W.E. Erickson Const., Inc. v. Congress-Kenilworth Corp.

• Decision Date: 10 January 1985
• Docket Number: P,CONGRESS-KENILWORTH,No. 83-2197,No. 4663,4663,83-2197
• Citation: 87 Ill.Dec. 536,132 Ill.App.3d 260,477 N.E.2d 513
• Court: United States Appellate Court of Illinois
• Parties: , 87 Ill.Dec. 536 W.E. ERICKSON CONSTRUCTION, INC., an Illinois corporation, Wilbert E. Erickson, individually and as beneficiary of Elmhurst National Bank Trust, and Elmhurst National Bank, a national banking association, as Trustee under Trust , Plaintiffs-Counterdefendants-Appellants-Cross Appellees, v.CORPORATION, a corporation, James Adams and John Stafford, jointly and severally, and Thunder Mountain Rapids Corporation, Defendants- Counterplaintiffs- Appellees- Cross Appellants.

Page 513

477 N.E.2d 513

132 Ill.App.3d 260, 87 Ill.Dec. 536

W.E. ERICKSON CONSTRUCTION, INC., an Illinois corporation Wilbert E. Erickson, individually and as beneficiary of Elmhurst National Bank Trust No. 4663, and Elmhurst National Bank, a national banking association, as Trustee under Trust No. 4663, Plaintiffs-Counterdefendants-Appellants-Cross Appellees, v. CONGRESS-KENILWORTH CORPORATION, a corporation, James Adams and John Stafford, jointly and severally, and Thunder Mountain Rapids Corporation Defendants- Counterplaintiffs- Appellees- Cross Appellants.

No. 83-2197.

Appellate Court of Illinois First District, Fourth Division.

Jan. 10, 1985.

As Modified on Denial of Rehearing

May 2, 1985.

Stuart M. Widman, Much, Shelist, Freed, Denenberg, Ament & Eiger, Chicago, for plaintiffs.

Nathan Diamond-Falk, Chicago, for defendants.

JIGANTI, Justice:

Plaintiffs, W.E. Erickson Construction, Inc., and Wilbert E. Erickson (jointly Erickson) brought this action to recover a sum allegedly due under a contract entered into with defendants, Congress-Kenilworth Corporation, James Adams and John Stafford (jointly C-K) for the construction of a concrete water slide, known as "Thunder Mountain Rapids" in Crestwood, Illinois. C-K filed a counterclaim for damages, among other things, for construction defects. Following a bench trial, judgment was rendered for Erickson on count II of its amended complaint (breach of contract) in the amount of $202,000. The remaining counts I and III (preliminary injunction/appointment of receiver), IV (account stated), V (quantum meruit ) and VI (accord and satisfaction) of Erickson's amended complaint and C-K's counterclaim were dismissed for want of equity. The trial court also awarded attorney's fees to C-K from a fund held by the receiver, which previously had been appointed. Erickson appeals from the award of damages, the dismissal of counts I, III, IV, V and VI of its amended complaint and the award of attorney's fees to C-K. C-K filed a cross-appeal which it has not pursued in this appeal.

The parties here are no strangers to this court. In an earlier appeal, we reversed an order appointing a receiver for C-K. (See W.E. Erickson Construction, Inc. v. Congress-Kenilworth Corporation (1983), 112 Ill.App.3d 847, 68 Ill.Dec. 356, 445 N.E.2d 1209.) Much of the background surrounding this controversy is contained in that opinion and will not be repeated here. In summary, Erickson, a general contractor, entered into a contract with C-K for the construction of a concrete water slide for a total cost not to exceed $535,000, exclusive of additional costs and interest. The contract provided that Erickson would be paid the cost of the work performed by subcontractors, a contractor's fee of 15% of the project cost, exclusive of concrete, carpentry, architectural and engineering costs, Erickson's labor for concrete and carpentry work, and overhead, as well as additional amounts attributable to the costs of extra or modified work, permits, engineering fees, certain sewer and sanitary work, and interest at the rate of 2% over prime for overdue balances. Work commenced on April 15, 1981 and was completed on July 3, 1981. The project was open to the public the next day on July 4, 1981. To date, Erickson has been paid $150,000 on the contract.

Under its amended count II, Erickson sought damages under the contract in the amount of approximately $550,000, the value of the contract Erickson claimed for its full performance under the contract. The trial court, however, found Erickson was entitled to $352,000 on its contract claim, and, after deducting $150,000 already paid to Erickson, awarded a judgment to Erickson for $202,000.

