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Archon Construction Co. Inc. v. U.S. Shelter, L.L.C.

Court of Appeals of Illinois, First District

March 31, 2017

ARCHON CONSTRUCTION COMPANY, INC., Plaintiff-Appellant and Counterdefendant-Cross-Appellee,
U.S. SHELTER, L.L.C., U.S. SHELTER GROUP, INC., and OAK RIDGE OF ELGIN, L.L.C., Defendants-Appellees, (U.S. Shelter, L.L.C., and Oak Ridge of Elgin, L.L.C., Counterplaintiffs-Cross-Appellants).

         Appeal from the Circuit Court of Cook County No. 08 CH 15325 Honorable Lisa R. Curcio Judge Presiding.

          PRESIDING JUSTICE ELLIS delivered the judgment of the court, with opinion. Justices McBride and Burke concurred in the judgment and opinion.



         ¶ 1 This appeal involves the trial court's decision on a quantum meruit claim made by plaintiff, Archon Construction Company, Inc. (Archon) against defendants, U.S. Shelter, L.L.C., U.S. Shelter Group, Inc., and Oak Ridge of Elgin, L.L.C. (collectively, U.S. Shelter). Archon appeals the trial court's decision denying its claim. U.S. Shelter cross-appeals the trial court's decision denying its counterclaim for breach of contract against Archon.

         ¶ 2 Archon was hired by U.S. Shelter to install a sanitary sewer system in a subdivision in the City of Elgin (city). The system would have to be approved and accepted by the city, which would ultimately own the system. The contract required Archon to conduct a videotaping of the interior of the completed system. After Archon completed the installation of the system, the city's engineering inspector reviewed videotapes of the system and required additional work before the city would accept the system. Even though the proposal submitted by Archon, which was accepted by U.S. Shelter, had specified polyvinyl chloride (PVC) pipes, Archon had to excavate, remove, and replace a portion of the system's PVC pipes with ductile iron pipes. Archon submitted its bill for the extra work to U.S. Shelter, who refused to pay. Litigation ensued.

         ¶ 3 This is the second time this matter is before this court. On June 4, 2013, we reversed the circuit court's grant of summary judgment on Archon's "extra work" claim. See Archon Construction Co. v. U.S. Shelter, L.L.C., 2013 IL App (1st) 121632-U. We concluded that general issues of material fact existed regarding, among other things, whether the "extra work" was made necessary through the fault of Archon.[1]

         ¶ 4 On remand, Archon voluntarily dismissed its "extra work" and other breach of contract claims, and proceeded to trial solely on its quantum meruit claim. After a bench trial, the court ruled in favor of defendants, concluding that Archon was not entitled to quasi-contractual relief for the costs it incurred for the services it performed. The court concluded that the services were covered under the express contract between Archon and U.S. Shelter and that Archon was the "contractor" responsible for the costs of the additional work. The court also found in favor of Archon on U.S. Shelter's breach of contract counterclaim for its repair and restoration of the surrounding property after Archon made its repairs to the sanitary sewer system. Both parties appealed.

         ¶ 5 As we explain below, the contract required a sanitary sewer system that was subject to the final approval of the city. This matter actually involves a contractual dispute between the parties for the extra work and costs involved in obtaining that final approval. But, because an express contract existed between Archon and U.S. Shelter, Archon cannot recover under the quasi-contractual quantum meruit theory. We also conclude that the circuit court's decision finding in favor of Archon on U.S. Shelter's counterclaim was not against the manifest weight of the evidence. For the reasons that follow, we affirm the judgment of the circuit court of Cook County.

         ¶ 6 I. BACKGROUND

         ¶ 7 Archon is an underground utility contractor. U.S. Shelter is a home building company, primarily involved with residential developments. The land in each development is owned by a different limited liability company, of which defendant, Oak Ridge of Elgin, L.L.C., was one. The instant case involves the development of the residential subdivision in the city of Elgin, known as Oak Ridge of Elgin (subdivision).

