John Kubinski & Sons, Inc. v. Dockside Development Corp.

• Decision Date: 03 November 1975
• Docket Number: No. 59623,59623
• Citation: 339 N.E.2d 529,33 Ill.App.3d 1015
• Parties: JOHN KUBINSKI & SONS, INC., an Illinois Corporation, Plaintiff-Counter-Defendant-Appellee, v. DOCKSIDE DEVELOPMENT CORP., an Illinois Corporation, Defendant-Counter- Plaintiff-Appellant, v. RESERVE INSURANCE COMPANY, an Illinois Corporation, Counter-Defendant, Cross-Plaintif and Third-Party Plaintiff-Appellee, v. JOHN KUBINSKI & SONS, INC., an Illinois Corporation, and Donald Kubinski, an Individual, Counter-Defendants-Cross-Defendants and Third-Party Defendants- Appellees.
• Court: United States Appellate Court of Illinois

Page 529

339 N.E.2d 529

33 Ill.App.3d 1015

JOHN KUBINSKI & SONS, INC., an Illinois Corporation, Plaintiff-Counter-Defendant-Appellee, v. DOCKSIDE DEVELOPMENT CORP., an Illinois Corporation, Defendant-Counter- Plaintiff-Appellant, v. RESERVE INSURANCE COMPANY, an Illinois Corporation, Counter-Defendant, Cross-Plaintif and Third-Party Plaintiff-Appellee, v. JOHN KUBINSKI & SONS, INC., an Illinois Corporation, and Donald Kubinski, an Individual,

Counter-Defendants-Cross-Defendants and

Third-Party Defendants- Appellees.

No. 59623.

Appellate Court of Illinois, First District, First Division.

Nov. 3, 1975.

Brown, Fox & Blumberg, Chicago (Eugene L. Resnick, Chicago, of counsel), for defendant-counter-plaintiff-appellant, Dockside Development Corp.

Schiff, Hardin & Waite, Chicago (Aaron J. Kramer, Chicago, of counsel), for counter-defendant-appellee and cross appellant, Reserve Ins. Co.

EGAN, Justice:

The plaintiff-counter-defendant, John Kubinski & Sons, Inc. (Kubinski), is an excavating contractor which entered into a written agreement on February 1, 1968, with the defendant, Dockside Development Corporation (Dockside), to excavate a slip at Lake Calumet Harbor. The plaintiff filed a complaint for breach of that written agreement; the defendant filed a counterclaim against the plaintiff for breach of the contract and against the plaintiff and its surety, Reserve Insurance Company (Reserve) for breach of the performance bond. The trial court entered judgment for the plaintiff, dismissed the defendant's counterclaim, and denied the petition of the plaintiff and Reserve for prejudgment interest. The defendant appears from the judgment in favor of the plaintiff and dismissing the defendant's counterclaim; and the plaintiff and Reserve cross-appeal from the denial of their petition for prejudgment interest.

Under the agreement, Kubinski was to excavate a slip at Lake Calumet Harbor to accommodate ocean and lake vessels and was to be paid 48 cents per cubic yard of excavated material with a guarantee of at least 300,000 cubic yards. The excavation was required to meet a periodic completion schedule by which Kubinski was to excavate a minimum of 12 1/2% Of the total material by specified dates beginning on March 15, 1968, and ending on January 1, 1969. The contract also provided that time was of the essence and for a $150 a day penalty clause for delay caused by Kubinski.

During the excavation Dockside was to construct a dockwall, a structure for mooring vessels, adjacent to the slip. The dockwall was to be completed by September 1, 1968; and until it was completed, Kubinski was not to excavate within a minimum 10-foot berm. A berm was described as a flat area of unexcavated earth which is left to support future construction equipment.

Only Dockside was authorized to suspend the excavation work when its engineers determined that further excavation would jeopardize the construction of the dockwall. These suspension periods had a maximum duration of 30 days; and after a suspension period, Kubinski was 'to promptly resume work.' After resuming work, Kubinski would be permitted to work for a period of at least 30 calendar days before another such suspension order could be issued.

Donald Kubinski testified that late in August, 1968, he asked Dockside to issue a 30-day suspension order because the excavation was getting close to the minimum 10-foot berm. On September 4, 1968, Dockside's engineers issued a suspension order which stated that since completion of the dockwall had not been met by the contract date of September 1, 1968, the owner would assume all costs in connection with the pumping required to keep the slip reasonably free of water. The contract had provided that the owner would bear the costs of pumping after September 1, 1968, but only during the duration of a suspension order.

