Fifth District affirms ruling in favor of defendant in breach of contract case

The defendant in a breach of contract case did not waive its right to enforce the forum-selection clause in its contracts with the plaintiff, the Fifth District Appellate Court held.

In an unpublished order filed Tuesday, the appeals panel affirmed the ruling of the Crawford County Circuit Court that granted Putnam Energy LLC’s motion to dismiss Superior Well Services, Inc.’s amended complaint.

Justice James Wexstten delivered the order and Justices Richard Goldenhersh and Bruce Stewart concurred.

In October 2011, Putnam Energy, an Indiana-based power company whose principal office is located in Westmont, Ill., sued Superior Well Service, a Delaware corporation headquartered in Pennsylvania, for breach of contract.

The suit alleged that the parties had entered into a series of contracts between 2008 and 2010 for Superior to provide services to some of Putnam’s natural gas wells in Crawford County and that Superior had breached the contracts in regards to two of those wells.

Putnam asserted that Crawford County was the proper venue for the complaint “because a substantial part of the events giving rise to the claim occurred within Crawford County where Putnam's gas reservoirs are located.”

The complaint, according to the appellate court order, did not include copies of the contracts at issue and did not detail any of the terms and conditions of the contracts.

Superior in December 2011 filed a motion to dismiss the suit, claiming that Putnam failed to comply with Section 2-606 of the Code of Civil Procedure.

This section states that if a claim is based on a written instrument, a copy of that written instrument must be attached to the pleading. It also notes that if that instrument is not accessible, the pleader must attach an affidavit stating such.

Putnam in January 2012 filed a response to Superior's motion to dismiss, as well as an affidavit from its majority owner that noted the contracts at issue had been destroyed in a fire.

After Putnam filed an amended complaint with the affidavit attached, Superior sought dismissal, claiming that Putnam failed to state a cognizable breach of contract claim.

It also argued that while the contracts apparently were destroyed in a fire, Putnam still needed to detail the terms of the parties’ contracts in order to support its claim.

Superior’s motion to dismiss, the appellate court order notes, “characterized Putnam’s amended complaint as ‘couched in terms of tort, as opposed to contract.’”

In its response to the defendant’s motion to dismiss, Putnam asserted that it was “impossible” to allege the specific terms of the contracts because it did not have copies of them.

The circuit court in May 2012 denied the defendant’s motion to dismiss, saying that Superior’s argument that Putnam failed to allege the contracts’ terms could be resolved through a bill of particulars.

The following month, Superior filed a motion seeking summary judgment or in the alternative, dismissal without prejudice.

The motion also noted that Superior had obtained copies of the contracts at issue and that each of them contained a provision providing that any litigation would be tried in the Court of Common Pleas of Indiana County in Pennsylvania.

While Superior argued that the forum-selection clause in its contracts was valid and enforceable in Illinois, Putnam asserted that Superior’s claim that Crawford County was not the proper venue was not timely under Section 2-104.

This section states in part that objections over venue are waived unless a motion to transfer is made before defendant is required to appear.

At a hearing on the motion to dismiss, Superior indicated that it would have tried to enforce the forum-selection clause in the contracts sooner, but that the contracts were not available. It also claimed that its right to enforce the clause was not a “venue issue.”

Putnam disagreed, and again argued that Superior had waived its argument over venue, as well as its right to enforce the forum-selection clause under contract law principles.

The circuit court dismissed Putnam’s amended complaint without prejudice and determined that Superior was entitled to have the claim litigated in Pennsylvania based on the terms of the parties’ contract.

On appeal, Putnam argued that the lower court erred in dismissing its complaint on the basis that Superior didn’t make a venue argument at the beginning of the case under Section 2-104.

The company also argued that regardless of whether the issue in its case is analyzed under Illinois’ venue and jurisdiction statues or contract law, the “result is the same.”

“We disagree,” Justice James Wexstten wrote for the appeals panel. “We also note that Putnam raises its jurisdictional argument for the first time on appeal.”

Wexstten noted that the appellate court agreed with Superior’s argument that it’s right to enforce the forum-selection clause was different than its right to object to venue under Section 2-104.

“Here, whether Crawford County is a statutorily authorized venue under Illinois law is not the underlying issue, and Superior did not abandon its contractual right to enforce the forum-selection clause by failing to raise an objection pursuant to section 2-104,” Wexstten wrote for the panel.

He explained in the order that “Section 2-104 clearly contemplates the filing of a motion to transfer but Illinois's statutory transfer provisions ‘apply only to transfers within the State of Illinois’ … Section 2-104 is thus inapplicable.”

The appellate court also disagreed with Putnam’s arguments that Superior had waived its right to enforce the forum-selection clause under Section 2-301, which governs objections to jurisdiction, and the general principles of contract law.

“Under the circumstances, Superior did not demonstrate conduct constituting an implied waiver of its right to enforce the forum-selection clause contained in the parties' contracts,” Wexstten wrote. “We accordingly affirm the circuit court's judgment dismissing Putnam's amended complaint without prejudice to filing suit in Pennsylvania.”