Computer Training Institute of Chicago, LLC v. State of Illinois, Department of Veterans’ Affairs, et al.

ORDER

BIRNBAUM, C J. This claim is brought by Computer Training Institute of Chicago, LLC ("CTIC or Claimant") against the State of Illinois Department of Veterans' Affairs and the Illinois State Approving Agency for Veterans' Education Benefits ("Respondents") in response to Respondents revoking approval of Claimant's courses offered to veterans under the G.I. Bill. Claimant alleges breach of contract and unjust enrichment based on the same set of facts. Specifically, Claimant contends that the State of Illinois, through two State Agencies - the State of Illinois Department of Veterans' Affairs and the Illinois State Approving Agency for Veterans' Education Benefits - breached its contract with CTIC to provide approved educational benefits to veterans under the G.I. Bill. Claimant's assertion that it has a contract with Respondents is based on the documentation that was exchanged between Claimant and Respondents as part of the application and ultimate suspension and termination process. Claimant did not sign a contract with Respondents. In support of its contract claim, Claimant contends that on January 11, 2012, Respondents approved Claimant's application to provide courses to veterans and that, pursuant to this approval, Claimant began enrolling veterans in its programs in July 2012. The very next month, however, Respondents notified Claimant that Respondents had suspended approval of Claimant's courses for sixty (60) days. Claimant contends that this suspension was "without cause." On October 12, 2012, Claimant received another letter from Respondents advising Claimant that approval of Claimant's programs was withdrawn due to Claimant's failure to comply with reporting requirements, failing to make records available for examination, and willfully and knowingly submitting false reports and engaging in erroneous and misleading sale and advertising practices. Claimant contends that Respondents' allegations are not true and objects to the procedure in which Respondents withdrew Claimant's approval. Specifically, Claimant contends that it was not afforded an opportunity to formally respond nor was it ever provided with a formal hearing or appeal.

PROCEDURAL POSTURE

Claimant has sought to remedy its asserted lack of due process in its dealings with Respondents through the Court of Claims and the Federal District Court. This matter is before the Court on Respondent's Amended Motion to Dismiss Claimant's Complaint. Claimant filed its two count complaint against Respondents on August 1, 2014. Claimant asserts breach of contract as its first cause of action and unjust enrichment as its second cause of action. This is not the first action that Claimant has brought in relation to the foregoing claims. Prior to filing its complaint with the Court of Claims, Claimant filed a lawsuit against the United States Department of Veterans' Affairs in the United States District Court for the Northern District of Illinois on October 3, 2013. This Court previously entered an order staying prosecution of this matter until the action in the District Court was resolved. That matter is resolved. On March 17, 2015, Judge Marovich of the Northern District of Illinois [*127] dismissed Claimant's complaint with prejudice as to the portion of the complaint that challenged the decision to disapprove Claimant's programs and dismissed the remaining portion of the complaint for lack of jurisdiction. In so doing, the Court found that the authority to decide questions of law and fact with regard to veterans' benefits rests exclusively with the Secretary of Veterans' Affairs.

On August 17, 2015, Respondents filed a 2-619(a) Motion to Dismiss Count II of Claimant's Complaint on the basis that this Court lacks jurisdiction to grant equitable relief and therefore cannot entertain an unjust enrichment claim. On September 25, 2015, both Claimant and Respondents appeared before Commissioner Rosenberg and the Commissioner entered a briefing schedule on Respondent's Motion to Dismiss. That same day, Respondents filed an Amended joint 2-615/2- 619(a)(1) Motion to Dismiss seeking to defeat both Counts of Claimant's Complaint on a number of bases, including that:

1. This matter is non-reviewable per statute, 2. The action is barred by collateral estoppel, 3. Count I must be dismissed for failure to state a claim pursuant to 2-615 and lack of jurisdiction pursuant to 2-619(a)(1) and, 4. Count II must be dismissed for lack of jurisdiction as equitable relief falls outside this Court's contract jurisdiction.

Claimant filed a Response to Respondent's Amended Motion to Dismiss on November 19, 2015 and Respondents filed a Reply to Claimant's Response to Respondent's Amended Motion to Dismiss on December 3, 2015.

ISSUES

This Court is presented with three legal questions, which are as follows: 1. Is this action barred by collateral estoppel? 2. Must Count I for Breach of Contract be dismissed for failure to state a claim? 3. Must Count II be dismissed for lack of jurisdiction over equitable matters?

Legal Standard for 2-615 Motions to Dismiss A motion to dismiss under section 2-615 attacks the legal sufficiency of a complaint and alleges only defects on the face of the complaint. Bryson v. News America Publications, Inc., 174 Ill.2d 77, 86 (1996). Exhibits attached to the complaint are a part of the complaint and must be considered. Brock v. Anderson Road Ass'n, 287 Ill.App.3d 16, 21, (1997). In addition, for purposes of a section 2-615 motion, the court considers matters subject to judicial notice and judicial admissions in the record. Mt. Zion State Bank & Trust v. Consolidated Communications, Inc., 169 Ill.2d 110, 115 (1995).

