The cases are legion. Time and again, companies enter into contracts with entities attached to the State of Illinois, the contract is then breached by the State-affiliated entity, and the victim of the contract breach loses any ability to recover damages because it sued in the wrong court.
Be careful not to fall into that trap.
Here is an example of a company that made that very mistake. A few years ago, Joseph Construction Company entered into a contract to perform substantial construction work for Governors State University (GSU). Joseph completed the work and then completed a series of punch-list items over the next nine months. At the end of it all, an official with GSU notified Joseph that GSU was withholding the final payment. Not surprisingly, Joseph Construction went to court. Unfortunately for Joseph Construction, however, it sued in regular Circuit Court, rather than going to the Illinois Court of Claims.
The Circuit Court dismissed Joseph’s case, holding that a breach of contract claim against a State-affiliated entity is heard exclusively in the Illinois Court of Claims. The court added that even though Joseph’s lawsuit was technically a claim to declare that the GSU official acted outside his legal authority, the court found that the case was essentially a breach of contract claim. By that point, it was too late for Joseph to re-file in the Court of Claims, so the company was out of luck.
You do not want to suffer the same fate. In this article, we are going to discuss:
- Some basics on the Illinois Court of Claims, and
- The exhaustion of remedies requirement in the Court of Claims.
Should All Breach of Contract Claims Against the State Be Filed in the Court of Claims?
Governments enjoy what is called “sovereign immunity.” Under the immunity rule, the State and related agencies cannot be sued (i.e., is “immune” from lawsuits) in any court without its consent. That principle is actually stated in a law called the State Lawsuit Immunity Act.
Specifically, the State Lawsuit Immunity Act provides that the State cannot be a party to a suit in court, except in the Court of Claims. Thus, the Court of Claims is the exclusive venue for any lawsuits against the State of Illinois.
In response to the question, “should all breach of contract claims against the State be filed in the Court of Claims?” the answer is, unequivocally, “yes.” Given that there is a forum in which to sue the government for legitimate disputes – the Court of Claims – that is the place to direct your company’s breach of contract claim against the State.
To be sure, the Court of Claims does not make it easy to assert a claim against the State. In particular, the rules in that court are different from regular Circuit Court in a number of ways. You generally need to file your claim within one year of the breach. In most cases, if you miss that deadline, then you lose your chance to recover damages entirely.
What is Exhaustion of Remedies?
Among the strict rules in the Illinois Court of Claims, there is one rule that requires some extended discussion. It is the “exhaustion of remedies.” This rule requires that those who have a dispute with the State of Illinois, or one of its departments or officials, must first make sure that they try to obtain redress elsewhere before suing in the Court of Claims.
In other words, a party can try to obtain a judgment against the government only after trying to be made whole by suing any other responsible party that relevant to the matter. Thus, a lawsuit against the government is the option of last resort for litigants.
A good way to understand that principle is through an example. Back in 1991, a patient at a State-run medical center was sexually assaulted by another patient in the facility. The victim sued the State for failing to protect her while she was a patient. The victim, however, did not sue her assailant. Even though the victim sought redress in the correct court, the Court of Claims, she failed to exhaust her other remedies first. Thus, her case was ultimately dismissed.
You may ask: What about the filing deadline in the Court of Claims? Won’t a lawsuit against the assailant take longer than a year, thus making it impossible to ever sue the State? Not so. The suggested procedure is to sue all responsible parties, but put the Court of Claims case on hold. That way, you can satisfy both the Court of Claims filing deadline and still make sure to exhaust all your other remedies first.
Thus, the proper way for the hospital victim to pursue her case would have been to sue the assailant in regular Circuit Court and sue the State of Illinois in the Court of Claims. Then, the victim could make sure that the Court of Claims suit was put on hold while the case against the assailant was allowed to move forward.
What Does All This Mean for Your Contract Claims?
If you are a contractor who often engages with the State of Illinois for your work, then when it comes to any dispute with the State, you need to make sure that you:
- Sue the State in the Court of Claims, not Circuit Court, when alleging a breach of contract in any form; and
- Make sure that you exhaust all of your other remedies while still preserving your claim in the Court of Claims.
Of course, the best way to make sure that your case is properly presented, and that your contract rights are protected, is to get the help of a seasoned administrative law, business-focused litigator who has experience handling cases against the State of Illinois.
ABOUT THE AUTHORS
Jordan Matyas – Clients benefit from Jordan’s more than two decades in government including working in the White House, the Legislature and as a regulator for the State and most recently as the Chief of Staff at the Regional Transportation Authority. Jordan is also a registered State and City lobbyist, working with clients on government relations, legislation, policy, and other aspects of public affairs. Contact Jordan at 1818 – An Advocacy Group.
Steve Silvey – Mr. Silvey is a former law clerk for the Chief Justice of the Illinois Court of Claims and law clerk for a Hearing Officer of the former Illinois Department of Financial Institutions where he assisted in investigations and administrative hearings. Since that time, he has concentrated his law practice on assisting businesses, risk management, insurance, commercial, property, contract and civil litigation. Contact Steve at https://www.pattersonlawfirm.com/, The Business Lawyers to Call in a Crisis®
Michael Haeberle – Clients contact Mike when they need a litigator. He assists businesses and individual in cases pending in court, arbitration and administrative agencies, and has tried cases before judges, juries, arbitrators, and administrative law judges, with a focus on business lawsuits, contract litigation, shareholder disputes (business divorces), and professional negligence cases. Contact Mike at https://www.pattersonlawfirm.com/ title=”Business Attorneys”, The Business Lawyers to Call in a Crisis®
- Joseph Const. Co. v. Bd. of Trustees of Governors State Univ., 2012 IL App (3d) 110379.
- Doe v. State, (1991), 43 Ill. Ct. Cl. 172.
Also found at 1818Advocacy.com’s blog: https://www.1818advocacy.com/how-do-i-collect-money-from-illinois-for-breach-of-contract-in-the-court-of-claims/