Chicago College of Osteopathic Medicine v. George A. Fuller Co.

Decision Date10 May 1983
Docket Number82-2259,Nos. 82-2176,82-2315 and 82-2316,82-2177,s. 82-2176
Citation719 F.2d 1335
Parties14 Fed. R. Evid. Serv. 635 CHICAGO COLLEGE OF OSTEOPATHIC MEDICINE, Plaintiff-Appellee, v. GEORGE A. FULLER COMPANY, Defendant-Appellant. GEORGE A. FULLER COMPANY, Defendant, Counterclaimant-Appellant, v. Ed HOFFMAN, Counterdefendant-Appellee. CHICAGO COLLEGE OF OSTEOPATHIC MEDICINE, Plaintiff-Appellee, v. GEORGE A. FULLER COMPANY, Defendant-Appellant. GEORGE A. FULLER COMPANY, Third Party Plaintiff-Appellant, v. SCHMIDT, GARDEN AND ERICKSON, Third Party Defendant-Appellee. CHICAGO COLLEGE OF OSTEOPATHIC MEDICINE, Plaintiff, Counterdefendant-Appellant, v. GEORGE A. FULLER COMPANY, Defendant, Counterclaimant and Third Party Plaintiff- Appellee, and AETNA CASUALTY AND SURETY COMPANY, Defendant-Appellee, v. SCHMIDT, GARDEN & ERICKSON, Third Party Defendant. CHICAGO COLLEGE OF OSTEOPATHIC MEDICINE, Plaintiff, Counterdefendant-Appellee, v. GEORGE A. FULLER COMPANY, Defendant, Counterclaimant and Third Party Plaintiff- Appellant, and AETNA CASUALTY & SURETY COMPANY, Defendant, v. SCHMIDT, GARDEN & ERICKSON, Third Party Defendant-Appellee. CHICAGO COLLEGE OF OSTEOPATHIC MEDICINE, Plaintiff, Counterdefendant, v. GEORGE A. FULLER COMPANY, Defendant, Counterclaimant and Third Party Plaintiff- Appellee, and AETNA CASUALTY AND SURETY COMPANY, Defendant, v. ED HOFFMAN EXCAVATING, INC., Counterdefendant-Appellant, and Schmidt, Garden & Erickson, Third Party Defendant.
CourtU.S. Court of Appeals — Seventh Circuit

Thomas A. Foran, Foran, Wiss & Schultz, Chicago, Ill., for plaintiff-appellant, counterdefendant-appellee.

Robert E. Kehoe, Jr., Wildman, Allen & Dixon, Chicago, Ill., for defendant-appellant.

Sherwin D. Abrams, Solomon, Rosenfeld, Elliott, Stiefel & Abrams, Ltd., Chicago, Ill., for counterdefendant-appellant.

John R. Doyle, McDermott, Will & Emery, Chicago, Ill., for third party defendant-appellee.

Before BAUER and WOOD, Circuit Judges, and GIBSON, Senior Circuit Judge. **

HARLINGTON WOOD, Jr., Circuit Judge.

This consolidated appeal of diversity jurisdiction cases consists of three major disputes arising from the construction of a New Family Outpatient Clinic (the "project"). In the original action, the plaintiff owner, Chicago College of Osteopathic Medicine ("CCOM"), sued the general contractor, George A. Fuller Company ("Fuller"), alleging breach of the construction contract by failing to carry the work forward in an expeditious manner, improperly supervising work on the project and submitting improper payment applications. By counterclaim, Fuller charged that CCOM and the project architect, Schmidt, Garden and Erickson ("SGE"), breached the construction contract by delaying the project's progress, delaying or refusing to make certain payments allegedly due Fuller, and terminating Fuller. Finally, there is the counterclaim filed by the subcontractor Ed Hoffman Excavating, Inc., ("Hoffman"), claiming damages for delay against Fuller.

I. Hoffman Litigation.

The Hoffman litigation presents two issues. 1 First, whether Hoffman was entitled to damages for delay. Second, whether CCOM or SGE must indemnify Fuller for delay damages paid to Hoffman.

A. Liability.

On October 8, 1973, Hoffman and Fuller contracted for Hoffman to perform the excavating services on the CCOM clinic project for $210,000. The printed form contract supplied by Fuller contained the following waiver of delay claims provision:

ARTICLE XI

If the Subcontractor shall be delayed in the commencement, prosecution or completion of the Work or shall be obstructed or hindered in the orderly progress of the Work by any act, neglect of [sic] default of the Contractor, the Owner, the Architect, another contractor or subcontractor or by any cause beyond the control of the Subcontractor, then the time fixed for completion of the Work shall be extended.... The Subcontractor expressly agrees not to make, and hereby waives, any claim for damages on account of any delay, obstruction or hindrance for any cause whatsoever, including but not limited to the aforesaid causes, and agrees that its sole right and remedy in the case of any delay ... shall be an extension of the time fixed for completion of the Work.

(Emphasis added.)

