Gust K. Newberg, Inc. v. Illinois State Toll Highway Authority

• Decision Date: 31 March 1987
• Docket Number: No. 2-86-0262,2-86-0262
• Citation: 506 N.E.2d 658,106 Ill.Dec. 858,153 Ill.App.3d 918
• Parties: , 106 Ill.Dec. 858 GUST K. NEWBERG, INC., Plaintiff-Appellant, v. ILLINOIS STATE TOLL HIGHWAY AUTHORITY, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 658

506 N.E.2d 658

153 Ill.App.3d 918, 106 Ill.Dec. 858

GUST K. NEWBERG, INC., Plaintiff-Appellant, v. ILLINOIS STATE TOLL HIGHWAY AUTHORITY, Defendant-Appellee.

No. 2-86-0262.

Appellate Court of Illinois Second District.

March 31, 1987.

Arnstein Gluck Lehr Barron & Milligan, Louis A. Lehr, Carey Filter White & Boland, Edward M. White, Eugene J. Kelley, Janis M. Gibbs, Nancy Andjich, Chicago, for plaintiff-appellant.

Epton Mullin & Druth, Ltd., Robert T. O'Donnell, Richard E. Friedman, Roland A. Eckert, Neil F. Hartigan, Atty. Gen., Chicago, for defendant-appellee.

Justice INGLIS delivered the opinion of the court:

This action was brought by a joint venture of Gust K. Newberg Construction Company, Krug Construction Company and Brighton Building and Maintenance Company (Newberg) seeking to recover damages arising from the alleged breach of two construction contracts by the Illinois State Toll Highway Authority (Authority). The court, sitting without a jury, entered judgment for defendant. We affirm.

In 1971, the Authority undertook to extend the East-West Tollway west from Aurora to Rock Falls. The bid documents provided that work would start on section 8-AB on or about August 2, 1971, and on section 7-AB on or about August 9, 1971. Newberg submitted its bid on July 20, 1971, to perform the work in section E-8AB, and on July 27, 1971, to perform the work in section E-7AB. These sections involved approximately 23 miles of roadway. Newberg was awarded a contract on each bid. Contracts were executed on August 6, 1971.

Notice to proceed under each contract was given August 11, 1971. When Newberg was given notice to proceed, however, no right-of-way was obtained in section 7. Several parcels became available about a week after the notice to proceed was issued, but as of September 3, 1971, Newberg did not go forward with its planned work because the available parcels were not contiguous. On September 20, 1971, Newberg considered there were a sufficient number of contiguous parcels so that it could start its operations in section 7B. Thereafter, the Authority continued to obtain right-of-way from time to time for various parcels.

In the meantime, Newberg discovered that some farmers had not been paid for damage which was to be done to the growing crops. Some farmers refused access to Newberg. Newberg notified the Authority of this situation, and the Authority advised Newberg to stay off the property until it had settled the farmers' crop claims. The Authority's procedure for settling crop claims was to send a representative to each farmer and negotiate a settlement. A check would be requested and, thereafter, hand delivered to the farmer.

A third problem allegedly impeded Newberg's progress in section 7. This was in an area known as Union Ditch. The Union Ditch property consisted of several parcels of land within the Union Ditch Drainage District (District), which adjoined the tollway right-of-way on the north for 2 1/2 miles. As part of the construction of the tollway, a ditch was to be built by Newberg on the north side of the right-of-way to collect water and channel it to Union Creek where it would flow under the tollway. Certain parcels within the Union Ditch area were actually part of the right-of-way, but additional property was also affected. Substantial excavation was required in an easement area north of the ditch itself. The right of entry in this area was obtained on October 21, 1971.

The last parcels for right-of-way in section 7 became available October 22, 1971.

The Authority gave Newberg notice to proceed in section 8 on August 11, 1971. In this section Newberg proceeded slowly and eventually halted its work claiming that the public utility interferences were impossible to work around.

Newberg worked from September 20, 1971, only until December 5, 1971. By working far fewer days than it had anticipated, Newberg fell behind its own schedule for 1971.

Newberg resumed working in the spring of 1972. Work was slow due to inclement weather. But, as of July 19, 1972, it appeared that Newberg's efforts would be successful. On that date, a project manager wrote to the Authority that paving operations would not be delayed and that the contractor was simply awaiting a dry period of approximately four days in order to initiate fine grading and allow the beginning of paving. In spite of these efforts, however, Newberg did not make up more lost time because of extraordinary weather conditions throughout 1972.

