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BETHLEHEM STEEL COMPANY v. CITY OF CHICAGO

October 22, 1964

BETHLEHEM STEEL COMPANY, A CORPORATION, PLAINTIFF,
v.
CITY OF CHICAGO, A MUNICIPAL CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Robson, District Judge.

Defendant has moved for summary judgment and plaintiff has filed a countermotion for the same relief. Plaintiff has also moved to strike portions of the defendant's answer, as amended. The suit involves the parties' rights and liabilities under a written construction contract of December 21, 1961, governing plaintiff's furnishing and erecting for $1,734,200 the steel work for a section of the South Route Superhighway known as Section S-2424.3-2HF.

The critical provision of the contract here involved is that which provides for $1,000 "liquidated damages" for each day of delay. The work was originally to have been completed on or before July 29, 1962, but that date was extended by the City to September 20, 1962. The work was actually completed November 21, 1962 — 52 days late — giving rise to the City's claim of the right to deduct $52,000 from the contract price.

The court concludes that there is no genuine issue of fact, and that the defendant's motion for summary judgment should be granted as to the $52,000 item. The plaintiff's countermotion for summary judgment should be denied as well as its motion to strike portions of the defendant's answer, as amended.

Plaintiff raises the further issue of the right to five per cent interest on $98,464.69, the remainder of the balance owed it, from February 7, 1963, or, in the alternative, from January 29, 1964, from which latter date (the time this suit was instituted) it also seeks interest on the $52,000 item.

Pursuant to the court's direction, defendant prepared and filed on July 7, 1964, its proposed stipulation of facts, which plaintiff has refused to sign. However, as the court reviews the proposed stipulation it concludes that it is founded on unchallenged documentary proof.

The work which Bethlehem undertook was the erection in Chicago of structural steel for a 22-span steel stringer elevated highway structure, approximately 1,815 feet long, to carry the South Route Superhighway from South Canal Street to the South Branch of the Chicago River. Bethlehem's work was preceded and followed by the work of other contractors on the same section.

The "Proposal and Acceptance" in the instructions to bidders required the bidders to "* * * complete * * * within the specified time the work required. * * *" Time was expressly stated to be the essence of the contract and specified provisions were made for delivery of the steel within 105 days thereafter, or a total of 195 days after commencement of work, which was to be not later than 15 days from notification. The successful bidder was to submit to the Commissioner of Public Works a "Time Schedule" for his work and if "less than the amount * * * specified to be completed" were accomplished "the City may declare this contract forfeited. * * *" The work had to be completed irrespective of weather conditions.

The all important provision specifying $1,000 a day "liquidated damages" for delay is as follows:

    "The work under this contract covers a very
  important section of the South Route Superhighway,
  and any delay in the completion of this work will
  materially delay the completion of and opening of the
  South Route Superhighway thereby causing great
  inconvenience to the public, added cost of
  engineering and supervision, maintenance of detours,
  and other tangible and intangible losses. Therefore,
  if any work shall remain uncompleted after the time
  specified in the Contract Documents for the
  completion of the work or after any authorized
  extension of such stipulated time, the Contractor
  shall pay to the City the sum listed in the following
  schedule for each and every day that such work
  remains uncompleted, and such moneys shall be paid as
  liquidated damages, not a penalty, to partially cover
  losses and expenses to the City.
    "Amount of Liquidated Damages per Day * * *.
  $1,000.00.
    "The City shall recover said liquidated damages by
  deducting the amount thereof out of any moneys due or
  that may become due the Contractor. * * *"

Provision was made to cover delay in a contractor's starting due to preceding contractor's delay. Unavoidable delays by the contractor were also covered, and extensions therefor accordingly granted.

There was delay in the preceding contractor's work, and Bethlehem was advised that certain parts of the work would be ready to receive the structural steel by May 10, 1962. Bethlehem noted the day and asked a 32-calendar day extension of its own completion date, and in a letter of June 2, 1962, requested instead a 35-day extension; still later a 52-day extension and then a 69-day extension. In reply to the last letter, the Chief Engineer of the City wrote Bethlehem on July 3, 1962:

    "This will acknowledge receipt of your letter dated
  June 29, 1962 in which you claim an additional
  extension of time of seventeen (17) calendar days
  making a total of sixty-nine (69) days.
    "Our records show that due to your own delay in
  fabrication you were unable to deliver the steel for
  erection as scheduled. Had the piers in question been
  completed you still were unable to supply the
  structural steel for erection. * * *
    "We wish to advise you at this time that the full
  length of time claimed as a delay will not be allowed
  as most of your delay has been

  caused within your own organization and not by our
  sub-structure contractor." (Italics supplied.)

The contractor whose work depended on Bethlehem's wrote on July 13, 1962, to the City's Chief Engineer with reference to Bethlehem's delay:

    "We are greatly alarmed by the lack of progress on
  the erection of structural steel. We have started
  framing for deck slabs in Spans 2, 3, 4 and 5, but it
  appears that we will very shortly run out of space to
  work to keep our deck slab pouring operation
  continuous. Since Bethlehem Steel Company is not our
  subcontractor on this steel erection, we are turning
  to you for assistance in expediting erection to
  enable us to proceed with docks and complete
  them. * * *"

The same contractor wrote again on July 20, 1962, in regard to Bethlehem's delay:

    "* * * [I]t will be noted that steel erection is
  pushed back over one month, which indicates their
  work will be two months behind their contract
  completion date of July 29, 1962.
    "This structural steel delay, over which we have
  absolutely no control, will delay final completion of
  the job, unless some measures are taken to expedite
  the ...

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