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C. Szabo Contracting, Inc. v. Lorig Construction Co.

Court of Appeals of Illinois, Second District

September 29, 2014

C. SZABO CONTRACTING, INC., Plaintiff-Appellee,
v.
LORIG CONSTRUCTION COMPANY, Defendant-Appellant (JLA Construction, Inc., Plaintiff)

Page 639

[Copyrighted Material Omitted]

Page 640

Appeal from the Circuit Court of Du Page County. No. 10-L-956. Honorable Dorothy French Mallen, Judge, Presiding.

SYLLABUS

Where defendant general contractor entered into a subcontract with plaintiff for storm sewers and other work on a construction project and plaintiff entered into a sub-subcontract with plaintiff sub- subcontractor for the pipe-jacking work related to the storm sewers, but defendant did not pay anyone after the sub-subcontractor completed the pipe-jacking work, the sub-subcontractor sued the general contractor for unjust enrichment based on a quasi-contract theory, and the trial court's judgment for the sub-subcontractor for the full amount due for the pipe-jacking work was affirmed by the appellate court, since even though an unjust enrichment claim based on quasi-contract is generally not available when an express contract governs the same matter, and such an action could not be sustained on the grounds that the general contractor enticed the sub-subcontractor to do the work or guaranteed payment, in the instant case, the circumstances warranted a judgment for the sub-subcontractor, especially when the general contractor's retention of the benefit of the completed pipe-jacking work without paying anyone amounted to unjust enrichment.

Pedro Cervantes and Rafael Rivera, Jr., both of Tristan & Cervantes, of Chicago, for appellant.

James F. McCluskey, Lauryn E. Parks, and Patrick R. Boland, all of Momkus McCluskey, LLC, of Lisle, for appellee.

JUSTICE ZENOFF delivered the judgment of the court, with opinion. Justices Schostok and Hudson concurred in the judgment and opinion.

OPINION

ZENOFF, JUSTICE.

Page 641

[¶1] The Illinois State Toll Highway Authority (Tollway) hired defendant, Lorig Construction Company (Lorig), to be the general contractor on a construction project on Interstate 355 near the Des Plaines River. Lorig subcontracted with plaintiff JLA Construction, Inc. (JLA), to install storm sewers and perform other work. JLA, in turn, subcontracted with plaintiff C. Szabo Contracting, Inc. (Szabo), to perform pipe-jacking, which involved installing underground storm sewer pipes using tunneling instead of open excavation. After the pipe-jacking was complete and no payment was received, Szabo and JLA sued Lorig using various theories, including breach of contract and unjust enrichment based on quasi-contract. JLA voluntarily dismissed its claims, and only Szabo's quasi-contract claim went to trial. Following a bench trial, the court found in Szabo's favor and entered judgment against Lorig in the amount of $215,400. Because we conclude that Lorig would be unjustly enriched if permitted to retain the benefit that it specifically requested and agreed to pay for, we affirm.

[¶2] I. BACKGROUND

[¶3] On May 1, 2006, after the Tollway had hired Lorig as the general contractor on the Interstate 355 project, Lorig subcontracted with JLA to install storm sewers and perform other work on the project. The subcontract amount was approximately $2.8 million. On August 31, 2006, as an add-on to the original subcontract, Lorig authorized JLA to perform pipe-jacking. The approved price for the pipe-jacking was $1,746 per linear foot of pipe.

[¶4] After Lorig subcontracted with JLA and authorized it to complete the pipe-jacking, Lorig discovered that JLA was not a Tollway-approved " Disadvantaged Business Enterprise" (DBE). This was problematic, because Lorig's agreement with the Tollway required it to subcontract a portion of its work to a DBE. Consequently, Lorig sent a letter to JLA requesting that it assign its subcontract to JLA & Sons, Inc., which was a DBE.

[¶5] On March 20, 2007, in follow-up correspondence to JLA, Lorig specifically exempted the pipe-jacking from the requested assignment to JLA & Sons. Lorig indicated that the pipe-jacking was not part of the original subcontract and did not need to be completed by a DBE. Although it would permit JLA to perform the pipe-jacking, Lorig expressed concern over JLA's ability to obtain union workers to do the work, as the Tollway required. Lorig threatened to take over the work if JLA was unable to provide union workers within five days.

[¶6] Upon receiving the follow-up correspondence from Lorig, JLA subcontracted the pipe-jacking work to Szabo. The subcontract price was $266,274, which was calculated at a rate of $1,746 per linear foot of pipe. On March 22, 2007, Szabo sent a fax on its company letterhead to Lorig indicating that it had obtained union

Page 642

workers and was " on the job continuing with the bore," which referenced the pipe-jacking. Lorig did not respond.

[¶7] After the pipe-jacking was complete, JLA and Szabo sent Lorig a number of communications. On April 10, 2007, JLA submitted to Lorig a lien waiver for completed work. The waiver identified Szabo as the sub-subcontractor that performed the pipe-jacking. On April 11, 2007, Szabo faxed to Lorig a payment request of $266,274 for the pipe-jacking. On April 30, 2007, Szabo faxed to Lorig certified payroll records related to the pipe-jacking. On May 26, 2007, Szabo faxed to Lorig another payment request. JLA and Szabo received no responses.

[¶8] On October 1, 2007, Szabo received a fax from Walter Simpson, Lorig's senior project engineer, requesting clarification about certain discrepancies in the " final numbers." Attached to the fax cover sheet were four pages that listed the pipe-jacking as well as all work completed under JLA's subcontract with Lorig before it was assigned to JLA & Sons. In response, Szabo faxed invoices and notes explaining the discrepancies, some of which pertained to the pipe-jacking and some of which pertained to work performed by JLA.

[¶9] At the bench trial, Carl Szabo testified as follows. During the course of the Interstate 355 project, he was both president of JLA and vice president of Szabo. On behalf of JLA, Carl signed the subcontract between JLA and Szabo. Carl's brother, James Szabo, signed the subcontract on behalf of Szabo. Before the pipe-jacking began, Carl had meetings with Simpson, during which they discussed the pipe-jacking and " how soon we would be able to get the proper forces out there to do the work." According to Carl, Simpson " encouraged us to do the work." Carl also spoke with Simpson a couple of times on the job.

[¶10] Carl testified that Szabo started working on preparations for the pipe-jacking on March 5, 2007, which was before its March 20, 2007, subcontract with JLA. The subcontract was executed because Szabo had a contract with a union and could obtain the necessary union workers. Szabo was on the project for about two months, and Carl was on the job daily.

[¶11] On cross-examination, Carl acknowledged that, in addition to representing Szabo on the jobsite, he also worked for JLA and JLA & Sons. To that end, he was on the jobsite during the course of the entire Interstate 355 project, not just during the pipe-jacking. Carl further admitted that the workers who started preparations for the pipe-jacking on March 5, 2007, also worked for JLA.

[¶12] Carl testified that Szabo was seeking only $215,400 in damages, instead of the full $266,274 subcontract price, because Lorig paid some of Szabo's suppliers directly. According to Carl, under industry custom, Szabo would have paid its own suppliers. One of Szabo's suppliers was Elmhurst-Chicago Stone, which supplied concrete pipe and aggregate for the pipe-jacking. An invoice from Elmhurst-Chicago Stone listed Szabo as the customer. On cross-examination, Carl acknowledged that ...


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