admitted on cross examination that recycling the belt wash
water would have reduced the Winklepress' performance. That is
clearly a contradiction of the rationale offered by Dietz for
specifying the recycling of belt wash water.
Edward Nevers admitted his familiarity with the
Environmental Protective Agency requirements for competition
but made the startling assertion that "competition was to be
taken with a grain of salt." This revealing statement reflects
Dietz' attitude favoring Carter to the exclusion of others and
proclaims conscious and deliberate purpose in insisting upon
conformity by all bidders to the Carter specifications.*fn8
When asked if Dietz had insisted upon Waldinger using
Carter, Mr. Nevers said "we would have been happy to accept
Carter but would have accepted others." I find that answer
James A. Statham, who was president of Ashbrook during the
bidding and testing process, testified, and I credit his
testimony, that at the start of the relationship between
Ashbrook and Dietz, only performance data on the 1-V Ashbrook
machine was requested by Dietz. Ashbrook was confident that it
would meet the performance levels. Ashbrook set about meeting
the production test requirements laid down by Dietz but when
those requirements were met, Ashbrook was confronted by a
demand from Dietz for production data on the Winklepress'
performance with alum treated sludge. Throughout the testing
period Dietz kept insisting that the performance data Ashbrook
submitted was insufficient although at the same time Dietz had
no data at all from Carter.
Prior to November 16, 1978, Statham says, Ashbrook and Dietz
never had a discussion about the mechanical aspects of the
Winklepress. On that date Dietz said that Ashbrook must comply
precisely with the specifications on mechanics. When Statham
told Dietz that if Ashbrook built a machine according to the
Dietz specifications it would be a machine designed by Dietz
and would not be guaranteed by Ashbrook, Tony Cantello
responded by saying that Ashbrook should not submit the 1-V
Winklepress again and that the specifications were not
On December 27, 1978, Ashbrook submitted its proposals for
the machine demanded by Dietz (Exhibit W-17). Exhibit W-17
made no guarantee of performance because, as Statham pointed
out, the submitted machine "was not a standard Winklepress,"
but was a machine of Dietz design.
On February 5, 1979, Dietz rejected the Ashbrook proposal
(See Exhibit A-69) and directed Tarlton, the general
contractor, to submit proposals from another manufacturer.
Harold W. Johnson, the chemist and environmental scientist
who worked for Carter at one time and now works for Ashbrook,
testified about the difference between the polymer mixing
methods in the Carter equipment and in the Ashbrook equipment.
Carter used a rotating drum to mix the polymer and the sludge
while Ashbrook employed a static vortex mixer. The Ashbrook
vortex mixer had a variable diameter orifice for mixing the
sludge and the polymer to avoid clogging when an alien
element, like a rag, would enter the mixing area through the
sludge feed pipe. The Carter 15-31 machine, after the sludge
was mixed in the rotating drum, poured the mixture into a
rotating "reactor-conditioner" where the sludge lay on a
rotating screen for gravity dewatering. The sludge then passed
into a distribution box and from there, through two four-inch
pipe openings by gravity flow, to the shear press section. In
Johnson's experience at Carter,
some clogging of the pipe openings occurred which required
shutting the machine down and hand clearing.
Johnson said that while recycling belt wash water worked in
the Carter equipment with its rotating "reactor conditioner",
in a flat belt machine, belt wash water recycling was
impossible. In a flat belt gravity dewatering section,
recycled belt wash water would (a) break up the floc; (b)
blind the belt, i.e., particles of sludge would clog the belt
preventing water from draining through, and (c) destroy the
solids capture performance of the machine. Johnson said that
Carter was the only company in the United States that recycled
belt wash water and that Carter had patents on the rotating
reactor that made recycle of the belt wash water possible.*fn9
Johnson also testified that he was familiar with the
Sanitary District specifications for the sludge dewatering
equipment and that only Carter could have met the requirements
of those specifications.
Robert Hurdle, Dietz' expert witness, said that he was not
persuaded that recycling the belt wash water in the sludge
dewatering equipment would have increased the "through-put"
performance. It was "possible," Hurdle thought, that polymer
consumption would have been reduced through belt wash water
recycle. However, on cross examination he pointed out that he
was saying that reduced polymer consumption was only a
possibility and that he could not offer an opinion of reduced
polymer consumption based upon reasonable scientific
Hurdle stated that Dietz took the Carter performance claims
at their face value and made no independent study of them. No
tests were run by Dietz; in fact Dietz had no test results on
the Carter equipment other than a bench test so that the
specifications were patterned on the Carter design without a
test of the 15-31 machine by anyone.
