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ADVANCE IRON WORKS, INC. v. JOHN EDWARDS CONSTRUCTION CO.

ADVANCE IRON WORKS, INC., Plaintiff,
v.
JOHN EDWARDS CONSTRUCTION COMPANY, EVEREST REINSURANCE COMPANY, and MID-STATE SURETY CORPORATION, Defendants.



The opinion of the court was delivered by: MARTIN ASHMAN, Magistrate Judge

MEMORANDUM OPINION AND ORDER

This case was brought as an action under the Miller Act, 40 U.S.C. § 270a et seq., and for breach of contract by Plaintiff Advance Iron Works, Inc. ("Advance") against Defendant John Edwards Construction Company ("JECC"), as the general contractor, and Everest Reinsurance Company and Mid-State Surety Corporation, as co-sureties on the Miller Act bond. JECC filed a counterclaim alleging breach of contract and quantum meruit. The parties have consented to have this Court conduct any and all proceedings in this case, including the entry of final judgment. See 28 U.S.C. § 636(c); Local R. 73.1(a).

After conducting a bench trial, the Court has carefully considered the testimony of the witnesses who appeared at trial, the exhibits introduced into evidence, the written submissions of the parties and the arguments of counsel. The following are the Court's findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a). To the extent certain findings of fact may be deemed to be conclusions of law, they shall also be considered the Court's conclusions of law. Similarly, to the extent matters contained in the conclusions of law may be deemed findings of fact, they shall also be considered the Court's factual findings.

  I. Findings of Fact

  A. Claims of the Parties

  1. JECC and Advance entered into an agreement whereby Advance was to furnish and install certain structural steel for a project known as the VA Hines Reactivation Center Renovation (the "Project"). Advance claims that it furnished and erected certain of the structural steel elements but was unable to erect and deliver all of the steel due to delays in the Project. JECC improperly terminated Advance's subcontract even though Advance was ready, willing, and able to complete the work on the Project.

  2. JECC claims that Advance breached the subcontract by failing to properly complete the subcontract work on a timely basis. It also claims that Advance breached its subcontract with Up-Rite Steel Company, which has since settled with JECC and assigned its claims to JECC (consolidated case 02 C 1152).

  B. The Parties

  3. Advance is an Illinois corporation, with its principal place of doing business in East Hazel Crest, Cook County, Illinois. Advance is in the business of manufacturing and providing structural and miscellaneous steel and related services, including the erection of said steel. Robert Sutphen, the Vice President of Advance, testified at trial on behalf of Advance. 4. JECC is an Illinois corporation with its offices in Downers Grove, Illinois. JECC is in the business of acting as a general contractor. John Pilut testified at trial. Since 1980 he has been President and sole owner of JECC. Del Calhoun, a project manager and general superintendent for JECC, also testified at trial. His duties include scheduling, on-site field adjustments and, in this case, running the Project in the field. Vincent Allegra, an estimator and project manager for Up-Rite Steel Erectors, also testified at trial. The final witness was Marc Bennett Karlin. During the pertinent time, Karlin's duties at JECC included handling invoices from vendors within the company and distributing funds to the vendors.

  5. Defendant Everest Reinsurance Company is a New Jersey corporation, authorized to do business in the State of Illinois. It is in the business of issuing surety bonds.

  6. Defendant Mid-State Corporation is a Michigan corporation, authorized to do business in the State of Illinois. It is in the business of issuing surety bonds.

  C. The Pertinent Contracts

  7. In July of 1999, JECC was awarded a contract by the Department of Veterans Affairs in response to its bid of $2,855,500.00 to renovate the Reactivation Center located at the Edward Hines Jr. VA Hospital in Hines, Illinois (the "General Contract"). The schedule called for the Project to be completed in November, 2000. (JTX 5.)*fn1

  8. Prior to the award of the General Contract, Advance submitted a proposal to JECC to provide steel fabrication and erection for the Project. (JTX 1.) 9. On November 23, 1999, JECC and Advance entered into a subcontract for the steel work for the sum of $220,000 (the "Advance Subcontract"). (JTX 3.)

  10. On March 16, 1999, Advance and Up-Rite Steel entered into a subcontract in the amount of $50,000 for the erection of the steel for the Project (the "Up-Rite Subcontract"). (DX 74.)

  D. Relevant Provisions of the Subcontract

  1. Scheduling

  11. The dates of commencement and substantial completion were not set forth in the Advance Subcontract; rather, the parties agreed that the dates would be set according to the schedule from JECC. (JTX 3 at §§ 9.1-9.3 & Ex. B.)

  12. The parties agreed that time was of the essence in the completion of the Advance Subcontract. (JTX 3 at § 9.4 and Ex. B.)

  13. One mobilization was included for the Advance work. Additional mobilizations would require additional compensation from JECC. (JTX 3 at Ex. H.) Advance agreed to "cooperate with [JECC] in scheduling and performing their Work to avoid conflict or interference with the work of others." (JTX 3 at Ex. B.)

  2. Dispute resolution

  14. AIA Document A201, the General Conditions of the Contract for Construction (the "General Conditions"), was incorporated by reference into the Advance Subcontract. (JTX 3 at § 1.2.) Paragraph 4.3 of the General Conditions governs the procedure for claims and disputes that might arise between JECC and Advance with respect to the Project. (JTX 4.) A "claim" is a "demand or assertion by one of the parties seeking, as a matter of right, adjustment or interpretation of Contract terms, payment of money, extension of time or other relief with respect to the terms of the Contract." It also includes "other disputes and matters in question between [JECC and Advance] arising out of or relating to the Contract."

  15. Claims must be initiated by written notice within 21 days after occurrence of the event giving rise to the claim or within 21 days after the claimant first recognizes the condition giving rise to the claim, whichever is later. (JTX 4 at §§ 4.3.1 & 4.3.2.)

  16. Pending final resolution of the claim, Advance was to proceed diligently with performance of the Advance Subcontract, unless it had not been paid, and JECC was to continue to make payments in accordance with the terms of the subcontract. (JTX 4 at § 4.3.3.)

  17. Under the terms of the Advance Subcontract, Advance was required to promptly make all claims for additional cost, extension of time and damages to JECC. (JTX 3 at § 5.3.)

  18. Pursuant to section 6.1.1 of the Advance Subcontract, any claim arising out of the subcontract was to be subject to mediation as a condition precedent to the filing of a lawsuit. Mediation was also required (with limited ...


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