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Illinois Structural Steel Corp v. Pathman Const. Co

SEPTEMBER 27, 1974.

ILLINOIS STRUCTURAL STEEL CORPORATION, PLAINTIFF-APPELLANT,

v.

PATHMAN CONSTRUCTION COMPANY, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. WALTER J. KOWALSKI, Judge, presiding.

MR. JUSTICE DRUCKER DELIVERED THE OPINION OF THE COURT:

This case involves a contract action in which plaintiff, a subcontractor, sued defendant, the general contractor, for $19,365.80, the amount allegedly due and owing on the subcontract. Defendant counterclaimed against plaintiff for damages ostensibly arising from plaintiff's alleged delay in furnishing the required steel. After a bench trial, the court entered judgment in favor of plaintiff for $19,365.80 plus interest and costs. The court also entered judgment for defendant on its counterclaim for $19,365.80 plus interest and costs. Plaintiff is appealing only from the adverse judgment entered against it on the counterclaim. Defendant did not cross-appeal nor file an appearance or brief. *fn1

On appeal plaintiff contends that (1) the court improperly treated defendant's counterclaim as one for liquidated damages; (2) the damages were not foreseeable; and (3) the damages were speculative.

Defendant had a contract with the United States Air Force to construct a combination dining, administration and living facility at Chanute Air Force Base, Rantoul, Illinois. On or about December 16, 1966, plaintiff and defendant entered into a written subcontract by which plaintiff was to supply structural steel for this project at a contract price of $42,540. Subsequently this amount was increased by $1,460. Under this subcontract time was considered of the essence, *fn2 and plaintiff expressly agreed to perform in accordance with a "critical path schedule" provided for this project. *fn3 Evidence was presented which demonstrated that although plaintiff eventually supplied the steel required, there were delays in delivery of critical steel, and that delivery was not made in accordance with the "critical path schedule." The steel delivered late was principally to be used for the central administration area. The general contract defendant had with the Air Force called for completion within 330 days and had a penalty clause if more than 330 days were needed. Although 330 days were not needed to build the dormitory wings, it was estimated that the full time period was required for the central area, thus the prompt delivery of steel was critical. Since plaintiff is not contesting the trial court's finding of liability for delay, we will only set forth the evidence presented on the issue of damages.

William Pathman, defendant's president, was the sole witness to testify on the issue of damages. He noted several items of damage caused by plaintiff's delay in delivering structural steel to the central area. First, the lack of steel for this area meant that work could not continue as planned in this part of the project. In order to keep the work progressing as a whole and to keep the men working (especially to keep the gang of bricklayers on the job and to prevent their disbanding), it was necessary to begin the masonry work on the dormitory wings sooner than the "critical path schedule" called for. The general contract with the Air Force required this masonry work to be carried out under certain temperature specifications. Therefore, because this masonry work was being begun earlier than anticipated, occurring late in winter and in early spring, temporary enclosures had to be built. The total cost of these enclosures was $36,962.64. Mr. Pathman attributed only 50% of this cost, or $18,481.32, to plaintiff's delay since some of the enclosures would have been necessary anyway. He further itemized the costs making up this figure (i.e., labor, material, propane gas, insurance and taxes on labor, overhead and profits). In conjunction with this testimony defendant introduced records, including daily time sheets, listing the employees and showing their number of hours on each type of work with respect to the enclosures.

Pathman also explained that as a result of starting the masonry walls before doing work which would otherwise have been done, it became necessary to bring in by hand all of the required stone fill for use within the buildings. Instead of dumping by truck inside the building, the stone had to be dumped outside the building and carried in by hand. Defendant introduced a summary, prepared from payroll records, indicating a cost including markups of $20,386.22. On cross-examination Pathman was not sure if this figure represented excess costs.

As further damages, Pathman cited an increase in overhead costs due to finishing beyond the 330-day period, although no penalty was assessed under the general contract with the Air Force. These costs were in large measure due to the fact that defendant was still working on the job all the way through the end of 1967, primarily on the center core area. He stated that monthly costs in the filed, without any allowance for overhead, was $5,768. For the 4 months, including overhead and profit at 10% each, the figure came to $27,917.12.

Pathman also referred in his testimony to seven invoices which were billed to plaintiff and had not been paid. These invoices were introduced in evidence. They covered purchases of steel to cover shortages by plaintiff and corrections of work in the field made by defendant (i.e., correcting improper fabrication of structural steel and repainting the steel when necessary). The invoices totaled $2,126.96. During the period that defendant was expecting the structural steel to arrive, it became necessary to protect the ground floor of the food and administration building from freezing. Pathman estimated that based on the approximately 24,000 square feet of floor area involved and a comparison with the average cost incurred on other jobs, it cost defendant $7,200. No supporting data was introduced in evidence on this item.

Finally, Pathman noted damages due to wasted crane time and crews standing idle due to improper shipments, shortages and missing items. No exact figure was given for this damage. Plaintiff did not introduce any testimony nor any exhibits to rebut the above evidence.

The court, in ruling for defendant on its counterclaim, stated:

"On the other hand, I also find on the countercomplaint that there was a delay and a breach of contract by virtue of the delay under the terms of that very same contract and the general understanding of the parties.

Now, the proof of costs or damages in connection with this delay are not sufficiently specific for the court to be able to allocate in dollars and cents each and every item. I find that the delay did at least occasion a loss to the defendant for the amount claimed by the plaintiff, and I am setting off that amount as against the amount owed to the plaintiff."

OPINION

• 1-3 Plaintiff initially contends that the court improperly treated defendant's claim as one for liquidated damages and argues that "under Illinois law, damages are said to be liquidated where they can be determined from the contract itself or from the contract and the rules of law applicable thereto, and are unliquidated where it is necessary to introduce evidence before plaintiff can prove its case." With this statement we agree, but we do not find that it is in conflict with any actions taken by the court. Reading the record as a whole, the court did not rely on any theory of liquidated damages. Instead, it explicitly required defendant to submit proof of actual damages sustained by plaintiff's delay. Moreover, the ...


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