It is undisputed that Waldinger suffered the following
damages as a result of being required to purchase Carter
equipment in place of the Ashbrook equipment:
(1) Increased cost to purchase Carter equipment, $284,123.00
(2) Additional engineering fees to Dietz for consideration
of the Carter equipment, $5,075.00
(3) Additional fees paid to Tarlton to construct a platform
to move the Carter machine into the building, $15,008.00
(4) Waldinger's loss of use of funds through the additional
expense of purchasing the Carter equipment, $64,249.00.
Total damages: $368,455.00
It is also uncontested that Waldinger has incurred
attorneys' fees for services through November 1, 1982 of
$40,154.00 and additional fees through January 27, 1983 of
$35,138.00 and that its attorneys have made cash advances
through September 1, 1982 of $9,259.79 and the additional sum
of $3,301.45 in cash advances for expenses. Under its contract
with Ashbrook, Waldinger was entitled to recover attorneys'
fees and expenses for Ashbrook's breach.
Did Ashbrook bid knowing it could not perform?
A factual contention is made by Waldinger, and to some
extent by Dietz, that Ashbrook undertook the job of supplying
the sludge dewatering equipment with full realization that
Ashbrook could not meet the requirements of the Sanitary
District specifications. I reject that factual contention. I
credit the testimony of the witnesses for Ashbrook, Statham
and Hartley, who testified that Ashbrook bid to supply the
sludge dewatering equipment relying upon the requirement that
specifications foster competition and that specifications not
be exclusionary or discriminatory. Ashbrook had the right to
rely upon its experience that specific mechanical subsystems
were ordinarily waived by the owner's engineer if a
supplier could show that the supplier's equipment met
performance specifications. Moreover, as Statham testified,
the specifications that Dietz had prepared made it impossible
for anyone but the Carter company to meet the literal
specifications of the mechanical subsystems.
Statham's claim that waiver of mechanical subsystem
requirements was a practice in the industry is supported by
the bid of Komline-Sanderson Engineering Corporation, a
competitor in the field of sludge dewatering equipment. That
bid read, "generally in accordance with and to meet the intent
of the plans and specifications." (Exhibit A-26). The fact
that three companies in addition to Carter bid on supplying
the sludge dewatering equipment, even though the plans and
specifications obviously were drawn around Carter equipment,
supports the contention of Ashbrook that the bidding was made
with the intent to conform to the performance requirements but
not the literal requirements of the mechanical subsystems.
CONCLUSIONS OF LAW
This suit began with Waldinger seeking recovery from
Ashbrook on the theory of breach of contract. Ashbrook
admitted that it breached its contract with Waldinger but
claimed that Ashbrook should be excused from liability because
of impracticability of performance occasioned by the
intervention of Dietz. Ashbrook sought damages from Dietz and
brought it into the case as a party and Waldinger amended its
pleadings to seek recovery against Dietz as well as against
Ashbrook. Counterclaims by Dietz were withdrawn by it in the
course of the trial.
Waldinger and Ashbrook seek to recover damages from Dietz on
two tort theories. First, Waldinger and Ashbrook claim that
Dietz intentionally interfered in the contractual relationship
between Waldinger and Ashbrook, causing them damage. Second,
Waldinger and Ashbrook claim that Dietz, as engineer in the
Sanitary District project, had a duty to perform its
contractual obligations to the Sanitary District with ordinary
care so as to avoid injury to Waldinger and Ashbrook.*fn10
The Theory of Intentional Interference
Illinois recognizes the tort of intentional interference
with contractual relationships. O'Brien v. State Street Bank
and Trust Co., 82 Ill. App.3d 83, 85, 37 Ill. Dec. 263,
401 N.E.2d 1356 (1980); Northern Insurance Co. of New York v.
Doctor, 23 Ill. App.2d 225, 228, 161 N.E.2d 867 (1959);
Republic Gear Company v. Borg-Warner Corporation, 406 F.2d 57,
61 (7th Cir. 1969).
The elements which establish a prima facie
tortious interference are the existence of a
valid business relationship . . . or expectancy;
knowledge of the relationship or expectancy on
the part of the interferer; an intentional
interference inducing or causing a breach or
termination of the relationship or expectancy;
and resultant damage to the party whose
relationship or expectancy has been disrupted.
