George A. Fuller Co., a Div. of Northrop Corp. v. Chicago College of Osteopathic Medicine

• Decision Date: 14 October 1983
• Docket Number: No. 80-1554,80-1554
• Citation: 719 F.2d 1326
• Parties: GEORGE A. FULLER CO., A DIVISION OF NORTHROP CORPORATION, Plaintiff-Appellant, v. CHICAGO COLLEGE OF OSTEOPATHIC MEDICINE, a corporation, et al., Defendants-Appellees. *
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1326

719 F.2d 1326 GEORGE A. FULLER CO., A DIVISION OF NORTHROP CORPORATION,
Plaintiff-Appellant,
v.
CHICAGO COLLEGE OF OSTEOPATHIC MEDICINE, a corporation, et
al., Defendants-Appellees. No. 80-1554. ^* United States Court of Appeals,
Seventh Circuit. Argued May 10, 1983.
Decided Oct. 14, 1983.

Page 1328

Robert E. Kehoe, Chicago, Ill., for plaintiff-appellant.

Steven A. Gorman, Foran, Wiss & Schultz, John R. Doyle, McDermott, Will & Emery, Chicago, Ill., for defendants-appellees.

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

HARLINGTON WOOD, Jr., Circuit Judge.

The plaintiff-appellant, George A. Fuller Company, a division of Northrop Corporation ("Fuller"), brought this action for tortious interference with contract against defendants-appellees, the Chicago College of Osteopathic Medicine ("CCOM"); CCOM's president, Thaddeus P. Kawalek; CCOM's vice-president, Robert W. Schaerer; and the architectural firm of Schmidt, Garden and Erikson ("SGE"). Jurisdiction is based on diversity of citizenship. The parties agree that the law of Illinois is controlling.

I. Facts.

This action involves both a construction contract between CCOM and Fuller whereby Fuller agreed to build a New Family Outpatient Clinic (the "project"), and the subcontracts between Fuller and numerous, unidentified subcontractors. SGE was the project architect. Due to disputes between the parties during the construction, CCOM and SGE terminated Fuller prior to completion.

Thereafter, CCOM filed suit against Fuller in the Northern District of Illinois under the caption Chicago College of Osteopathic Medicine v. George A. Fuller Company, ("Case No. 75 C 4161"), alleging that Fuller breached 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. Fuller denied the charges and counterclaimed against CCOM and SGE, alleging that they had breached the construction contract by delaying the project's progress, delaying or refusing to make certain payments allegedly due Fuller, and terminating Fuller.

In early 1979, Fuller sought leave to file an amended counterclaim in Case No. 75 C 4161. Count III of the proposed amended counterclaim was virtually identical to the complaint involved in this action. On July 11, 1979, prior to a ruling on its motion, Fuller filed the instant complaint under Docket No. 79 C 2890. Thereafter, Fuller was denied leave to file Count III of its amended counterclaim in Case No. 75 C 4161. Fuller did not appeal that ruling, but did seek leave to have Case No. 79 C 2890 consolidated with Case No. 75 C 4161. In its motion to consolidate, and at a later hearing, Fuller contended that its tortious interference theory set forth in the 1979 complaint was "based upon the same set of

Page 1329

facts and transactions" and involved "essentially the same issues and evidence" as the contract theory asserted in its counterclaim in Case No. 75 C 4161. The defendants moved to dismiss the complaint in Case No. 79 C 2890.

On March 19, 1980, Judge Leighton granted the defendants' motions and dismissed Fuller's complaint, concluding the complaint was vague and failed to state a claim upon which relief could be granted. The dismissal was without prejudice to Fuller amending its counterclaim in Case No. 75 C 4161 and asserting, in proper fashion, any claims which it had against the plaintiff (CCOM) in that action. Fuller appeals from that dismissal having elected to stand on its complaint and not to file any claims in addition to those already filed in Case No. 75 C 4161.

CCOM's breach of contract claim against Fuller, and Fuller's contract claim against CCOM and its claims against SGE in Case No. 75 C 4161 were tried by a jury in November and December, 1980. Verdicts were returned in favor of CCOM and SGE and against Fuller on Fuller's respective claims against them, and against CCOM on its claim against Fuller. Judgments entered on the verdicts are now on appeal to this court.

Although this appeal raises several issues, we need only consider whether the complaint states an action for tortious interference of contract, due to our conclusion that it does not.

II. The Complaint.

For purposes of analysis, the complaint is summarized in detail as follows:

In 1973, Fuller and CCOM contracted for Fuller to construct a New Family Health Care Outpatients Clinic. SGE was architect and supervisor for the project. Fuller then contracted with numerous subcontractors with the knowledge of CCOM, SGE, Kawalek, and Schaerer ("defendants"). Complaint p 9. Between 1971 and 1973, CCOM applied to the United States Department of Health, Education and Welfare for federal grants to finance the construction and received approval for 75% of the construction price. Id. p 13. In 1974, CCOM sought financing through a bond issuance in the amount of $35,000,000 to provide money for the clinic and, predominantly, for the construction of a teaching hospital--a costlier project for which SGE also served as architect. Id. p 15. Motivated in part, "to consummate the ... bond financing and proceed with the construction of the new ... hospital," the defendants caused the publication of false statements concerning the cost increases of the clinic project, fearing that disclosure of increases would jeopardize the funding.

Prior to June 10, 1975, the defendants conspired to: (1) avoid costly borrowing by refusing to "approve or pay Fuller's payment applications for work performed by Fuller and its subcontractors during the months of March, April and May, 1975," thereby forcing Fuller and the subcontractors to finance the cost of construction; (2) refused to "approve or pay delay claims of Fuller and its subcontractors," despite their responsibility for the delay; (3) refuse to "approve or pay the claims for extras of Fuller and its subcontractors, although the work had been authorized for agreed amounts in writing by SGE...." Id. p 21(a)-(c).

After June 10, 1975, despite the success of the bond issue, the defendants--still interested in concealing the "true facts,"--"interfered with Fuller's relations with CCOM under that contract and with Fuller's contractual relations with its subcontractors" by the following acts: (1) In late June, 1975, when paying for work performed in March, April, and May, 1975, the defendants "arbitrarily and maliciously reduced the amounts shown" on the payment application and refused to pay the full amount; (2) To coerce Fuller to waive claims for extras and delays, they refused to approve or pay certain other payment applications "on the unfounded grounds that Fuller's payment applications were not in proper form," and subcontractors had filed mechanic's liens against the property; (3) Defendants refused to pay Fuller for such work even after...