and complete in all regards. [The] facility shall pay [Synertx’s] invoices within thirty (30) days of the end of each month of service.” - 4 - The president of Synertx provided an affidavit that Synertx sent each provided of as the well facilities as monthly statements of invoices outstanding for services balances. He further averred that Synertx provided all of the services listed on the invoices objection from statements. and the never The received facilities record to further any any written of showed the that notice or invoices or the facilities failed to pay the full balance due on the invoices, or made late payments on admitted some that they of them. had The received facilities the majority invoices and owner had not disputed the amount of the invoices or questioned whether the therapists had actually provided the services. Instead the facilities argued that Synertx should be estopped from enforcing the contract because Synertx had materially breached the agreement by failing to provide sufficient number of therapists to meet the facilities’ needs. Synertx summary judgment on The court proceeded to grant the amount of unpaid invoices because the facilities had failed to provide a triable issue of fact as to the inaccuracy of any of the billings. The Georgia Court also relied upon Lipton v. Warner & Bates, 228 Ga. App. 516 (1998), in which a law firm provided legal services to the defendant for which it billed but was not paid. The defendant provided an affidavit in opposition to summary judgment in which it sought to dispute the services rendered. - 5 - The Georgia Court found for the plaintiff on the basis that the defendant had accepted the services without disputing the bills. These cases provide ample authority judgment in favor of SIS on Count I. to support summary Here SIS provided computer consulting services in an attempt to install and implement an accounting software program. It is clear from the e-mail strings provided that the installation and implementation did not go smoothly. e-mail strings There is no evidence, however, in any of the to support an argument that SIS was not proceeding in good faith to provide professional services agreed upon. Further, Pace did not take advantage of the contractual provision allowing it to dispute any of the services provided. The obvious purpose of the notice provision was to avoid disputes such as this one growing into an expensive lawsuit. A party cannot sit back, accept services, and decide not to pay for them after the fact. The case for an account stated is especially strong where the contract requires written notice of any dispute to be made on a timely basis (Synertx). Even without such a notice requirement Georgia law requires a timely dispute to be made. and not pay. One cannot accept services, receive bills, (Lipton). If Pace was so dissatisfied with the services provided by SIS, it could have disputed the invoices and cancelled the Agreement. - 6 - Pace argues that SIS did not always bill on a monthly basis as the contract required. the failure dispute. to bill on However, Pace does not explain how a monthly basis is material to the The explanation given by SIS was that SIS did not bill where the amount of work for the specific period was small. Pace does not argue that delay in billing, for example, allowed the balance due to increase to an unexpected large amount that created a cash flow problem for Pace. See, Burnham v. Cooney, 593 S.E. 2d 701, 704-05 (Ga. App, 2004) (Attorney’s failure to bill allowed the fees to escalate, even after being told to cease working on the case because of the fact that the party being sued had become judgment proof). Here Pace was well aware of the accumulation of fees due but did nothing about it other than to make together. invoices The that partial law payments is describe clear the or in ignore Georgia services the that billed invoices if you you all ignore concede the accuracy of the invoices and thereby create an account stated. Pace makes several other arguments which need not detain us long. It argues that some of the invoices contained the name of a person to contact in case of dispute while others did not. Pace did not, however, make any attempt to contact the person named. Nor does this detract from the clear language of the Agreement that requires timely written disputes. argues that it could not have been - 7 - expected to Pace further be able to dispute invoices because of the short period of time afforded by the agreement, fifteen days. This argument might have had a better chance of success had Pace actually attempted to dispute some of the invoices in writing after 15 days. Pace here is relying on the e-mail strings Certainly, since as proxies for written disputes, if the “complaints” were true complaints as to quality or quantity of work, Pace could have easily filed written complaints as to the specific invoices as required by the Agreement even if the complaints were late. so. It also can be noted that Pace They did not do paid approximately $89,000.00 on the invoices over the course of the work that concluded on June 10, 2013, after Pace denied access to SIS effectively cancelling the contract. Pace also argues that under Georgia law where the plaintiff is seeking to recover on an open account and the amount is disputed, the parties cannot proceed with the action on an open account, but instead proceed under breach of contract. American Teleconferencing Services v. Network Billing Systems, LLC, 668 S.E.2d 259, 263 (Ga. App. 2008). However, the case of Imex International, Inc. v. Wires Engineering, 261 Ga. App. 329, 332 (2003), a case cited by the American Teleconferencing court, states that a buyer must make “a seasonable objection” to the invoice or subject itself to “admission creating an action on an open account. - 8 - by silence,” thus Accordingly, the Court grants summary judgment on Count I. Judgment is entered in the amount of $85,244.46 plus costs. Having granted summary judgment on Count I, Count II, Breach of Contract, and Count III, Unjust Enrichment, are dismissed. B. Pace’s Counterclaim SIS has moved for summary judgment on Pace’s Counterclaim in which it contends that “completely and correctly.” SIS did not perform its services It relies on Eastview HealthCare, 674 S.E. 2d at 646, a case which the court discussed above. that case, unpaid while invoice the court amounts granted based on summary account judgment stated, it In on the denied summary judgment to Synertx on the facilities’ counterclaim for lost profits due to understaffing. The Georgia court held that if jury there contract is then evidence summary by which judgment a is to could be find denied. breach Here of Pace argues that it has submitted some evidence that SIS did not provide complete services so that the software was installed and implemented without Pace hiring a replacement consultant. SIS responds arguing that a provision of the parties’ Agreement, whereby Pace agreed to hold SIS harmless from “any claims or causes of action brought against [SIS] by any party as a result of [SIS’] performance,” applies to prevent Pace from suing it based on its performance. While the language cited could be read, as SIS does, to prevent a counterclaim, the language can - 9 - also can be read to apply only to those claims made by a third party arising out of SIS’ performance. It would be unusual for a party to enter into an agreement that prevents it from suing for breach of contract. SIS’ interpretation would require Pace to hold itself harmless from itself. constitutes an ambiguity. Accordingly, the At the very least this Thus, summary judgment is not proper. Motion for Summary Judgment on Pace’s Counterclaim is denied. C. Attorney’s fees SIS has requested attorney’s fees for prosecuting this case and defending Pace’s Counterclaim. Pace has objected based on the failure of SIS’ counsel to itemize the fee request. SIS filed a detailed fee request as an exhibit to its Reply Brief. Pace objects on the grounds that it is too late to supply such material at the reply stage. Pace is correct. However this dispute is irrelevant at this stage because the Court has denied summary judgment on the Counterclaims so that the fee request will need to be modified which will allow Pace time to review the fee request. Therefore, the Motion to Strike the fee Motion for request is denied without prejudice. III. For the reasons Summary Judgment entered in the [ECF. amount CONCLUSION stated No. of herein, 19] is $85,244.46 - 10 - Plaintiff’s granted, plus and costs, judgment but is without attorney’s fees. Defendant’s Plaintiff’s Motion for Summary Judgment on Counterclaim is denied. Defendant’s Motion Strike the fee request is denied without prejudice. IT IS SO ORDERED. Harry D. Leinenweber, Judge United States District Court Dated: August 22, 2016 - 11 - to
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