Unicon Management Corp. v. City of Chicago

• Decision Date: 20 December 1968
• Docket Number: No. 16831.,16831.
• Citation: 404 F.2d 627
• Parties: UNICON MANAGEMENT CORP., Plaintiff-Appellee, v. CITY OF CHICAGO, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

404 F.2d 627 (1968)

UNICON MANAGEMENT CORP., Plaintiff-Appellee, v. CITY OF CHICAGO, Defendant-Appellant.

No. 16831.

United States Court of Appeals Seventh Circuit.

December 20, 1968.

Raymond F. Simon, Brendan Q. O'Brien, Chicago, Ill., for defendant-appellant.

Herbert Morton, Richard A. Greig, John O. Snook, Chicago, Ill., for plaintiff-appellee.

Before SWYGERT, FAIRCHILD and CUMMINGS, Circuit Judges.

CUMMINGS, Circuit Judge.

This is an interlocutory appeal taken under Section 1292(b) of the Judicial Code (28 U.S.C. § 1292(b)) from the district court's denial of a motion to dismiss the complaint, filed by the defendant City of Chicago. This diversity action was brought by Unicon Management Corp., formerly the Malan Construction Corp., a New York corporation, to recover damages assertedly caused by the City's delays in approving wall panels and doors for the Eastern Airlines hangar built by Unicon at O'Hare International Airport in Chicago.

In April 1960, Unicon and the City executed a contract for the construction of this hangar for $3,794,000. The contract required Unicon to complete its work by May 16, 1961. The complaint alleged that the City notified Unicon to proceed with its work even though the essential site work and grading had not yet been completed. The complaint also charged that the City failed to approve wall panels for the hangar for 10 months and doors for 4 months.¹ Count I claimed that these delays caused Unicon to incur $525,000 in additional costs and expenses in the performance of its contract work. Count II is a quantum meruit claim for the same amount. The complaint labeled the City's failure to approve these items promptly as "arbitrary, capricious, and unjustified procrastination."

The City's motion to dismiss relied on Section GC120 of the contract as relieving it of any liability for these delays. That Section provides:

"GC120 PROVISIONS RELATIVE TO DELAY

"(A) Anything contained in the conditions or specifications document to the contrary notwithstanding, it is agreed that the following provisions relative to unavoidable delay shall be controlling:

"1. Should the Contractor be obstructed or delayed in the commencement, prosecution or completion of the work hereunder by any act or delay of the City or by unavoidable acts or delays on the part of transportation companies in transporting, switching or delivering material for said work, or by acts of public authorities, or by riot, insurrection, war, pestilence, fire, lightning, earthquake, cyclone, or through any delays or defaults of other parties under contract with said City or due to unavoidable delays in obtaining the specified materials or equipment for said work because of controlled materials, priorities, allocations, or prohibitions established by the United States of America, or due to strikes that cause unavoidable delays in performing said work, or to other unavoidable causes (except wet or cold weather), and provided the Purchasing Agent shall determine that any of such causes or delays were entirely beyond the control of the Contractor, then the times herein fixed for the completion of said work shall be extended for a period equivalent to the time lost by reason of any of the aforesaid causes or delays mentioned herein.² No such allowance of time shall be made, however, unless notice in writing of a claim therefor is presented to the Purchasing Agent before the 30th day of each succeeding month of all delays occurring within the preceding month, and the Contractor shall satisfy the Purchasing Agent that the delays so claimed are unavoidable and substantial, and could not be reasonably anticipated or adequately guarded against, and said allowance of time is authorized in writing by the Mayor, Comptroller and Purchasing Agent.

"2. It is further expressly understood and agreed that the Contractor shall not be entitled to any damages or compensation from the City, or be reimbursed for any losses, on account of any delay or delays resulting from any of the causes aforesaid. The Commissioner and the Purchasing Agent shall determine the number of days, if any, that the Contractor has been so delayed and his decision shall be final and binding upon other parties to this contract upon authorization in writing as hereinbefore set forth."

The district court construed this provision as exonerating the City from liability only for unavoidable delays. The court was influenced by the introductory clause of GC120 and considered the body of the Section to be too ambiguous to immunize the City from paying damages for any delays. The motion to dismiss was denied on the ground that under GC120, Unicon did not waive its right to damages for delay. In view of the Illinois cases construing similar contractual language, we are compelled to disagree with this disposition.

In our view, this case is controlled by Herlihy Mid-Continent Co. v. Sanitary District, 390 Ill. 160, 60 N.E.2d 882 (1945). Article 30 of the contract between Herlihy and the Sanitary District was the forerunner of Section GC120 of the instant contract. Although Article 30 was entitled "Unavoidable Delays," the Illinois Supreme Court held that the title was "a mere recital and can not be construed as limiting or controlling matters covered by clearly expressed stipulations" (390 Ill. at p. 165, 60 N.E.2d at p. 885). Similarly here, the introductory clause of GC120 must be disregarded in view of the unlimited title and the subsequent language of paragraph 1 of GC120 referring to "any act or delay of the City."

Moreover, since, as the trial judge realized, the term "unavoidable" in the first paragraph of GC120 is used to mean unavoidable by the contractor itself, it is immaterial whether the delay could have been avoided by the City or a third party. The word "unavoidable" is used to describe certain contingencies and not others. Thus, war, riot, insurrection and acts of God are grounds for extension of time without regard to whether they could somehow have been avoided. Delays in transportation, on the other hand, or delays in obtaining materials due to government priorities or controls will excuse timely performance only if the contractor could not have avoided the delay. The final proviso of paragraph 1 of GC120 requires that as a prerequisite to relief from the deadlines, the "Purchasing Agent shall determine that any of such causes or delays were entirely beyond the control of the Contractor." This same meaning must be applied to the word "unavoidable" in the introductory paragraph lest the interpretation of the word in the introduction render the use of the...