P.R.S. International v. Shred Pax
State: Illinois
Court: 3rd District Appellate
Docket No: 3-97-0227
Case Date: 10/31/1997
Nos. 3--97--0227 & 3--97--0666
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 1997
P.R.S. INTERNATIONAL, INC., ) Appeal from the Circuit Court
) of the 18th Judicial Circuit,
Plaintiff-Appellant, ) Dupage County, Illinois
)
v. )
)
SHRED PAX CORPORATION, )
)
Defendant-Appellee, )
)
ONE THREE SIX, INC., INDRESSO, )
INC., SHRED PAX SYSTEMS, INC., )
and ALVIN KACZMAREK, ) No. 95--L--54
)
Defendants. )
)
CONSOLIDATED WITH: 3--97--0666 )
)
P.R.S. INTERNATIONAL, INC. )
)
Appellant, )
)
v. )
)
SHRED PAX CORPORATION, ) Honorable
) Edward Duncan
Appellee. ) Judge, Presiding
Justice BRESLIN delivered the opinion of the court:
In this action for breach of a contract for the purchase of
machinery we are asked to determine whether plaintiff P.R.S.
International, Inc.'s (PRS) failure to respond to defendant, Shred
Pax Corporation's (Shred Pax) request to admit facts, properly
resulted in judicial admissions which barred PRS's claims. The
trial court ruled that the failure to respond to Shred Pax's
request to admit caused the facts to be deemed admitted. The court
subsequently granted Shred Pax's motion for summary judgment
finding that the admissions precluded PRS's action and that the
evidence also demonstrated that it had repudiated the agreement.
The court then awarded Shred Pax $39,296.25 on its counterclaim
against PRS for breach of contract. On appeal, PRS contends that
the court erred when it awarded Shred Pax summary judgment (3--97--
0227) and resulting damages (3--97--0666). Although we hold that
the trial court properly denied PRS leave to serve its response to
Shred Pax, we hold that the trial court could not consider disputed
ultimate facts and legal conclusions included in the request to
admit and that summary judgment was inappropriate. Accordingly, we
reverse and remand 3--97-0227 and 3--97--0666.
FACTS
In April 1990, PRS contracted with Shred Pax to purchase a
pyrolysis machine, shredding machines, and equipment related to
their operation. The pyrolysis machine was to transform tires,
which had been shredded by the shredding machines, into carbon
black, a substance used when reinforcing tires as well as in paint,
printing ink, carbon paper and electric resistors. Shred Pax was
to deliver "[o]ne pyrolysis system, including shredders" and
related equipment and install it at a site in Plymouth, Florida,
approximately 8-10 months after the contract was entered. PRS
contends that the date of delivery was approximately February 18,
1991. The total contract price was $898,200. Following a down
payment of $269,460, PRS was to make seven monthly payments of
$78,592.50. A payment of $39,296.25 would follow in the eighth
month and "$39,296.25 net 30 after approval of [the] shredding
system." All the payments were made except for the final payment
of $39,296.25.
In entering the contract for the machinery, PRS intended to
create an operation to process a minimum of 5,000 rubber tires a
day into oil and carbon black. Unfortunately, although the
shredding components and other equipment were delivered two months
after the contract was entered, PRS never received the pyrolysis
machine from Shed Pax. Its operation, which was eventually located
in South Beloit, Illinois, rather than Florida, failed in 1993.
PRS claims that the operation's demise was a direct result of Shred
Pax's failure to deliver the pyrolysis machine, which was an
integral component to the business of reducing rubber tires to oil
and carbon black.
In November 1991, three PRS representatives went to Shred
Pax's plant in Wood Dale, Illinois, to discuss matters related to
the pyrolysis machine with Shred Pax's president. They claimed
that the machine was not visible, except for a few parts, and that
the president of Shred Pax refused to disclose who was
manufacturing the machine. PRS claimed that this was part of a
fraudulent course of conduct by Shred Pax, which PRS claimed had
never built the machine.
During that period in time, PRS initiated discussions
regarding the potential sale of the pyrolysis machine. In
correspondence, PRS stated that Shred Pax was in a superior
position to sell the machine since it was in the business of
selling such products and could easily communicate with the desired
market. By 1993, all cooperation, if any ever existed, ended.
Eventually in a letter demonstrating his personal frustration with
the affair, PRS's attorney, and at that time the principal
shareholder, wrote a letter to Shred Pax informing it that the
"best avenue" was for Shred Pax to sell the machine and that it was
his "desire to be completely disassociated with anything to do with
tire shredding or burning."
