Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 75 C 4161 - George N. Leighton, Judge.
Before CUMMINGS, Chief Judge, WOOD, Circuit Judge, and GARZA, Senior Circuit Judge.*fn*
The appeal in this diversity jurisdiction case concerns a small portion of a much larger dispute arising over the construction of an out-patient clinic at the Chicago College of Osteopathic Medicine in Hyde Park, Chicago. This court resolved most of the dispute in Chicago College of Osteopathic Medicine v. George A. Fuller Co., 719 F.2d 1335 (7th Cir. 1983); however, on the issue whether Ed Hoffman Excavating, Inc. ("Hoffman"), the subcontractor excavator on the project, is entitled to any delay damages from George A. Fuller Co. ("Fuller"), the general contractor, we remanded for additional findings.
In its first decision the district court granted relief to Hoffman for costs incurred consequent to a nine-month delay in excavation of the site, holding that a clause in the subcontract expressly waiving Hoffman's rights to collect for damages caused by delays (the "Delay Waiver Clause") did not apply to the extraordinary delays involved in this case. On appeal we reversed, holding that Illinois law did not permit such a narrow construction of the Delay Waiver Clause, and remanded for the district court to consider three other theories upon which relief might be granted to Hoffman: (1) that Fuller waived its rights under the Delay Waiver Clause, (2) that Hoffman met the five-prong test for obtaining payment for extra work, and (3) that the parties orally modified the written contract. Id. at 1340-41. On remand the district court, relying on all three legal theories, held that fuller was liable to Hoffman in the amount of $180,189. Fuller appeals the finding of liability and the damages determination; Hoffman cross-appeals seeking additional damages.
In 1973 Fuller and Hoffman entered into an agreement (the "Subcontract") for Hoffman to perform the excavation and backfill work for an out-patient clinic at Chicago College of Osteopathic Medicine. The Subcontract price was $210,000.
Originally, Hoffman was to commence work on November 9, 1973. Because of delays caused by the owner, Chicago College of Osteopathic Medicine ("CCOM"), and the architect, Schmidt, Garden & Erickson ("SGE"), Hoffman did not actually begin work until January 25, 1974. For the next seven months through no fault of its own Hoffman proceeded with the excavation in a sporadic unorthodox, and more expensive manner. For example, it began work on January 25 by clearing the site, which took about a week. Hoffman then halted work until March 9, 1974, when it began excavation, but only to a depth of five feet in limited areas of the site. Hoffman performed this partial excavation work in eight to ten days. About a month later Hoffman was directed to recommence the excavation; this time Hoffman encountered uncharted sewer lines which halted excavation. Hoffman returned to the site on May 9 only to discover existing fire lines which forced another delay. Delays of this sort continued to plague the excavation project for several more months until August 7, 1984, nine months after excavation was originally scheduled to begin; on the date Hoffman finally began uninterrupted mass excavation, completing the job in three and one-half months.
During the delay period Hoffman wrote to and had several conversations with Fuller about the delays and the problems the delays were causing Hoffman. In a January 2, 1974 letter Hoffman complained about the delay and asked Fuller to either release Hoffman from its "contractual obligation" or pay the additional charges sought. Fuller orally asked Hoffman "to hand on in good faith" and promised Hoffman that it would be paid for the additional costs that it was incurring as a result of the delays. Tr. 2988. On February 8, 1974, Hoffman wrote to Fuller advising that Hoffman would be seeking additional remuneration because of the delays. In a February, 1974 meeting Fuller assured Hoffman that Article XI, the Delay Waiver Clause,*fn1 which allocated the risk of delay to Hoffman, Fuller, 719 F.2d at 1339-40, did not apply to the extraordinary delays that had occurred, that Fuller would pay for the additional costs that Hoffman was incurring, and that Fuller would attempt to pass on such costs to SGE and CCOM, Tr. 54-59 & 29.