The interest protected is the reasonable
expectation of economic advantage.
O'Brien, 82 Ill. App.3d at 85, 37 Ill.Dec. 263, 401 N.E.2d 1356
(quoting City of Rock Falls v. Chicago Title & Trust Co.,
13 Ill. App.3d 359, 363, 300 N.E.2d 331 (1973)). See also Doctor,
23 Ill. App.2d at 228, 161 N.E.2d 867 and Republic Gear Co.,
406 F.2d at 61.
Malice in the sense of ill will is not a requisite to
recovery. Intentional conduct which brings about the breach
with knowledge of the relationship is all that is required.
W.P. Iverson & Co. v. Dunham Manufacturing Co., 18 Ill. App.2d 404,
152 N.E.2d 615 (1958); Republic Gear Company v.
Borg-Warner Corporation, 406 F.2d 57 (7th Cir. 1969).
It is not necessary, however, that the purpose to
cause the breach of contract or failure to deal
be the actor's sole or paramount purpose. It is
sufficient that he designs this result whether
because he desires it as an end in itself or
because he regards it as a necessary, even if
regrettable, means to some other end. . . . `Ill
will' toward the person harmed is not an
essential condition of liability; the actor `may
be liable even when he acts with no desire to
harm the other.' And as to the often cited
requirement of malice, it is said: `But the
context and course of decision makes it clear
that what is meant is not malice in the sense of
ill will but merely purposeful interference
W.P. Iverson & Co. Inc., 18 Ill. App.2d at 418, 152 N.E.2d 615
(quoting Republic of Italy v. DeAngelis, 206 F.2d 121, 130 (2nd
Cir. 1953) (Clark, J., concurring) (citing 4 Restatement of
Torts § 766 et seq. (1939)).*fn11
It is uncontested that a contractual relationship existed
between Waldinger and Ashbrook and that Dietz had full
knowledge of that relationship. It is the third element, an
intentional interference inducing or causing a breach or
termination of the relationship or expectancy, that was
contested by the parties.
As set out in the finding of facts, supra p. 974, it is
manifest that Dietz patterned the sludge dewatering equipment
specifications on equipment produced by the Carter
Manufacturing Company. It is also clear that Dietz insisted on
the use of Carter equipment and conformity to Carter design
purposefully and in deliberate disregard of
40 C.F.R. § 35.936-13 (1976) which required open and free competition.
There was no rational basis for Dietz' insistence on the
Carter mechanical subsystems. There was no showing that the
Carter mechanical subsystems were reasonable and necessary for
the purpose intended for the sludge dewatering equipment.
There was no scientific foundation for requiring recycle of
the belt wash water. There was no data available from tests on
alum treated sludge.
Dietz took Carter's performance claims at face value and
made no independent study of them. In fact, the specifications
were patterned on the Carter design without a test of that
company's 15-31 machine by anyone. There was nothing to
substantiate that recycling belt wash water would have
increased the "through-put" performance of the belt press and
it was only a possibility without reasonable scientific
certainty that polymer consumption might have been reduced. In
sum, Dietz arbitrarily insisted on literal conformity to the
Carter mechanical subsystems and did so without any rational
or scientific engineering basis.
That Dietz' conduct was deliberate and intentional is borne
out by the testimony of Sakolosky, Cantello and Nevers. What
those three individuals or Dietz or the Sanitary District
stood to gain from insistence on use of the Carter equipment
is not at all clear from the evidence. The most that can be
said is that early in its design work, the Dietz team formed
the opinion that the Carter equipment was superior, although
the team provided no basis for that conclusion. It is also
apparent that Dietz designed the structure housing the sludge
dewatering equipment on the basis of the Carter specifications
and, when a competitor of Carter became the successful bidder,
structural difficulties arose in trying to fit an alien
machine into the space designed and the team may have been
trying to avoid those difficulties.