In 1995, PRS filed suit claiming, among other things, that
Shred Pax breached the contract when it failed to deliver the
pyrolysis system in 1991. Shred Pax denied the material
allegations of the complaint and stated that the system was not
delivered because PRS repudiated and breached the contract. Early
in the discovery process Shred Pax submitted a set of
interrogatories and requests to admit to PRS. PRS did not reply to
the requests within the statutory period of 28 days. Its response
to the interrogatories were delivered four months after they were
submitted. When the request to admit facts remained unanswered for
10 months, Shred Pax filed a motion to have the requested facts
deemed admitted. PRS still had not filed a response after 15
months when the court ruled on Shred Pax's motion. The court
denied PRS leave to serve its response and stated that absent good
cause, Supreme Court Rules 216 and 183 mandated that the facts be
admitted. Since the court found that no good explanation was given
for the delay, it denied PRS leave and ordered the facts be admitted.
Included in the request to admit were requests to admit the
genuineness of documents, as well as the following relevant
statements:
"6. Shred Pax delivered to PRS the shredding
system and other equipment required by the contract
other than the pyrolysis system.
7. PRS accepted, approved, and used the
shredding system and other equipment delivered by
Shred Pax.
8. PRS failed to pay Shred Pax $898,200.
9. Prior to February, 1991, PRS ceased doing
business at the Florida location***.
13. PRS never obtained all of the permits
required by applicable federal, state, and
municipal law for delivery, installation, or
operation of the pyrolysis system at any location
in the United States.
17. PRS never requested that Shred Pax
deliver the pyrolysis system to PRS at a particular
location on a particular date.
18. PRS refused to take delivery of the
pyrolysis system.
19. PRS requested that Shred Pax sell the
pyrolysis system to someone else.
20. Shred Pax had the pyrolysis system ready
for delivery in February, 1991, and thereafter.
21. PRS repudiated the parties' contract by
refusing to take delivery of the pyrolysis system
or by requesting that Shred Pax sell the pyrolysis
system to someone else.
22. PRS breached the parties' contract by (1)
repudiating the parties' contract, by refusing to
take delivery of the pyrolysis system or by
requesting that Shred Pax sell the pyrolysis system
to someone else, (2) by failing to pay Shred Pax
$39,296.25 when due, or (3) failing to obtain all
of the permits required by applicable federal,
state, and municipal law for delivery,
installation, or operation of the pyrolysis system
at any location in the United States."
Based on the admissions and various correspondence from PRS
officials, Shred Pax moved for summary judgment claiming that PRS
was in breach of contract and that it had also repudiated the
agreement. In addition to the admissions and correspondence
allegedly demonstrating a repudiation, Shred Pax included an
affidavit from an expert in the field of air pollution permit
regulations who stated that air pollution regulations required PRS
to acquire a construction permit before installing the pyrolysis
system.
Despite the fact that there was substantial evidence that the
pyrolysis system was never built or delivered, the court found that
the admissions resulting from the failure to respond to the request
to admit precluded PRS's claim for breach and it awarded Shred Pax
summary judgment. The court also noted that the evidence
demonstrated a repudiation on PRS's part. Shred Pax was later
awarded $39,296.25 in damages. PRS appeals from the decision
awarding summary judgment (3--97--0227) and the award of damages
(3--97--0666).
ANALYSIS
I. DENIAL OF LEAVE TO SERVE RESPONSE
The first issue on appeal is whether the court abused its
discretion when it denied PRS leave to serve Shred Pax with its
response to the request to admit.
Supreme Court Rule 216(c) provides that unless the party to
whom a request to admit was directed responds within 28 days, the
facts of the document are deemed admitted. 134 Ill. 2d R. 216(c);
Schwalb v. Wood, 288 Ill. App. 3d 498, 680 N.E.2d 773 (1997).
Supreme Court Rule 183 provides an exception, however, and allows
the court to extend the time for filing a pleading if the party
demonstrates "good cause." 134 Ill. 2d R. 183; Bright v. Dicke, 166
Ill. 2d 204, 652 N.E.2d 275 (1995). Absence of prejudice to the
opposing party is immaterial; it is a prerequisite that the
responding party demonstrate good cause to obtain the relief
granted by Rule 183. Bright, 166 Ill. 2d at 209, 652 N.E.2d at 277.
