In ESP Global, LLC v. Northwest Community Hospital, the appellate court affirmed that the defendant, Northwest Community Hospital ("Northwest"), breached its contract implied in fact with the plaintiff, ESP Global, LLC ("ESP"). 2020 IL App (1st) 182023. On ESP’s cross-appeal, the court reviewed the exclusion of some of ESP’s damages testimony based on the finding that it constituted expert opinion testimony that was not properly disclosed because the witness was tendered as a lay witness under Illinois Supreme Court Rule 213(f)(1). Ultimately, the appellate court reversed the trial court, relying on the underlying principles of Rule 213(f).
(Editor’s Note: In his March 2 post, Brian Haussmann uses this same case to provide important lessons for parties wishing to engage in services agreements that contemplate multiple phases, and for the lawyers who represent them.)
Northwest and ESP, an equipment maintenance consultancy company, entered into a written contract where, for a flat fee, ESP would assess Northwest’s equipment and make recommendations for improvement. Once ESP completed its assessment, Northwest sought additional assistance from ESP to implement the recommendations for 10% of Northwest’s actual savings for a five-year period. ESP began its additional assistance, and ultimately negotiated a contract with a new vendor for Northwest, resulting in significant savings. When ESP sought its contingency fee for the additional services, Northwest refused to pay. Consequently, ESP sued Northwest for breach of contract.
During pre-trail proceedings, ESP tendered its President as a Rule 213(f)(1) lay witness and stated that he may testify regarding "the estimated and actual savings of [Northwest] as a result of [ESP’s] efforts and performance", "damages as a result of [Northwest’s] breach", and "the value of the work performed by [ESP]."Accordingly, during the bench trial, ESP’s President testified to Northwest’s actual savings under the new vendor. His testimony was grounded exclusively on a baseline number that was included in a joint exhibit that was received into evidence by stipulation. The baseline was the difference between Northwest’s costs before and after the new vendor. However, the trial court found it to be expert opinion testimony and since ESP’s President was disclosed only as a lay witness under Rule 213(f)(1), rather than an expert under 213(f)(3), certain portions were not admissible.
At the end of trial, the court determined there was a contract implied in fact for the additional services, which Northwest breached. Accordingly, ESP was entitled to 10% of Northwest’s actual savings resulting from the contract with the new vendor for a five-year period. Northwest appealed the judgment and ESP cross-appealed the exclusion of its damages evidence. The appellate court affirmed the judgment and turned to ESP’s cross-appeal regarding Illinois Supreme Court Rule 213(f).
Rule 213(f)(1) v. 213(f)(3) Witness Testimony
Rule 213(f)(1) permits a lay witness to give "fact or lay opinion testimony," provided that the offering party has identified "the subjects on which the witness will testify." Ill. S. Ct. R. 213(f)(1). Rule 213(f)(3) permits a controlled expert witness to give "expert testimony", provided that the offering party has identified the subjects on which the witness will testify, and also the witness’s qualifications, conclusions, and reports. Id. at 213(f)(3).
Here, ESP’s President testified regarding its damages by determining Northwest’s actual savings. To do so, ESP calculated the difference between Northwest’s equipment maintenance costs before and after the contract with the new vendor. The appellate court acknowledged that the President’s testimony involved a mathematical calculation. However, it was not persuaded that this made him an expert. Rather the court emphasized that (1) the baseline calculation was included in the parties’ joint exhibit and was received into evidence by stipulation; and (2) ESP disclosed that its President would testify regarding damages and its value to Northwest. Thus, the court could not conclude that his testimony exceeded the scope of Rule 213(f)(1) fact or lay opinion testimony or that it was not properly disclosed.
As the Illinois Supreme Court has noted, the "purpose behind Rule 213 is to avoid surprise and to discourage tactical gamesmanship." Sullivan v. Edward Hosp., 209 Ill. 2d 100, 111 (2004). Accordingly, the appellate court’s analysis was not focused on the distinctions between an expert or lay witness, but rather was grounded in these principles. ESP’s disclosures were sufficient to avoid surprise to Northwest and its conduct could not be characterized as gamesmanship. Thus, the testimony was admissible. While the differences between expert and lay witnesses are important, litigants and courts should not lose sight of Rule 213(f)’s purpose.