Wermers Floorcovering, Inc. v. Santanna Natural Gas Corp.

Case Date: 07/30/2003
Court: 2nd District Appellate
Docket No: 2-02-0581 Rel

No. 2--02--0581


IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT


WERMERS FLOORCOVERING, INC.,

          Plaintiff-Appellee,

v.

SANTANNA NATURAL GAS
CORPORATION, d/b/a Santanna
Energy Services,

          Defendant-Appellant.

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Appeal from the Circuit Court
of Lee County.


No. 01--SC--262



Honorable
Charles T. Beckman,
Judge, Presiding.


JUSTICE CALLUM delivered the opinion of the court:

Defendant, Santanna Natural Gas Corporation, d/b/a SantannaEnergy Services, appeals from a judgment awarding $1,421.22 toplaintiff, Wermers Floorcovering, Inc., a company that sells andinstalls carpet and wallpaper, for defendant's breach of a contractto supply natural gas at a fixed price for a definite term. Defendant argues that the trial court erroneously concluded thatthe affirmative defense of voluntary payment did not precludeplaintiff's claim. Because we conclude that plaintiff's voluntarypayments to defendant were not made under duress, we reverse.

Gerald Wermers, plaintiff's owner, received a notice from Nicor Gas Company (Nicor) about its new customer select program,which allowed its natural gas customers to contract with other gassuppliers for service. Wermers recalled that Nicor's list ofsuppliers contained 10 or 12 companies. Wermers investigated therates offered by the different suppliers and entered into a three-year contract with defendant. According to that agreement,plaintiff would be charged a rate of $0.265 per therm for itsnatural gas usage. A few months later, defendant sent a proposalto plaintiff for a flat rate service that would include all Nicordistribution charges. Plaintiff agreed, and an addendum wasexecuted whereby the rate was increased to $0.4365 per therm.

In June 2000, Wermers noticed that plaintiff's gas bill wassignificantly higher. He discovered that defendant was chargingplaintiff a per therm rate that was higher than that in thecontract. Wermers called defendant and was informed that it hadsent plaintiff a letter explaining that it had to increase itsprices due to unprecedented market conditions. He had not receivedthe letter, so defendant faxed him a copy. In the letter,defendant stated:

"Due to the recent unanticipated increase in the price ofnatural gas, Santanna Energy Services (SES) has determinedthat a condition of Force Majeure exists, and it is no longerable to supply gas at the current contract rate. ***

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If you do not wish to continue in the Nicor Gas SelectProgram, you may of course return to Nicor Gas sales service.*** Should you, for any reason, wish to return to Nicor Gas,please contact our Customer Service staff *** and they willmake sure that you have the proper procedure."

Wermers had several conversations with defendant, during which he insisted that defendant honor the contractual rate. He wasinformed by defendant to "either pay [the increased rate] or thegas would be shut off." Although plaintiff continued to pay defendant's monthly bill in full for the next eight months, he kepta chart of the charges above the contractual rate. Wermers alsoconsulted an attorney, who informed him to maintain his records,and, when the damages were large enough, a lawsuit would beeconomically justified.

On May 9, 2001, plaintiff filed a two-count complaint,alleging that defendant breached the contract. In its answer,defendant asserted four affirmative defenses, including thevoluntary payment doctrine. After a bench trial, the trial court ordered judgment for plaintiff. The court determined thatdefendant's affirmative defense of voluntary payment did not defeatplaintiff's claims because plaintiff's payments were made underduress. Defendant appeals.

Defendant does not contest the trial court's conclusion thatit breached the contract. Rather, it contends that the trial courterred by finding that plaintiff's payments were made while underduress and, thus, not subject to the voluntary payment affirmativedefense. We review the trial court's factual findings under amanifest weight of the evidence standard. In re D.M., 336 Ill.App. 3d 766, 773 (2002). A decision is against the manifest weightof the evidence if the facts clearly demonstrate that the courtshould have reached the opposite conclusion. D.M., 336 Ill. App.3d at 773.

