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Contracting & Material Co. v. City of Chicago

JUNE 21, 1974.




APPEAL from the Circuit Court of Cook County; the Hon. GEORGE FIEDLER, Judge, presiding.


Plaintiff appeals from a judgment in a contract action following a bench trial. The trial court found: (a) that defendant did not breach its construction contract with plaintiff; (b) that defendant was not wrongful or inequitable in any of its dealings with plaintiff; and (c) that plaintiff breached the construction contract by failing to work two 8-hour shifts each day, 5 days a week during the times in question. In conclusion, the trial court found all issues in the case in favor of defendant and denied recovery by plaintiff.

We reverse the judgment.

On appeal, the basic issue is one of determining the respective rights and obligations of the parties under the terms of the construction contract. Specifically, we are asked to determine whether the contract gave plaintiff the right to time extensions and whether the so-called "delays damages clause" of the contract bars recovery in this case.

Originally, this action was brought by plaintiff in connection with a public construction contract for the South Lake Shore Drive Interchange in Chicago. The complaint contained two counts. Count I claimed $198,261.55, plus interest for expenses incurred as a result of accelerating work during the time defendant was considering plaintiff's requested extensions of time, and also during the period following defendant's refusal. Count II claimed $143,125.89 allegedly owed to plaintiff as the 2 percent retained percentage of the contract price. During the trial, defendant agreed to pay the retained percentage of $143,125.89, and Count II was dismissed. When the case was finally submitted, plaintiff claimed a total of $185,830.64 plus interest dating from June 20, 1968.

The contract at issue was awarded to plaintiff after formal advertisement by the City. Defendant prepared all of the contract documents so that plaintiff merely filled in its original contract price calculation of $7,116,220.56. After adjustments, the final contract price was calculated at $7,154,572.56.

The contract was approved on July 7, 1965, and provided that the work was to be performed and completed within 450 calendar days from the date specified for commencement of the work. On July 14, 1965, defendant notified plaintiff to begin work on July 15, 1965. Consequently, the original completion date was October 8, 1966.

Plaintiff commenced work on the project on July 15, 1965, and proceeded until December 3, 1965, when defendant issued a written suspension order which directed plaintiff to halt work. In January, 1966, defendant lifted the suspension order and directed plaintiff to resume work. The resulting delay occasioned by the suspension order was 46 days. During the suspension period, first on December 10, 1965, and again after the suspension order was lifted on February 15, 1966, plaintiff requested that the date for completion of the contract be extended to offset the loss of time caused by defendant's suspension order. Both requests were rejected by defendant, and the original completion date for the contract remained in effect.

A further delay was encountered when a strike, called by Local 150 of the Operating Engineers Union on April 9, 1966, halted all construction. The strike continued for 51 days and ended May 29, 1966. The resulting delay was 58 days. During the period of the strike and again on May 31, 1966, plaintiff requested an extension of time in order to compensate for work days lost because of the strike delay. Further requests for extensions of time were made in June, July and August, 1966. Despite the repeated requests by plaintiff for extensions of time equivalent to the time losses due to the two delays, defendant refused to extend the completion date of the contract. By a letter dated June 21, 1966, defendant denied the requested time extensions and further pointed out the express requirement in the contract that the contractor work two 8-hour shifts, 5 days per week as a prerequisite for extension allowances. Except for 3 or 4 days, plaintiff did not work two shifts a day.

During 1966, defendant maintained that the contract did not entitle plaintiff to any extension of time, and plaintiff was held to the original October 8, 1966, completion date. In August, 1966, in an effort to meet the unextended October 8, 1966, completion date, plaintiff accelerated its work schedule and began to work overtime hours on the project. Plaintiff submitted to defendant certified copies of payroll records as well as a series of letters specifying the premium portion of the overtime hours to be charged to defendant. In each instance, defendant indicated that it had checked the payrolls and found the amounts to be substantially correct.

The subject road was opened to traffic on November 1, 1966, although plaintiff's overtime work continued until November 27, 1966. At that time, plaintiff was still being held to the October 8, 1966, completion date. On January 21, 1967, defendant issued a contract modification which extended contract performance time 46 days to cover defendant's suspension order. On July 12, 1967, defendant granted an extension of 58 days because of the strike delay. The completion date was ultimately extended to April 23, 1967. Although the work was not fully performed until July 24, 1967, defendant accepted this as the final completion date without any penalty to plaintiff.

In December, 1966, plaintiff submitted itemized invoices to defendant for expenses incurred due to overtime work. The amount submitted was $198,261.55. After the invoices were received by defendant, plaintiff was notified that the amount of its claim had been revised downward to $146,410.10, and that the City purchasing agent was being requested to issue a contract modification in the amount of $146,410.10 to cover the "contractor's cost in the accelerated program." Defendant's reduction schedule attached to the invoice for plaintiff's premium overtime eliminated certain supervisory personnel as not being participants in the accelerated effort and deleted overtime for November, 1966. Defendant claimed that the accelerated work period terminated on October 31, 1966.

On June 20, 1968, defendant further notified plaintiff that invoices had been submitted to the State of Illinois and the Bureau of Public Roads and that they had been returned marked, "non-participating" by the Federal government. Non-participation of the Federal government indicates that Federal funds are not available. After defendant learned of the non-availability of Federal funds, it refused to pay plaintiff for acceleration overtime expenses.

Plaintiff subsequently commenced the instant action to recover its claim for overtime expenses. The essence of plaintiff's case is that defendant wrongfully and inequitably refused to extend the contract performance date to reflect delays caused by the 46-day suspension order and the 51-day strike. Plaintiff also contends that because it was held to the original completion date, it ...

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