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DOING STEEL, INC. v. CASTLE CONSTRUCTION CORPORATION

United States District Court, N.D. Illinois


February 18, 2004.

DOING STEEL, INC., a Missouri corporation, Plaintiff,
v.
CASTLE CONSTRUCTION CORPORATION, an Illinois corporation, Defendant,

The opinion of the court was delivered by: MARVIN ASPEN, Chief Judge, District

MEMORANDUM OPINION AND ORDER

Plaintiff, Doing Steel, Inc., ("Doing Steel") filed a three-count complaint against Defendant Castle Construction Corporation ("Castle") alleging breach of contract, conversion, and breach of fiduciary duty. In an earlier opinion, we dismissed Doing Steel's conversion and breach of fiduciary duty claims. See Doing Steel, Inc. v. Castle Const. Corp., No, 02-C-1674, 2002 WL 31664476 (N.D. Ill. Nov. 21, 2002). Doing Steel then filed the present Motion for Partial Summary Judgment or, In the Alternative, to Strike Castle Construction Corporation's First and Second Affirmative Defenses. For the reasons set forth below, we deny both the motion for partial summary judgment as well as the motion to strike.*fn1

BACKGROUND

  The following facts, unless otherwise specified, have been culled from the parties' Local Rule Page 2 56.1 Statements of Material Facts. In 1999, Defendant Castle Construction entered into a contract with Illinois School District #148 to build a school in Dolton, Illinois. On September 8, 1999, Plaintiff Doing Steel entered into a subcontract agreement with Castle for steel work to be done in connection with the school construction project. (Pl.'s L.R. 56.1 Statement, Ex. A) ("Subcontract"). Castle agreed to pay $721,000 to Doing Steel for "satisfactory performance" of Doing Steel's obligations under the Subcontract. (Subcontract, Art. 4.) Castle also authorized Doing Steel to perform extra work by approving change orders to the original Subcontract agreement in the amount of $9,146.95, *fn2 for a total contract price of $730,146.95.

  Doing Steel began work on the project in December 1999 and stopped working in December of 2000. On January 5, 2001, Castle issued a notice terminating Doing Steel as a subcontractor. Doing Steel filed the present lawsuit in July 2002, claiming that it stopped working on the project in 2000 because it had not been paid by Castle for ten months and that it is still owed $220,651.95 under the Subcontract. (Pl.'s L.R. 56.1 Statement ¶ 8.) Both parties agree that Castle requested and received from the school district payments "based on the amount of structural steel in place" totaling $114,520.50, and that Castle never passed that money on to Doing Steel. Castle claims that the reason Doing Steel was not paid was because Doing Steel had not provided "satisfactory performance" as required by the Subcontract because it failed to meet construction deadlines, interfered with the work of other contractors, and ultimately left some of its work unfinished. (Def.'s L.R. 56.1 Statement ¶ 8.) Doing Steel, on the other hand, maintains that it satisfactorily performed most of its contractual obligations. (Pl.'s L.R. 56.1 ¶ 10.) Page 3

  There are several areas of disagreement between the parties. First, they dispute the amount of work Doing Steel left unfinished after Castle terminated Doing Steel from the school project. Castle claims that Doing Steel never provided or installed aluminum railings, as was required by the Subcontract. (Def.'s L.R. 56.1 Statement ¶¶ 6-7.) The parties agree that Doing Steel never fabricated or installed any aluminum for the school project. Id. However, Doing Steel denies that it was required to do so, claiming that it works only with steel, that it is "neither an installer nor fabricator of aluminum," and that it was only contractually required to perform work related to furnishing and installing steel work for the school project, (Pl.'s L.R. 56.1 Statement ¶¶ 6-7.)

