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United States v. Carlson Bros., Inc

United States District Court, C.D. Illinois, Urbana Division

September 23, 2019

THE UNITED STATES OF AMERICA, for the use and benefit of DUCE CONSTRUCTION COMPANY, an Illinois corporation, Plaintiff,
v.
CARLSON BROS., INC, and LIBERTY MUTUAL INSURANCE COMPANY, a Massachusetts corporation, Defendants.

          ORDER

          JONATHAN E. HAWLEY U.S. MAGISTRATE JUDGE

         Before the Court are the parties’ cross motions for partial summary judgment (D. 26 & 27). For the reasons stated, infra, the motions are denied.

         I

         A

         Carlson and Duce entered into a subcontract agreement providing that Duce would perform earthwork, excavation and site utility work at a project in Champaign, Illinois known as the Providence at Sycamore and Providence at Thornberry projects. The parties agree that Carlson owes Duce $261, 852.41 on the contract, but dispute whether Carlson owes Duce an additional $85, 871.75.

         Specifically, during the course of the project it became apparent that Duce needed to perform additional work outside the scope of the original agreement. According to Duce, Carlson’s project manager, Tom Newquist, asked Duce to perform the work to avoid a delay in the construction schedule, notwithstanding the fact that Duce did not have an opportunity to comply with the contract’s requirement that all change orders be submitted in writing in advance of the work. Carlson has presented no evidence to contradict the testimony of Duce’s project manager, Daniel Wilson, that Newquist told him not to stop work despite not having submitted a written change order, but Carlson argues that the written change order provision in the contract nevertheless precludes Duce from recovering for the additional work.

         B

         In Carlson’s motion for partial summary judgment, it argues that it is entitled to summary judgment on Duce’s claim for interest and attorneys fees, because it deposited $261, 852.41 with an escrow agent for the benefit of Duce upon completion of the project. Duce, on the other hand, argues that the contract provides for interest and attorney fees on accounts more than 30 days past due (D. 26-1 at p. 21) and, notwithstanding that the funds are in the hands of the escrow agent, Duce still to this day has not received those funds because the escrow agent refuses to release them until Duce signs a lien waiver-something Duce refuses to do because there remains a dispute regarding the additional $85, 871.75 for work beyond the scope of the original contract.

         Carlson also argues it is entitled to summary judgment on the issue regarding the amount due in excess of the original subcontract amount, arguing that it is undisputed that Duce did not follow the written change order procedure in the contract. Duce responds, however, that Carlson agreed to an oral modification of this provision when inducing it to continue working without following the procedure in order to avoid any delay in the project schedule.

         C

         In Duce’s motion for partial summary judgment, it argues that it is entitled to summary judgment on the $261, 852.41 for work that is not in dispute, plus interest and attorney fees, given that it has yet to receive the payment. Carlson does not dispute that it owes Duce the $261, 852.41, but argues that Duce is not entitled to interest and attorney fees because it turned the funds over to the escrow agent. The fact that the escrow agent has not released the funds to Duce relieved Carlson of its obligation and the fact that those funds have yet to be released to Duce is not its fault.

         Duce also argues that it is entitled to summary judgment regarding the amount outside the scope of the contract agreement because, notwithstanding the fact that the change order procedure was not followed, the parties orally modified this provision to keep the project on schedule. Carlson’s response is essentially that the written change order in the contract is absolute.

         II

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