Glenn H. Johnson Construction Co. v. Board of Education

614 N.E.2d 208, 245 Ill. App. 3d 18, 185 Ill. Dec. 74, 1993 Ill. App. LEXIS 397
CourtAppellate Court of Illinois
DecidedMarch 26, 1993
Docket1-92-0736
StatusPublished
Cited by5 cases

This text of 614 N.E.2d 208 (Glenn H. Johnson Construction Co. v. Board of Education) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Glenn H. Johnson Construction Co. v. Board of Education, 614 N.E.2d 208, 245 Ill. App. 3d 18, 185 Ill. Dec. 74, 1993 Ill. App. LEXIS 397 (Ill. Ct. App. 1993).

Opinion

PRESIDING JUSTICE McNAMARA

delivered the opinion of the court:

Plaintiff, Glenn H. Johnson Construction Company, appeals from an order of the circuit court of Cook County which denied its motion to compel arbitration of a dispute regarding monies allegedly owing from defendant, Board of Education, Community Consolidated School District No. 15. The trial court concluded that the parties evidenced their intent not to arbitrate disputes when they deleted the operative arbitration clause, section 4.5.1 of the general conditions, from their construction contract. The sole issue on appeal is whether the trial court erred in holding that the contract did not provide for arbitration of the parties' dispute.

The relevant facts are as follows. Defendant hired plaintiff to be the general contractor on a project involving the construction of Kimball Hill Elementary School in Rolling Meadows, Illinois. In addition to the construction of the new school, the project included the demolition and removal of the existing Kimball High School building, the removal of fuel tanks buried on the site, and the potential removal of contaminated and unsuitable soil. Pursuant to the parties' contract, plaintiff agreed to dispose of contaminated soil at a unit price of $110 per cubic yard, and to remove and dispose of unsuitable soil at a price of $18 per cubic yard. (For purposes of this appeal, the relevant documents comprising the parties' contract include the general conditions, the supplementary conditions, and the additional supplementary conditions. The latter two modify, delete from and/or add to the general conditions.)

As the preparation of the project site commenced, plaintiff identified areas containing contaminated and unsuitable soil. Plaintiff removed the soil from the site and disposed of it at an approved waste disposal facility. Subsequently, plaintiff submitted change orders and invoices to defendant for the cost of removing and disposing of the soil. According to plaintiff, defendant was billed for the soil removal and disposal at the rates specified in the contract. Defendant’s architect denied plaintiff’s claim in part, and defendant refused to pay the portion which the architect disputed.

Consequently, on October 2, 1990, plaintiff submitted its demand for arbitration (Demand) to the American Arbitration Association (AAA) seeking the arbitration of its claim against defendant pursuant to the Construction Industry Arbitration Rules (Rules). (The AAA does not act as an arbitrator, but rather administers arbitrations in accordance with the agreement of the parties and maintains panels from which arbitrators may be chosen by the parties.) On October 9, 1990, the AAA case administrator, Matthew Luzi, wrote a letter to the parties acknowledging receipt of plaintiff’s Demand, informing defendant of its right to file an answering statement, and requesting the parties to select an arbitration panel.

In response to plaintiff’s Demand, on October 18, 1990, defendant sent its response to the AAA disputing the arbitrability of plaintiff’s claim. Defendant informed Luzi that the contract clause permitting arbitration of such claims, namely section 4.5.1 of the general conditions, had been deleted in its entirety by the additional supplementary conditions. Defendant explained that in the absence of the operative language of section 4.5.1, the AAA lacked authority to move forward with plaintiff’s Demand. Defendant also informed Luzi that plaintiff had failed to attach to its Demand a copy of the additional supplementary conditions evidencing that section 4.5.1 had been deleted.

On October 19, 1990, plaintiff wrote to Luzi explaining its position concerning the arbitrability of claims arising out of the contract. Plaintiff acknowledged that the additional supplemental conditions deleted section 4.5.1, but disagreed that this deletion eliminated defendant’s obligation to arbitrate the subject dispute. In support of this contention, plaintiff highlighted the language of section 4.4.4 of the general conditions which provides, in pertinent part: “[T]he Architect will notify the parties in writing that the Architect’s decision will be made within seven days, which decision shall be final and binding on the parties but subject to arbitration.” (Emphasis added.) Plaintiff also noted that sections 4.5.2 through 4.5.7 of the general conditions, which relate to and govern procedures for arbitration proceedings between the parties, were left intact notwithstanding the deletion of section 4.5.1.

On October 22, 1990, defendant submitted another letter to the AAA essentially repeating its position concerning the interpretation of the parties’ contract.

On November 6, 1990, Luzi sent a letter to the parties stating:

“The AAA, after reviewing the contentions of the parties and the Arbitration agreement, has determined that an issue as to arbitrability exists which may be determined by an Arbitrator^).”

Upon receipt of this letter, defendant, on November 13, 1990, wrote a letter directly to the AAA’s regional vice-president, David Scott Carfello, again challenging the arbitrability of the parties’ dispute. Plaintiff received a copy of this letter on Friday, November 16, 1990. On Monday, November 19, 1990, plaintiff telephoned the AAA and requested an opportunity to respond in writing to defendant's letter. Plaintiff was allegedly informed that no action would be taken in response to defendant’s letter until plaintiff had an opportunity to respond to it in writing.

Before plaintiff responded, however, on November 21, 1990, Carfello issued the AAA’s final ruling concerning its authority to arbitrate the parties’ dispute. Carfello stated:

“As relayed to each side, the Association has determined that based on the contentions of the parties, the Association is without authority to process this arbitration.
If the parties would be willing to submit to arbitration concerning this matter, under the Rules of the American Arbitration Association, the Association will proceed to administer this matter.”

Accordingly, on or about January 9, 1991, plaintiff filed a petition to compel arbitration in the circuit court of Cook County. In count I, plaintiff sought an order compelling arbitration of the parties’ dispute. In the alternative, and only in the event the trial court determined that the parties’ dispute was not arbitrable, plaintiff sought in count II an adjudication that it was entitled to the amounts allegedly owing from defendant.

In response to the petition, on February 15, 1991, defendant filed its answer, affirmative defenses, and counterclaim denying the arbitrability of the petition and any claims for monies due, and asserting claims against plaintiff for breach of contract.

After a lengthy discovery process, on November 19, 1991, plaintiff filed its motion to compel arbitration of the dispute, requesting the same relief it sought in count I of its petition. After the parties briefed the motion and delivered oral arguments, the trial court issued an order denying the motion.

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614 N.E.2d 208, 245 Ill. App. 3d 18, 185 Ill. Dec. 74, 1993 Ill. App. LEXIS 397, Counsel Stack Legal Research, https://law.counselstack.com/opinion/glenn-h-johnson-construction-co-v-board-of-education-illappct-1993.