The fourth element, the amount of damages, like the first
and second elements, is virtually uncontested. No disagreement
is raised over the amount of damages suffered by Waldinger
although Dietz argues strenuously that the plaintiffs may not
recover economic losses.*fn12 It is Dietz' position that it
cannot be liable for economic losses experienced by Waldinger
because the claim
against Dietz sounds in tort and under the holding of
Moorman Manufacturing Company v. National Tank Company,
91 Ill.2d 69, 61 Ill.Dec. 746, 435 N.E.2d 443 (1982), economic
losses are not recoverable. Dietz' reliance upon Moorman is
misplaced. In Moorman the plaintiff sought to recover for
economic losses experienced as a result of defective conditions
in a grain bin. The plaintiff proceeded on theories of strict
liability in tort and of warranty. Moorman does not bar a suit
for direct losses based on negligence although, under the
language of the case, apparently solely economic loss cannot be
recovered in a negligence action. Id. at 88, 61 Ill.Dec. 746,
4,35 N.E.2d 443. However, Moorman makes it quite clear
that economic loss is recoverable when it is attributable to
intentional conduct on the part of the defendant. Id. at 88-89,
61 Ill.Dec. 746, 435 N.E.2d 443. (Plaintiff could recover
economic loss attributable to intentional misrepresentation.)
The case of Redarowicz v. Ohlendorf, 92 Ill.2d 171, 65
Ill.Dec. 411, 441 N.E.2d 324 (1982), follows Moorman but,
contrary to Dietz' contention, does not stand for the
proposition that economic losses may not be recovered in tort.
Redarowicz holds, "the complained of economic losses are not
recoverable under a negligence theory." Id. at 178, 65 Ill.Dec.
411, 441 N.E.2d 324 (emphasis added). See also Pittway v.
Lockheed, 641 F.2d 524 (7th Cir. 1981) (Illinois will not
permit recovery of economic losses on a negligence theory).
The court concludes, therefore, that Waldinger may recover
its damages, including strictly economic loss, because the
theory of recovery is for intentional conduct, not merely
negligent conduct. That strictly economic losses should be
recoverable in the tort of intentional interference with a
contractual relationship is borne out by the rationale
underlying the right to recover. "The interest protected is
the reasonable expectation of economic advantage."
O'Brien, 82 Ill. App.3d at 85, 37 Ill.Dec. 263,
401 N.E.2d 1356.
Attorneys' Fees as an Element of Damages
In this action the court concludes that the attorneys' fees
incurred by Waldinger in prosecuting its claims against
Ashbrook and Dietz are recoverable as damages and should be
assessed against Dietz.
Generally, attorneys' fees may not be recovered except when
their recovery is provided for by statute or by contract.
See Ritter v. Ritter, 381 Ill. 549, 46 N.E.2d 41 (1943). That
general rule, however, is not without exception. See Omni
Overseas Freighting Company v. Cardell Insurance, 78 Ill. App.3d 639,
33 Ill.Dec. 779, 397 N.E.2d 112 (1st Dist. 1979).
There are two independent grounds upon which the award of
attorneys' fees is warranted in this case.
First, this case involves a contract which specifically
provides for the recovery of attorneys' fees. Waldinger and
Ashbrook agreed that, in the event of a breach by Ashbrook,
Waldinger could recover its attorneys' fees. Here, however,
Ashbrook's breach was caused by Dietz' intentional conduct and
was excusable because of commercial impracticability of
performance. Waldinger's reasonable expectations regarding the
payment of its attorneys' fees should not be defeated by
Dietz' deliberate acts, but the party responsible for
Ashbrook's breach, Dietz, should be held liable for
Waldinger's attorneys' fees.
Second, courts have determined that assessing attorneys'
fees against a third party as an element of damages is
warranted when a lawsuit has been occasioned by the misconduct
of the third party. See Sorenson v. Fio Rito, 90 Ill. App.3d 368,
45 Ill.Dec. 714, 413 N.E.2d 47 (1st Dist. 1980); M.F.
Roach Company v. Town of Provincetown, 355 Mass. 731,
247 N.E.2d 377 (1969). Waldinger's suit against Ashbrook arose from
Dietz' intentional interference with the contractual
relationship of Waldinger and Ashbrook, and Dietz is liable for
the reasonable fees incurred by Waldinger. As stated in
Sorenson v. Fio Rito, supra, "Illinois law does not
preclude . . . awarding attorneys' fees when those fees
constitute nothing more than ordinary losses resulting from the
defendant's conduct." Id. at 374, 45
Ill.Dec. 714, 413 N.E.2d 47. See also Garris v. Schwartz,
551 F.2d 156, 159-161 (7th Cir. 1977) (Pell, J., dissenting); Evra
Corporation v. Swiss Bank Corporation, 522 F. Supp. 820, 834-35
Negligence by Dietz
In light of the findings and conclusions relating to the
plaintiffs' theory of intentional conduct, it is not necessary
to dwell upon the question of Dietz' negligence. Suffice it to
say that the record also supports the conclusion that Dietz
failed to exercise ordinary care in its preparation of the
specifications and its insistence on the use of the Carter
mechanical subsystems. That conclusion is supported by the
testimony of Dietz' expert Hurdle.