[*128] Legal Standard for 2-619(a)(1) Motions to Dismiss A section 2-619 motion to dismiss admits all well-pleaded facts in the complaint together with all reasonable inferences that can be drawn from those facts in the plaintiffs favor. Redwood v. Herman, 331 Ill.App.3d 1073, 1076-77, 265 Ill.Dec. 432, 772 N.E.2d 803 (2002). Section 2-619(a)(1) provides for a dismissal when "the court does not have jurisdiction of the subject matter of the action." Cohen v.

McDonald's Corp., 347 Ill.App.3d 627, 632, 808 N.E.2d 1, 5 (2004) (citing 735 ILCS 5/2-619(a)(1)). The presence or absence of subject matter jurisdiction is determined from the nature of the case and the relief sought. Id.

ANALYSIS

I. ISSUES SET FORTH IN COUNTS I AND II OF

CLAIMANT'S COMPLAINT ARE BOTH PRECLUDED BY

COLLATERAL ESTOPPEL AS THE DISTRICT COURT

PREVIOUSLY RULED THAT ONLY THE SECRETARY OF

VETERANS' AFFAIRS HAS AUTHORITY TO REVIEW

RESPONDENTS' DECISION.

Collateral estoppel is a matter properly raised under section 2-619(a)(4) See Smith v. Chem. Pers. Search, Inc., 215 Ill.App.3d 1078, 1081 (1991); See also Kyoung Suk Kim v. St. Elizabeth's Hosp. of Hosp. Sisters of Third Order of St. Francis, 395 Ill.App.3d 1086, 1092, 918 N.E.2d 256, 261 (2009).

Collateral estoppel applies when a party, or someone in privity with a party, participates in two separate and consecutive cases arising on different causes of action, and some controlling fact or question material to the determination of both causes has been adjudicated against that party in the former suit by a court of competent jurisdiction. Nowak v. St. Rita High School, 197 Ill.2d 381, 389-90 (2001). Under the doctrine of collateral estoppel, the adjudication of the question in the first cause will be conclusive of the same question in the later suit and operates as an estoppel as to the point or question litigated and determined. Id. (emphasis added). There are three requirements for application of collateral estoppel: (1) the issue decided in the prior adjudication is identical with the one presented in the suit in question, (2) there was a final judgment on the merits in the prior adjudication, and (3) the party against whom estoppel is asserted was a party or in privity with a party to the prior adjudication. State Bldg. Venture v. O'Donnell, 239 Ill. 2d 151, 940 N.E.2d 1122 (2010).

In the present case, the Northern District of Illinois has already held that the "biggest impediment to CTIC's claim for payment for education it provided veterans after August 3, 2012 is that this Court has no jurisdiction to review the USVA's decisions with respect to veteran benefits." See Respondent's Amended Motion to Dismiss, Exhibit A, Pg. 9. Accordingly, Judge Marovich dismissed both counts of the Claimant's complaint for lack of jurisdiction. To that end, the issue decided in the prior adjudication is identical with the one presented in the suit in question - namely, whether the Secretary of Veterans' Affairs is the sole authority to [*129] review these decisions. Moreover, there was a final judgment on the merits of the prior adjudication as Judge Marovich dismissed Claimant's complaint with prejudice. Finally, the party who is estopped from re-litigating the same issues is Computer Training Institute of Chicago, LLC, the same plaintiff in the prior adjudication before Judge Marovich. It warrants noting that that the action before Judge Marovich was filed against the Secretary of Veterans' Affairs. Thus, Respondents are correct in their assertion that Claimant's action is defeated by collateral estoppel (issue preclusion) rather than by res judicata (claim preclusion). To that end, Respondents correctly argue that this matter is nonreviewable as it has already been decided by another court. The Court answered this issue definitively and in the affirmative. The sole authority to review and make the decisions complained of by the Claimant rests with the Secretary of Veterans' Affairs. Judge Marovich's opinion goes on to note:

The Secretary shall decide all questions of law and fact necessary to a decision by the Secretary under a law that affects the provision of benefits by the Secretary to veterans or dependents or survivors of veterans. Subject to subsection (b), the decision of the Secretary as to any such question shall be final and conclusive and may not be reviewed by any other official or by any court, whether by an action in the nature of mandamus or otherwise. Id. Citing 38 U.S.C. §511(a) (emphasis added).

The law has not changed since Claimant's complaint was dismissed by Judge Marovich on March 17, 2015 and, thus, the issue remains the same. If Judge Marovich lacked jurisdiction because the sole authority with regard to these matters is the Secretary of Veterans' Affairs, then it holds that this Court also lacks jurisdiction with regard to these matters because the sole authority with regard to these matters still remains with the Secretary of Veterans' Affairs. For these reasons, both Counts I and I Is hould be dismissed.