  The parties also disagree over whether Doing Steel completed its work in a timely manner. Doing Steel claims that it worked "continuously" on the school project from December of 1999 to December of 2000. (Pl.'s L.R. 56.1 Statement ¶ 8.) Castle responds that Doing Steel began work on the project over one month late, created numerous other delays, and that those delays prevented other contractors from beginning their portions of the school project as scheduled. (Def.'s L.R. 56.1 Statement ¶ 21.) Ultimately, Castle asserts that it was required to make up for Doing Steel's tardiness, incurring "$144,655.27 in acceleration costs stemming from overtime paid to subcontractors, roofer expenses for changing the sequence of work, overtime paid to Castle, and overhead expenses" in order to complete the school project on time. (Def.'s L.R, 56.1 Statement ¶ 25.)

  Doing Steel brought the present action in 2002, alleging that Castle breached the Subcontract by failing to pay Doing Steel. Castle asserts three affirmative defenses based on Doing Steel's alleged failure to perform under the Subcontract. Two of Castle's affirmative defenses are the subject of the present motion for summary judgment.*fn3 Page 4

  ANALYSIS

  I. Standard of Review: Motion for Summary Judgment*fn4

  Summary judgment is proper only when "there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed R. Civ, P. 56(c). A genuine issue for trial exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). This standard places Page 5 the initial burden on the moving party to identify "those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (citations omitted). Once the moving party has met this burden of production, the nonmoving party "must set forth specific facts showing that there is a genuine issue for trial." Fed.R. Civ. P, 56(e). In deciding whether summary judgment is appropriate, we must accept the nonmoving party's evidence as true, and draw all inferences in that party's favor. See Anderson, 477 U.S. at 255.

  II. Discussion

  A. First Affirmative Defense: Set Off for Costs Incurred by Castle After Doing Steel's Termination

  In its first affirmative defense, Castle claims that it is entitled to a set off against any damages awarded to Doing Steel. Upon its termination from the Subcontract, Castle argues, Doing Steel became liable for costs incurred in completing Doing Steel's assigned tasks. Doing Steel does not contest the legal sufficiency of Castle's defense since the Subcontract explicitly allows Castle to recover the costs of performing Doing Steel's work upon Doing Steel's termination. (Subcontract, Art. 10.1.2.) Rather, Doing Steel argues that summary judgment is proper because Castle has not presented sufficient evidence to create a genuine issue of material fact for trial on the issue of whether Castle is entitled to any post-termination costs.

  As stated above, in assessing a summary judgment motion, we must first consider whether Doing Steel has met its initial burden of production, identifying evidence that would demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Doing Steel attempts to meet its burden by admitting that when it ceased working on the project it Page 6 had not completed installation of a particular handrail (thereby negating any fact issue with regard to that task) but arguing that it left no other work unfinished.*fn5 (Pl.'s L.R. 56.1 Statement ¶ 11) ("[a]t the time it ceased work, the only item remaining under the Subcontract Agreement was the fabrication and installation of twenty linear feet of handrail."). However, Doing Steel does not point to any "portions of the pleadings, depositions, answers to interrogatories, and admissions on file'" that would demonstrate the absence of a genuine issue of material fact on the issue of whether it had any other work left to perform. Celotex, 477 U.S. at 323. The only evidentiary authority that Doing Steel cites in its Local Rule 56.1 Statement is a citation to its own Statement of Contested Issues of Fact and Law in the parties' Final Pretrial Order. (Pl's L.R. 56.1 Statement, Ex. F ¶ 60) (emphasis added). In that portion of the final pretrial order, Doing Steel asserts that, "[t]he completion of these handrails had no structural significance to the building, in no way impeded any other contractor's or subcontractor's completion of their work, and the cost of completing the handrails was approximately $1496.00." Id This statement has nothing to do with the issue raised on summary judgment by Doing Steel, i.e. whether Castle could demonstrate at trial that it incurred costs in completing Doing Steel's work (aside from the costs of installing the handrail). Thus, Doing Steel does not even meet its basic burden of "`showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325,

