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02/23/87 Arthur Cencula, v. Jay Keller

February 23, 1987





504 N.E.2d 997, 152 Ill. App. 3d 754, 105 Ill. Dec. 712 1987.IL.220

Appeal from the Circuit Court of Lake County; the Hon. Charles R. Scott, Judge, presiding.


JUSTICE WOODWARD delivered the opinion of the court. REINHARD and NASH, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WOODWARD, Defendant, Jay Keller, appeals from the trial court's denial of his motion to compel arbitration.

Plaintiff, Arthur Cencula, entered into a contract with defendant, under which terms the plaintiff was to build a private residence for defendant. On May 3, 1985, plaintiff brought suit against defendant alleging that he had substantially performed all that was required of him under the contract and that defendant had failed to pay him for the work. Plaintiff alleged that the total contract price of $161,000 plus $4,374.97 for additions and extras agreed to subsequent to the contract was due, less a credit of $2,089.57. That sum, reduced by defendant's payments of $86,165, left an amount of $77,120.40 due plaintiff. Additionally, plaintiff claimed to have incurred costs in excess of $5,000 due to interest owed on amounts plaintiff had to borrow as a direct and proximate cause of defendant's breach of contract. Count II of plaintiff's complaint requested judgment in the amount of $77,120.40 based on the fair market value of the improvements plaintiff made to defendant's property, less the amount of money paid by defendant and the credits due to defendant.

The parties' contract included a detailed list of the work to be performed by plaintiff and the features to be included on defendant's home, allowances for material used, a list of work and materials to be handled by the owner and to be considered exclusions to the contract, and a clause dealing with payouts and time limits for performance of the work. The contract contained a final clause providing:

"In Conclusion, all work performed on this home at 42609 Crawford Rd., Antioch, Ill. 60002 by said contractor, Arthur A. Cencula, Sr. will be inspected and approved by expert engineer, Mr. Lowell Swenson, on a periodic basis. Work must meet all reasonable standards of construction to the satisfaction of the expert engineer. Both contractor and owner agree to having Mr. Lowell Swenson, expert engineer, assigned to this project as arbitrator and mediator of any disputed differences regarding quality of construction and materials used. His decision will be binding and final on all differences between both parties. All fees to the above expert engineer will be borne on the owner and will not be considered as part of the contract price of the house. All payouts will be made prior to getting approval of work completed by Mr. Swenson, expert engineer."

Approximately one month after plaintiff filed his complaint, defendant filed an answer generally denying the allegations. He denied that the parties agreed to certain additions in the amount of $4,374.97; that plaintiff had performed all that was required of him under the contract and had substantially performed all work as of May 1, 1985; that he had violated the contract by not paying the full amount due; and that he owed plaintiff the amount plaintiff alleged. Defendant additionally stated that he was entitled to credits not considered in plaintiff's calculations.

On June 11, 1985, plaintiff filed a demand for a bill of particulars setting forth what additional credits the defendant was requesting. On January 31, 1986, the defendant filed a bill of particulars listing 51 items for which he alleged he should be credited in an amount of $9,480.02. On February 27, 1986, defendant first asserted that the cause should be submitted for arbitration, and he requested that the trial court dismiss plaintiff's complaint and enter an order compelling arbitration. On April 3, 1986, the trial court allowed plaintiff's attorney to withdraw, and on May 29, 1986, defendant filed a motion requesting the court to allow a new law firm to file an appearance and to allow him to file a counterclaim instanter should the motion to compel arbitration be denied. On September 26, 1986, the trial court found defendant to have waived his right to arbitration and denied the defendant's motion to compel arbitration and to file a counterclaim. On October 8, 1986, defendant filed a notice of interlocutory appeal.

On appeal, defendant contends that the trial court erred in ruling that he had waived his right to arbitration. We note initially that Supreme Court Rule 307(a) allows a party to take an interlocutory appeal from an order of the trial court refusing to grant an injunction. (87 Ill. 2d R. 307(a).) Appeals from the denial of a motion to stay proceedings and compel arbitration are considered analogous to appeals from the denial of an injunction (J&K Cement Construction, Inc. v. Montalbano Builders, Inc. (1983), 119 Ill. App. 3d 663, 667), and accordingly, we have jurisdiction to consider this appeal.

Arbitration is a favored method of settling disputes in Illinois, and a finding of waiver of arbitration rights is disfavored. However, a waiver may occur when a party acts in a manner which is inconsistent with the arbitration clause, thus indicating abandonment of the right. Kostakos v. KSN Joint Venture No. 1 (1986), 142 Ill. App. 3d 533, 536.

Defendant, admitting that there was a 9 1/2-month delay between the filing of the complaint and his motion to compel arbitration, cites the case of Brennan v. Kenwick (1981), 97 Ill. App. 3d 1040. In that case, the appellate court reversed the trial court's finding of waiver, holding that a failure to assert arbitration rights for nine months, by itself, was not sufficient to require a finding of waiver. 97 Ill. App. 3d 1040, 1043.

Defendant further contends that at no time did he conduct himself in a manner inconsistent with the right to arbitrate the dispute. He argues that he never asked the trial court to rule on any fact or law relating to the merits of the case. He points to the fact that he did not request affirmative relief in his answer but only requested leave to file a counterclaim if the trial court denied his motion to compel arbitration. In Kessler, Merci & Lochner, Inc. v. Pioneer Bank & Trust Co. (1981), 101 Ill. App. 3d 502, 509, the court held that defendant's filing of an answer which set up the ...

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