II. COUNT I OF CLAIMANT'S COMPLAINT MUST BE DISMISSED ON THE BASIS THAT A CONTRACT DOES NOT EXIST AS A MATTER OF LAW.

Respondents contend that Claimant's breach of contract claim must be dismissed for failure to state a claim pursuant to 735 ILCS 5/2-615 and lack of jurisdiction pursuant to 735 ILCS 5/2-619(a)(1) as no contract existed between the parties. See Respondent's Amended Motion to Dismiss, P. 8. Thus the State contends that Claimant failed to state a cause of action for breach of contract because "[respondent's approval of Claimant's program application did not create a contract between the parties." As the Respondents correctly note, in order to plead an action for breach of contract, a plaintiff must allege: 1) the existence of a valid enforceable contract; 2) substantial performance by plaintiff; 3) a breach by the defendant; and 4) resultant damages. Respondents go on to assert that Claimant has not provided sufficient documentation to meet the foregoing standard and, therefore, has failed to plead this cause of action for breach of contract. Notably, Respondents definitely state that the Application and Approval Letter are not controlling.

As stated supra, a motion to dismiss under section 2-615 attacks the legal sufficiency of a complaint and alleges only defects on the face of the complaint. To [*130] state a cause of action for breach of contract, plaintiff must allege that a contract exists, plaintiff performed its obligations under the contract, defendant breached the contract, and plaintiff was injured as a result. Talbert v. Home Sav. of Am., F.A., 265 Ill.App.3d 376, 638 N.E.2d 354 (1994). An offer, acceptance, and consideration are the basic ingredients of a contract. Steinberg v. Chicago Med. Sch., 69 Ill. 2d 320, 329, 371 N.E.2d 634, 639 (1977). A general allegation that a contract exists without supporting facts is a legal conclusion which may not be admitted by a motion to dismiss. Talbert at 376. Terms such as "offered," "accepted," and "breached its contract" suggest mere legal conclusions. Id.

In this case, the Claimant contends that a contract exists. But those assertions ring hollow. Specifically, Claimant states that "On or about January 11, 2012, CTIC and Respondents entered into a contract whereby CTIC would provide Educational Programs to enrolled veterans. Respondents agreed to fund and pay for the educational Programs by reimbursing the veterans for the cost of the Educational Programs." Compl., P. 6, ¶28 (emphasis added). Claimant goes on to allege that "CTIC provided the Educational Programs to the veterans as required by the contract and performed all duties and obligations required of CTIC under the terms and conditions required of it under the contract." Id. at ¶30 (emphasis added). Finally, Claimant contends that Respondents "... materially breached the contract..." Id. at ¶31(a)-(e). Although Claimant uses the requisite terms of art to define a contract, Claimant does not provide supporting documents.

For

example,

Claimant

does not specify when or how Respondents or Claimant made an offer, when the offer was accepted, and what the definite terms of the offer were.

Rather, Claimant, in support of its assertion, furnished documentation that was exchanged between Claimant and Respondents as part of the application and ultimate suspension and termination process. Specifically, Claimant points to a letter from the IDVA dated August 3, 2012 stating that "currently enrolled veterans can continue to be certified as enrolled; but that no new students can be certified." Thus, the Respondents' 2-615 Motion to Dismiss should be granted as to Count I as Claimant has failed to plead sufficiently to allege the existence of a contract.

III. COUNT II OF CLAIMANT'S COMPLAINT SHOULD BE DISMISSED ON THE BASIS THAT THIS COURT DOES NOT HAVE JURISDICTION TO HEAR EQUITABLE CLAIMS.

Claimant asserts nearly identical allegations in support of its count for unjust enrichment. In so doing, Claimant seeks to circumvent the non-existence of a contract by recovering under an alternate theory of recovery - unjust enrichment.

Because it is an equitable remedy, unjust enrichment is only available when there is no adequate remedy at law. Guinn v. Hoskins Chevrolet, 361 Ill.App.3d 575, 836 N.E.2d 681 (1st Dist. 2005). As such, where there is a specific contract that governs the relationship of the parties, the doctrine of unjust enrichment has no application. Id. The Court of Claims is one of limited jurisdiction as defined by 705 ILCS 505/8. See also Veal v. Klincar, 49 Ill.Ct.Cl. 137, 138 (1996). Section 8 of the Court of Claims Act specifies that, inter alia, this Court has jurisdiction to hear and determine "all claims against the State founded upon any contract entered into with the State." Id. This Court has acknowledged that, while it does possess limited equitable powers, it does not possess "general equitable powers". Garimella v. Bd.

[*131] of Trustees of Univ. of III, 50 Ill.Ct.Cl. 350, 351 (1996). As such, this Court has oft refused to exercise any equitable powers. Id. For example, in Correctional Medical Services, Inc. v. State of Illinois, 58 Ill.Ct.Cl. 190, 199 (2006), this Court held that a claim in this Court cannot be predicated on a pure estoppel (promissory or equitable estoppel) theory as the basis for relief because a claim founded solely upon an estoppel does not fall within any of the grants of our jurisdictional statute. §8 of the Court of Claims Act (705 ILCS 505/8). This Court went on to state that "our core jurisdiction consists of claims against the State founded upon a tort, a contract, or a "law of ... Illinois." A purely equitable estoppel claim is generally not within our §8 jurisdiction.

For these reasons and t he foregoing r easons, Counts I and I I of Claimant's complaint are dismissed with prejudice.