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Kenny Const. Co. v. Hinsdale San. Dist.





Appeal from the Circuit Court of Cook County; the Hon. Warren D. Wolfson, Judge, presiding.


Kenny Construction Company (Kenny) brought this action for breach of contract against the Hinsdale Sanitary District (HSD). The HSD counterclaimed for breach of contract. The jury returned a verdict for Kenny and awarded $700,000 in damages.

This action arose out of a construction contract between Kenny and the HSD for the installation of the Phase V Interceptor Sewer (Phase V project). This project involved the installation of approximately 12,360 lineal feet of sewer line and supporting structures to service the Oak Brook area in Du Page County, Illinois. Initial bids on the project were rejected. When bids were retaken in June, Kenny emerged as the low bidder.

Just prior to the deadline for the June bids, the HSD learned that the village of Oak Brook would be constructing a new roadway along the Jorie Boulevard section of the Phase V project which would require a revision of the original plans and specifications. Preferring not to reschedule the bid date, the HSD issued an "Addendum" to the Phase V bidding documents. The Addendum told the prospective bidders that they should submit their proposals on the basis of the original plans and specifications. Once the extent of the roadway construction along Jorie Boulevard was known and its impact on the cost of that portion of the project could be ascertained, the HSD would treat the roadway improvement as a "changed condition," calling for an equitable adjustment in the contract price.

Another change affecting the Phase V project resulted from a decision to widen Ginger Creek. The decision was made after the contract was awarded to Kenny but prior to construction. This widening caused the creek to encroach on the sewer alignment for the Ginger Creek section of the Phase V project.

Kenny produced evidence at trial establishing that both the widening of Ginger Creek and the construction of a roadway along Jorie Boulevard prevented Kenny from performing the contract as bid primarily because Kenny's bid proposal for the Jorie Boulevard and Ginger Creek sections of the project was based on the open-cut method of excavation, as opposed to the tunneling method.

Briefly, the open-cut method involves the digging of trenches with a back-hoe from the surface. The trenches are 40 feet wide at the surface and require a much wider work area to move construction equipment and to stockpile the dirt. Evidence adduced at trial indicated that the new dimensions of Ginger Creek and the Jorie Boulevard roadway prevented the use of the open-cut method over large portions of both those sections of the project. Kenny determined that the tunneling method of excavation would have to be used where changes in excavation were necessary.

The tunneling method involves the use of a boring machine which digs a tunnel beneath the surface of the ground. This method of excavation is much more expensive than the open-cut method, and Kenny informed the HSD that to excavate by tunneling rather than by open-cut would involve substantial additional excavation costs for both Jorie Boulevard and Ginger Creek. The HSD did not approve these additional costs but began to explore possible alternative alignments which would avoid such large additional costs.

Actual construction by Kenny began on September 23, 1974. The original plan was to begin by "jacking" the tunnels along the 22d Street, Route 83, and tollway portions of the project before going to Spring Road, 31st Street, and Jorie Boulevard. Jacking is one way of excavating by the tunnel method. It involves the use of a tunnel boring machine (TBM) which "pumps" the pipe in place behind the TBM as the tunnel is being dug. This is the least expensive method of tunneling because it does not require the use of any filler around the pipe or tunnel supports. Both filler and tunnel supports are required for the rib and lag method of tunneling.

The rib and lag method, like jacking, uses a TBM. However, rib and lagging requires a much larger tunnel. As the tunnel is excavated, it is supported by steel ribs joined by wooden lags. Once these ribs and lags are in place, the pipe is laid in the tunnel and a filler is injected to close the tunnel. The rib and lag method is much more expensive than the jacking method.

Soon after the jacking began, Kenny experienced difficulty. Progress was much too slow and Kenny could not keep the TBM on line. A few days before December 30, 1974, Kenny abandoned jacking in favor of rib and lagging.

About two weeks prior to the change in tunneling method, Kenny submitted its first pay request. Under the contract, the HSD was to make monthly payments based on progress reports submitted by Kenny. These monthly reports were to document the amount of work completed.

After paying on the first progress payment request, the HSD objected to the method used by Kenny in computing the amount of progress payments due. In response to Kenny's threat to pull off the job, the HSD made one more payment on February 19, 1975. The HSD made no further payments.

While the dispute over progress payments was taking place, another dispute centered around the Jorie Boulevard and Ginger Creek sections of the project. Ever since Kenny had projected that the Jorie Boulevard and Ginger Creek lines would have to be installed by the more expensive tunneling method, Lindley (the project engineer) and the HSD had sought to devise an alternate alignment to avoid huge additional costs.

In September 1974, Lindley revised the plans and specifications for the Jorie Boulevard alignment. Kenny produced evidence at trial indicating that this revision failed to alleviate the additional costs because it provided an inadequate work area for the open-cut method to be used.

On February 3, 1975, Lindley produced another revision. Under this revision the Ginger Creek alignment was moved away from the creek to minimize its encroachment into the pipe alignment. However, the creek continued to encroach in at least one section. This revision also imposed a new limitation in that the Ginger Creek segment had to be excavated within a 40-foot-wide easement. The original plans depicted an unlimited work space. The Jorie Boulevard alignment remained the same as in the September revision.

The HSD and Kenny met on February 6 to discuss the Jorie Boulevard and Ginger Creek situations. Kenny suggested that if the Ginger Creek alignment were moved to the south of the creek, they could put the pipe in at the originally projected cost. Kenny also suggested that if the original line along Jorie Boulevard was restored, and a Commonwealth Edison cable relocated, the Jorie line could also be put in at the original cost.

The HSD did not secure the relocation of the cable. They did, however, move the Ginger Creek alignment to the south of the creek. This new alignment ran across property belonging to the Oak Brook Park District. On March 3, 1975, Pearson, the HSD's engineer, instructed Kenny to begin work along the new Ginger Creek alignment. Kenny dispatched an operator and bulldozer and commenced work. Shortly after work began, the Oak Brook police ordered Kenny to stop work, leave the site, and repair all damage. As it developed, the HSD had no easement or informal permission from the Oak Brook Park District to install the sewer on that property.

Subsequent revisions did not alleviate the necessity of additional costs, costs which the HSD was unwilling to assume notwithstanding the contract ...

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