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First Condo. Dev. v. Apex Construction





Appeal from the Circuit Court of Cook County; the Hon. Joseph Gordon, Judge, presiding.


This is an interlocutory appeal from the granting of First Condominium Development Company's (First Condo) motion to stay arbitration and the denial of defendant Apex Construction & Engineering Corporation's (Apex) motion to stay litigation in this cause.

In January 1979, First Condo began a condominium conversion project at the University Apartments on East 55th Street in Chicago. First Condo contracted with Apex for the construction of a pool, bathhouse and health club, including general contracting, plumbing, heating, ventilation, air conditioning and electrical work, "except work shown by others on plans or specifications." The work was to be completed by May 30, 1979. Construction was actually completed on or about January 19, 1981. The contract documents which were prepared by First Condo incorporated the latest edition of the American Institute of Architects (AIA) Documents A201, General Conditions of Contract for Construction, which included a general arbitration clause at section 7.9.1.

On June 16, 1982, First Condo filed its first amended complaint against Apex and six co-defendants. Count 1 was against Swann & Weiskopf, Ltd., James A. Swann and Malcolm S. Weiskopf (architect) based on contract. Counts 2 and 3 alleged wilful and wanton misconduct and misrepresentation by the architect. Count 4 against Apex was based on the breach of contract between Apex and First Condo. Count 5 against Apex alleged wilful and wanton misconduct. Count 6 for breach of contract was brought against the pool contractor, Paddock of the Midwest, Inc. (Paddock). Count 7 charged Paddock with wilful and wanton misconduct. Count 8 charged the engineer, Jerome M. Klipp & Associates (Klipp) with breach of contract. Paddock subsequently filed a third-party complaint against Trumbull Excavating Company on a subcontract. First Condo sought compensatory and punitive damages against the architect, Apex, and Paddock and compensatory damages against Klipp.

Essentially, First Condo's complaint alleged that at different times during the construction of the pool, bathhouse and indoor health club, unidentified individuals under the supervision of the architect and/or Apex and/or Paddock severed an electrical utility line (September 25, 1979), a gas utility line (October 8, 1979) and a telephone cable and conduit system (June 14, 1980). Due to these mishaps it was necessary to relocate and re-excavate the pool on at least one occasion, resulting in money damages to First Condo, including construction cost overruns, the expense of obtaining zoning variances, damage to personal property, repair of utility lines, the cost of compensating the condominium association for the late opening of the pool and health club, and damage to First Condo's business reputation and good will as a condominium developer, resulting in unsold condominium units.

On March 26, 1981, Apex filed with the American Arbitration Association a demand for arbitration for the balance due under the contract, plus extras ordered and furnished, of $108,629.41. On March 27, 1981, Apex filed a motion to stay proceedings against it on First Condo's complaint in the trial court. On July 30, 1981, First Condo filed a motion to stay arbitration, denying the existence of a binding arbitration agreement between the parties. Both parties filed memoranda of law in support of their positions. The trial court found that the contract documents between First Condo and Apex included a valid arbitration clause. The court stated that the issue was whether the agreement should be enforced despite the pending multiparty litigation and third-party claims. Both parties again filed memoranda. On October 20, 1982, the trial court granted First Condo's motion to stay arbitration and denied Apex's motion to stay the law proceedings. Apex appeals.

The issue before this court is whether the trial court erred in enjoining arbitration once it had determined that an enforceable arbitration agreement existed between the parties.

Sections 2(a) and (d) of the Uniform Arbitration Act (Arbitration Act) (Ill. Rev. Stat. 1979, ch. 10, pars. 102(a) and (d)) provide:

"(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 in pertinent part:

"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 the revocation of any contract * * *." Ill. Rev. Stat. 1979, ch. 10, par. 101.

It is a well-established principle that arbitration is favored by the State, Federal and common law. (Brennan v. Kenwick (1981), 97 Ill. App.3d 1040, 425 N.E.2d 439; School District No. 46 v. Del Bianco (1966), 68 Ill. App.2d 145, 215 N.E.2d 25, appeal denied (1966), 33 Ill.2d 628.) The object of arbitration is to foster the final disposition of disputes in an easier, quicker and more economical manner than by litigation. Once a contract containing a valid arbitration clause has been executed, the parties are irrevocably committed to arbitrate all disputes arising under the agreement. School District No. 46 v. Del Bianco (1966), 68 Ill. App.2d 145, 215 N.E.2d 25.

In Del Bianco a school district brought suit against the general contractor, the architect and the bonding company regarding the construction of an elementary school. The architect, Del Bianco, filed a motion to stay the proceedings and compel arbitration, which the trial court denied. In reversing the trial court order and ordering the parties to arbitrate, the appellate court stated that the sole issue under the Arbitration Act in a preliminary hearing to stay or compel arbitration is whether there is an agreement to arbitrate; and that the provisions of the Act ...

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