Bd. of Educ. of Lincoln Elementary Sch. Dist. v. Melotte-Morse-Leonatti, Ltd.
| Decision Date | 15 May 2017 |
| Docket Number | NO. 4-16-0709,4-16-0709 |
| Parties | THE BOARD OF EDUCATION OF LINCOLN ELEMENTARY SCHOOL DISTRICT #27, Plaintiff, v. MELOTTE-MORSE-LEONATTI, LTD.; and FANNING HOWEY ASSOCIATES, INC., Defendants, and MELOTTE-MORSE-LEONATTI, LTD., Defendant and Third-Party Plaintiff, v. HYMANS ENGINEERING, INC., Third-Party Defendant and THE BOARD OF EDUCATION OF LINCOLN ELMENTARY SCHOOL DISTRICT #27, Assignee of Melotte-Morse-Leonatti, Ltd., Defendant and Third-Party Plaintiff Appellant, v. HYMANS ENGINEERING, INC., Third-Party Defendant-Appellee. |
| Court | United States Appellate Court of Illinois |
NOTICE
This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).
Appeal from Circuit Court of Logan County
Honorable Thomas W. Funk, Judge Presiding.
¶ 1 Held: The appellate court affirmed, concluding the trial court did not err in (1) dismissing the third-party complaint under section 2-619(a)(9) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(9) (West 2014)) or (2) denying the motion to reconsider that dismissal.
¶ 2 In February 2001, plaintiff, the Board of Education of the Lincoln Elementary School District #27 (Board), entered into a contract with defendants, Melotte-Morse-Leonatti, Ltd. (Melotte) and Fanning Howey Associates, Inc. (Fanning), where Melotte and Fanning agreed to perform architectural and engineering services for the design and specification for the construction of a junior high school and an elementary school in Lincoln, Illinois. In April 2001, third-party plaintiff, Melotte entered into a subcontract with third-party defendant, Hymans Engineering, Inc. (Hymans), where Hymans agreed to provide the design of the heating, ventilation, and air conditioning (HVAC) systems for both schools. After later occupying the structures for use, the Board observed several deficiencies in both schools, including defective HVAC systems in the junior high school.
¶ 3 In April 2008, the Board filed a complaint against Melotte and Fanning, alleging claims of breach of contract. In June 2008, Melotte filed a third-party complaint against Hymans, seeking to recover any amount shown to be due to the Board as a result of the defective design of the HVAC systems in the junior high school.
¶ 4 In March 2016, the Board, Melotte and Fanning reached a settlement, part of which included the assignment of Melotte's third-party complaint to the Board. In May 2016, Hymans filed a motion to dismiss the third-party complaint under section 2-619(a)(9) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(9) (West 2014)), arguing Melotte, and therefore the Board as its assignee, forfeited the only remedy available under the subcontract by failing to timely demand mediation or arbitration. Following a June 2016 hearing, the trial court granted Hymans' motion to dismiss. The Board later filed a motion to reconsider, which the court denied.
¶ 5 The Board appeals, arguing the trial court erred by (1) denying its motion to reconsider on the basis the issue of arbitrability was a legal theory not previously raised; and (2) dismissing its third-party complaint where (a) an order granting a stay was previously granted, and (b) genuine issues of material fact existed as to the affirmative matter asserted. We affirm.
¶ 8 In April 2008, the Board filed a complaint against Melotte and Fanning, alleging claims of breach of contract. In relevant part, the Board sought to recover an amount in excess of $50,000 for the damages caused by the improperly designed and defective HVAC systems installed in the junior high school.
¶ 10 In June 2008, Melotte filed a third-party complaint against Hymans, alleging a claim of breach of contract. Melotte sought to recover any amount shown to be due to the Board as a result of the defective design of the HVAC systems installed in the junior high school.
