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BATTEAST CONSTRUCTION COMPANY, INC. v. PUBLIC BLDG. COMM.

April 3, 2001

BATTEAST CONSTRUCTION COMPANY, INC., PLAINTIFF
v.
PUBLIC BUILDING COMMISSION OF CHICAGO, DEFENDANT.



The opinion of the court was delivered by: Robert W. Gettleman, U.S. District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff, Batteast Construction Company, Inc. has filed a six count complaint against the Public Building Commission of Chicago. Count 1 of plaintiff's complaint alleges breach of contract for failure to make payments due. In Count 2, plaintiff alleges breach of contract resulting from defendant's hindrances and disruptions to plaintiffs performance of the contract. The remaining counts include breach of implied warranty (Count 3), breach of contract resulting from wrongful termination (Count 4), quantum meruit (Count 5), and promissory estoppel (Count 6). Defendant has moved to dismiss plaintiffs complaint for lack of subject matter jurisdiction. Defendant also moves to dismiss each count for failure to state a claim. For the following reasons, defendants' motion is denied in part and granted in part.

FACTS

For purposes of a motion to dismiss, the court accepts the factual allegations of the complaint as true and draws all reasonable inferences in favor of plaintiff. Travel all Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1428 (7th Cir. 1996). Plaintiff, an Indiana corporation with its principal place of business in South Bend, Indiana, is in the business of general construction contracting. Defendant, a municipal corporation with offices in Chicago, Illinois, existing pursuant to the Illinois Public Building Commission Act, administers the construction of building facilities for the City of Chicago. Plaintiff submitted bids to defendant for the construction of the Chicago Children's Advocacy Center (the "Project") in accordance with defendant's plans and specifications. On November 9, 1999, defendant awarded a contract to plaintiff, identified as Contract No. 1123R, for the Project.

The contract provided that plaintiff would be paid the lump sum price of $4,461,908, and that the amount might be adjusted to include extras and any changes implemented pursuant to the terms of the contract. Generally, the scope of plaintiffs work included site clearing, demolition, miscellaneous earth work, and construction of the new facility. The contract required the Project's completion by November 1, 2000, but also provided that the completion date could be extended if plaintiff experienced problems to its work that were beyond its control or if defendant changed the scope of the plaintiff's work by ordering extras or other changes.

Plaintiff commenced performance under the contract on November 22, 1999, and periodically invoiced defendant for the progress plaintiff made pursuant to the contract. In turn, defendant made progress payments to plaintiff. During the course of the work, defendant periodically instructed plaintiff to perform extra work, pursuant to the contract's changes clause, in order to correct defects and errors in the plans. The parties administered specific changes using bulletin numbers (a specific change would be identified with a bulletin number). The parties then negotiated plaintiffs additional compensation that resulted from these bulletins. The parties eventually entered into nine formal contract change orders, which formally increased the contract price to $6,352,407.74 and extended the Project's completion date to December 27, 2000.

In January 2001, plaintiff was able to achieve substantial completion of the contract work. During this time, defendant accepted beneficial occupancy of the work and thereafter began using the facility for its intended purpose. In addition, defendant issued contract punch lists to plaintiff identifying the remaining work to be performed for acceptance of the Project and issued directives ordering plaintiff to perform extra and additional work. Many of these directives were incorporated into new bulletins. Defendant subsequently issued additional punch lists, which altered the original punch list that was used to identify the remaining work to be completed. Plaintiff alleges that the punch list items were completed by May 2001, but that, between January and June 2001, defendant continued to issue additional directives ordering plaintiff to perform extra work.

The complaint alleges that, during the course of the work, plaintiff diligently pursued the remaining work, but encountered disruptions, hindrances, and other problems that were beyond its control and caused by defendant's tortious and wrongful actions. These hindrances prevented plaintiff from completing the work within the time allotted by the contract. The complaint also alleges that, with the exception of the 56-day extension, defendant failed to grant plaintiff any additional time to complete its performance and threatened to assess contract-liquidated damages against plaintiff for failing to complete the Project within the performance period.

Defendant refused to make progress payments to plaintiff after May 9, 2001, and on June 26, 2001, forwarded a default termination letter to plaintiff pursuant Section 28 of the contract. As a result of the letter, plaintiff was forced to leave the Project site. Plaintiff alleges that, at the time of termination, it had completed all of the work required by the contract and was in the process of closing out the Project and resolving the few work items that remained open. Plaintiff claims defendant owes $978,140.58 as the unpaid amount of the adjusted contract price and $154,883 for the out-of-scope work completed by plaintiff. Plaintiff also seeks other damages in an amount not less than $200,000.

LEGAL STANDARD

In ruling on a motion to dismiss for failure to state a claim, the court considers "whether relief is possible under any set of facts that could be established consistent with the allegations." Bartholet v. Reishauer A.G., 953 F.2d 1073, 1078 (7th Cir. 1992). A claim may be dismissed only if it is beyond doubt that under no set of facts would plaintiffs allegations entitle it to relief Conley v. Gibson, 355 U.S. 41, 45-46; Travel All Over the World, 73 F.3d at 1429-30. The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide its merits. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990).

DISCUSSION

Motion to Dismiss for Lack of Subject Matter Jurisdiction

Defendant moves to dismiss plaintiffs complaint arguing that plaintiff has failed to properly allege diversity of citizenship under 28 U.S.C. § 1332. For purposes of diversity jurisdiction, a corporation is a citizen of the state where it has its principal place of business as well as a citizen of the state in which it is incorporated. 28 U.S.C. § 1332(c). Accordingly, plaintiff has ...


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