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08/25/88 Plainfield Community v. Lindblad Construction

August 25, 1988

PLAINFIELD COMMUNITY CONSOLIDATED SCHOOL DISTRICT NO. 202, PLAINTIFF-APPELLEE AND CROSS-APPELLANT

v.

LINDBLAD CONSTRUCTION COMPANY, DEFENDANT-APPELLEE AND CROSS-APPELLEE (ASBESTOS SAFETY, INC., DEFENDANT-APPELLANT)



Before the matter was submitted to arbitration, Lindblad demanded another $23,000 for additional sums purportedly assessed against ASI by IDOL. The amount submitted for arbitration was $34,007.49 plus [17] Lindblad's overhead and profit. After the hearing, the arbitrator issued his award for Lindblad against Plainfield in the amount of $34,007.49, stipulating that any refunds to ASI by the State of Illinois be returned to Plainfield.

APPELLATE COURT OF ILLINOIS, THIRD DISTRICT

528 N.E.2d 996, 174 Ill. App. 3d 149, 124 Ill. Dec. 105 1988.IL.1304

Appeal from the Circuit Court of Will County; the Hon. Herman S. Haase, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE STOUDER delivered the opinion of the court. HEIPLE and BARRY, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE STOUDER

This is an action to reverse both the modification of an arbitration award and the award of attorney fees. Plainfield School District No. 202 (Plainfield) entered into a contract with Lindblad Construction Company (Lindblad) for construction work on two school buildings. Lindblad then entered into a subcontract with Asbestos Safety, Inc. , for the removal of the asbestos from the schools. Neither the Plainfield-Lindblad contract nor the Lindblad-ASI subcontract provided that prevailing wages be paid as required under the Prevailing Wage Act (Ill. Rev. Stat. 1985, ch. 48, pars. 39s-1 through 39s-12).

Thereafter, the Illinois Department of Labor assessed penalties against ASI for its failure to comply with the Prevailing Wage Act. (Ill. Rev. Stat. 1985, ch. 48, pars. 39s-1 through 39s-12.) ASI paid the wage claim and informed Lindblad of its need to modify the subcontract to accommodate the wage difference. Lindblad then notified the construction project architect that ASI paid IDOL $10,324.15 on the wage claim. Lindblad noted that Plainfield did not specify compliance with the Illinois Prevailing Wage Act in the construction contract and asked for a "change order" in the amount of $11,873.00, which sum included overhead and profit for Lindblad. The project architect denied Lindblad's request, and, for the benefit of ASI, Lindblad made a demand for arbitration pursuant to the construction contract.

Plainfield subsequently brought an action to vacate the arbitration award pursuant to section 12 of the Uniform Arbitration Act (Ill. Rev. Stat. 1985, ch. 10, pars. 101 through 123). Plainfield claimed that the arbitrator exceeded its power in assessing the award against it. Specifically, Plainfield asserted that the arbitration award was entered against it for its negligent failure to include in the construction contract a prevailing wage rate provision. Plainfield then asked the court to vacate the award since, as a public body, Plainfield is immune from suit under the Local Governmental and Governmental Employees Tort Immunity Act (Tort Immunity Act) (Ill. Rev. Stat. 1985, ch. 85, pars. 1-101 through 9-107).

A variety of pleadings were filed and motions made on the original complaint. Plainfield then amended its complaint and filed a motion for summary judgment, asking the court either to vacate or modify the award on the basis that ASI had intentionally misrepresented the amount owed by Plainfield under the contract. Plainfield and Lindblad then filed motions for attorney fees and costs. They both alleged that ASI's president, William Steinmetz, falsely stated at the arbitration hearing that the entire $34,007.49 was attributable to the Plainfield-Lindblad contract when most of that amount was actually attributable to two other school district contracts. Plainfield and Lindblad claimed rights to attorney fees and costs as a result of ASI's misrepresentations before both the arbitrator and the court.

On October 22, 1987, the circuit court entered an order granting Lindblad leave to file an amended motion for summary judgment within seven days and ASI to respond 14 days thereafter. The hearing on the motions for summary judgment and for attorney fees and costs was set for November 25, 1987.

Lindblad filed its amended motion for summary judgment on November 13, 1987, giving ASI 12 days to respond. At the hearing, the trial court entered an order granting summary judgment for Lindblad, reducing the arbitrator's award to $10,567.52, and granting both Lindblad and Plainfield attorney fees under section 2-611 of the Civil Practice Law (Ill. Rev. Stat., 1986 Supp., ch. 110, par. 2-611) against ASI and William Steinmetz. The court found that Steinmetz knowingly presented false information to the arbitrator regarding the amount in controversy and filed pleadings with the court, requesting the court to confirm an arbitration award, which Steinmetz knew was for a sum far in excess of the amount to which ASI had any right. ASI appeals from that decision. Plainfield cross-appeals, asking this court to hold that it is immune from liability only if we determine that the trial court erred in reducing the arbitration award to $10,567.52.

The first issue we address is whether the trial court properly reduced the arbitrator's award, which was inflated because of the misrepresentations of a party to that proceeding. Section 12 of the Uniform Arbitration Act provides that "the court shall vacate an award where: (1) The award was procured by corruption, fraud or other undue means." (Ill. Rev. Stat. 1985, ch. 10, par. 112(a)(1).) This court has held that where an arbitration award is in part improperly procured, only that part will be set aside. (Stufflebeam v. Allen (1913), 184 Ill. App. 133, 136-37.) In this case Lindblad procured an award of $34,007.49 based upon Steinmetz' assertions that IDOL assessed that amount against ASI for its work under the Plainfield-Lindblad contract. The record is clear, however, that the actual amount assessed against ASI by IDOL under the contract is $10,567.52. ASI does not deny that Steinmetz gave false testimony at the arbitration hearing as to the amount actually assessed against ASI under the Plainfield-Lindblad contract. Thus, it appears that a portion of the arbitration award was procured through improper means, namely fraud. The trial court was correct, therefore, in setting aside that portion of the award improperly procured.

ASI argues that the trial court did not have jurisdiction to set aside the award, since (1) the arbitrator's award is to be given great deference and (2) the error in the award is not apparent upon the face of the award. We note, however, that while an award may be given deference, the statute clearly permits the court to vacate the award under the ...


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