  Although this is a sufficient ground upon which to deny summary judgment, we also observe that Castle has met its burden of setting forth specific facts to show that there is a genuine issue of material fact on the issue of post-termination costs. Fed.R.Civ.P. 56(e). In its response to Doing Steel's motion, Castle argues that, in addition to the cost of installing the handrail, Doing Steel was Page 7 responsible for, and failed to complete, some aluminum work on the school project. Doing Steel retorts that it is impossible for Castle to recover under the Subcontract for aluminum work because 1) Doing Steel is not a fabricator of aluminum; and 2) Article 15.2 of the Subcontract specifically provides that the scope of work is only to "furnish and install all structural and miscellaneous steel work." (Pl.'s L.R. 56.1 Statement ¶¶ 6-7) (emphasis in original). There are several problems with these arguments. First, Doing Steel points to no evidence to support its assertion that it is not a fabricator of aluminum. Second, although Doing Steel correctly cites one portion of Article 15.2 of the Subcontract, it fails to note the remainder of that Article. Article 15.2 also requires Doing Steel to perform all work in accordance with "specification division 5." Specification division SA, which arguably could be considered a part of specification division 5, *fn6 describes requirements for performing aluminum work. (Def.'s L.R. 56.1 Statement, Ex. Y, § 5A.O7) (providing that "[w]here aluminum is to be fastened to steel supporting members or other dissimilar metal parts, keep aluminum from direct contact with such parts . . ."). While this portion of the Subcontract does not necessarily prove that Doing Steel was required to produce aluminum, it suggests that supplying aluminum may have been one of Doing Steel's contractual duties. Thus, there is a genuine issue of material fact for trial as to what costs (if any) Castle incurred in performing Doing Steel's work after Doing Steel's termination. Summary judgment is therefore denied with respect to Castle's first affirmative defense. Page 8

  B) Second Affirmative Defense: Set Off for Delay

  In its second affirmative defense, Castle claims that it is entitled to damages*fn7 in the amount paid by Castle as a result of Doing Steel's alleged delays in completing its work on the school project. Doing Steel believes that the Subcontract does not allow for recovery for delays in performance. We disagree. The Subcontract is replete with covenants regarding the timing of the construction project. For example, Article 3.1 of the Subcontract states that, "[t]ime is of the essence for both parties." In Article 3.2, Doing Steel agreed to be bound by Castle's schedule of work, and, in Article 3.4, it promised that it would coordinate its work with other contractors "so as not to delay, interfere or damage such other contractors' or suppliers' work or performance." Finally, Article 10.1.1 of the Subcontract specifically enumerates remedies that are available in case Doing Steel fails to maintain Castle's schedule of work.

  In spite of all of the contractual promises Doing Steel made to complete its work on time, Doing Steel claims that Castle cannot recover for delay and overtime costs because Article 10.1.2 of the Subcontract limits contractual remedies to those costs incurred by Castle in "performing [Doing Steel's] work." Presumably, Doing Steel's rationale is that, even if Castle paid overtime to other contractors to make up for Doing Steel's tardiness, those payments ultimately went to complete the Page 9 work of those contractors and not toward performing Doing Steel's work. Because Article 10.1.2 does not specifically authorize Castle to collect damages for the overtime charges, Doing Steel reasons, Castle has no recourse for Doing Steel's delays under the Subcontract. Again, we disagree. One of Doing Steel's contractual responsibilities was to maintain the schedule of work set by Castle for the school project. (Subcontract, Article 3.2.) Doing Steel's alleged failure to do so constituted a failure to perform its work. Thus, any damages incurred by Castle in remedying that situation can be considered a cost of "performing [Doing Steel's] work."

  Furthermore, under Illinois law, a contract does not limit the type of relief available to a party unless the contract itself "clearly indicate [s] that the intent of the parties was to make the stipulated remedy exclusive." Board of Regents v. Wilson, 326 N.E.2d 216, 220 (Ill.App.Ct 1975) (citations omitted); see also Brian McDonagh, S.C. v. Moss, 565 N.E.2d 159, 161 (Ill.App.Ct. 1990) (noting that merely providing for one type of remedy in a contract "does not preclude other remedies available to them in the event of a breach."). Doing Steel does not argue that the remedies listed in the Subcontract were meant to be exclusive, nor is there any indication in the Subcontract itself that the parties intended to preclude other remedies. We therefore find that the Subcontract does not preclude Castle's second affirmative defense.

