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Shaw Industries, Inc. v. Community College District No. 515

December 12, 2000

SHAW INDUSTRIES, INC., A GEORGIA CORPORATION,
PLAINTIFF-APPELLANT,
V.
COMMUNITY COLLEGE DISTRICT NO. 515, ALSO KNOWN AS PRAIRIE STATE COLLEGE, A BODY POLITIC AND CORPORATE,
DEFENDANT-APPELLEE.



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY No. 98 L 9642 THE HONORABLE SHELDON GARDNER JUDGE PRESIDING.

The opinion of the court was delivered by: Justice Cousins

Plaintiff, subcontractor Shaw Industries, Inc. (Shaw), filed an amended complaint against defendant, Community College District No. 515, also known as Prairie State College (Prairie State College), alleging breach of contract arising from Prairie State College's failure to require the procurement of a payment bond from its contractor, now bankrupt, Prairie State Associates, Inc. (PSA), pursuant to the Illinois Public Construction Bond Act (30 ILCS 550/1 et seq. (West 1998)) (Bond Act). Prairie State College filed a motion to dismiss the amended complaint pursuant to Section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 1998)), which the trial court granted without prejudice. Thereafter, Shaw filed a motion to reconsider. The trial court denied Shaw's motion and dismissed Shaw's cause with prejudice without leave to amend. Shaw appealed.

On appeal, Shaw, the subcontractor, principally contends that the trial court committed reversible error in dismissing its amended complaint because (1) plaintiff was a third-party beneficiary authorized to bring the cause of action pursuant to Section 1 of the Bond Act (30 ILCS 550/1 (West 1998)), and (2) plaintiff's breach of contract suit against the defendant, a public entity, is not subject to the six-month limitations period in Section 2 of the Bond Act (30 ILCS 550/2 (West 1998)). Shaw also alleges that it is entitled to recover from Prairie State College pursuant to the Local Government Prompt Payment Act (Prompt Payment Act) (50 ILCS 505/9 (West 1998)).

BACKGROUND

In its amended complaint, Shaw states that it is in the business of manufacturing and selling materials, including carpeting. PSA, now bankrupt, was in the business of selling and installing carpeting and other materials manufactured by other companies. In December 1996, PSA ordered carpeting and related materials from Shaw so that PSA could fulfill its obligation to Prairie State College pursuant to purchase order number 31974, dated August 21, 1996.

The purchase order was for 465 yards of carpet, including installation. The cost listed on the purchase order was $14,800. It was addressed to Don Sullivan of PSA, Inc., from Ray Marthaler of Prairie State College. Shaw also alleges that Prairie State College had prior dealings with PSA and was familiar with the fact that PSA purchased, as opposed to manufactured, carpeting.

Additional allegations by Shaw include the following: that it fully performed all of its obligations and that it last furnished material to PSA on or about February 21, 1997; that Prairie State College claims to have paid PSA all public funds appropriated for the project; that PSA owes Shaw $25,877.28 plus interest; and that, pursuant to the Bond Act, Prairie State College, a political subdivision, was obligated to require a payment bond from PSA to ensure payment to all of PSA's subcontractors that furnished labor and/or materials in connection with purchase order number 31974.

On August 1, 1997, Shaw served Prairie State College and PSA with a "Notice Of Claim For Lien Against Public Funds And Claim On Contractor's Bond." In a letter dated August 4, 1997, Prairie State College advised Shaw that no payment bond had been obtained.

Shaw also contends that had Prairie State College obtained a payment bond from PSA, as required by Section 1 of the Bond Act to guarantee payment for the materials used in connection with a public improvement, then Shaw would have been able to recover under said bond for the materials it provided to the now-bankrupt PSA. Shaw further contends that it should be able to recover under the Prompt Payment Act.

Prairie State College moved to dismiss Shaw's amended complaint alleging that plaintiff's complaint asserted a cause of action for breach of contract yet also implied violations under the Bond Act. Specifically, defendant's motion asserted that: (1) plaintiff cannot assert a breach of contract claim as [it is] not in privity of contract for the contract at issue; (2) plaintiff has exceeded the statute of limitations to file for payment under the Bond Act; (3) the Prompt Payment Act does not apply to claims brought by subcontractors against public bodies; and (4) the doctrine of laches should apply here as Prairie State College has already completed its budget and levy and paid the contractor for the work at issue and, therefore, should not be required to pay a claim that did not come in a timely manner. On appeal, Shaw contests allegations (1), (2) and (3).

We affirm.

ANALYSIS

I.

When a complaint is dismissed pursuant to Section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 1998)), the standard of review is de novo. Vernon v. Schuster, 179 Ill. 2d 338, 344, 688 N.E.2d 1172, 1175 (1997). The question presented by a Section 2-615 motion to dismiss is whether the allegations of the complaint, when viewed in a light most favorable to the plaintiff, are sufficient to state a cause of action upon which relief can be granted. Vernon, 179 Ill. 2d at 344, 688 N.E.2d at 1175. A cause of action should not be dismissed on the pleadings unless it clearly appears that no set of facts can be proved under the pleadings that entitle the plaintiff to recover. Vernon, 179 Ill. 2d at 344, 688 N.E.2d at 1175.

A.

Shaw contends that the trial court committed reversible error in dismissing its amended complaint under section 2-615 of the Illinois Code of Civil Procedure (735 ILCS 5/2-615 (West 1998)), because Shaw was a third-party beneficiary authorized to bring the cause of action pursuant to Section 1 of the Bond Act (30 ILCS 550/1 (West 1998)), and also because its breach of contract suit against the defendant, a public entity, is not subject to the six-month limitations period in section 2 of the Bond Act (30 ILCS 550/2 (West 1998)).

Section 1 of the Bond Act (30 ILCS 550/1 (West 1998)) provides:

"Except as otherwise provided by this Act, all officials, boards, commissions or agents of this State, or of any political subdivision thereof in making contracts for public work of any kind to be performed for the State, or a political subdivision thereof shall require every contractor for such work to furnish, supply and deliver a bond to the State, or to the political subdivision thereof entering into such contract, as the case may be, with good and sufficient sureties. The amount of such bond shall be fixed by such officials, boards, commissions, commissioners or agents, and such bond, among other conditions, shall be conditioned for the completion of the contract, for the payment of material used in such work and for all labor performed in such work, whether by subcontractor or otherwise." (Emphasis added.) 30 ILCS 550/1 (West 1998).

Here, section 1 of the Bond Act provides that the public entity "shall require every contractor for such work to furnish, supply and deliver a bond to the State *** with good and sufficient sureties." (Emphasis added.) 30 ILCS ...


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