Prepakt Concrete Co. v. Fidelity and Deposit Co. of Md.

• Decision Date: 01 April 1968
• Docket Number: 16188.,No. 16187,16187
• Citation: 393 F.2d 187
• Parties: The PREPAKT CONCRETE COMPANY, Plaintiff-Appellant and Cross-Appellee, v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND, Continental Illinois National Bank and Trust Company of Chicago, and Goethe Building Corporation, Defendants-Appellees and Cross-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

393 F.2d 187 (1968)

The PREPAKT CONCRETE COMPANY, Plaintiff-Appellant and Cross-Appellee, v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND, Continental Illinois National Bank and Trust Company of Chicago, and Goethe Building Corporation, Defendants-Appellees and Cross-Appellants.

Nos. 16187, 16188.

United States Court of Appeals Seventh Circuit.

April 1, 1968.

John H. Bishop, John M. Falasz, Chicago, Ill., Leslie Hynes, New York City, for Prepakt Concrete Co.

John P. Hampton, Roger D. Doten, Edward P. McNeela, Chicago, Ill., for defendants-appellees and cross-appellants, Dent, Hampton & Doten, Chicago, Ill., of counsel.

Before HASTINGS, Chief Judge, and KILEY and SWYGERT, Circuit Judges.

KILEY, Circuit Judge.

This suit by Prepakt Concrete Compeny arises from the construction of a high-rise apartment building on property owned by Continental Illinois National Bank as trustee. Goethe Building Corporation was the prime contractor, and Mid-Continent Construction Company, Inc., its subcontractor. Prepakt was Mid-Continent's second tier subcontractor. Fidelity and Deposit Company of Maryland furnished a labor and material payment bond for Mid-Continent.

Prepakt was not paid for the construction work which it performed on the apartment building. As a result, it sued Mid-Continent on its contract and Fidelity on its bond; and also sought to foreclose Prepakt's mechanics lien against Continental and Goethe. Prepakt sought to recover $65,054.90 from each defendant. Goethe and Continental counterclaimed against Prepakt for damages for negligent performance of Prepakt's work. The counterclaim was settled during the trial and was dismissed. The district court, without a jury, gave judgment for $49,993.79 against Mid-Continent and Fidelity, and for $49,509.68¹ against Continental and Goethe. Prepakt appeals from the judgments in its favor, and Continental, Goethe and Fidelity cross-appeal. Mid-Continent has not appealed from the judgment below. We vacate the judgments and remand for entry of corrected judgments.

Goethe's subcontract with Mid-Continent required the latter to furnish labor, material and equipment for excavation and foundation substructure work. Under the sub-subcontract between Mid-Continent and Prepakt, Prepakt undertook to furnish labor and material for the "installation of exterior concrete pile walls." Prepakt was to drive concrete pilings into the ground so that they would abut and provide reasonably leak-proof walls about the perimeter of the basement and subbasement. Prepakt was required to do any grouting needed to leak-seal the pile walls. It was to be paid for the grouting work unless the work was made necessary by its negligence.

Under the subcontract Mid-Continent agreed to pay Prepakt $45.00 per hour after Prepakt moved its men and equipment onto the site for any time during which Prepakt was unable to work because of circumstances beyond its control. Prepakt moved onto the site on March 23, 1961, at Mid-Continent's direction, but because Mid-Continent delayed performance of preparatory work, Prepakt was unable to begin its work until May 1, 1961.

About October 21, 1961, Goethe terminated the subcontract with Mid-Continent because of the latter's default. At this time Prepakt had completed installation of the pilings but had not done any grouting. After Mid-Continent's contract was terminated Goethe employed another contractor to perform the excavation work that Mid-Continent was to have done. During this excavation it was discovered that some of the piles installed by Prepakt were not plumb or in alignment and that water and soil had entered the basement and sub-basement through the pilings. Goethe requested Prepakt to supply the grouting needed to make the pilings reasonably leak-proof. Prepakt refused and Goethe employed another contractor to do the necessary grouting at a cost of $15,061.11.

On August 25, 1961, Prepakt filed a claim for a lien under the Illinois Mechanics Lien Statute, Chapter 82 ILL. REV.STAT.1967, against Continental on funds in its hands, due or to become due Goethe under the prime contract. Thereafter Continental and Goethe paid out money in excess of the amount of the lien of $65,054.90 to various subcontractors and suppliers.

On January 5, 1967, the district court entered findings of fact and conclusions of law in Prepakt's suit against Mid-Continent, Fidelity, Goethe and Continental, and on February 10 entered judgment in Prepakt's favor against Mid-Continent and Fidelity for the contract price of $65,054.90 less $15,061.11, the cost of the grouting, or $49,993.79; and against Continental and Goethe for the contract price less the cost of grouting and less $484.11, a bond premium, or $49,509.68. The contract price of $65,054.90, and impliedly Prepakt's recovery, includes $12,262.50 in delay costs caused by Mid-Continent's failure to prepare the job site on time. The court dismissed the counterclaim of Goethe and Continental on the basis of the settlement under which Prepakt paid $10,000 to the counterclaimants.

The main contention of Prepakt is that the cost of the grouting paid by Goethe, for the work which Prepakt refused to do, should not have been set off against Prepakt's judgment against Goethe and Continental. Prepakt argues that the counterclaimants sought to recover the cost of grouting in their counterclaim against Prepakt; and that since Prepakt paid $10,000 in settlement of the counterclaim, the offset against the amount claimed by Prepakt against Goethe and Continental should have been limited to the sum of the $10,000 settlement figure plus the $484.11 bond premium. Prepakt accordingly insists that it is entitled to judgment in the sum of $54,570.79.

Prepakt filed a motion to amend the district court's original findings and conclusions. In this motion it sought to limit the offset from its judgments against Continental and Goethe to the $10,000 it paid in settlement of the counterclaim. The court denied the request and we find no error in this ruling.

The court found, and the record shows, that the $10,000 settlement concerned only the counterclaim issues based on negligence and did not resolve any issue in Prepakt's contract suit; that Prepakt had offered no proof of the items of damage involved in the settlement of the counterclaim; and that the request for credit on account of the $10,000 payment was not made during the trial but was presented only on the post-trial motion to amend. These findings are not challenged. We think the court properly concluded, upon the findings above mentioned, that the settlement should receive no consideration in arriving at the judgments entered by the court. The record shows that in discussing his understanding of the settlement, counsel for Prepakt stated that it was not to affect the result in the contract suit. Prepakt cannot seek relief from this court because subsequent events make it appear that it would have been wiser to refuse settlement and risk a trial on the merits.

In its motion to amend Prepakt also claimed interest on the amounts "found to be due and owing by the various defendants" from July 13, 1961, the date upon which it removed its personnel and...