Duce Construction Company Inc. v. Carlson Bros Inc et al

Filing 36

ORDER denying 26 and 27 Motions for Partial Summary Judgment. See written order. Entered by Magistrate Judge Jonathan E. Hawley on 9/23/19. (WG, ilcd)

E-FILED

Monday, 23 September, 2019 01:04:24 PM
Clerk, U.S. District Court, ILCD

IN THE
UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
URBANA DIVISION
THE UNITED STATES OF
AMERICA, for the use and benefit of
DUCE CONSTRUCTION
COMPANY, an Illinois corporation,
Plaintiff,

Case No. 2:17-cv-02173-JEH

v.
CARLSON BROS., INC, and
LIBERTY MUTUAL INSURANCE
COMPANY, a Massachusetts
corporation,
Defendants.
Order
Before the Court are the parties’ cross motions for partial summary
judgment (D. 26 & 27). For the reasons stated, infra, the motions are denied.
I
A
Carlson and Duce entered into a subcontract agreement providing that Duce
would perform earthwork, excavation and site utility work at a project in
Champaign, Illinois known as the Providence at Sycamore and Providence at
Thornberry projects. The parties agree that Carlson owes Duce $261,852.41 on the
contract, but dispute whether Carlson owes Duce an additional $85,871.75.
Specifically, during the course of the project it became apparent that Duce
needed to perform additional work outside the scope of the original agreement.
According to Duce, Carlson’s project manager, Tom Newquist, asked Duce to
perform the work to avoid a delay in the construction schedule, notwithstanding
1

the fact that Duce did not have an opportunity to comply with the contract’s
requirement that all change orders be submitted in writing in advance of the work.
Carlson has presented no evidence to contradict the testimony of Duce’s project
manager, Daniel Wilson, that Newquist told him not to stop work despite not
having submitted a written change order, but Carlson argues that the written
change order provision in the contract nevertheless precludes Duce from
recovering for the additional work.
B
In Carlson’s motion for partial summary judgment, it argues that it is
entitled to summary judgment on Duce’s claim for interest and attorneys fees,
because it deposited $261,852.41 with an escrow agent for the benefit of Duce upon
completion of the project. Duce, on the other hand, argues that the contract
provides for interest and attorney fees on accounts more than 30 days past due (D.
26-1 at p. 21) and, notwithstanding that the funds are in the hands of the escrow
agent, Duce still to this day has not received those funds because the escrow agent
refuses to release them until Duce signs a lien waiver—something Duce refuses to
do because there remains a dispute regarding the additional $85,871.75 for work
beyond the scope of the original contract.
Carlson also argues it is entitled to summary judgment on the issue
regarding the amount due in excess of the original subcontract amount, arguing
that it is undisputed that Duce did not follow the written change order procedure
in the contract. Duce responds, however, that Carlson agreed to an oral
modification of this provision when inducing it to continue working without
following the procedure in order to avoid any delay in the project schedule.
C
In Duce’s motion for partial summary judgment, it argues that it is entitled
to summary judgment on the $261,852.41 for work that is not in dispute, plus
2

interest and attorney fees, given that it has yet to receive the payment. Carlson
does not dispute that it owes Duce the $261,852.41, but argues that Duce is not
entitled to interest and attorney fees because it turned the funds over to the
escrow agent. The fact that the escrow agent has not released the funds to Duce
relieved Carlson of its obligation and the fact that those funds have yet to be
released to Duce is not its fault.
Duce also argues that it is entitled to summary judgment regarding the
amount outside the scope of the contract agreement because, notwithstanding the
fact that the change order procedure was not followed, the parties orally modified
this provision to keep the project on schedule. Carlson’s response is essentially
that the written change order in the contract is absolute.
II
A
Summary judgment is appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317,
322-23 (1986). The moving party has the burden of providing proper y evidence to
show the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477
U.S. 317, 323- 24 (1986). Once the moving party has met its burden, the opposing
party must come forward with specific evidence, not mere allegations or denials
of the pleadings, which demonstrates that there is a genuine issue for trial. Gracia
v. Volvo Europa Truck, N.V., 112 F.3d 291, 294 (7th Cir. 1997). “[A] party moving for
summary judgment can prevail just by showing that the other party has no
evidence on an issue on which that party has the burden of proof.” Brazinski v.
Amoco Petroleum Additives Co., 6 F.3d 1176, 1183(7th Cir. 1993).

