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People Ex Rel. Delisi Const. Co. v. Bd. of Educ.

FEBRUARY 28, 1975.




APPEAL from the Circuit Court of Cook County; the Hon. RAYMOND K. BERG, Judge, presiding.


This is an interlocutory appeal involving the propriety of an order denying defendant's application to stay proceedings pending arbitration of a claim for damages because of a breach of contract.

It appears that defendant advertised plans and specifications for the construction of an elementary school. Plaintiff was the low bidder and was notified by defendant's letter of February 5, 1974 that (1) its proposal was approved; (2) contracts would be forthcoming; and (3) it was authorized to undertake certain preliminary work. Thereafter, by letter of February 15, 1974, defendant notified plaintiff that the contents of its letter of February 5, 1974 were rescinded. A contract was then awarded to another contractor.

Plaintiff filed a petition for writ of mandamus, and defendant's motion to dismiss, which contested the court's jurisdiction, was denied. Defendant then moved to require plaintiff to elect remedies, following which plaintiff filed an amended petition seeking damages for breach of contract. In its answer thereto, defendant denied (1) the existence of any contract; and (2) the jurisdiction of the court to consider the claim of damages. With the filing of this answer, defendant demanded a trial by jury.

At defendant's request, concurred in by plaintiff and the court, a hearing was held, without a jury, on the issue of liability. The court found that a contractual relationship existed and that defendant had breached it. Later, on the same day, the court impaneled a jury to determine the damages resulting from the breach. Thereupon, defendant requested that the damages issue be submitted to arbitration pursuant to the contract. After a brief recess, defendant applied for a stay of further proceedings pending arbitration. The stay was denied, and defendant filed its notice of appeal from that order. Defendant then refused to participate in the jury proceedings, and an ex parte verdict and judgment thereon were entered for plaintiff in the amount of $30,527.


Appeal has not been taken from the court's finding of the existence and the breach of a contract, and the parties are in apparent accord that the arbitration clause in the specifications *fn1 includes claims of damages for breach thereof. In any event, we believe such a claim is embodied within the arbitration clause, which provides in pertinent part:

"All claims, disputes and other matters in question arising out of, or relating to, this Contract or the breach thereof, * * * shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise."

Thus, we are concerned only with the question of whether defendant's application for stay should have been granted.

• 1 In this regard, plaintiff claims that there was no error in the denial of the stay, because defendant waived arbitration of the damages issue. Defendant contends that until the court had found a contract or agreement to be in existence, it could not invoke the use of the arbitration procedures to resolve the question of damages for its breach. It points out that after the finding of a viable contract, it immediately applied for a stay of further proceedings, which it urges should have been granted under the provisions of sections 1 and 2 of the Uniform Arbitration Act (Ill. Rev. Stat. 1973, ch. 10, pars. 101-102). We note that section 1 of the Act reads as follows:

"A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable save upon such grounds as exist at law or in equity for the revocation of any contract."

Section 2(c) of the Act provides:

"If an issue referable to arbitration under the alleged agreement is involved in an action or proceeding pending in a court having jurisdiction to hear applications under subdivision (a) of ...

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