On July 1, 1974, Hoffman wrote a letter to Fuller detailing the problems that had arisen consequent to the delays and asked Fuller to "notify [Hoffman] in writing to cease and desist the excavating work immediately" if Fuller would "not accept or process the additional charges over and above the contract amount which is forth coming (sic)." Fuller never responded in writing but continued to promise orally that it would pay Hoffman for its additional costs. Tr. 2988.
Although delay problems ended on August 25, in their stead arose problems over the storage of excavated material Hoffman hoped to use as backfill material. Under the terms of the Subcontract Hoffman was responsible for providing "materials . . . necessary for the proper completion of the . . . Backfill work." Article I. The Subcontract specifications provided, however, that Hoffman could use material excavated from the lowermost layer of the excavation as backfill material provided it met specifications.*fn2 Paragraphs 54 and 55 Exhibit A to the Subcontract allowed Hoffman to stockpile the excavated backfill material on the job site provided space was available and imposed on it any expense of relocation of the sand.*fn3
Initially space was available a the job site for stock-piling the backfill material and Hoffman took advantage of it. In September, 1974, however, the stockpiled material began to create a safety hazard and Fuller told Hoffman to remove the material. Hoffman refused to remove the sand until Fuller had agreed to pay for extra costs incurred and provided Hoffman an alternative storage site a block away. Later, Fuller directed Hoffman to remove the material from the alternative storage site. Hoffman again refused to remove the material until Fuller promised additional compensation. This time, rather than move the sand to another location, Hoffman sold it for about $9,000. When it came time to backfill the CCOM job Hoffman replaced the sand it had sold with sand it had excavated at the Brain Research project, another excavation project in the area that Hoffman was working on.
On these facts Judge Leighton held (1) that fuller waived its right under Article XXXIV to insist that all waivers and modification be in writing,*fn4 its right under Article XI, the Delay Waiver Clause, to be free from liability for costs of delay incurred by Hoffman, and its right under paragraphs 10 and 35 of Exhibit A to insist that Hoffman bear the costs occasioned by being forced to perform the work out of sequence or in an otherwise unorthodox fashion;*fn5 (2) that Fuller and Hoffman orally modified the terms of the subcontract;*fn6 and (3) that Hoffman met the five-prong test for obtaining extra pay for providing replacement sand for backfill. Judge Leighton awarded Hoffman $180,189, $85,539 to cover the cost of doing the excavation work and $94,650 for providing the replacement backfill sand.
II. Liability for Delay Damages
We first review Judge Leighton's finding that fuller waived its rights under the Subcontract. Waiver is the voluntary and intentional relinquishment of a known right. Pantle v. Industrial Commission, 61 Ill. 2d 365, 372-73, 335 N.E.2d 491, 496 (1975); Lempera v. Karner, 79 Ill. App. 3d 221, 223, 34 Ill. Dec. 549, 550, 398 N.E.2d 224 (1st Dist. 1979); Michel v. Efferson, 223 La. 136, 65 So. 2d 115, 119-20 (1953); Gamble v. Hogan, 88 Ga. App. 430, 76 S.E.2d 658, 661 (1953); Mayhew & Isbell Lumber Co. v. Valley Wells Truck Growers' Association, 216 S.W. 225, 233 (Tex. Civ. App. 1919); 17A C.J.S. Contracts § 514(1), p. 838 (1963). Waiver may be proven by words or deeds of the party against whom waiver is invoked that are inconsistent with an intention to insist on that party's contractual rights. John Kubinski & Sons, Inc. v. Dockside Development Corp., 33 Ill. App. 3d 1015, 1020, 339 N.E.2d 529 (1st Dist. 1975).
