Lake States Engineering Corp. v. One Naperville Corp.

499 N.E.2d 657, 148 Ill. App. 3d 836, 102 Ill. Dec. 100, 1986 Ill. App. LEXIS 2979
CourtAppellate Court of Illinois
DecidedOctober 20, 1986
DocketNo. 85—0682
StatusPublished
Cited by4 cases

This text of 499 N.E.2d 657 (Lake States Engineering Corp. v. One Naperville Corp.) 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
Lake States Engineering Corp. v. One Naperville Corp., 499 N.E.2d 657, 148 Ill. App. 3d 836, 102 Ill. Dec. 100, 1986 Ill. App. LEXIS 2979 (Ill. Ct. App. 1986).

Opinion

JUSTICE STROUSE

delivered the opinion of the court:

This action was brought by Lake States Engineering Corporation (Lake States) on the basis of a construction contract with One Naperville Corporation (ONC). Colonial, Inc. (Colonial), a joint-venture partner of ONC, sought to intervene to protect its interest. Leave to intervene was denied. Colonial appeals from the denial.

Colonial and ONC entered into a joint-venture partnership agreement to purchase and develop real estate (hereinafter referred to as the property). The joint venture’s primary purposes included: (1) acquiring the property; (2) financing and constructing an office building on the property; and (3) operating, leasing, managing, maintaining, or selling the improved property. Colonial and ONC each own a 50% interest in the profits of the joint venture.

ONC had the authority on behalf of the joint venture to obtain satisfactory agreements with contractors for the development of the property. ONC, under the joint-venture agreement, had no authority, unless agreed to in writing by Colonial, to commence any legal action to enforce the rights of the joint-venture partners. Colonial has never given its permission to ONC to represent the joint venture in this action. ONC had the obligation under the joint-venture agreement to maintain, or cause to be maintained, the project in a reasonable and prudent manner.

On or about December 1, 1982, Lake States entered into a contract with ONC wherein Lake States agreed to install concrete caissons. On January 28, 1983, ONC entered into a supplemental contract with Lake States wherein Lake States agreed to drill the caisson shafts beyond the original contract depth. On or about December 3, 1982, ONC entered into an oral contract with TSC Corporation (TSC) wherein TSC agreed to perform construction services.

On September 9, 1983, Lake States filed this action against ONC alleging that ONC had failed to pay Lake States $23,316.38 for work performed pursuant to their contract. Various claims and counterclaims have been made in subsequent pleadings. Thereafter, on April 22, 1985, ONC filed a counterclaim against both Lake States and TSC. In count I, ONC alleged that Lake States breached its contract by installing caissons with irregular shafts and incomplete “bells,” which caused the foundation problems of the property. In count II, ONC alleged that Lake States concealed and suppressed known defects and deficiencies in the caissons. In count III, ONC alleged that TSC breached its oral contract with ONC by improperly supervising the caisson construction and improperly performing engineering tests.

Lake States filed a six-count amended third-party complaint against TSC on August 9, 1985. Lake States alleged that it relied on soil tests performed and recommendations made by TSC before filling the caisson shafts with concrete. Lake State’s third-party complaint contains one count for active-passive indemnity and one count for contribution for each of the two counts directed against it by ONC. In counts V and VI, Lake States sought to recover against TSC on a third-party beneficiary theory should ONC recover against Lake States.

To date, the only discovery completed were interrogatories answered by Lake States. No depositions have been taken.

After the original complaint was filed by Lake States against ONC, Colonial believed that the joint venture’s interests in this lawsuit were being represented by a law firm. However, Colonial never received any status report concerning this lawsuit and did not learn of the status until sometime in February of 1985. At that time Colonial learned that ONC was pursuing this lawsuit on its own behalf and not on behalf of the joint venture.

On March 27, 1985, Colonial filed a motion to intervene, memorandum in support of that motion, and proposed complaint. Colonial alleged that it should be allowed to intervene as of right. Colonial initially argued that it had filed a timely motion to intervene and that the trial court had not determined any major issues between the original parties. Colonial also argued that the existing parties did not adequately represent Colonial’s interests because: (1) Colonial has a unique interest in determining whether the damage to the caissons resulted from the breach by ONC of its contractual obligation to use reasonable care to supervise the caisson construction; (2) the relationship between Colonial and ONC had deteriorated such that a reasonable person in Colonial’s position would not rely on ONC to represent its interest; and (3) counsel for ONC had represented Colonial’s adversaries in other lawsuits arising from this same joint-venture relationship. Finally, Colonial alleged that as a joint-venture partner, Colonial will or may be bound by a judgment entered against ONC because each member of a joint venture is liable for contracts entered into by any other members of the joint venture.

The proposed seven-count amended complaint, filed March 15, 1985, alleged a breach of the joint-venture agreement, negligent supervision of Lake States and TSC, negligent installation of the caissons, use of inferior materials in the caissons, and lack of care in performing soil-bearing-capacity tests. The proposed complaint also added James Popp and Carolyn DePhillips, individually and doing business as Drafting & Construction Services, for negligent supervision.

On April 22, 1985, ONC filed a motion to strike the motion to intervene. ONC argued that Colonial was not in privity of contract and could not allege an independent tort or contract theory against Lake States or TSC. ONC also alleged that there were numerous claims between Colonial and ONC which would unduly hinder and delay trial. The trial court stated that if Colonial should be granted leave to intervene, Colonial could not raise new issues or add new parties and Colonial could not pursue any individual actions against any parties to this lawsuit. The trial court was primarily concerned that any differences between the joint-venture partners, ONC and Colonial, not be litigated in this action. In an order dated April 30, 1985, the trial court granted Colonial leave to intervene, so long as Colonial raised no new issues or parties, and leave to file a proposed complaint and additional authority in support. Colonial argued that it only sought to add new issues and parties that were directly related to the underlying facts that gave rise to the lawsuit, which the legislature clearly intended, and that it would not cause delay but would in fact avoid the greater delay caused by multiple suits.

On June 18, 1985, in a hearing on Colonial’s motion to intervene, TSC and Lake States argued that it would be advantageous to allow Colonial to intervene so that a court in one proceeding could resolve all disputes involving the caisson construction rather than expose them to multiple depositions and litigation. The court again stated that Colonial would have leave to intervene as long as Colonial did not add new parties and issues. The court also indicated that Colonial would not be given the right to pursue its contract claim against ONC. In the trial court’s order dated June 18, 1985, the court denied Colonial’s motion to intervene and leave to file its complaint but granted one final opportunity to intervene by an amended complaint which did not add new parties or raise new issues.

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Bluebook (online)
499 N.E.2d 657, 148 Ill. App. 3d 836, 102 Ill. Dec. 100, 1986 Ill. App. LEXIS 2979, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lake-states-engineering-corp-v-one-naperville-corp-illappct-1986.