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03/31/88 Northrop Corporation, v. Crouch-Walker


March 31, 1988

NORTHROP CORPORATION, THIRD-PARTY PLAINTIFF/APPELLANT

v.

CROUCH-WALKER, INC., THIRD-PARTY DEFENDANT/APPELLEE, AND M.W. POWELL COMPANY, THIRD-PARTY DEFENDANT/APPELLEE 1988.IL.464

APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIFTH DIVISION

APPEAL from the CIRCUIT COURT of COOK COUNTY, HONORABLE MYRON T. GOMBERG, Judge Presiding.

APPELLATE Judges:

JUSTICE PINCHAM delivered the opinion of the court. SULLIVAN and MURRAY, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE PINCHAM

Northrop Corporation (Northrop), a general construction company, filed a complaint alleging that Carter Hawley Hale Stores, Inc. (Carter Hawley) breached a construction contract with Northrop. Carter Hawley responded by filing a counterclaim against Northrop which alleged serious defects in the construction. In response to Carter Hawley's counterclaim, Northrop filed third-party complaints against two subcontractors, Crouch-Walker Corporation (Crouch-Walker) and M.W. Powell Company (Powell). Northrop here appeals the trial court's dismissal of its amended third-party complaints against Crouch-Walker and Powell.

In July 1974, Carter Hawley and Northrop entered into a contract for the construction of a Neiman Marcus retail specialty store. Northrop agreed to design, construct and install the exterior masonry wall panels and travertine work of the store. The contract between Carter Hawley and Northrop also provided that Carter Hawley was to either assign certain subcontracts to the contractor, Northrop, or require Northrop to enter into the subcontracts. Northrop agreed to supervise, administer and coordinate all work under the assigned subcontracts as if it were Northrop's own work.

Northrop entered into a subcontract with Crouch-Walker for the installation of the masonry, wall panel and travertine work of the store. Crouch-Walker guaranteed that it would install the work using the methodology set forth and in accordance with Northrop's general contract plans and specifications.

Northrop's complaint against Carter Hawley sought $29,000 due Northrop from Carter Hawley under the contract between them. Carter Hawley's amended counterclaim against Northrop alleged serious leaks in the roof, abnormal settling of the sidewalks and that Northrop failed to properly design, construct and install the wall panels and exterior travertine as Northrop had contracted.

Powell subcontracted with Northrop to provide the roofing, sheet metal and membrane waterproofing for the store. Northrop's third-party complaints against Crouch-Walker and Powell alleged that Crouch-Walker and Powell were solely responsible for any leaks in the construction of the Neiman Marcus store and were therefore liable to Northrop for any damages which Carter Hawley might recover from Northrop.

The pleadings which the trial court dismissed and which are at issue on this appeal are Northrop's amended third-party complaints which contain three counts directed against Crouch-Walker (counts I-III), and three parallel counts (counts IV-VI) against Powell for alleged breaches of written guaranties that the work would comply with Northrop's contract with Carter Hawley and alleged breaches of various written and implied warranties.

Counts I and IV of the amended third-party complaint alleged that in the event of any recovery by Carter Hawley against Northrop, such recovery would arise solely from the subcontractors' breach of a provision in the subcontracts, Article XXII, wherein Crouch-Walker and Powell each guaranteed that the work would be completed in strict accordance with the requirements of the general contract.

Counts I and V of Northrop's amended third-party complaint also alleged that each of the defects that Carter Hawley alleged in the design and construction of the Neiman Marcus store is the proximate result of the subcontractors' breaches of the subcontracts.

Counts II and V of Northrop's third-party complaint alleged that the subcontractors failed to perform the work in a good and workmanlike manner, or in a skillful and expeditious manner, and that the work did not constitute a complete and workable system.

