Fischer v. First Chicago Capital Markets, Inc.

United States Court of Appeals for the Seventh Circuit · Contracts

Contractsoral modificationservices contractone-year provisionpartial performancerestitutionunjust enrichmentRule 12(b)(6)

Facts

FCCM hired Fischer in 1995 to help develop a healthcare accounts receivables securitization program, and the parties signed a written consulting agreement providing monthly hourly compensation through the program's start-up phase. Fischer alleged that before and after the written agreement, FCCM orally promised that after the hourly arrangement ended he would continue servicing and marketing the program in exchange for annual basis-point fees for the life of the bonds. After June 1996, Fischer continued to perform marketing and administrative services without hourly compensation, including work related to St. Francis and ServantCor bond issues and obtaining the Daughters of Charity National Healthcare System as a new participant. FCCM later terminated the relationship and refused to pay the annual compensation Fischer claimed.

Issue

Whether Fischer stated a claim based on an alleged oral modification or promissory estoppel despite Illinois's statute of frauds, and whether he at least stated a claim in quantum meruit for uncompensated services. A subsidiary issue was whether the parol evidence rule barred proof of the alleged oral assurances.

Rule

Under Illinois law, the parol evidence rule does not bar evidence of later oral modifications, but the statute of frauds bars enforcement of an oral services agreement that cannot be performed within one year. Partial performance does not remove such an agreement from the statute of frauds where restitution can adequately compensate the performing party and, in any event, the equitable partial-performance exception is unavailable when the plaintiff seeks only money damages. Promissory estoppel is also subject to the statute of frauds. A quantum meruit claim requires performance of services, the reasonable value of the services, and receipt by the defendant of a benefit it would be unjust to retain without paying compensation.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Chicago, Mira Dalton signed a written consulting agreement with Lakefront Structured Finance, LLC to design a municipal leasing program through September. The writing said the parties would later discuss any long-term compensation, and Mira alleges that in November, after the writing was signed, the firm's managing director orally promised her annual percentage-based fees if she kept servicing the program for as long as the financing remained outstanding.

If Mira sues to prove the November oral promise, which argument is strongest under Illinois law as described by the majority opinion?

Explanation. The majority drew a distinction between admissibility and enforceability. Under Illinois law, the parol evidence rule applies only to prior or contemporaneous agreements, not later oral modifications. Thus a later oral promise may be provable even if it may ultimately fail for another reason, such as the statute of frauds.