Under Illinois law, Dietz, as the engineer for the Sanitary
District, owed Waldinger and Ashbrook a duty to use ordinary
care not to cause them loss or damage where it was foreseeable
that Waldinger and Ashbrook would rely upon the skill of
Dietz. Miller v. Dewitt, 59 Ill. App.2d 38, 208 N.E.2d 249 (4th
Dist. 1965), aff'd in part and rev'd in part on other grounds,
37 Ill.2d 273, 226 N.E.2d 630 (1967). The difference between a
negligence theory of recovery and an intentional conduct theory
of recovery would be that Ashbrook and Waldinger could collect
only direct damages and not their economic losses as well.
Moorman Manufacturing Company v. National Tank Company, supra
and Redarowicz v. Ohlendorf, supra.
Prejudice to Dietz?
Dietz argues at page 8 of its brief that the court's ruling,
in limine, that Waldinger could not recover "loss of use of
money" and "attorneys' fees" from Dietz under its negligence
theory but could recover those items from Ashbrook under its
contract theory was prejudicial to Dietz. The prejudice claimed
is that Dietz was thereby not afforded an opportunity either to
question Waldinger's damages or to submit any evidence in
opposition thereto. I find this argument incomprehensible
because Dietz must have known that Waldinger and Ashbrook were
proceeding on the alternative theory of intentional conduct.
See Document No. 53, filed April 28, 1982 in which Waldinger
claims intentional conduct on the part of Dietz. See also
Document No. 52, item no. 8, where Dietz states that a
contested issue of fact is whether Dietz intentionally
interfered with the contractual relationship between Waldinger
and Ashbrook. Moreover, at no time did Dietz seek a continuance
or ask for an opportunity to marshal and present evidence on
the points about which it now claims prejudice.
Ashbrook's Administrative Remedies
Dietz argues that Ashbrook waived its statutory
administrative remedy of protest and is thereby estopped to
recover from Dietz. Because of the disposition of the case on
Waldinger's claim for intentional interference with its
contractual expectancies, discussion of this point is not
necessary to the disposition of the case. In passing, however,
the court notes that the cases cited by Dietz*fn13 dealing
with lack of standing to sue by an unsuccessful bidder on a
federal agency project have no bearing on the questions in
this case. Ashbrook is not seeking to recover from the
Sanitary District but seeks damages from a third party for its
intentional conduct which made the specifications
discriminatory and noncompetitive. Ashbrook relied upon Dietz
to draw competitive nondiscriminatory specifications in
compliance with the Code of Federal Regulations. Ashbrook is
not here claiming that it was excluded from competition in the
bidding process but for the loss of the reasonable expectation
of economic advantage from Ashbrook's contract with Waldinger
and to recover also the economic losses flowing from the
breach of that relationship.
It is noteworthy that the administrative opportunity for
review of the specifications by the Environmental Protective
had expired by the time it became apparent that Dietz was
insisting upon use of the Carter mechanical subsystems.*fn14
When Ashbrook did file a protest, Dietz moved to dismiss it
because it was not timely. Ashbrook could not have gone to the
Environmental Protective Agency when on the face of the
protest, it showed that it was untimely. In short, there was
no administrative remedy available to Ashbrook at the time
that the discrimination became manifest.
If Dietz had made it perfectly clear in the spring of 1978
that it intended to insist on literal compliance with the
mechanical aspects of the belt filter press specifications,
there might have been an opportunity to seek administrative
review of that decision through the Environmental Protection
Agency. Dietz, however, waited until November of 1978 before
informing Ashbrook that it must comply literally with the
specifications on mechanics. See pp. 4 and 18 of the findings
Ashbrook's Impracticability of Performance
Ashbrook contends that it is excused from performing its
contract with Waldinger. Under the facts of the case, the
court concludes that contention is meritorious.
The Uniform Commercial Code, § 2-615, Excuse By Failure of
Presupposed Conditions, provides in pertinent part:
(a) [N]on-delivery in whole . . . by a
seller . . . is not a breach of his duty under a
contract for sale if performance as agreed has been
made impracticable by the occurrence of a
contingency the nonoccurrence of which was a basic
assumption on which the contract was made. . . .
Ill.Rev.Stat. ch. 26, § 2-615(a) (1961).