         ¶ 8 U.S. Shelter hired Spies and Associates (Spies), a firm of civil engineers and land designers, to design plans for the subdivision and to be the on-site engineer, as required by the city and the Fox River Water Reclamation District (FRWRD). Spies prepared the plans, titled "Public Improvement Plans for Oak Ridge Subdivision" (Plans). The Plans were approved by the city, FRWRD, and the Illinois Environmental Protection Agency.[2]

         ¶ 9 The Plans included the "City of Elgin General Notes" (General Notes), a document provided by the city that includes the specifications the city requires for all sanitary sewer systems installed in the city. The General Notes state that all underground construction must comply with the "City of Elgin Engineering and Construction Standards and Specifications" (Elgin Specifications) and the "Standard Specifications for Water and Sewer Main Construction in Illinois" (Illinois Specifications).

         ¶ 10 U.S. Shelter sought bids for the installation of a sanitary sewer system for the subdivision and hired Archon after it submitted the successful bid. In addition to installing the sanitary sewer system, Archon agreed to install water main and storm sewers, for a total contract price of $890, 955.29. The storm sewer and water systems are not at issue.

         ¶ 11 Archon's five-page proposal for the sanitary sewer system was based on the Plans. There is no dispute that the Plans, including the General Notes, the Elgin Specifications, and the Illinois Specifications, were incorporated into, and became a part of, the contract between Archon and U.S. Shelter.

         ¶ 12 The General Notes, in the section titled "Sanitary Sewer, " state: "All sanitary sewers shall be televised and tested as required by [the city and FRWRD] prior to acceptance."

         ¶ 13 The Elgin Specifications state: "

A mandatory televising of the sanitary sewer mains shall be performed by the developer one year after the successful completion of the sewer. The contractor shall then provide a copy of the video tape to the City of Elgin Engineering Division of Public Works for review. Any deficiencies or defects in the pipe material or construction, as noted by the engineer, shall be repaired at the contractor's expense prior to final acceptance by the city."

         ¶ 14 The Illinois Specifications state, among other things, that "[i]n the event the ENGINEER finds the materials or the finished product in which the materials are used or the WORK performed are not in conformity with the Plans and Specifications including tolerances and have resulted in an inferior or unsatisfactory product, the WORK or material shall be removed and replaced or otherwise corrected by and at the expense of the CONTRACTOR."

         ¶ 15 Archon's proposal included a line item "Testing and Televise, " with a price of $14, 670.10. The proposal also contained itemized prices for materials, including types and quantities. The proposal further stated: "Any additional work items not listed will be completed on negotiated price or [time and materials]." Although the General Notes specified that the material of the sanitary sewer pipes could be either ductile iron or PVC (minimum SDR 26), Archon's proposal did not provide for installation of ductile iron pipe for any of the sanitary sewer lines. Archon's proposal provided that the sanitary sewer system would be constructed of PVC pipe, minimum SDR 26.[3]

         ¶ 16 Spies confirmed to U.S. Shelter that Archon's proposal complied with the Plans. Chuck Mensik, on behalf of U.S. Shelter, and Garry A. Sementa, on behalf of Archon, signed the final proposal dated January 6, 2005. Under its contract with U.S. Shelter, Spies was to oversee the installation of the sanitary sewer system.

         ¶ 17 Archon began installing the sanitary sewer system on February 23, 2005, and completed the installation around August 8, 2005. Prior to completing its installation of the sanitary sewer system, Archon had the pipes air tested and mandrel tested. FRWRD reviewed the air test and observed the mandrel test, and found both tests acceptable. Around the time Archon completed the installation, Spies confirmed to U.S. Shelter that Archon's work complied with the Plans, the Elgin Specifications, and the Illinois Specifications.[4]

         ¶ 18 During construction, on three separate occasions, Archon had to excavate and repair various portions of the sanitary sewer system, including the portion between manhole (MH) 108 and MH 110. This extra work apparently resulted from Archon's use of fittings made of SDR 35 material, which was weaker and thinner than that required by the Plans, namely SDR 26 material. All of the repairs were completed by August 2005, and Archon did not request additional payments from U.S. Shelter for that extra work. The cost of that extra work is not at issue in this appeal.

         ¶ 19 As noted, the contract required televising of the sanitary sewer system before the city would accept the system. Archon had agreed to perform testing and televising of the sanitary sewer system in the contract. The city required that the televising be performed at least a year after installation to make sure that any potential settling had already occurred. In early 2007, Archon hired a company, H.R. Stewart to televise the sanitary sewer system. A camera was run through the system, and a ...

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