Energy Plus Consulting v. Illinois Fuel Co.

An Illinois county entered a contract with Energy Plus Consulting (EPC) (plaintiff) giving EPC an 18-month-long exclusive right to find and contract with third parties to develop the county’s coal reserve. The county could reject third-party proposals presented by EPC. Illinois Fuel Co. and Appalachian Fuels LLC (collectively, Fuels) (defendants) were interested in exploring the reserve. In August 2001, EPC and Fuels entered an agreement under which EPC would present Fuels to the county and, if the county granted Fuels an exclusive option to explore the reserve, Fuels would pay EPC $100,000. The agreement also contained a liquidated-damages clause that stated that Fuels would pay $720,000 to EPC if Fuels did not release the county’s option contract within 90 days of entering the option (the 90-day deadline). If Fuels executed a mining lease with the county, Fuels was required to pay EPC $720,000 per year for four years. Thereafter, Fuels and the county executed an exclusive option contract for Fuels to explore and lease the coal reserve. The option’s expiration date was February 13, 2002. Fuels paid EPC $100,000, as contractually required. In November 2001, a few days after the 90-day deadline had expired, EPC and Fuels amended the agreement (the amendment), extending the 90-day deadline to December 31, 2001. Fuels paid $50,000 for the extension. The amendment further allowed Fuels to extend the deadline again to February 13, 2002, if Fuels paid EPC another $50,000 by December 31. Four days after December 31, Fuels notified the county and EPC that it was releasing the option. EPC demanded a $720,000 payment, and Fuels refused. EPC sued Fuels alleging breach of contract. The district court granted summary judgment in favor of Fuels, finding the liquidated-damages clause unenforceable. EPC appealed.