Crouch-Walker and Powell each moved, pursuant to the Illinois Code of Civil Procedure, section 2-615 to dismiss Northrop's claims against them. The trial court held that Northrop's complaint was conclusory and did not comply with the requirements of specificity in pleading which the supreme court enunciated in Knox College v. Celotex Corporation (1981), 88 Ill. 2d 407. Although Northrop stated in the trial court that it sought recovery against the subcontractors on a theory of express contractual indemnity solely on the basis of alleged breaches of the guaranties and warranties contained in the subcontracts, the trial court concluded that Northrop actually sought to be indemnified from its own negligence by Crouch-Walker and Powell, and therefore failed to state a cause of action since Ill. Rev. Stat. 1985, ch. 29, par. 61 bars such indemnification. Northrop's earlier filed third-party complaint was dismissed by the trial court because Northrop based its claim for recovery upon Article XVII of the subcontracts which provided, in contravention to Ill. Rev. Stat. 1985, ch. 29, par. 61, that Crouch-Walker and Powell would indemnify Northrop for Northrop's own negligence.

Later, in its amended third-party complaint, Northrop did not cite Article XVII, and in the trial court hearings Northrop expressly denied that it relied upon Article XVII and identified its claim as one sounding solely in contract. Moreover, Northrop asserted that it is entitled to contractual indemnity not because of the indemnity provision of Article XVII, but because of Crouch-Walker's and Powell's alleged breaches of the other covenants and warranties in the subcontracts. Notwithstanding Northrop's arguments, the trial court concluded that Northrop was essentially attempting to circumvent the prohibition of Ill. Rev. Stat. 1985, ch. 29, par. 61 against the indemnification of a construction contractor from its own negligence and held that Northrop had failed to state a cause of action against Crouch-Walker and Powell. Northrop requested leave to again amend its third-party complaint, without tendering a proposed amended pleading, and the trial court denied Northrop's motion.

In order to survive a motion to dismiss, a complaint must state a cause of action that is both legally and factually sufficient. A legally sufficient complaint is one which sets forth a legally recognized claim upon which the plaintiff is entitled to recover damages. A factually sufficient complaint must plead facts which are essential to the plaintiff's alleged cause of action. Failing either factual or legal sufficiency, the complaint must be dismissed. See People ex rel Fahner v. Carriage Way West, Inc., (1981), 88 Ill. 2d 300.

Northrop's third-party complaints against Crouch-Walker and Powell alleged that the subcontractors breached certain express provisions and implied warranties contained in their contracts with Northrop. In so doing, contrary to the finding of the trial court, Northrop did set forth a legally recognized claim, breach of contract, against the subcontractors, upon which relief can be granted. Northrop's complaint was therefore legally sufficient. However, the complaint is factually insufficient and the trial court properly dismissed it for that reason.

Because Northrop predicated its breach of express and implied contract claims upon allegations that Crouch-Walker and Powell failed to perform in a workmanlike manner and failed to use appropriate materials, Northrop has the burden of pleading ultimate facts to support those allegations. Northrop's amended third-party complaint however failed to enunciate any specific acts or omissions of Crouch-Walker and Powell, in derogation of the subcontracts, which support Northrop's Conclusions that the subcontractors failed to perform in a workmanlike manner. Likewise, Northrop's amended third-party complaint failed to inform Crouch-Walker and Powell of which inappropriate materials they allegedly used in constructing the stores which resulted in the defects complained of by Carter Hawley in its amended counterclaim against Northrop. The allegations of Northrop's complaint only generally informed Crouch-Walker and Powell of the nature of its claims against them. The complaint is so conclusory, that it neglects to inform either Crouch-Walker, Powell, or the court, of the specific accusations for which the subcontractors have been hailed into court to answer.