Article XXXIV of the Subcontract expressly provides that "provisions of this contract [cannot] be waived except by an express waiver in writing." Since there is no writing waiving this "Waiver Only in Writing" provision, or any other Subcontract provision, Article XXXIV would seem to preclude a finding of waiver. However, the weight of the authority in Illinois holds that Waiver Only in Writing provisions can be waived by words and deeds of the parties, so long as the waiver is provide by clear and convincing evidence. See Delta Construction, Inc. v. Dressler, 64 Ill. App. 3d 867, 874-75, 21 Ill. Dec. 576, 582, 381 N.E.2d 1023 (3d Dist. 1978); Custom Builders, Inc. v. Clemons, 52 Ill. App. 3d 399, 403, 10 Ill. Dec. 149, 152, 367 N.E.2d 537, 540 (3d Dist. 1977); Mayer Paving & Asphalt v. Carl A. Morse, Inc., 48 Ill. App. 3d 73, 80, 8 Ill. Dec. 122, 127, 365 N.E.2d 360 (1st Dist. 1977). But see Radio Corporation of America v. Smith,109 Ill. App. 2d 91 248 N.E.2d 310, 311 (5th Dist. 1969). Judge Leighton held that Fuller, through its words and deeds, waived it right to insist on a waiver in writing. This finding is supported by the factual finding that Fuller made repeated oral promises to Hoffman that it would reimburse Hoffman for costs occasioned by the delays notwithstanding the Delay Waiver Clause. The oral manner in which the promises were made is, under Illinois precedent, sufficient evidence of an intention not to insist on the waiver being in writing. See Delta Construction, Inc., 64 Ill. App. 3d at 874-75, 21 Ill. Dec. at 582 (3d Dist. 1978) orally requesting extra work from a subcontractor and agreeing to alteration of the subcontract is sufficient without a writing to show a waiver of a Waiver Only in Writing provision). But see Radio Corporation of America, 248 N.E.2d at 311. We therefore uphold Judge Leighton's finding that fuller waived the Waiver Only in Writing provision
Paragraph 35 of Exhibit A provides that
the Subcontractor shall perform his Work when and as directed by the Contractor. The Subcontractor shall omit any section or portions of this Work that may be required by the Contractor and shall later fill in such sections or portions when directed, at no additional cost to the Contractor. The Subcontractor shall also perform any Work out of sequence that may be required by the Contractor, at no additional cost to the Contractor.
Paragraph 10 of Exhibit A provides that "certain items of Work may be stopped and completed at a later date with no additional cost charged to Owner, Architect or Contractor." Finally, Article XI provides that
the Subcontractor expressly agrees not to make, and hereby waives, any claim for damages on account of any delay, obstruction or hindrance from any cause whatsoever . . . and agrees that its sole right and remedy in the case of any delay, obstruction or hindrance shall be an extension of the time fixed for completion of the Work.
$%Read together, these three provisions allocate to Hoffman the risk of delay. Therefore, absent waiver or modification, these three provisions preclude Hoffman from collecting damages for delay.
Judge Leighton found that Fuller waived its right under these three provision to insist that Hoffman bear the costs for the delays. Judge Leighton grounded this conclusion upon factual findings (1) that Fuller repeatedly promised Hoffman that it (Fuller) would be personally liable to Hoffman for the delays and (2) that fuller stated that the Delay Waiver Clause did not apply to the extraordinary delays involved here. These statements by Fuller constitute behavior inconsistent with an intention to insist on Fuller's rights under these provisions of the Subcontract and therefore support the waiver finding.
Fuller attacks Judge Leighton's waiver finding on two grounds. First, Fuller argues that Judge Leighton never found that Fuller promised to be personally liable for the delay damages, but only promised that Hoffman "would be paid," and that to the extent a payor was identified it was CCOM or SGE. although some of Judge Leighton's findings do not point to a particular actor (i.e., payor), other findings make clear that Fuller promised Hoffman that it would be the payor of last resort in the event neither SGE nor CCOM paid Hoffman. See, e.g., pp. 6 & 10 of Judge Leighton's order. Moreover, where someone promises that something will occur, the implication is that the promisor assumes the ...