The Proviso Township High School District must pay a contractor for work, authorized by its superintendent and state financial supervisor, to repair fire damage at one of its high schools, even though the school board never formally voted on the contract, Illinois’ highest court has ruled.
On April 16, the Illinois Supreme Court found in favor of contractor Restore Construction, of Franklin Park, in a long running dispute with the west suburban high school district over more than $1.4 million in unpaid fees for work Restore performed to repair fire damage at Proviso East High School six years ago.
The majority opinion was authored by Justice Lloyd A. Karmeier. Chief Justice Anne M. Burke and justices Thomas L. Kilbride, Mary Jane Theis and P. Scott Neville concurred in the decision.
“The work performed by Restore and the reasonableness of the amounts it charged were subject to multiple levels of oversight and are unquestioned,” Karmeier wrote in the majority opinion. “The mistakes were the Board’s alone. A fundamental precept of Illinois law is that no one shall be permitted to take advantage of his own wrong.
“Allowing the Board to escape responsibility for paying what it owes based on its own misconduct would directly contravene this core principle and reward school districts for failing to adhere to the law. That is not a precedent we should set, particularly where, as here, the school board has had such difficulty managing its own financial affairs that it has been forced to operate with State oversight for more than a decade.”
Justice Rita B. Garman dissented, however, asserting the majority’s findings place taxpayers at risk from future “sweetheart deals” orchestrated by school superintendents and other officials, under the guise of emergency actions.
The decision upheld a decision from the Illinois First District Appellate Court, which had also ruled in favor of Restore. And it brought to an end a court battle that dates back to 2015.
In 2014, Restore was hired by the superintendent of Proviso Township High School District 209 to begin emergency repairs to Proviso East High School after a large fire in the building. The work was to be funded exclusively from funds received from the district’s insurer.
At the time, the district was under the supervision of a Financial Oversight Panel, created by the Illinois State Board of Education, to watch the district’s troubled finances.
The district’s chief fiscal officer, who had been hired by the FOP, also signed off on the selection of Restore and participated in oversight of Restore’s work at Proviso East.
However, after Restore completed the $7.27 million project in 2015, the school district refused to pay Restore the remaining $1.4 million the contractor said was owed.
Restore then sued the Proviso district, asserting the district had violated its contract.
The school district, however, argued the contract had never been approved by the school board and had never been put out for competitive bid, as required by law. Therefore, the district did not need to pay Restore.
While the Proviso district prevailed in Cook County Circuit Court, on appeal, justices at the First District Appellate Court and at the Illinois Supreme Court took a dim view of that argument.
The Supreme Court majority found the Proviso board had approved the contract “informally.” While no vote was taken, the justices said, the board was fully aware of Restore’s work, and never objected or brought it up for discussion during the months the work was underway.
“Where a contract has been made in a way that does not conform to the law but is of the type that was within the power of the municipal corporation to make, the contract has been performed in good faith, and the municipal corporation has accepted its benefits, the municipality cannot invoke its own failure to comply with legal requirements as basis for defeating recovery,” Karmeier wrote.
“…To permit the Board to reap the benefits of Restore’s efforts without paying the remaining amounts it owes would result in a substantial windfall to the District and its taxpayers and a substantial loss to Restore,” Karmeier wrote.
The majority further rejected Proviso’s argument Restore was seeking to “raid” taxpayer funds.
They noted the funds did not come from taxpayers, but from the district’s insurers.
In her dissent, however, Garman said Proviso should have carried the day in this case.
She asserted state law should have rendered Restore’s claim void, because, as the district argued, it never formally approved any contract.
She said state law requiring such votes exist to protect taxpayers from having to fund “under-the-table arrangements, sweetheart deals, and backroom graft,” at the whims of school superintendents and other unelected officials.
“The majority’s decision disregards these concerns and puts future taxpayers on the hook, so long as an emergency exists and the service provider acts in good faith,” Garman wrote. “Given the amount of money in projects such as these, I do not believe we should so easily dismiss the requirements of the statute and the valid interests of those who will have to pay the bill.”
Justice Michael J. Burke took no part in the decision.
Proviso District 209 has been represented in the action by attorneys William F. Gleason, Eric S. Grodsky and Raymond A. Hauser, of the firm of Hauser, Izzo, Petrarca, Gleason & Stillman LLC, of Flossmoor.
Restore Construction has been represented by attorneys Michael W. Rathsack and Gene A. Eich, of Chicago.