At trial, Edwin Hoffman, the President and Treasurer of Hoffman, testified he discussed the meaning of Article XI with Fuller personnel--Fullington, Bronge, and Marchiori--at a meeting held in February, 1974. According to Hoffman, the Fuller personnel informed him that Article XI covered commonly encountered delays of a few days, but "did not apply to [this] particular situation" where the period of delay amounted to several months. On several occasions, Mr. Hoffman requested a release from the excavating contract, but Bronge told Hoffman to "hang on in good faith" and, in February of 1974, at a meeting with Fuller's Hessmer, Fullington and Bronge, Hoffman was promised payment for the delays and extra costs incurred.

The district court found that Hoffman had relied upon the promises made by Fuller personnel assuring extra payment and that the parties did not intend the delay provision to apply to delays purposely caused by the conduct of either the owner, the general contractor, or the architect, but to "ordinary delays anticipated by things such as weather, unavailability of supplies, and matters of that kind." Id. at 3091. The court determined that the delay clause was inapplicable because it found that SGE Fuller, and CCOM caused the delay; the court attributed no delay to Hoffman. Although this interpretation of the delay provision yields a fair result, Illinois case law is to the contrary. Unicon Management Corp. v. City of Chicago, 404 F.2d 627 (7th Cir.1968) (Illinois law applied); 2 Herlihy Mid-Continent Co. v. Sanitary Dist., 390 Ill. 160, 60 N.E.2d 882 (1945); Underground Construction Co. v. Sanitary Dist., 367 Ill. 360, 11 N.E.2d 361 (1937) (10-months delay); M.A. Lombard & Son Co. v. Public Building Commission, 101 Ill.App.3d 514, 57 Ill.Dec. 209, 428 N.E.2d 889, 892 (1st Dist.1981); Bates & Rogers Construction Corp. v. North Shore Sanitary Dist., 92 Ill.App.3d 90, 47 Ill.Dec. 158, 414 N.E.2d 1274 (2d Dist.1981). See generally Annot., Validity and Construction of "No Damage" Clause With Respect to Delay in Building or Construction Contract, 74 A.L.R.3d 187 (1976).

In Herlihy Mid-Continent Co., the plaintiff (Herlihy) agreed to construct part of the Calumet sewage works extension for the Sanitary District of Chicago. The Sanitary District caused two years of delay and Herlihy sued for resulting damages. The contract provided: "[T]he Contractor shall not be entitled to any damages ... from the Sanitary District on account of any delay ... resulting from any of the causes aforesaid in this article [except for the following enumerated expenses]." Id. 60 N.E.2d at 884-85. The court observed that, absent a delay-waiver clause, a contractor is entitled to recover damages sustained by a delay caused by the contractee's default. Herlihy contended that the court should apply fundamental rules of construction, such as construing the contract prepared by a defendant most strongly against him, ascertaining what meaning and intent an ordinary person would attach to the language, and adopting a strained construction to prevent an injustice. The court rejected the use of rules of construction because the contract term "any act or delay" was "broad and comprehensive, ... plain and understandable, ... [and bore] no construction except that it shows an intent to include all delays caused by the district whether they be unavoidable or such that they could have been avoided by the district." Moreover, the court considered it immaterial whether the Sanitary District had an excuse which justified its act causing the delay.

Here, the language of Article XI in the Fuller/Hoffman contract plainly waives any claim for damages on account of any delay for any cause whatsoever. It is not ambiguous. Mr. Hoffman's testimony that the parties meant ordinary delay or delay of a few days cannot now be engrafted on the agreement. Nor does Illinois law presume, as did the district court, that under Illinois law deliberate delay by the contractor is not covered by such a broad waiver provision.

Alternatively, Hoffman argues that (1) Fuller waived the delay provision, 3 (2) Hoffman meets the five-prong test for obtaining payment for extra work, 4 and (3) the parties orally modified the written contract work. 5 The district court did not rule upon any of these theories of recovery. Thus, we must remand to the district court to consider the merits of these alternative grounds for recovery. We leave it up to the district court to determine whether sufficient evidence was presented in the bench trial to enable the judge to rule on these alternative theories of recovery based on the trial record, or, if insufficient evidence was presented below, to conduct a new trial. We direct that this case be remanded to the same judge, Judge Leighton, who presided over the trial below.

B. Indemnification.

Fuller argues that CCOM and SGE should indemnify it for damages resulting from the Hoffman litigation because the district court found that SGE and CCOM also caused some of the delays in Hoffman's work. Although Fuller does not contend that there is an express indemnity contract between it and SGE or CCOM, Fuller asserts there is an implied indemnity contract since it is being held liable for damages caused by the misconduct of SGE and CCOM. See generally N. Bua, Third Party Practice in Illinois: Express and Implied Indemnity, 25 DePaul L.Rev. 287, 296 (1975-76).

The district court dismissed Fuller's third-party complaint against SGE and CCOM for indemnity, ruling that the complaint failed to state a claim upon which relief could be granted. The district court relied primarily upon th...

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