Ill. Rev. Stat. 1985, ch. 110, par. 42 (2) of the Civil Practice Act provides that no pleading "is bad in substance which contains such information as reasonably informs the opposite party of the nature of the claim or defense which he is called upon to meet." The supreme court in Knox College v. Celotex Corporation (1981), 88 Ill. 2d 407, on facts strikingly similar to those in the case at bar, cited the Historical and Practice Notes to Ill. Rev. Stat. 1985, ch. 110, par. 42 (2) in the Smith-Hurd Annotated Statutes which state:

"Subsection 2 must be construed with other sections of the Act and cannot be interpreted as making other sections inoperative. Section 31 of the Act requires 'substantial averments of fact necessary to state a cause of action.' Section 33 of the Act requires 'a plain and concise statement of the pleader's cause of action.' Sections 33 and 43 of the Act require each cause of action or defense to be separately pleaded and designated. . . . The present section does not replace these sections, but permits formal defects to be ignored, and makes it necessary to state all facts that would be material if the parties were strangers to the litigation. It does not relieve the pleader of the necessity of stating a cause of action.

Notice pleading, which prevails under the Federal rules [citations], is not sufficient under the Illinois Civil Practice Act. A pleading which merely paraphrases the law, 'as though . . . to say that [the pleader's] case will not meet legal requirements, without stating facts,' is insufficient. Richardson v. Eichhorn, 18 Ill. App. 2d 273, 276, 151 N.E.2d 819, 821 (4th Dist.1958)." Ill. Ann. Stat., ch. 110, par. 42, Historical and Practice Notes, at 98-99.

Northrop adopts the allegations in Carter Hawley's amended counterclaim as its own allegations against Crouch-Walker and Powell and incorporates them in its pleadings. It is instructive to examine the pertinent provisions of the adopted and incorporated allegations of the Carter Hawley amended counterclaim. Count I of the amended counterclaim by Carter Hawley alleged, inter alia that:

"(4) Under the terms of the contract, [Northrop] expressly agreed to perform its work in accordance with the Contract, expressly agreed to do its work in a workmanlike manner, 'and expressly warranted that' . . . all work would be of good quality, free from faults and defects and in conformance with the Contract Documents;

(5) [Northrop] failed to perform its Work under the Contract in the following respects:

(a) [Northrop] failed to properly design, construct and install the exterior travertine walls utilizing the 'conventional system', as proposed by [Northrop], resulting in serious deficiencies . . .,

(b) [Northrop] failed to properly construct the roof of the building, resulting in numerous and continuing roof leaks;

(c) [Northrop] failed to properly waterproof the exterior walls of the building . . .,

(d) [Northrop] failed to properly construct the sidewalks of the Project, resulting in abnormal settling of the sidewalks in many areas."

Count III of the amended counterclaim by Carter Hawley alleged, inter alia, that:

"5. [Northrop] was guilty of the following acts of negligence in performing its work on the exterior travertine walls of the project:

(a) [Northrop] used gypsum, rather than mortar, to fasten the stainless steel anchors . . ..

(f) [Northrop] improperly used painted, rather than stainless, steel for support angles in some locations . . .,

(6) [Northrop] was guilty of the following acts of negligence in performing its work on the roof of the project:

(c) [Northrop] improperly used a product known as Pyro-kane for the vapor barrier on the roof, instead of the proper materials.

7. [Northrop] was guilty of the following acts of negligence in performing its efforts to waterproof the exterior walls of the building:

(a) [Northrop] failed to properly construct the parapet walls.

(c) [Northrop] failed to properly install the waterproofing, including flashing, in some locations."

Neither the adopted and incorporated allegations of Carter Hawley, nor the allegations which Northrop set forth in its amended third party complaint are factually sufficient to survive a motion to dismiss. The allegations fail to state the ultimate facts which are essential to bring the claim within the ambit of the breach of contract action which Northrop alleges. Moreover, the allegations are replete with terms and averments that are merely subjective and conclusory, rather than the required "substantial averments of facts necessary to state a cause of action." Examples include: "workmanlike manner", "of good quality", "in accordance with the highest quality trade practices", "failed to properly waterproof", and "failed to properly design, construct and install . . . utilizing the 'conventional system'". It is noteworthy that the definition of the term "conventional system", which Northrop strongly emphasizes, is yet a mystery to this court as Northrop has not been able to define it.

