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Bethlehem Steel Corp. v. City of Chicago

August 27, 1965

BETHLEHEM STEEL CORPORATION, PLAINTIFF-APPELLANT,
v.
CITY OF CHICAGO, DEFENDANT-APPELLEE



Duffy and Knoch, Circuit Judges, and Grant, District Judge.

Author: Grant

GRANT, District Judge.

Plaintiff-Appellant*fn1 (Bethlehem) brought this action to recover an item of $52,000.00, together with certain items of interest, etc., withheld by the Defendant (City), as liquidated damages for delay in furnishing, erecting, and painting of the structural steel for a portion of the South Route Superhighway, now the "Dan Ryan Expressway", in the City of Chicago. On consideration of a motion and a counter-motion for summary judgment, the District Court concluded that Plaintiff's claims on the items in controversy should be denied and entered judgment accordingly.*fn2 We agree and we affirm.

The trial court's findings included the following uncontroverted facts:

"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."

Bethlehem's work on this project followed the construction of the foundation and piers of the superhighway by another contractor. Bethlehem, in turn, was followed by still another contractor who constructed the deck and the roadway.

Following successive requests for extensions of its own agreed completion date, Bethlehem was granted a total of 63 days' additional time within which to perform its contract. Actual completion by Bethlehem, however, was 52 days after the extended date, which delay the City assessed at $1,000.00 per day, or a total of $52,000.00 as liquidated damages.

Bethlehem contends it is entitled to the $52,000.00 on the ground that the City actually sustained no damages. Bethlehem contends that the above-quoted provision for liquidated damages is, in fact, an invalid penalty provision. It points out that notwithstanding the fact that it admittedly was responsible for 52 days of unexcused delay in the completion ...


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