Absent an abuse of discretion, this court will not disturb the
trial court's decision to deny a motion for extension of time under
Rule 183. Schwalb, 288 Ill. App. 3d at 501, 680 N.E.2d at 776.
PRS asserts that the court abused its discretion because the
court's ruling acts as a punishment. It claims that the failure to
respond was not deliberate and that denial of leave to serve its
response was an abuse of discretion under Supreme Court Rule 219(c)
(Official Reports Advance Sheet No. 20 (Sept. 27, 1995), R. 219,
effective Jan. 1, 1996).
PRS is mistaken when it argues that the court abused its
discretion under Rule 219(c) since what occurred was the result of
the operation of Rule 216(c). See F.J. Penham v. Oldham, 86 Ill.
App. 3d 1018, 408 N.E.2d 487 (1980) (summary judgment based on
judicial admission made under Rule 216(c) does not constitute a
sanction imposed under Rule 219(c)). PRS ignores the fact that
Rule 183 is specific in requiring a good cause showing for the
delay before the court is granted any discretion. See Bright, 166
Ill. 2d at 209, 652 N.E.2d at 277. No explanation was given to the
trial court for the delay. Accordingly, we hold that the court did
not abuse its discretion when it denied PRS leave to serve its
response.
II. SUMMARY JUDGMENT
Having determined that the court did not abuse its discretion,
we must consider whether summary judgment was appropriate in light
of its decision.
Summary judgment should only be granted when the pleadings,
depositions, admissions and affidavits on file show that there is
no genuine issue of material fact and that the moving party is
entitled to judgment as a matter of law. 735 ILCS 5/2--1005(c)
(West 1996); Armstrong v. Washington, 289 Ill. App. 3d 306, 682
N.E.2d 761 (1997). This court's review of an order granting
summary judgment is de novo. First of America Trust Co. v. First
Illini Bancorp, Inc., 289 Ill. App. 3d 276, 681 N.E.2d 45 (1997).
Admissions resulting from a request to admit pursuant to Rule
216 are "tantamount" to judicial admissions and are taken as true.
Mt. Zion State Bank & Trust v. Consolidated Communications, Inc.,
169 Ill. 2d 110, 660 N.E.2d 863 (1995). The admissions are thus
incontrovertible and have the effect of withdrawing the matter from
contention. People v. Mindham, 253 Ill. App. 3d 792, 625 N.E.2d 835
(1993).
A request to admit facts is a discovery tool. Bright, 166 Ill.
2d at 208, 652 N.E.2d at 276. Parties utilizing Rule 216(c) are to
avoid requesting admissions concerning conclusions or opinions of
law (People v. Mindham, 253 Ill. App. 3d 792, 625 N.E.2d 835
(1993)) and controverted facts, (Sims v. City of Alton, 172 Ill.
App. 3d 694, 526 N.E.2d 931 (1988)), since the intent behind the
Rule was not to allow parties to ultimately prove their case
through this procedure. People v. Strasbaugh, 194 Ill. App. 3d
1012, 551 N.E.2d 1095 (1990). There is disagreement, however, as
to the effect of requesting a party to admit disputed ultimate
facts -- any contested facts needed to establish one's case or
defense -- when no objection is made.
In Strasbaugh, 194 Ill. App. 3d at 1017, 551 N.E.2d at 1099,
the court found that certain requests to admit were improper and
could not form the basis of a motion for summary judgment because
they called for admissions of ultimate facts. The court reasoned
that Rule 216 was developed to allow admissions to undisputed facts
so that the opposing party did not have to prove what was
uncontroverted and that it was not appropriate to prove one's case
with requests to admit when "ultimate facts are fairly disputed."
Strasbaugh, 194 Ill. App. 3d at 1017, 551 N.E.2d at 1099.
Similarly in Sims, 172 Ill. App. 3d at 699, 526 N.E.2d at 935, the
court held that permitting a party to obtain conclusions of law and
ultimate facts, essentially conceding the entire case, was
inconsistent with the purpose of Rule 216. Thus, the court
permitted a late response to counter the inappropriate
requests.[fn1]
In Mindham, 253 Ill. App. 3d at 792, 625 N.E.2d at 841,
however, the court concluded that while it may be true that the
request to admit should not be used to request ultimate facts,
whether a fact is ultimate may not be known at the time the request
is submitted. Furthermore, the court noted that to avoid an
admission, the opposing party can simply object pursuant to Rule
216. According to Mindham, 253 Ill. App. 3d at 792, 625 N.E.2d at
841, unopposed requests to admit facts, whether they relate to
ultimate facts or not, are admitted and incontrovertible.