In Knox College v. Celotex Corporation (1981), 88 Ill. 2d 407, the plaintiff Knox also alleged that the defendant contractor, Celotex Corporation, breached its construction contract resulting in defects which caused leaks in the building. The allegations of misconduct in Knox, held to be factually insufficient, while similar, were more detailed than the allegations in the instant case. The supreme court, in upholding the trial court's dismissal of the complaint, stated that the plaintiff's failure to plead facts supportive of the legal Conclusions upon which the cause of action was predicated, could not be rectified by the invocation of the rule that pleadings must be construed liberally. The Knox court stated:

"Although the allegations of this count may generally inform Iber of the nature of the claim it will be called upon to defend, it must keep in mind that section 42 (2) of the Civil Practice Act does not relieve Knox of the obligation to plead facts and not Conclusions, as stated in the Historical and Practice Notes quoted above. Applying simple logic to the question, if a motion to dismiss admits only facts well pleaded and not Conclusions, then, in considering the motion, if after deleting the Conclusions that are pleaded there are not sufficient allegations of fact which state a cause of action against the defendant, the motion must be granted regardless of how many Conclusions the count may contain and regardless of whether or not they inform the defendant in a general way of the nature of the claim against him. In Richardson v. Eichhorn (1958), 18 Ill. App. 2d 273, the court noted the differences in the considerations to be applied when reviewing a case after judgment, based on evidence, from those to be applied in a case when the complaint is directly attacked by motion. In the latter situation, 'the motion admits facts well pleaded, and Conclusions may be proper if based on facts set forth, but the motion does not admit Conclusions or inferences by the pleader, such as Conclusions of law or facts unsupported by allegations of specific facts on which the Conclusions must rest.' Richardson v. Eichhorn (1958), 18 Ill. App. 2d 273, 276.

Notice pleading, as known in some jurisdictions, is not sufficient under our practice act. (First National Bank v. City of Aurora (1978), 71 Ill. 2d 1, 8.) Although both sections 42 (2) and 33 (3) of our practice act contain provisions concerning liberal construction, such provisions do not remedy the failure of a complaint to state a cause of action." Knox College v. Celotex Corporation (1981), 88 Ill. 2d 407, 426-27.

Likewise in the pending case, once Northrop's Conclusions of fact are deleted from the pleadings, the remaining allegations of fact are insufficient to state a cause of action against either Crouch-Walker or Powell. Conspicuously absent from Northrop's third-party counterclaim are explanations of exactly which materials or methods used by the subcontractors were improper as opposed to proper. With the exception of its claims that gypsum was used instead of mortar to fasten the stainless steel anchors, and that painted steel support angles rather than stainless steel support angles were used, each of Northrop's allegations is too general to constitute fact pleading. The trial court properly concluded that Northrop's pleadings did not reach the standard of specificity set forth in Knox.

The court notes another parallel to the Knox case which justifies the dismissal of Northrop's third-party complaint. Crouch-Walker's and Powell's warranties to do the work in a workmanlike manner, were warranties of limited duration and the period of warranty has now expired. Northrop has not alleged that it gave the subcontractors any notice of the alleged defects within the warranty period or that the subcontractors refused to honor the warranties during that period. The same situation occurred in Knox. In a separate count of its complaint, the plaintiff Knox alleged that Celotex had guaranteed that the roof would not leak. The court stated:

"In Count VI, paragraph 54 contains the substance of the allegations of paragraph 46 of Count V. The insufficiencies of these allegations in relation to Count V, as previously noted, likewise render then insufficient to state a cause of action in Count VI. Although Count VI is based on an alleged guarantee, it is not alleged in that count that Iber was notified of any leaks during the life of the guarantee. We hold that the trial court did not abuse its discretion in dismissing this count." Knox College v. Celotex Corporation (1981), 88 Ill. 2d 407, 428.

For these reasons we affirm the decision of the trial court to dismiss Northrop's third-party complaint against Crouch-Walker and Powell.

SULLIVAN and MURRAY, JJ., Concurring.

CASE RESOLUTION

AFFIRMED.

19880331

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