The president of Dockside testified that the failure to complete the dockwall by September 1, 1968, was due to a delay in obtaining steel from Europe; and that Dockside did not execute the written contract for the installation of the dockwall until the early part of September, 1968.

During the suspension of work, which was ordered on September 4, but which took effect 10 days later, the attorney for Kubinski wrote a letter dated October 7, 1968, to the Dockside engineers. In that letter he advised them of their failure to meet the dockwell completion date and the uncertainty of even further delay. He also stated that due to the approach of winter his client's performance would be made more difficult by the existence of a frost condition in the ground. He also requested the owner's position on additional compensation for the increased costs due to the delay.

On October 23, 1968, a conference of the parties was held to determine if an agreement could be reached on additional compensation for Kubinski due to the likelihood of adverse winter conditions. At the time of this meeting the original suspension order had already expired on October 14, 1968. No written agreement was reached at that conference. However, another letter from Kubinski's attorney dated October 28, 1968, was sent to Dockside stating the attorney's understanding of what had occurred at that conference.

The letter stated that the dockwall completion date of September 1, 1968, had not been met; that it was anticipated that excavation could resume on or about November 15; that Kubinski would necessarily incur greater expenses because of the delay; that extra compensation would be necessary; and that considerable difficulty was had in reaching a formula to determine extra compensation. The letter then added the attorney's understanding of what was actually agreed to as follows:

'Nevertheless, we were able to agree that in the event the contractor is forced to complete all or some portion of the work while a frost condition exists, that one of the following two methods of extra compensation would be employed:

'(a) In the event that the frost condition requires the use of a ripper, that the owner will bear the cost of the ripper complete with an operator, a tractor to pull the ripper, fuel, and incidental costs.

'(b) In the event that the frost condition is so severe that the use of a ripper alone will not obviate the problem, then we have agreed that we will have an additional meeting to negotiate such additional compensation as would then seem fair.'

The letter stated that the contents could be approved and confirmed with Dockside's authorized signature; that copies were furnished to Kubinski for the same purpose; and that signed copies should be exchanged. Dockside did sign that letter but made the following alteration:

'Except as modified by this letter the contract between John Kubinski & Sons, Inc. and Dockside Development Corp. dated 2/1/68 as heretofore amended and supplemented shall be and continue in full force and effect.'

Dockside requested that a copy of the letter, as altered, be signed by Kubinski and forwarded to Dockside. However, Kubinski never did sign that letter.

On December 3, 1968, Dockside's engineers sent a letter to Kubinski stating that it was anticipated that work on the dockwall would have progressed sufficiently for resumption of excavation on December 14, 1968. On December 9, 1968, Kubinski's attorney answered by letter stating that the contract date of September 1 had not been met; that the approximate resumption date of November 15 had not been met; and that due to still an additional 30 days' delay, work would have to be done during the severe winter months. The letter then listed several factors affecting increased costs and stated that an additional meeting should be held because 'the additional delay has made inclement weather a reality.' The suggested meeting would be held to determine the 'substantial additional expense' resulting from the cold weather.

Dockside answered the letter of December 9 by stating that there was no need for any further meetings and that increased charges and costs could be worked out as soon as the job was finished. Kubinski's attorney answered Dockside by the following language taken from a lengthy letter dated December 18, 1968:

'Your failure to make the work available prior to the middle of December constitutes a clear and substantial breach of the contract on your part. Such breach justifies our client in declaring the contract terminated.'

A meeting was held on December 26, 1968, to discuss a possible new price to complete the job, but no agreement was reached. Dockside thereafter hired another contractor to complete the remaining excavation and was required to pay $65,220 more than the initial contract price with Kubinski. It was that sum that Dockside sought to recover in its counterclaim.

The defendant admits that it caused the delay but contends that the contract provisions for the dockwall completion date were waived by another agreement and the subsequent conduct of the parties. Consequently, the defendant contends, the contract remained in full force and effect until abandoned by the plaintiff on December 18.

Delays in performance of a contract may be waived by conduct indicating an intention to regard the contract as still in force and effect. (Board of Ed., Sch. Dist. No. 90 v. United States F. & G. Co., 115 Ill.App.2d 416, 427, 253 N.E.2d 663.) In order that there may be a waiver of performance of the provisions of a contract in accordance with their terms, the facts and circumstances must show an intentional relinquishment of a known right, and the acts relied on must be inconsistent with an intention to insist on the rights of the party under the contract. I.L.P. Contracts § 409.

Dockside points to several actions by Kubinski after the September 1 dockwall completion date to support a finding of waiver as a matter of law: Kubinski asked for the September suspension order; he delivered Reserve Insurance Company's bond after September in order to release $43,000...