Under the voluntary payment doctrine, "money voluntarily paidunder a claim of right to the payment, and with knowledge of thefacts by the person making the payment, cannot be recovered by thepayor solely because the claim was illegal." Smith v. Prime Cableof Chicago, 276 Ill. App. 3d 843, 847 (1995). A payment isinvoluntary if (1) the payor lacked knowledge of the facts uponwhich to protest the payment at the time of payment, or (2) thepayor paid under duress. Getto v. City of Chicago, 86 Ill. 2d 39,48-49 (1981). In other words, to negate the applicability of thedoctrine, plaintiff must "not only show that the claim asserted wasunlawful but also that payment was not voluntary, that there wassome necessity which amounted to compulsion. [Citations.]" Smith,276 Ill. App. 3d at 848.

Such compulsion, or duress, occurs " '[w]here a person, toprevent injury to himself, his business or property, is compelledto make payment of money which the party demanding has no right toreceive and no adequate opportunity is afforded the payor toeffectively resist such demand.' " Smith, 276 Ill. App. 3d at 849,quoting Schlossberg v. E.L. Trendel & Associates, Inc., 63 Ill.App. 3d 939, 942 (1978). Protest may also serve as evidence ofcompulsion and an unwillingness to pay; however, it does notconclusively establish compulsion where compulsion is disproved byother circumstances. Smith, 276 Ill. App. 3d at 849. Indetermining whether a plaintiff's payment was made undercompulsion, this court must consider all the facts andcircumstances surrounding the transaction. Smith, 276 Ill. App. 3dat 850.

The recoupment of payments made under duress is limited toitems deemed to be necessities. Geary v. Dominick's Finer Foods,Inc., 129 Ill. 2d 389, 398 (1989). Specifically, to determinewhether duress motivated the payment of a demanded sum, attentionmust be given to the nature of the asset involved and theconsequences of nonpayment. Geary, 129 Ill. 2d at 398. Furthermore, "the existence of a reasonable alternative sourceprecludes any arguments about whether a particular product orservice constitutes a necessity." Dreyfus v. Ameritech MobileCommunications, Inc., 298 Ill. App. 3d 933, 940 (1998).

The present case involves natural gas service. Indeed, otherutilities have been deemed necessities, and the payments made underprotest to maintain those services have been held recoupable. SeeGetto, 86 Ill. 2d at 51 (payment made under duress when paid toavoid loss of telephone service); Ross v. City of Geneva, 71 Ill.2d 27, 33-34 (1978) (payment made under duress where pubic utilitythreatened to terminate electricity). But see Dreyfus, 298 Ill.App. 3d at 940 (cellular telephone service not a necessity); Smith,276 Ill. App. 3d at 855 (same for cable service). However,defendant insists that the manifest weight of the evidenceestablished that plaintiff had reasonable alternative sourcesavailable for natural gas service and, thus, its voluntary paymentswere not made under duress. We agree.

At the trial, the evidence showed that Wermers had reviewedNicor's customer select list, telephoned several companies, andaccepted the service offer extended by defendant. In addition,Wermers admitted receiving the faxed letter from defendant thatclearly stated that, if the customer did not want to pay the higherrate, service could revert to Nicor. This unrefuted evidenceestablishes that alternative sources of natural gas were availableto plaintiff.

Nonetheless, plaintiff presented no evidence suggesting thatit had to pay defendant because switching to another natural gassupplier was unreasonable. Wermers testified that defendantinformed him that it would terminate service if plaintiff did notpay the disputed charges, but he did not present testimonyconcerning what consequences the business might suffer if theservice were terminated or if it had to change suppliers. Instead,Wermers testified that, after the dispute arose, he did notinvestigate switching suppliers, even though the parties' contractwas terminable without penalty on 30 days' notice. According toDreyfus, 298 Ill. App. 3d at 940, when a party has alternativesources available and could have opted out of making a disputedpayment, then the asset involved is not a "necessity," the duressexception does not apply, and the voluntary payments cannot berecouped. We conclude that the trial court's ruling that plaintiffpaid defendant under duress is against the manifest weight of theevidence and that plaintiff's claim was defeated by the voluntarypayment affirmative defense.

For these reasons, the judgment of the circuit court of LeeCounty is reversed.

Reversed.

BOWMAN and O'MALLEY, JJ., concur.