Shred Pax contends that the Mindham decision discusses the
only remedy available to a respondent and that, absent an
objection, all statements are admitted. Shred Pax argues that our
Supreme Court's decision in Bright v. Dicke, 166 Ill. 2d 204, 652
N.E.2d 275 (1995) controls. In Bright, the court held that the
failure to provide good cause for a failure to respond will result
in admissions of the facts requested. However, the court did not
address the issue of whether a trial court may appropriately
consider controverted ultimate facts or conclusions in a subsequent
motion for summary judgment when a request to admit has gone
unanswered for no reasonable explanation.
In our opinion, the trial court may not consider controverted
ultimate facts and legal conclusions just because a party has
failed to respond within the 28 day statutory period. To permit a
party to escape litigation in such a manner would thwart the
purpose Rule 216 and invite parties to include all kinds of
information in their requests, no matter how hotly disputed, to see
what they can get away with. This is a far cry from the purpose of
the rule which is to obviate the difficulty involved regarding
proof of evidence which is incontrovertible. Wintersteen v.
National Cooperage & Woodenware Co., 361 Ill. 95, 197 N.E. 578
(1935). Accordingly, we hold that the trial court could not
consider disputed ultimate facts and conclusions of law included in
Shred Pax's request to admit when considering Shred Pax's motion
for summary judgment.
Shred Pax argues that there are various bases upon which the
trial court's judgment may be affirmed. We will consider each
argument below.
1. Failure to Pay Installment of $39,296.25 When Due
Shred Pax contends that PRS admitted that it failed to pay the
full contract price and that a breach occurred when it accepted the
shredder system without paying the remaining installment within 30
days of acceptance. PRS does not dispute the fact that it did not
pay. It argues that the contract did not call for the payment of
the final installment until the pyrolysis machine was installed.
Rather than being a dispute concerning ultimate facts or
conclusions, this argument centers around an interpretation of the
contract.
Interpreting the language of a contract is a matter of law
appropriate for summary judgment unless the language is ambiguous.
Welsh v. Commonwealth Credit Union, 249 Ill. App. 3d 719, 619
N.E.2d 181 (1993). When construing the language of the contract,
the document must be read as a whole and all parts must be
construed together. Preski v. Warchol Construction Co., 111 Ill.
App. 3d 641, 444 N.E.2d 1105 (1982). A contract is ambiguous if it
is reasonably susceptible to more than one meaning. People ex rel.
Burris v. Memorial Consultants, Inc., 224 Ill. App. 3d 653, 587
N.E.2d 34 (1992).
The agreement stated that the parties were bargaining for the
delivery of "[o]ne pyrolysis system, including shredders ***."
Delivery of the pyrolysis system was to occur 8 to 10 months after
the down payment. After seven monthly payments, a payment of
$39,296.25 was to be made in "the eighth month and $39,296.25 net
30 after approval of [the] shredding system."
The use of the terms "pyrolysis system" and "shredding system"
results in confusion, especially in light of the fact that the
shredding system was delivered within two months of the time the
contract was entered. Accordingly, we hold that the contract is
ambiguous and that summary judgment would not be appropriate on
this basis.
2. Repudiation of Contract
Shred Pax also insists that it is due summary judgment because
PRS repudiated the contract. Shred Pax contends that summary
judgment is proper because PRS admitted that it: (a) never
requested that Shred Pax deliver the system to PRS at a particular
location on a particular date; (b) refused to take delivery of the
pyrolysis machine; (c) requested that Shred Pax sell the pyrolysis
system to someone else; (d) repudiated the contract by refusing to
take delivery or by requesting that Shred Pax sell the machine.
Absent justification, a definite statement made by one party
of a contract to the other that it will not perform its contractual
duties constitutes an anticipatory repudiation. Builder's Concrete
Co. of Morton v. Fred Faubel and Sons, Inc., 58 Ill. App. 3d 100,
373 N.E.2d 863 (1978). The party's manifestation must clearly and
unequivocally be that it will not render the promised performance
when it becomes due. In re Marriage of Olsen, 124 Ill. 2d 19, 528
N.E.2d 684 (1988).
