Lk Comstock & Co., Inc. v. morse/ubm Jt. Venture

505 N.E.2d 1253, 153 Ill. App. 3d 475, 106 Ill. Dec. 462, 1987 Ill. App. LEXIS 2186
CourtAppellate Court of Illinois
DecidedMarch 12, 1987
Docket86-0462
StatusPublished
Cited by6 cases

This text of 505 N.E.2d 1253 (Lk Comstock & Co., Inc. v. morse/ubm Jt. Venture) 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
Lk Comstock & Co., Inc. v. morse/ubm Jt. Venture, 505 N.E.2d 1253, 153 Ill. App. 3d 475, 106 Ill. Dec. 462, 1987 Ill. App. LEXIS 2186 (Ill. Ct. App. 1987).

Opinion

JUSTICE JIGANTI

delivered the opinion of the court:

Plaintiff, L. K. Comstock (Comstock), contracted with the State of Illinois, acting by and through the Capital Development Board (CDB), to perform certain electrical construction on the University of Illinois replacement hospital project. The CDB, in turn, contracted with the defendants, Morse/Diesel, Inc. of Illinois, UBM, Inc., and the Morse/ UBM Joint Venture, to act as the CDB’s construction manager for this project. For convenience, the defendants in this appeal will be referred to as the construction manager. No contract was entered into by Comstock and the construction manager.

Comstock brought this action against the construction manager for damages in excess of $4.2 million arising out of a 23-month delay that Comstock encountered in performing its contract with the CDB. Count I of Comstock’s complaint alleges that the construction manager caused this delay, thereby breaching its duty to Comstock, by failing to, among other things, coordinate, direct, supervise, organize, and expedite the construction project. Count III alleged that these failures by the construction manager were also a breach of the contract between the CDB and the construction manager and that Com-stock was an intended third-party beneficiary of the CDB construction-manager contract who could therefore bring suit against the construction manager. The construction manager moved for summary judgment with respect to counts I and III and moved to dismiss count II. The trial court granted the construction manager’s motions. Com-stock appeals the granting of the motion for summary judgment as to counts I and III and the denial of Comstock’s motion for rehearing, which requested leave to amend the complaint. No appeal is taken with respect to count II.

Resolution of the issues on appeal depends upon the construction of various provisions contained in the contract between the CDB and Comstock, principally the no-damage-for-delay provision contained in paragraph 4 — 12(C).

Paragraph 4 — 12(C) provides:

“C. The Contractor [Comstock] shall not be entitled to any claim for damaged [sic] or compensation from CDB on account of any delays ***.”

Both parties argue on appeal that this provision warrants judgment in their favor. Comstock argues that, in light of the fact that some provisions in the contract specifically refer to the construction manager with regard to claims and delays and that paragraph 4 — 12(C) does not mention the construction manager, paragraph 4 — 12(C) does not bar claims for delay by Comstock against the construction manager. Alternatively, Comstock suggests that paragraph 4 — 12(C) is ambiguous and thus raises a question of fact which would preclude summary judgment.

In contrast, the construction manager argues that it is entitled to the protection of paragraph 4 — 12(C) because the construction manager is a third-party beneficiary of the no-damage-for-delay provision, is entitled to the CDB’s privileges when performing the CDB’s responsibilities, and is released from liability for delay to the same extent that the CDB is released. In support of its arguments, the construction manager primarily relies upon the case of Bates & Rogers Construction Corp. v. Greeley & Hansen (1985), 109 Ill. 2d 225, 486 N.E.2d 902.

In Bates & Rogers, the plaintiff-contractor, Bates & Rogers, entered into a contract with the North Shore Sanitary District (District). The defendants were retained by the District as engineers for the project. As in this case, the defendants-engineers did not execute a contract with the plaintiffs. The plaintiffs sought damages from the defendants on the grounds that the defendants were negligent in, among other things, exercising their powers as engineers for the project. After determining that the type of damages sought by the plaintiffs were in fact delay damages, the court addressed the issue of whether the exculpatory provision agreed to by the plaintiffs in their agreement with the District also barred suit against the defendants. That exculpatory provision provided:

“ ‘The Contractor agrees to make no claim for damages for delay in the performance of this Contract occasioned by any act or omission to act of the District or any of its representatives, or because of any injunction which may be brought against the District or its representatives, and agrees that any such claim shall be fully compensated for by an extension of time to complete performance of the work as provided herein.’ ” (Emphasis omitted.) 109 Ill. 2d 225, 229.

The plaintiffs in Bates & Rogers argued that the defendants could not invoke this provision because the defendants were neither parties to the agreement between the plaintiffs and the District nor were they third-party beneficiaries of that agreement. The Illinois Supreme Court, however, held that the defendants were third-party beneficiaries and therefore were entitled to the protection of the no-damage-for-delay clause.

In determining whether the parties intended the defendants to be third-party beneficiaries, the court in Bates & Rogers relied upon various provisions in the contract and the circumstances surrounding the parties. The court first noted that the exculpatory provision specifically recognized that claims arising out of delays could be occasioned by the District and its representatives. The defendants were, in another provision of the contract, named as the District’s representative. The court also noted that the provision provided that the plaintiffs would be fully compensated by an extension of time for any delay-damages claim. Additionally, the court examined the contractual relationship between the District and the defendants, particularly the extent of responsibility that the defendants had over the management of the project. In light of these factors, the court concluded that because the District was relying extensively upon the skill of the defendants in the operation of the project, it was logical that the District intended to exculpate the defendants from damage claims to ensure that the defendants would exercise their best judgment in regard to the District’s interests. (Bates & Rogers Construction Corp. v. Greeley & Hansen (1985), 109 Ill. 2d 225, 234, 486 N.E.2d 902.) The court went on to note that if this were not the case, the defendants’ ability to act in the interest of the District would be impaired by the threat of lawsuits.

Comstock argues that Bates & Rogers does not apply to this case because the exculpatory provision here does not specifically refer to the CDB’s representative, nor does it expressly state that an extension of time is the sole remedy. Accordingly, Comstock argues, this court should not imply the same protection to the defendants here that was granted in Bates & Rogers. We do not agree.

The contract between the CDB and Comstock expressly provides in article 3 — 01 that the construction manager is a representative of the CDB and has the power to act on the CDB’s behalf. Article 5 of the contract lists the duties, rights, and responsibilities of the construction manager.

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Bluebook (online)
505 N.E.2d 1253, 153 Ill. App. 3d 475, 106 Ill. Dec. 462, 1987 Ill. App. LEXIS 2186, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lk-comstock-co-inc-v-morseubm-jt-venture-illappct-1987.