Ozdeger v. Altay

384 N.E.2d 82, 66 Ill. App. 3d 629, 23 Ill. Dec. 446, 1978 Ill. App. LEXIS 3703
Appellate Court of Illinois·Decided November 15, 1978·No. 78-1180·Published·Cited by 17 cases

Opinion

Mr. JUSTICE McNAMARA

delivered the opinion of the court:

Defendants bring this interlocutory appeal from an order of the circuit court of Cook County denying their motion to stay the proceedings in the trial court and to compel arbitration of the claims in plaintiffs’ amended complaint. The trial court found that an arbitration clause providing for arbitration of all disputes “arising out of, or relating to” a written contract entered into between the parties was inapplicable to a subsequent oral agreement entered into by the parties.

On June 16, 1976, plaintiffs, the owners of certain real estate located in Glenview, Illinois, entered into a written contract with defendants whereby the latter undertook to act as architects and as general contractors for a home to be constructed on plaintiffs’ property. Part of the contract was on an American Institute of Architects (hereafter referred to as “AIA”) form; the remainder was typewritten and attached to the form as an addendum. The portion of the agreement on the AIA form contained an arbitration clause which provided:

“All claims, disputes and other matters in question arising out of, or relating to, this Agreement or the breach thereof shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise. This agreement to arbitrate shall be specifically enforceable under the prevailing arbitration law.”

The typewritten addendum outlined defendants’ duties as general contractors.

Subsequent to the execution of the written contract, the parties orally agreed that defendants would act as carpentry managers. Defendants were to expedite and control the material supply and quality of the work to be performed by the carpenters working at plaintiffs’ residence.

Plaintiffs became dissatisfied with defendants’ performance and filed suit, alleging that defendants had breached their duties as architects, general contractors, and carpentry managers. A copy of the written contract was attached to the complaint. In response, defendants filed a motion to stay proceedings and to compel arbitration pursuant to the arbitration clause.

At the hearing on defendants’ motion, plaintiffs argued that they were not required to arbitrate any of the matters alleged in their complaint or, in the alternative, that the arbitration clause was applicable only to that portion of the contract on the AIA form and not to the addendum or the oral agreement. The trial court rejected plaintiffs’ argument as to the written agreement and held that, by virtue of the arbitration clause, plaintiffs were bound to arbitrate any disputes arising out of or relating to defendants’ performance as architects and general contractors. On appeal this court affirmed the trial court’s holding. Ozdeger v. S. M. Altay, Ltd. (1978), 64 Ill. App. 3d 1036.

With respect to the oral agreement, the trial court gave plaintiffs leave to file an amended complaint. The amended complaint realleged the written agreement and further alleged that defendants orally agreed to act as carpentry managers on the project for a fee. Plaintiffs claimed that defendants breached this oral agreement by failing to oversee and expedite the carpentry aspects of the project, causing plaintiffs to incur additional expenses. Plaintiffs prayed for damages of $55,000. Defendantsrenewed their motion to stay proceedings and to compel arbitration. The trial court held, however, that the amended complaint sufficiently alleged a separate and distinguishable oral agreement to which the arbitration clause contained in the written contract was not applicable.

Defendants contend that the trial court erred in holding that plaintiffs were not bound to arbitrate disputes arising from the alleged breach of the carpentry management agreement. Defendants maintain that the language of the clause contained in the written contract, providing for arbitration of all disputes “arising out of, or relating to” that contract is broad enough to encompass a subsequent agreement which itself arose out of the original contract. Defendants emphasize that it was necessary for plaintiffs to plead the original contract in their amended complaint in order to render intelligible the terms of the subsequent oral agreement. They further argue that submission of two phases of the controversy to arbitration, while reserving disputes concerning carpentry management for litigation, could not reasonably have been contemplated by the parties. Defendants contend that the advantages of arbitration will be lost if resolution of the entire dispute must await the outcome of a trial wherein many of the issues and much of the evidence will be identical to that presented in the arbitration proceeding.

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Ozdeger v. Altay, 384 N.E.2d 82, 66 Ill. App. 3d 629, 23 Ill. Dec. 446, 1978 Ill. App. LEXIS 3703 (Ill. Ct. App. 1978).

384 N.E.2d 82 (Ozdeger v. Altay) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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