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Central Contracting, Inc. v. Kenny Construction Co.

United States District Court, N.D. Illinois, Eastern Division

February 25, 2015

CENTRAL CONTRACTING, INC., Counterdefendant.


JORGE L. ALONSO, District Judge.

Before the Court are the parties' cross-motions for partial summary judgment. For the reasons explained below, the motion of plaintiff/counterdefendant, Central Contracting, Inc. ("Central"), for partial summary judgment [88] is denied, and the motion of defendant/counterplaintiff Kenny Construction Company ("Kenny") for partial summary judgment [78] is granted.


Central filed its complaint and amended complaint in September 2011 against Kenny and defendant Trans-Allegheny Interstate Line Company ("TrailCo") in the Circuit Court of Monongalia County, West Virginia, asserting claims for breach of contract, enforcement of mechanic's lien, and unjust enrichment. On October 7, 2011, defendants removed the case to the United States District Court for the Northern District of West Virginia, alleging diversity jurisdiction. On December 23, 2011, the district court granted in part defendants' motion to transfer the case to this district, severing Counts I and III (breach of contract and unjust enrichment) and transferring them to this district.[1] Upon transfer, the case was assigned to the Honorable Amy J. St. Eve. Defendants answered the amended complaint, and Kenny filed a counterclaim asserting claims for declaratory judgment (Count I), breach of contract (Count II), unjust enrichment (Count III), and an accounting (Count IV). The case was later reassigned to the Honorable John Z. Lee and recently reassigned to this Court.

In February 2012, Kenny moved for partial summary judgment. In response, Central invoked Federal Rule of Civil Procedure 56(d) and argued that it was unable to respond to Kenny's motion without discovery. Judge St. Eve entered an order denying Kenny's motion without prejudice and granting Central's Rule 56(d) request for discovery. In that order, the court described the basic facts as follows:

This dispute arises out of a Subcontract Agreement ("Subcontract") into which Central and Kenny entered on September 22, 2007. The Subcontract was in furtherance of a contract between Kenny and TrailCo.... Pursuant to the Subcontract, [Central] performed access road construction services in connection with the Trans-Allegheny Interstate Line Company 500kV Transmission Project. Central alleges that Kenny breached the Subcontract by failing and refusing to pay $5, 723, 852.80 that Kenny owed Central under the Subcontract. Further, Central alleges that TrailCo was unjustly enriched by Central's improvement of TrailCo's property.
In its Counterclaim, Kenny alleges that payment under the Subcontract was based upon the time and equipment expenses of the work plus a fee for the expenses Central incurred on the project. Because many of Central's workers had to travel away from their homes during the project, the Subcontract provided that Kenny would pay Central the necessary per diem expenses incurred by the project workers.... Kenny asserts that during a financial audit of Central, it discovered that it had paid $4, 910, 056.00 to Central in per diem expenses, but Central passed along only $1, 501, 790 to its employees.

Cent. Contracting, Inc. v. Kenny Constr. Co., No. 11 C 9175, R. 43, 2012 WL 832842, at *1-2 (N.D. Ill. Mar. 12, 2012) (citations omitted). "Kenny also allegedly discovered an irregularity with respect to labor rates during the financial audit-namely, that Central charged Kenny for increased labor rates but did not pass those increases along to its workers. Kenny asserts that it overpaid $923, 572.00 relating to increased labor costs." Id. at *2 n.4 (citation omitted).

All discovery has been completed. Kenny has filed a motion for partial summary judgment on Counts I and III (breach of contract and unjust enrichment) of Central's amended complaint and on Counts I-III of Kenny's counterclaim (declaratory judgment, breach of contract, and unjust enrichment), on the issue of whether Central was entitled under the Subcontract to per diem payments.[2] Central has filed a motion for partial summary judgment on the same issue, as to the same claims as well as Count IV of Kenny's counterclaim (which seeks an accounting), and on the additional issue of whether Central was entitled to payments based on increased wage rates for field laborers.


