Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

WESTERN WATERPROOFING v. SFLD. HOUS. AUTH.

September 22, 1987

WESTERN WATERPROOFING COMPANY, INC., MID-CONTINENTAL RESTORATION COMPANY, INC., PLAINTIFFS,
v.
SPRINGFIELD HOUSING AUTHORITY, DEFENDANT.



The opinion of the court was delivered by: Mills, District Judge:

OPINION ORDER

As far as the Court and the parties can discern, this case presents a novel issue under Illinois law.

The ultimate issue: Whether a third party beneficiary contract action may be asserted by an unpaid subcontractor against a public entity where such entity has failed to procure from a general contractor a payment bond as required by the Illinois Bond Act.

The case is before this Court on cross motions for summary judgment. Under Count III of their complaint, Plaintiff Western Waterproofing Company, Inc., prays for judgment in the amount of $129,000. Under Count VI of their complaint, Mid-Continental Restoration Company, Inc., prays for judgment in the amount of $22,456. Defendant Springfield Housing Authority prays for judgment dismissing Counts III and VI of Plaintiffs' complaint.

Summary judgment will be granted where there is no genuine issue as to any material fact and the movant is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c).

The pertinent facts of this suit are undisputed. Plaintiffs were subcontractors for a federally funded construction project of the Defendant, Springfield Housing Authority (SHA). In January 1985, the SHA entered into an agreement with Bildoc, Inc. (Bildoc), for the waterproofing and weatherization of five hi-rise apartment buildings. The general contractor, Bildoc, then entered into contracts with various subcontractors which included Plaintiffs Western Waterproofing Company, Inc. (Western) and Mid-Continental Restoration Company, Inc. (Mid-Continental). Both Plaintiffs contributed labor and materials toward the completion of the project. Both were to receive payment 63 days from completion of the project. Work was completed and final payment, less retainage in the amount of $12,481.16, was made to Bildoc on December 13, 1985.

Western was to be paid $129,000 under its agreement with Bildoc. Mid-Continental was to be paid $22,456 under its agreement with Bildoc. Neither Plaintiff has received any payments for work performed.

Plaintiffs filed their complaint on May 2, 1986. They secured a default judgment against Defendant Bildoc based on Counts I and IV of the complaint in a judgment order entered July 11, 1986. The Plaintiffs have been unable to collect on this judgment. Plaintiffs then resumed proceedings in this case in February 1987 against the SHA. Plaintiffs confessed SHA's motion to strike Counts II and V of the complaint. Thus, Counts III and VI of the complaint, which allege that the Plaintiffs are third party beneficiaries of SHA's contract with Bildoc, remain unlitigated and are the subject of the cross motions for summary judgment.

I.

The basis of the Plaintiffs' claim as a third party beneficiary of the contract between SHA and Bildoc stems from the following provision in the general contract:

PERFORMANCE AND PAYMENT BOND

    A performance bond in the amount of total
  amount of contract for cost of installation of
  windows will be furnished to the authority as a
  separate cost item and will be added to the
  contract price. After the first shipment of
  windows and payment thereof by SHA, the
  Contractor

  shall provide SHA with a Waiver of Lien against
  all materials on site.

The SHA failed to procure from Bildoc either a performance bond or a payment bond. Both parties agree that had a payment bond been secured the Plaintiffs, as subcontractors, would have collected monies due them under such bond. The parties further agree that subcontractors have no rights under a performance bond. Thus, the initial bone of contention is, what exactly was required under the contract. If only a performance bond was required, as stated in the body of the provision, then Western and Mid-Continental as subcontractors have no claim. If, however, a payment bond was also required as stated in the heading of the provision, then Plaintiffs have stated a colorable claim.

The nature of the bonds involved is as follows. Generally, as a condition of the construction contract between an owner (SHA) and a general contractor (Bildoc), the owner requires the contractor to obtain a surety bond. "There are two kinds of surety bonds, performance bonds and payment bonds. A performance bond simply insures that the contractor will perform the work as contracted. . . . A payment bond, on the other hand, requires that the contractor pay all subcontractors and materialmen before the owner will make final payment." Taylor Woodrow Blitman Const. Corp. v. Southfield Gardens Co., 534 F. Supp. 340, 344 (D.Mass. 1982) (footnotes omitted); see also J. Calamari & J. Perillo, The ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.