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Kelso-burnett Co. v. Zeus Development Corp.





APPEAL from the Circuit Court of Du Page County; the Hon. JOHN S. TESCHNER, Judge, presiding.


This is an interlocutory appeal from an order of the trial court denying a motion to stay proceedings and to compel arbitration.

On October 17, 1978, plaintiff, Kelso-Burnett Co. (hereinafter "Kelso"), entered into a subcontract with the general contractor of the Briarwood Lakes project in Oak Brook, defendant Zeus Development Corporation (hereinafter "Zeus"), wherein Kelso agreed to perform electrical work for the project. The contract included an arbitration clause which provided that:

"Unless otherwise agreed, all claims, disputes, and other matters in question arising out of, or relating to, this sub-contract agreement or a default hereunder shall be arbitrated in mode and manner as set forth in Paragraph 7.10 of the latest edition of General Conditions of Contracts for Construction, AIA document A-201.11."

Notwithstanding that provision, when a dispute arose which resulted in Zeus' termination of the contract upon Kelso's default pursuant to another provision of the contract, Kelso filed a three-count suit on March 23, 1981; two counts to foreclose its mechanics' lien against Zeus and other defendants alleged to have an interest in the property, and a separate count for breach of contract against only Zeus. The other parties named in the lien counts were the record titleholder and its beneficiary, the mortgagee, and other subcontractors who had recorded claims against the property.

Kelso's complaint alleged, inter alia, that it performed electrical work pursuant to its contract with Zeus during the period October 1978 through July 1980; that invoices submitted to Zeus throughout much of 1979 and through June 1980 remain unpaid and that Zeus had not made any specific objections or disputed the correctness of any unit price or invoice for the work covered by the invoices; that Zeus had induced Kelso to submit certain final waivers of lien and waivers of lien to date on the express condition that it would immediately pay Kelso the full amounts due as represented by the waivers upon receipt of funds from its financing sources; and, further, that such payments were not made. Prior to filing of the complaint for foreclosure, and following unsuccessful attempts to resolve their differences, Zeus had notified Kelso that it was regarded as being in default of the contract. Kelso was allowed two days to cure the default and, upon Kelso's failure to cure, was notified by Zeus that the agreement was terminated. Kelso thereafter filed its complaint to foreclose.

Zeus responded to the complaint with a motion for stay of proceedings and to compel arbitration in accordance with the contract. Prior to the trial court's decision on that motion another defendant, J.P. Baron, Inc., the carpentry subcontractor of the project, was granted leave to intervene to seek adjudication of its lien claim arising out of the work it performed on the Briarwood Lakes project and was granted leave to file an amended counterclaim naming additional party defendants. Moser Lumber, Inc., Baron's material supplier, filed its answer in the form of a general denial; the other defendants either failed to appear or failed to answer by the time this interlocutory appeal was commenced. The circuit court of Du Page County denied Zeus' motion to certify the issue for appeal and ordered the defendants to answer or otherwise plead. Zeus timely filed its notice of interlocutory appeal.

The sole issue presented by this appeal is whether the trial court erred in denying Zeus' motion to compel arbitration and to stay the lawsuit pending completion of arbitration.

• 1 Despite the trial court's refusal to certify the question for appeal, this court nevertheless has jurisdiction to consider this interlocutory appeal pursuant to Supreme Court Rule 307(a) (73 Ill.2d R. 307(a)), because the trial court's order denying the requested relief is analogous to the denial of an injunction. School District No. 46 v. Del Bianco (1966), 68 Ill. App.2d 145.

Sections 2(a) and (d) of "An Act relating to arbitration * * *" (hereafter "Arbitration Act") (Ill. Rev. Stat. 1979, ch. 10, pars. 102(a) and 102(d)) provide that:

"(a) On application of a party showing an agreement described in Section 1, and the opposing party's refusal to arbitrate, the court shall order the parties to proceed with arbitration, but if the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised and shall order arbitration if found for the moving party, otherwise, the application shall be denied.

(d) Any action or proceeding involving an issue subject to arbitration shall be stayed if an order for arbitration or an application therefor has been made under this Section or, if the issue is severable, the stay may be with respect thereto only. When the application is made in such action or proceeding, the order for arbitration shall include such stay."

Section 1 of the Arbitration Act referred to above provides as follows:

"Validity of arbitration agreement. 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 for ...

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