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Gateway Drywall v. Village Construction Co.

OPINION FILED AUGUST 31, 1979.

GATEWAY DRYWALL & DECORATING, INC., PLAINTIFF-APPELLEE,

v.

THE VILLAGE CONSTRUCTION COMPANY ET AL., DEFENDANTS-APPELLANTS. — (STEPHENSON ROOFING CO. ET AL., DEFENDANTS.) — CHARLES RUTLEDGE GENERAL CONTRACTOR, INC., PLAINTIFF-APPELLEE,

v.

THE VILLAGE CONSTRUCTION COMPANY ET AL., DEFENDANTS-APPELLANTS. — (GATEWAY DRYWALL & DECORATING, INC., DEFENDANT-APPELLEE; STEPHENSON ROOFING CO. ET AL., DEFENDANTS.)



APPEAL from the Circuit Court of St. Clair County; the Hon. ROBERT A. HAYES, Judge, presiding.

MR. PRESIDING JUSTICE JONES DELIVERED THE OPINION OF THE COURT:

Rehearing denied September 26, 1979.

Pursuant to Supreme Court Rule 308 (Ill. Rev. Stat. 1977, ch. 110A, par. 308), this court has allowed defendants Village Construction Company, Village Associates and LaSalle National Bank to appeal from an interlocutory order of the circuit court of St. Clair County which denied defendants' application for stay of judicial proceedings pending arbitration in two consolidated actions for foreclosure on mechanic's liens. See Ill. Rev. Stat. 1977, ch. 10, pars. 102(a) and (d).

The sole issue on appeal is whether by their conduct these defendants have waived any contractual right to have the present claims and disputes decided by arbitration.

Defendant Village Construction Company was the general contractor responsible for the erection of an apartment complex known as St. Clair Village under a general construction contract apparently executed in August of 1973 by it and defendant Village Associates as "owner" of certain property. It is unclear whether the defendant bank was an actual party to this contract, but it was definitely interested in the project by virtue of its relationship as trustee of a land trust in favor of Village Associates.

In its capacity as general contractor, Village Construction Company on November 12, 1973, entered into several written subcontracts for performance of individual portions of the work with various parties, including the two whose actions for foreclosure on mechanic's liens are involved here, Charles Rutledge General Contractor, Inc., and Gateway Drywall and Decorating, Inc. Under their respective subcontracts, Rutledge was obligated to provide certain carpentry services and Gateway was obligated to provide services with respect to construction and painting of drywalls. Both of these subcontracts were substantially identical in form and substance and provided for arbitration of disputes in article 13 of each subcontract in the following manner:

"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 the same manner and under the same procedure as provided in the Contract Documents with respect to disputes between the Owner and the Contractor except that a decision by the architect shall not be a condition precedent to arbitration."

General Condition 5(a) of the general contract provided for arbitration of disputes between the owner and contractor in pertinent part as follows:

"5. Arbitration

(a) Between Parties

Parties agree that all disputes between them concerning matters arising out of the Contract and any other matters directly or indirectly concerning the Development and Work shall be arbitrated and decided by the Authority *fn1 pursuant to the Uniform Arbitration Act (Chapter 10, Section 101 et seq., Illinois Revised Statutes)."

Subcontractors Rutledge and Gateway thereafter performed work relating to their subcontracts. Gateway provided its last services to the project on March 9, 1976, and Rutledge apparently rendered its last services on August 9, 1973. On October 22, 1976, Gateway filed a complaint in the circuit court seeking judgment against Village Construction and foreclosure on a mechanic's lien in the claimed amount of $88,501 and interest thereon from March 9, 1976. Rutledge filed a similar complaint on July 1, 1977, claiming a mechanic's lien in the amount of $20,881.04. Both of these complaints named five other companies which were potential lien creditors as defendants in addition to the primary parties already mentioned. The cases were consolidated in the circuit court on August 17, 1977, and on August 25, 1977, defendant, Stephenson Roofing Company, filed an answer to the Rutledge complaint and a counterclaim action for a mechanic's lien against Village Construction similar to the primary actions.

All three defendants who brought this appeal filed separate answers to the Gateway and Rutledge complaints. With respect to Gateway's complaint of October 22, 1976, the bank responded first, filing an answer on December 22, 1976. Village Construction and Village Associates followed, filing answers on June 1, 1977. With respect to Rutledge's complaint of July 1, 1977, all three defendants filed answers on January 4, 1978. The answers of Village Construction and Village Associates claimed identical setoffs against Rutledge in a sum in excess of its demand by reason of Rutledge's alleged breach of contract and negligence. None of these answers contained any reference to the arbitration provisions contained in the subcontracts.

These defendants apparently participated thereafter in discovery to some extent. At least their counsel conceded at oral argument in this court that one deposition was taken for discovery purposes. Trial was eventually set for May 19, 1978; however, the cause was continued from that date as a result of a May 9 order of court granting defense counsel's motion to withdraw as attorney. A second trial date was apparently set, and on August 14, 1978, defendants' new attorney filed a motion for continuance which was denied. On August 15, 1978, the day after the continuance motion was denied, defendants filed the petition for stay of proceedings and order for arbitration. After conducting a hearing, the trial court on August 17, 1978, denied defendants' petition on the basis that defendants had waived the contractual provisions for arbitration of disputes. A motion for reconsideration was subsequently ...


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