In 1973, Newberg was confronted with a nationwide cement shortage which made the obtaining of cement in any significant quantities impossible. Therefore, completion of the roadway was deferred until 1974.

The cumulative effect of the foregoing delays resulted in heavy damages to Newberg. On September 18, 1974, Newberg submitted a written claim for delay damages asserting that construction was delayed by the Authority's lack of diligence. Newberg proposed a settlement of $2.75 million which was initially accepted by the Highway Authority Board, but ultimately rejected by the Attorney General. (See Newberg-Krug-Brighton v. Illinois State Toll Highway Authority (1978), 63 Ill.App.3d 780, 20 Ill.Dec. 820, 380 N.E.2d 1029, appeal denied (1979), 72 Ill.2d 583; Gust K. Newberg v. Illinois State Toll Highway Authority (1982), 103 Ill.App.3d 557, 59 Ill.Dec. 618, 431 N.E.2d 1375, aff'd (1983), 98 Ill.2d 58, 74 Ill.Dec. 548, 456 N.E.2d 50.) A six-week trial ensued.

Concerning the section 7 right-of-way issue, Newberg introduced evidence to show that when the notice to proceed was given to Newberg on August 11, 1971, no right-of-way whatsoever had been obtained in section 7. While several parcels became available about a week later, as of September 3, 1971, Newberg did not go forward with the work because the available parcels were not contiguous. Newberg also contended that even though certain rights-of-way were acquired by the Authority, Newberg was not able to work on those parcels because of standing crops. As a result of the delays in acquiring rights-of-way and the delay in settling for crop damages, gaps were created in the right-of-way preventing any effective movement by Newberg of its earth moving equipment until September 20, nearly 40 days after the notice to proceed.

Newberg also complained of the Authority's failure to timely acquire right-of-way parcels in section 7 in the Union Ditch drainage area. Newberg contended that the Authority should have taken it upon itself to acquire the property rather than proceed along its plan by which it entered into an agreement with the District allowing it to acquire the property from the property owners. Newberg challenged that delay was further occasioned by the Authority's failure to perform certain engineering regarding the ditch.

Finally, Newberg complained that arrangements had not been completed for the relocation of utilities crossing the tollway in many critical right-of-way areas in section 8.

Concerning Newberg's right-of-way complaints, the Authority responded at trial by both relying on contract provisions which placed the burden on the bidder to consider possible right-of-way delays and by introducing evidence that showed that the Authority acted with all diligence in acquiring right-of-way parcels.

The Authority contended that Newberg understood its obligation to acquaint itself with the status of right-of-way acquisition at the time it submitted its bid and to be aware of any right-of-way parcels yet to be acquired and the possibility of delay in acquiring them. Special provision 114 of the parties' contract provided:

"Each bidder is instructed to fully acquaint himself with the status of the right-of-way acquisition at the time of the submission of his bid and the possibility of the acquisition of the parcels remaining to be acquired, if any, in time so as not to interfere with the progress of his work under this contract, and the Authority shall not be liable to any damage that may occur to him for any and all delay, expense, or for any other cause that may occur to him or be occasioned by him or any of his subcontractors through delay of the Authority in securing the necessary right-of-way.

The Authority agrees that it will make every effort to acquire any real property not acquired at the time of the submission of the bids and required for the completion of the work with all speed and diligence possible."

Newberg was familiar with this type of contract provision from its work on other Authority construction projects. The record reflects, however, that none of Newberg's project coordinators or its vice-president for construction made inquiry into the status of right-of-way acquisitions before Newberg submitted its bids. A condemnation suit for 18 parcels in section 7 was first filed on the day before Newberg's bid was submitted. Condemnation suits for the remaining parcels were not filed until after Newberg submitted its bid. At the preconstruction meeting of August 10, 1971, Newberg was promised that 18 of the 42 right-of-way parcels in section 7 would be available within a week to 10 days. As promised, on August 19, 1971, 18 parcels in that section were made available.

The Authority tendered evidence to show that the Authority made every effort to acquire the remaining right-of-way parcels with all speed and diligence. The Authority's right-of-way acquisition expert opined that it would reasonably be expected to take 60 to 90 days from the date of a condemnation suit until an order vesting title in the Authority was obtained. The Authority obtained title to all parcels in section 7 within 60 days of filing the suits.

Concerning the delays surrounding the Union Ditch property, we note that the Authority negotiated an agreement with the local drainage District. This occurred a week before Newberg submitted its bid. The agreement provided that the District would acquire property for the ditch and give an...