Opinion
Case No. 00 C 2482
August 23, 2000
Stephen Theodore Mikus, Chicago, IL, for plaintiff.
Richard B. Levy, Glenn Douglas Newman, Douglas Alan Graham, Chicago, IL, for defendant.
MEMORANDUM OPINION AND ORDER
INTRODUCTION
Before the court is the defendant, Commonwealth Edison's motion to dismiss for failure to state a claim upon which relief can be granted. For the following reasons, the motion is denied.
BACKGROUND
In ruling on a motion to dismiss for failure to state a claim, the court will dismiss a claim only if it is beyond doubt that under no set of facts would the plaintiff's allegations entitle him to relief. See Travel All Over the World, Inc. v. Kingdom off Saudi Arabia, 73 F.3d 1423, 1429-30 (7th Cir. 1996). The purpose of a motion to dismiss is to test the sufficiency of the Complaint, not to decide its merits. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). For purposes of a motion to dismiss, the court accepts the factual allegations of the Complaint as true and draws all reasonable inferences in favor of the plaintiff. See Travel All Over the World, 73 F.3d at 1428.
ComEd entered into a "Strategic Relationship Agreement for Line Clearing Services," or "SRA" with plaintiff Wright Tree Service, Inc. whereby, Wright agreed to trim trees near ComEd's power lines. Under the SRA, the parties agreed to a multi-layered dispute resolution process beginning with a two-part negotiation process. If negotiations failed, mediation followed. If mediation failed, the final step would be arbitration. According to the SPA, either party could terminate the SRA, given 30 days' notice. On September 17, 1999, ComEd notified Wright that it was terminating the SPA. Wright claims that ComEd owes it over $3 million; however, ComEd has not paid Wright. Wright also claims that ComEd admitting owing it at least $1,900,000.
DISCUSSION
Count I of Wright's Complaint seeks to compel arbitration of this dispute. 9 U.S.C. § 1 et seq. ComEd argues that Count I is premature and unripe because neither party has unilaterally, nor have the parties mutually, submitted the dispute to mediation. Mediation is the agreed-upon prerequisite to arbitration, according to the SPA. The Complaint alleges that "ComEd has not agreed to or engaged in negotiation or mediation despite request." Compl. at ¶ 12. Under the SPA, if mediation has not succeeded within 60 days, the matter proceeds to arbitration. Wright contends that it requested that ComEd submit to mediation on December 8, 1999, waited sixty days, and, after not receiving a response from ComEd, filed the instant lawsuit.
In labor disputes, whether the procedural prerequisites to arbitration have been met is an issue for the arbitrator. See John Wiley Sons, Inc. v. Livingston, 376 U.S. 543, 557-58 (1964). Although Wiley and its progeny deal with labor disputes and, in some cases, the prerequisites of collective bargaining agreements, both cases under the Wiley standard and the instant case arise under the United States Arbitration Act, 9 U.S.C. § 1 et seq., see generally United Paperworks International Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 39 (1987).
Furthermore, courts have relegated ripeness issues to the arbitrator in business contract disputes as well. See Semco, L.L.C. v. Ellicott Machine Corp. Internat'l, No.Civ.A. 99-1928, 1999 WL 493278, *2 (E.D. La. July 9, 1999). The facts of Semco compare to those in the instant case; both involve a contract dispute. In Semco, the defendant Ellicott had contracted with the plaintiff SENCO to construct three 28" cutter suction dredge vessels. The court found that because "the Contract states that all disputes shall proceed to non-binding mediation. This necessarily includes disputes as to procedural steps." Semco at *2.
In this case, page 10 of the SRA directs the parties to engage the three step dispute resolution process "[s]hould a dispute occur between ComEd and Contractor arising out of or relating to the Agreement . . ." Compl. Ex. A, p. 10. In other words, a dispute as to the Agreement initiates the three step process. The ripeness dispute raised by ComEd arises out of the Agreement and thus would fall under the purview of the arbitrator. The motion to dismiss Count I is denied.
Count II of the Complaint alleges breach of contract, seeking $1,900,000. ComEd argues that the court should dismiss Count II because the face of the SPA provides ComEd with a basis for withholding payment. Wright has attached the SRA to the Complaint. A copy of any written instrument which is an exhibit to a Complaint is considered to be a part of the pleadings. Fed.R.Civ.P. 10(c).
"Under Illinois law, the plaintiff proves a breach of contract by establishing: (1) a valid and enforceable contract; (2) performance of contractual duties by the plaintiff; (3) a breach of contractual duties by the defendant; and (4) resulting damages to the plaintiff." Olympic Chevrolet, Inc. v. General Motors Corp., 959 F. Supp. 918, 922 (N.D. Ill. 1997).
According to the SPA, ComEd is not required to make payments for work not performed; can decline to pay an invoice if it decides it is necessary to protect ComEd from losses due to Wright's breach, misconduct, negligence or failure to substantiate amounts due to Wright; and can set off against any amount payable any indebtedness for which ComEd may be liable or ultimately responsible for arising out of the transaction with Wright. Compl. Ex. A p. 3, 9, 10. ComEd argues that the Complaint fails to allege how ComEd's refusal to pay is not covered by these provisions.
Wright is not required to allege every factual detail of its claim. Fed.R.Civ.P. 8(c). Rather, the issue is "whether relief is possible under any set of facts that could be established consistent with the allegations." Bartholet v. Reishauer A.G., 953 F.2d 1073, 1078 (7th Cir. 1992). Wright has alleged the four elements of a breach of contract claim.
In Count II, Wright alleges that ComEd admitted owing Wright $1,900,000. ComEd contends that this figure arose during settlement negotiations. Pursuant to Federal Rule of Evidence 408, settlement offers are not admissible to prove liability or the validity of a claim. However, the motion before the court is one to dismiss pursuant to Rule 12. Whether the $1,900,000 figure arose during settlement negotiations is a dispute of fact. Fact issues are not to be decided on a motion to dismiss. See Smith v. Cash Store Management, Inc., 195 F.3d 325, 327 (7th Cir. 1999). Furthermore, all facts are to be taken in the light most favorable to Wright. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The motion to dismiss Count II is denied.
CONCLUSION
Accordingly, for the foregoing reasons, ComEd's motion to dismiss is denied.
IT IS SO ORDERED.