  Turning then to the factual sufficiency of Castle's second affirmative defense, Doing Steel once again fails to meet its initial burden of demonstrating the absence of a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In its summary judgment motion, Doing Steel never actually denies that it failed to comply with Castle's schedule of work, asserting simply that it "continuously performed" work on the school project. (Pl.'s L.R, 56.1 Statement ¶ 8.) The bare assertion that it "continuously performed" does not speak to the issue of whether Doing Page 10 Steel caused any delays on the project, and certainly does not suggest the absence of a genuine issue of material fact on the issue.

  Furthermore, Doing Steel offers only one piece of affirmative evidence in support of its assertion that it "continuously performed." Specifically, Doing Steel provides invoices, which were submitted by Castle to the school district, in which Castle requested payment for work performed by Doing Steel. Doing Steel argues that these requests are evidence of Doing Steel's satisfactory performance of the Subcontract. It is true that the pay requests may constitute evidence at trial on the question of whether Doing Steel performed some of its tasks under the Subcontract However, the pay slips do not speak at all to the issue of whether or not Doing Steel performed some its work late or whether Castle incurred costs as a result of those alleged delays. Thus, the submissions do not demonstrate the absence of a genuine issue of material fact with regard to Castle's second affirmative defense.

  Furthermore, we note that Castle has met its burden of setting forth specific facts showing that there is a genuine issue for trial on its second affirmative defense. See Fed.R.Civ.P. 56(e). Castle submitted a stack of invoices from various contractors purporting to catalogue the overtime costs incurred by Castle in correcting Doing Steel's delays. In addition, Castle provides deposition transcripts of Robert Gates, Castle's Vice President, and Reid Specht, Castle's Superintendent, which detail the costs associated with Doing Steel's alleged failure to maintain Castle's schedule of work.

  Doing Steel attempts to rebut much of this evidence by challenging its admissibility at trial. It is true that, in ruling on a motion for summary judgment, a court may only consider evidence that would be admissible at trial. Fed.R.Civ.P. 56(e) (requiring that supporting affidavits "shall set forth such facts as would be admissible at trial."). Doing Steel misses the Seventh Circuit's Page 11 pronouncement, however, that "[t]he evidence need not be admissible in form (for example, affidavits are not normally admissible at trial), but it must be admissible in content." Stinnett v. Iron Works Gym/Executive Health Spa, Inc., 301 F.3d 610, 613 (7th Cir. 2002). For example, Doing Steel challenges the submission of invoices which purport to reflect overtime costs incurred by Castle in making up for Doing Steel's failure to comply with the construction schedule. Doing Steel argues that we should disregard these documents because they contain no language linking the overtime charges with Doing Steel's alleged delays. In essence, Doing Steel is claiming that we should not consider those documents because they are not properly authenticated. See Fed.R.Evid. 901(a). While it is true that these documents would need to be authenticated to be admissible at trial, the only relevant issue for purposes of summary judgment is whether their content is admissible, which it is. For example, Castle could call the person who performed the overtime work to testify that he did the work at a given cost and then call someone else to demonstrate that the overtime work was necessary as a result of Doing Steel's delays. We may therefore consider the invoices for purposes of the present motion.

  Doing Steel advances similar faulty evidentiary arguments with regard to the remainder of Castle's proffered evidence. Since Doing Steel does not cite to any evidence that is inadmissible in content, however, we consider all of the evidence put forth by Castle in considering the merits of Doing Steel's motion for partial summary judgment. We find that Castle has more than met its burden of showing that there is a genuine issue of material fact with regard to Castle's second affirmative defense. Page 12

  CONCLUSION

  For the foregoing reasons, this Court denies Doing Steel's Motion for Partial Summary Judgment or, In the Alternative, to Strike Castle Construction Corporation's First and Second Affirmative Defenses. It is so ordered.


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