East Peoria Community High School District No. 309 v. Grand Stage Lighting Co.

601 N.E.2d 972, 235 Ill. App. 3d 756, 176 Ill. Dec. 274, 1992 Ill. App. LEXIS 1439
Appellate Court of Illinois·Decided September 4, 1992·No. 3-91-0869·Published·Cited by 18 cases

Opinion

JUSTICE GORMAN

delivered the opinion of the court:

Defendants-counterplaintiffs-subcontractors filed actions against plaintiff-counterdefendant East Peoria Community High School District No. 309 to collect on amounts unpaid by the general contractor for certain work performed on the school. The trial court granted summary judgment for defendants. We affirm.

In 1985, plaintiff East Peoria High School District No. 309 contracted with Tousley-Iber to oversee a life safety survey and related improvements of some high school buildings. Tousley-Iber contracted with defendant Union Roofing for the roof work; with defendant PIPCO Companies Ltd. for the plumbing and electrical work; with defendant Grand Stage Lighting for stage renovation work; and with defendant Shick Supply and Equipment Company for the locker replacement. All of the subcontractors performed the work contracted for. The original unpaid amounts were as follows: Union Roofing — $63,042.61; PIPCO — $15,467.07; Grand Stage— $145,949; and Shick-$22,782.

Plaintiff made progress payments to Tousley-Iber. Tousley-Iber did not make any payments to defendant Shick or to defendant Grand Stage Lighting. Tousley-Iber paid defendant Union Roofing and defendant PIPCO for part of the work they performed.

Litigation ensued between the parties. The only claims at issue here are the claims by the subcontractors that they were third-party beneficiaries of the agreement between plaintiff and Tousley-Iber and that “An Act in relation to bonds of contractors entering into contracts for public construction” (Bond Act) (Ill. Rev. Stat. 1987, ch. 29, par. 15 et seq.) mandated that plaintiff require Tousley-Iber to obtain a payment bond. Plaintiff raised certain affirmative defenses. The court granted each defendant’s motion for summary judgment and held in its February 1990 order that, among other things, the contract was subject to the Bond Act and that the subcontractors were third-party beneficiaries of the contract be: tween plaintiff and Tousley-Iber. As a result of the court’s Octobei 1991 order entered pursuant to the parties’ stipulation, defendants Union Roofing, Grand Stage, and PIPCO received partial paymeni against their lien claims. The amounts now claimed to be due are as follows: Union Roofing — $53,263.34; PIPCO — $13,067.80; Grane Stage-$123,309.27; and Shick-$22,782.

Plaintiff now appeals.

The first issue for review is whether the Bond Act mandated that plaintiff require Tousley-Iber to obtain a payment bond.

The Bond Act provides, in pertinent part, as follows:

“All officials, boards, commissions or agents of this State, or of any political subdivision thereof in making contracts for public work of any kind to be performed for the State, or any political subdivision thereof shall require every contractor for such work to furnish, supply and deliver a bond to the State, or to the political subdivision thereof entering into such contract, as the case may be, with good and sufficient sureties.” Ill. Rev. Stat. 1987, ch. 29, par. 15.
“Every person furnishing material or performing labor, either individually or as a sub-contractor for any contractor, with the State, or a political subdivision thereof where a bond or letter of credit shall be executed as provided in this Act, shall have the right to sue on such bond or letter of credit *** provided, however, that this Act shall not be taken to in any way make the State, or the political subdivision thereof entering into such contract, as the case may be, liable *** to any greater extent than it was liable under the law as it stood prior to the adoption of this Act.” Ill. Rev. Stat. 1987, ch. 29, par. 16.

As a preliminary matter, Tousley-Iber was a general contractor even though it styled itself a “construction manager.” It hired subcontractors and provided no unique services.

Plaintiff argues that the liability of a public body to a subcontractor is controlled by the Mechanics Lien Act (Ill. Rev. Stat. 1987, ch. 82, par. 1 et seq.) and the Bond Act, with the latter containing a critical proviso. The proviso states that the Bond Act “shall not be taken to in any way make the State, or the political subdivision thereof entering into such contract *** liable *** to any greater extent than it was liable under the law as it stood prior to the adoption of this Act.” (Ill. Rev. Stat. 1981, ch. 29, par. 16.) Pointing especially to the inclusion of the words “in any way,” plaintiff asserts that the proviso defeats the subcontractors’ contract claims here. Plaintiff argues that Emulsicoat, Inc. v. City of Hoopeston (1981), 99 Ill. App. 3d 835, 425 N.E.2d 1349, supports its position that the language is to be read broadly.

We are not persuaded by plaintiff’s argument. First, we note that “as a remedial statute, the Bond Act is liberally construed to effectuate the General Assembly’s intent to encourage and protect artisans, materialmen, and tradesmen.” (Chicago Housing Authority v. United States Fidelity & Guaranty Co. (1964), 49 Ill. App. 2d 407, 199 N.E.2d 217.) Furthermore, Western Waterproofing Co. v. Springfield Housing Authority (C.D. Ill. 1987), 669 F. Supp. 901, squarely addressed the issue presented in the instant case. There, the court had to determine whether a third-party beneficiary contract action could be asserted against a public entity where the entity had failed to procure a payment bond from a general contractor. The court held that the Bond Act should be read into the contract between the housing authority and the general contractor. The court there noted that “[u]nder Illinois law ‘statutory provisions applicable to a contract *** are deemed to form a part of that contract and must be construed in connection therewith.’ ” (Western Waterproofing, 669 F. Supp. at 903, quoting DC Electronics, Inc. v. Employers Modern Life Co. (1980), 90 Ill. App. 3d 342, 348, 413 N.E.2d 23.) “[B]ecause the Bond Act was established to achieve the same remedial goal as the mechanic’s lien in a public works situation, it follows that the Bond Act should be read into the public works contract between [the housing authority] and [the general contractor], requiring the procurement of a payment bond as required by the Bond Act.” 669 F. Supp. at 904.

In contrast, the Emulsicoat case dealt only with a negligence claim against two municipalities. The court there specifically examined the Bond Act’s proviso and held that it “represented] a very cautious approach by the legislature to the question of tort immunity of municipalities.” (Emulsicoat, 99 Ill. App. 3d at 838.) Thus, we reject plaintiff’s argument and hold that the Bond Act mandated that plaintiff require Tousley-Iber to obtain a payment bond.

The second issue for review is whether the subcontractors were third-party beneficiaries of the contract between plaintiff and Tousley-Iber.

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East Peoria Community High School District No. 309 v. Grand Stage Lighting Co., 601 N.E.2d 972, 235 Ill. App. 3d 756, 176 Ill. Dec. 274, 1992 Ill. App. LEXIS 1439 (Ill. Ct. App. 1992).

601 N.E.2d 972 (East Peoria Community High School District No. 309 v. Grand Stage Lighting Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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