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Denton Enterprises v. State Toll Hwy. Auth.

OPINION FILED OCTOBER 1, 1979.

DENTON ENTERPRISES, INC., ET AL., PLAINTIFFS-APPELLANTS,

v.

THE ILLINOIS STATE TOLL HIGHWAY AUTHORITY, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. ALLEN HARTMAN, Judge, presiding.

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

Denton Enterprises, Inc., and Holloway Construction Company (plaintiffs) filed an action against the Illinois State Toll Highway Authority (Authority) claiming additional contract charges and damages arising out of a construction project on the East-West Tollway. The trial court dismissed counts I through XIII and XV through XXVI on the ground that plaintiffs had waived any claims for damages arising out of the contracts by their acceptance of final payment. Plaintiffs appeal.

A preliminary observation is essential. The defendant filed a "Motion Attacking The Complaint." This motion is a hybrid. It seeks dismissal of plaintiffs' complaint under section 48 of the Civil Practice Act because of the existence of affirmative matter avoiding the claim. (Ill. Rev. Stat. 1977, ch. 110, par. 48(l)(i).) It also seeks to strike many specified portions of the complaint on the ground that they are substantially insufficient in law under section 45 of the Civil Practice Act.

Plaintiffs filed a response to defendant's motion "attacking the complaint." This response contains argument and exhibits together with a memorandum of law. Both defendant's motion and plaintiffs' response are supported by affidavits. In addition, the record contains other affidavits and depositions.

• 1 As the supreme court has pointed out, this type of procedure "is likely to confuse both the parties and the court." (Janes v. First Federal Savings & Loan Association (1974), 57 Ill.2d 398, 406, 312 N.E.2d 605.) Janes involved a motion under section 45 combined with a motion for summary judgment. As the supreme court stated, the summary judgment procedure "almost necessarily assumes that a cause of action has been stated * * *" (Janes, 57 Ill.2d 398, 406). The comments made in Janes are applicable here. We have concluded that the most expeditious manner of disposition of this appeal is to consider the proceeding before us as a motion under section 48 of the Civil Practice Act. In this determination we follow the implied agreement between the litigants here. The briefs of the parties contain no argument concerning the legal sufficiency of plaintiffs' complaint as regards the motion of defendant to strike based on section 45. Consequently this issue has been waived under Supreme Court Rule 341(e)(7). See Ill. Rev. Stat. 1977, ch. 110A, par. 341(e)(7); People ex rel. Rappaport v. Drazek (1975), 30 Ill. App.3d 310, 317, 332 N.E.2d 532.

The following facts appear from the proceedings. Plaintiffs are contractors. Individually and as a joint venture they were awarded contracts by the Authority for construction of certain sections of the East-West Tollway. The Standard Specifications for the Northern Illinois State Toll Highway (1971) were incorporated into each contract by reference. Section 109.7 of said Standard Specifications states in relevant part:

"The acceptance by the Contractor of the final payment shall constitute a release and waiver of any and all rights and privileges under the terms of the Contract; further, the acceptance by the Contractor of final payment shall relieve the Authority from any and all claims or liabilities for anything done or furnished relative to The Work or for any act or neglect on the part of the Authority relating to or connected with the Contract."

Both contracts provided for completion dates of August 1, 1973, at which time plaintiffs were to receive final payment. Plaintiffs did not complete the work until April of 1975. They alleged the delay was caused by misrepresentation by defendant of the contract work, acceleration of the work, refusal of the Authority to deal with changed conditions and other alleged acts of breach and misconduct. Plaintiffs alleged damages in unanticipated costs and losses aggregating millions of dollars. In accordance with the contract, the Authority held 10 percent of all interim payments as a retainage. This sum was to be paid to plaintiffs as part of the final payments under the contracts. Representatives of plaintiffs advised the Authority of their intention to take action against it for damages and additional compensation.

On or about July 18, 1975, representatives of Newberg-Krug-Brighton, another contractor involved in the tollway project, inquired of Assistant Attorney General John Lavery, chief of the legal department of the Authority, whether something could be done to permit contractors to accept final payments without waiving their claims. Lavery wrote a memorandum, dated July 18, 1975, to Richard Blakely (who was at the time executive director of the Authority), informing him of the request and advising him that under the contract specifications, final payment could not be made without a release and waiver of claims by the contractors.

Although not on the agenda for their regular meeting on July 31, 1975, the board of directors of the Authority considered a modification of section 109.7 of the Standard Specifications (above quoted) regarding the effect of final payment. The directors made no request to the Authority's legal counsel for preparation of any resolution pertaining to this subject matter. Assistant Attorney General John Lavery was present at the directors' meeting in his capacity of chief of the legal department of the Authority. A motion was proposed by C.A. Benowicz, chief engineer for the Authority, and adopted unanimously by the Board. The following is an excerpt from the official minutes of the meeting:

"Mr. Benowicz then requested that the following motion relating to final payments be adopted: `In consideration of the specific history which has been related and the attendant problems of equity which exist, and for purposes of achieving uniformity with contracts let by the Department of Transportation, together with expressions by the Court relative to interpretation of acceptance of final payments constituting a release and waiver of any and all privileges under the terms of the contract, it is my recommendation that the Directors exercise their prerogative to "reform" the contractual provision of any contract presently in progress and all future contracts in this area by providing that whenever the improvement provided for by the contract shall have been completely performed on the part of the Contractor and all parts of The Work have been approved by the Engineer and the Consulting Engineer and accepted by the Authority, unless the Contractor prosecutes a legal action within sixty days after the acceptance of final payment, the final payment shall constitute a release and waiver of any and all rights and privileges under the terms of the contract and shall relieve the Authority from any and all claims or liabilities for anything done or furnished relative to The Work and for any act of negligence or omission on the part of the Authority relating to or connected with the Contractor.'

Mr. Sosewitz then advised the Board that he was in agreement with the motion and pointed out that on other occasions the Consulting Engineers had requested similar actions.

Director Voss commented that he, too, was in agreement with the motion and further pointed out that, as a result of this motion, the Authority could possibly look for a little lower bidding in the future.

Director Moore moved for the adoption of said motion; seconded by Director Voss.

Mr. Blakely then inquired of the Chief of the Legal Department if there would be any problem of the Directors having a right to reform any contract. Mr. Lavery responded that there would be no problem.

Chairman Binder then called for a voice vote, and there being `Ayes' and no `Nays', declared said motion ...


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