(a) Failure to Request Delivery
The fact that PRS admitted that it did not request delivery is
not an ultimate fact which the trial court need ignore since it is
not apparent why it even amounts to a repudiation. Shred Pax has
not explained its position. The contract does not say that PRS
must request delivery; rather the contract dictates that the system
be delivered to the site in Florida. Since the site was not
available, another place of delivery was needed. To argue that
this amounted to a repudiation, however, is without merit since it
does not evidence that PRS would otherwise reject delivery at its
South Beloit site. Therefore, we reject this argument.
(b) Refusal To Take Delivery
Shred Pax next contends that PRS repudiated the contract when
it refused to take delivery of the machine. Although a refusal to
take delivery may amount to a repudiation (see Great Western Sugar
Co. v. World's Finest Chocolate, Inc., 169 Ill. App. 3d 949, 523
N.E.2d 1149 (1988)), Shred Pax's proof is based solely upon an
admission acquired pursuant to the court's ruling. Whether the
machine was delivered, however, was an ultimate fact which was
disputed from the beginning of the case. Shred Pax improperly
sought an admission concerning the machine's delivery and it should
not be considered as an admission supporting its motion for summary
judgment.
(c) Requests that Shred Pax Sell Machine
Shred Pax also asserts that a repudiation occurred when PRS
officials requested that Shred Pax sell the pyrolysis machine.
Discussions began in late November 1991, and continued through 1993
culminating in a letter from PRS's attorney and principal
shareholder wherein he stated that it was his "desire to be
completely disassociated with anything to do with tire shredding or
burning."
This statement created an ambiguous implication that
performance would not occur. However, it was not so definite so
that the trial court could rule that the language amounted to a
repudiation as a matter of law. See Truman L. Flatt & Sons Co. v.
Schupf, 271 Ill. App. 3d 983, 649 N.E.2d 990 (1995). Under the
circumstances, whether the requests that the machine be sold could
amount to a repudiation well after delivery was due is a question
of fact and was not appropriate for summary judgment.
(d) Admission of Repudiation
Shred Pax relies on PRS's admission made in paragraph 21
wherein it admitted that it repudiated the agreement by refusing to
take delivery and by requesting that Shred Pax sell the machine.
This statement is a legal conclusion and may not be considered by
the trial court. Likewise, paragraph 22 (wherein PRS admits that
it breached the contract by: repudiating it; failing to pay
$39,296.25 when due; and failing to obtain the necessary permits
for delivery and installation) is also a legal conclusion and may
not be considered by the trial court when ruling on Shred Pax's
motion.
3. Breach Resulting From Failure to Acquire Permits
Finally, Shred Pax argues that summary judgment was
appropriate because PRS admitted that it had not acquired the
necessary permits to install and operate the pyrolysis machine in
compliance with air pollution regulations. Shred Pax asserts that
the failure to obtain the permit resulted in a breach of contract
because statutes and laws in existence at the time of contracting
are considered part of the contract. PRS, to the contrary, has
asserted that no special permit was required since the pyrolysis
machine did not emit toxins at a level which would require a
special construction permit.
Statutes and laws in existence at the time a contract is
entered are considered part of the contract. Braye v. Archer-
Daniels-Midland Co., 175 Ill. 2d 201, 676 N.E.2d 1295 (1997). They
are treated as implied terms to which the parties have agreed.
Mitchell Buick and Oldsmobile Sales, Inc. v. McHenry Savings Bank,
235 Ill. App. 3d 978, 601 N.E.2d 1360 (1992).
Whether a special permit was required for the machine's
installation is another issue central to the case and for which a
request to admit was improper. Whether the law required a permit
in this specific instance, rendering the permit an implied
condition precedent, involves a question of fact which needs to be
determined at trial.
CONCLUSION
In conclusion, we hold that the trial court improperly awarded
summary judgment to Shred Pax. Therefore, we reverse and remand
for further proceedings.
For the foregoing reasons, the judgment of the Circuit Court
of Dupage County is reversed and remanded.
LYTTON, P.J., and MICHELA, J., concur.
[fn1] In addition, the Sims court noted that the plaintiffs
failed to show how they would be prejudiced by allowing the
defendant leave to file a late response. We note that this issue
is not relevant since the court in Bright, 166 Ill. 2d at 209, 652
N.E.2d at 277 held that prejudice is irrelevant and that the
responding party bears the burden of demonstrating good cause
before being allowed to respond.
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