¶ 12 On August 1, 2008, Hymans filed a combined motion to dismiss under section 2-619.1 of the Code (735 ILCS 5/2-619.1 (West 2008)). In relevant part, Hymans moved the court to dismiss the third-party complaint under section 2-619(a)(9) of the Code (735 ILCS 5/2-619(a)(9) (West 2008)) because Melotte was "not authorized [under its subcontract] to avail itself of a remedy *** by way of an action in the [trial] court, but [rather] only through mediation and arbitration." In support, Hymans highlighted its subcontract provided:
Hymans also noted: "Contemporaneous with the filing of this [m]otion, [Hymans] has served upon [Melotte] a demand for mediation and arbitration with respect to any and all claims and disputes set forth in the third[-]party complaint."
¶ 14 On August 13, 2008, Melotte filed a response to Hymans' combined motion to dismiss. With respect to Hymans' request for dismissal under section 2-619(a)(9), Melotte acknowledged its subcontract contained a standard arbitration clause but indicated it filed its third-party complaint "based on the assumption, apparently mistaken, that Hymans did not want to arbitrate the dispute." Melotte asserted, setting aside its mistaken assumption, Hymans was not entitled to have the third-party complaint dismissed.
¶ 15 Melotte highlighted, under section 2(d) of the Illinois Uniform Arbitration Act (Uniform Arbitration Act) (710 ILCS 5/2(d) (West 2008)), the proper procedure where a party is seeking to compel another party to arbitrate issues raised in a lawsuit is to move to stay the lawsuit. Melotte suggested the reason the Uniform Arbitration Act required staying rather than dismissing an action was because it more effectively protected the parties' interests and theinterests of justice. Melotte asserted a stay was more appropriate in the present matter because (1) "if Hymans should elect to waive its right to arbitrate, [it] could return to its chosen forum—the courts—without fear of having its claims barred by the applicable statute of limitations"; (2) "while it may be unlikely, if the arbitration panel found that certain claims were not subject to arbitration, [it] could return to court without having to worry about statute of limitations issues"; and (3) the "[c]ourt would have jurisdiction over the parties and, therefore, would be an available forum to enforce any arbitration awards or for appeal purposes."
¶ 16 Melotte requested, "[i]f [the trial court] is inclined to grant what in effect is Hymans' motion to compel arbitration, *** it should stay the [t]hird[-][p]arty [c]omplaint, rather than dismiss it."
¶ 18 Following an August 15, 2008, hearing, the trial court denied Hymans' combined motion to dismiss and stayed the third-party complaint. A transcript from the hearing or a bystander's report is not included in the record on appeal. In its written order, the court specifically provided "the [t]hird[-][p]arty [c]omplaint shall be stayed pending mediation and arbitration between [Melotte] and [Hymans] pursuant to the parties' contract."
¶ 20 In March 2016, the trial court entered an agreed order dismissing the Board's complaint against Melotte and Fanning as the parties had reached a settlement. The order noted the settlement had no impact on any claims against Hymans.
¶ 21 In April 2016, the Board filed a notice of assignment, which indicated Melotte had assigned its third-party complaint against Hymans to the Board.
¶ 23 In May 2016, Hymans filed a motion to dismiss under section 2-619(a)(9) of the Code (735 ILCS 5/2-619(a)(9) (West 2014)). Hymans alleged any deficiencies with the HVAC systems at the junior high school were known by at least May 2004, as evidenced by correspondence attached to its motion. The correspondence was addressed to Melotte and highlighted issues with the "closing of dampers" and "size of [the] outside air intakes" in the junior high school's HVAC systems. Hymans also alleged, following the trial court's entry of its 2008 order staying proceedings on the third-party complaint, Melotte (1) "did not make a demand for mediation or arbitration"; and (2) "failed and refused to engage in mediation and/or arbitration with [it], abandoning all efforts to do so, and deferring instead to engage for years in litigation and settlement negotiations with [the Board]."
¶ 24 Hymans stated its subcontract provided:
Hymans also highlighted the applicable statute of limitations for a written contract (735 ILCS5/13-206 (West 2004)) was 10 years from the date the cause of action accrued.
¶ 25 Hymans argued dismissal was appropriate because Melotte, and therefore the Board...
To continue reading
Request your trial