Erickson argues that the trial court erred in the assessment of damages awarded to it under the contract. Erickson maintains that the trial court, by entering judgment for it under its contract count, had found that Erickson had substantially performed under the contract. However, Erickson contends, the trial court did not award it damages for its substantial performance under the contract. Rather, Erickson asserts, the trial court erroneously entered judgment for it only in the amount of its out-of-pocket expenses for subcontractor labor and materials. C-K argues that the judgment entered was proper. C-K asserts that the trial court had found that Erickson had failed to substantially perform under the contract and, therefore, Erickson was not entitled to damages under the contract. Alternatively, C-K maintains that if the trial court had found that Erickson had rendered substantial performance, the award entered was still proper as it represented the value of the contract fully performed as proven by Erickson. The first issue to be resolved is whether Erickson substantially performed under the contract.

Under the doctrine of substantial performance, the general rule regarding building contracts is that a builder is not required to perform perfectly, but rather is only held to a duty of substantial performance in a workmanlike manner. (Brewer v. Custom Builders Corporation (1976), 42 Ill.App.3d 668, 673, 1 Ill.Dec. 377, 356 N.E.2d 565.) A purchaser who receives substantial performance of the building contract must pay the price bargained for, less an offset for defects in what he received as compared to what strict performance would have given him. (Park v. Sohn (1982), 89 Ill.2d 453, 464-65, 60 Ill.Dec. 609, 433 N.E.2d 651; Mayfield v. Swafford (1982), 106 Ill.App.3d 610, 612, 62 Ill.Dec. 155, 435 N.E.2d 953; Brewer v. Custom Builders Corporation (1976), 42 Ill.App.3d 668, 673-74, 1 Ill.Dec. 377, 356 N.E.2d 565; Restatement (Second) of Contracts Section 347 (1979).) A contractor whose work amounts to less than substantial performance may not recover on the contract. Under such circumstances, a contractor may recover under a quasi-contractual theory for the reasonable value of its services rendered less any damages suffered by the purchaser. (Brewer, 42 Ill.App.3d 668, 673, 1 Ill.Dec. 377, 356 N.E.2d 565; Calamari & Perillo, Contracts § 11-26, at 426-28 (2d ed. 1979).) The question of whether substantial performance has been given varies on the facts presented in each case. (Brewer, 42 Ill.App.3d 668, 673, 1 Ill.Dec. 377, 356 N.E.2d 565.) The trial court's finding will not be disturbed on appeal unless the holding of the trial court is against the manifest weight of the evidence. V & V Cement Contractors, Inc. v. LaSalle National Bank (1983), 119 Ill.App.3d 154, 157, 74 Ill.Dec. 934, 456 N.E.2d 655.

Judgment was rendered for Erickson on its contract count, count II of its amended complaint, in the amount of $202,000, plus statutory interest and costs. That count alleged C-K's breach of contract for non-payment and sought, approximately $550,000 in damages, the value of the contract for Erickson's full performance. The trial court found that while there existed defects in construction of the water slide they were insufficient in themselves to sustain a finding that the water slide was constructed in a "wholly unworkmanlike manner." However, the court found that with respect to the selection of architects and in the subcontractor--bidding process, Erickson "wholly failed to perform." Notwithstanding this conclusion, the court then went on to enter judgment on amended count II (the breach of contract).

C-K asserts that the finding of these deficiencies in Erickson's performance by the trial court indicates that the trial court had concluded the Erickson had not substantially performed under the contract. Contrary to C-K's contention, we believe that as the trail court had entered judgment on its contract count the trial court necessarily found that Erickson had substantially performed under the contract. This conclusion is supported by the trial court's dismissal of Erickson's amended count V which sought recovery on a non-contractual theory of recovery, quantum meruit.

Moreover, the evidence presented at trial established that Erickson had substantially performed under the contract. There was no substantial difference between what C-K contracted for and what it received. There was considerable testimony adduced with regard to the extensive cracking of the concrete flumes within the water slide. Witnesses for both parties presented conflicting testimony as to whether such damage was beyond acceptable limits. But all agreed that the cracks did not affect the operation of the structure as a water slide. Further, an important factor in determining whether a contractor or builder has rendered substantial performance is the actual receipt and enjoyment of benefits by the purchaser. (Brewer v. Custom Builders Corporation (1976), 42 Ill.App.3d 668, 673, 1 Ill.Dec. 377, 356 N.E.2d 565.) We conclude that there was sufficient evidence to support the trial court's finding that Erickson sustained its burden in proving that its performance was substantial. Damages, therefore, should have been measured on this basis.

The trial court did not, however, apply the standard of substantial performance is assessing Erickson's damages under the contract. While the trial court entered judgment on the contract, it is evident from the amount awarded that damages were not calculated upon Erickson's substantial performance under the contract. Erickson sought recovery for its damages under the contract. It appears from the amount Erickson was awarded that Erickson only recovered its out-of-pocket expenses for subcontractor labor and materials. Based on this award, it would seem that the trial court may have unintentionally used the non-contractual theory of quantum meruit to measure Erickson's damages under the contract. We note, as we stated earlier, the the trial court dismissed Erickson's claim for quantum meruit under its amended count V. Nevertheless, under the circumstances, the trial court's award was not a proper method of computation of damages under the doctrine of...