A. Legal Standards

1. Summary Judgment

"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In considering such a motion, the Court construes the evidence and all inferences that reasonably can be drawn therefrom in the light most favorable to the nonmoving party. See Kvapil v. Chippewa Cnty., Wis., 752 F.3d 708, 712 (7th Cir. 2014). "Summary judgment should be denied if the dispute is genuine': if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Talanda v. KFC Nat'l Mgmt. Co., 140 F.3d 1090, 1095 (7th Cir. 1998) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)); see also Bunn v. Khoury Enters., Inc., 753 F.3d 676, 681-82 (7th Cir. 2014). The court will enter summary judgment against a party who does not "come forward with evidence that would reasonably permit the finder of fact to find in [its] favor on a material question." Modrowski v. Pigatto, 712 F.3d 1166, 1167 (7th Cir. 2013).

2. Contract Interpretation

Paragraph 6.10 of the Subcontract provides, and the parties[3] agree, that it is to be construed under Illinois law. (R. 79-1, Agreed L.R. 56.1 Stmt., Ex. A, Subcontract, at 10 ΒΆ 6.10.) To establish a breach of contract under Illinois law, a party must show "(1) the existence of a valid and enforceable contract; (2) substantial performance by the plaintiff; (3) a breach by the defendant; and (4) resultant damages." nClosures Inc. v. Block & Co., 770 F.3d 598, 601 (7th Cir. 2014); see also W.W. Vincent & Co. v. First Colony Life Ins. Co., 814 N.E.2d 960, 967 (Ill.App.Ct. 2004). The parties' claims present questions of contract interpretation, the basic rules of which are well settled. In Illinois, the determination of whether a contract is ambiguous, as well as the construction of an unambiguous contract, are questions of law. See Gallagher v. Lenart, 874 N.E.2d 43, 50 (Ill. 2007); Cent. Ill. Light Co. v. Home Ins. Co., 821 N.E.2d 206, 214 (Ill. 2004). "The primary objective in construing a contract is to give effect to the intent of the parties." Gallagher, 874 N.E.2d at 58. Illinois courts interpret contracts according to the "four corners" rule, which requires that "an agreement, when reduced to writing, must be presumed to speak the intention of the parties who signed it. It speaks for itself, and the intention with which it was executed must be determined from the language used. It is not to be changed by extrinsic evidence.'" Air Safety, Inc. v. Teachers Realty Corp., 706 N.E.2d 882, 884 (Ill. 1999) (brackets omitted) (quoting W. Ill. Oil Co. v. Thompson, 186 N.E.2d 285, 291 (Ill. 1962)). In applying this rule, "[a] court must initially look to the language of a contract alone, as the language, given its plain and ordinary meaning, is the best indication of the parties' intent." Gallagher, 874 N.E.2d at 58. "[B]ecause words derive their meaning from the context in which they are used, a contract must be construed as a whole, viewing each part in light of the others. The intent of the parties is not to be gathered from detached portions of a contract or from any clause or provision standing by itself." Id. (citation omitted).

If the words in a contract are clear and unambiguous, "they must be given their plain, ordinary and popular meaning." Thompson v. Gordon, 948 N.E.2d 39, 47 (Ill. 2011); see also Utility Audit, Inc. v. Horace Mann Serv. Corp., 383 F.3d 683, 687 (7th Cir. 2004) (citing Trade Ctr. v. Dominick's Finer Foods, 711 N.E.2d 333, 335 (Ill.App.Ct. 1999)) ("Under Illinois law, ... contract terms are interpreted according to their plain meaning unless otherwise defined."). If a contract is unambiguous, "the court will enforce it as written, without resorting to extrinsic evidence." Curia v. Nelson, 587 F.3d 824, 829 (7th Cir. 2009) (citing Farm Credit Bank v. Whitlock, 581 N.E.2d 664, 667 (Ill. 1991)). Interpretation of the terms of an unambiguous contract is a question particularly suited to disposition on summary judgment. Kallman v. Radioshack Corp., 315 F.3d 731, 735 (7th Cir. 2002). If the language of a contract is reasonably susceptible to more than one meaning, however, it is ambiguous. "In that case, a court may consider extrinsic evidence to ascertain the parties' intent." Gallagher, 874 N.E.2d at 58.

"Language in a contract is not ambiguous merely because the parties disagree as to its interpretation." Vill. of Arlington Heights v. Anderson, 963 N.E.2d 949, 956 (Ill.App.Ct. 2011). A contract is not necessarily unambiguous when each party insists that the language unambiguously supports its position, and a contract is not necessarily ambiguous ...

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