3

B
As an initial matter, the parties do not dispute that Carlson owes Duce
$261,852.41 for work performed under the original contract. Accordingly, without
question, the final judgment in this case will, at a minimum, include a judgment
in favor of Duce for that amount at the conclusion of the case. Regarding what is
really at issue in this case, i.e., interest and attorney fees on the $261,852.41 and the
$85,871.75 in work beyond the original contract, neither party has established that
it is entitled to summary judgment.
First, regarding interest and attorney fees, the contract indisputably
provides for interest and attorney fees related to collection thereof for amounts
past due more than 30 days. However, the contract provides that “[f]inal payment
shall become due to Subcontractor” after “all required final waivers, affidavits,
guarantees . . . are submitted to General Contractor by Subcontractor. . .” (D. 26-1
at p. 3). It is undisputed that no such final waiver has ever been provided to
Carlson by Duce so, by the literal terms of the contract, no remaining funds are yet
“due.” Thus, the interest and attorney fees provisions in the contract have not yet
kicked in. Although the parties spill much ink over the circumstances regarding
the escrow agent’s refusal to release funds, Carlson’s involvement in the agent’s
refusal to release the funds, and Duce’s efforts to provide an acceptable waiver,
these circumstances are beside the point for purposes of the contract.
Given that Duce has not performed the precondition in the contract for
making final payment “due,” it is not entitled to summary judgement for interest
and attorney fees to collect a past “due” amount. However, depending on the
outcome of the case, Duce may be able to argue that it is entitled to prejudgment
interest and/or attorney fees based upon a source of law, rather than the contract
standing alone. Under Illinois law, at least prejudgment interest can be awarded
via a statute or equity under certain circumstances. See e.g., Platinum Technology,
4

Inc., v. Federal Insurance Co., 282 F.3d 927 (7th Cir. 927). But Duce has not pressed
these non-contractual methods at this stage in the litigation and, rightly so, given
that such questions are better left for a decision by the Court after the merits of the
case have been resolved. Accordingly, neither party is entitled to summary
judgment on the issue of interest and attorney fees on the $261,851.41 indisputably
owned by Carlson to Duce.
Second, on the question of whether Duce is entitled to $85,871.75 for work
performed outside the original contract, neither party is entitled to summary
judgment on this question either. Carlson relies solely upon the contract language
requiring a written change order for work performed outside the contract but
ignores the Illinois law providing that an oral modification of a written contract is
enforceable, even when the contract prohibits oral modifications. See Tadros vs.
Kuzmak, 277 Ill.App.3d 301, 660 N.E.2d 162 (1st Dist., 1995); Caulfield vs. Packer
Engineering, Inc., 2015 Ill.App. (1st) 140463-U; A.W. Wendell & Sons, Inc. v. Qazi, 254
Ill.App.3d 97, 626 N.E.2d 280 (2nd Dist., 1993); and Berg & Associates, Inc. v. Nelsen
Steel & Wire Co., 221 Ill.App.3d 526, 580 N.E.2d 1198 (1st Dist, 1991). Accordingly,
Carlson’s singular reliance upon the contract language is insufficient to entitle it
to summary judgment.
On the flip side, although Duce suggests that the parties orally modified the
contract, “the existence of an oral modification—as well as its terms, conditions,
and the intent of the parties—are all questions of fact that must be determined by
the trier of fact.” Household Financial Services, Inc., v. Coastal Mortg. Services, Inc.,
152 F.Supp.2d 1015, 1022 (N.D. Ill; July 12, 2001), citing E.A. Cox Co. v. Road Savers
Int'l Corp., 648 N.E.2d 271, 277 (Ill. App. 1995); Maher & Assocs., Inc. v. Quality
Cabinets, 640 N.E.2d 1000, 1007 (Ill. App. 1994) (“Whether the terms of a written
contract are modified by acts or conduct is a question of fact for the trier of fact.”);
Giannetti v. Angiuli, 263 Ill.App.3d 305, 200 (Ill. App. 1994) (“Whether a party's
5

course of conduct waives strict compliance with a contractual provision and
results in forfeiture is generally a question of fact; such a question is unsuitable for
disposition by way of summary judgment.”). Accordingly, summary judgment in
favor of Duce is inappropriate, as the question is one for the jury to decide.
III
For the reasons stated, supra, the parties’ cross motions for partial summary
judgment are DENIED (D. 26, 27).
It is so ordered.
Entered: September 23, 2019
s/Jonathan E. Hawley
U.S. Magistrate Judge

6