Wheeling Trust & Sav. Bank v. Tremco Inc.

• Decision Date: 13 January 1987
• Docket Number: No. 85-3626,85-3626
• Citation: 106 Ill.Dec. 254,505 N.E.2d 1045,153 Ill.App.3d 136
• Parties: , 106 Ill.Dec. 254, Prod.Liab.Rep. (CCH) P 11,404 WHEELING TRUST & SAVINGS BANK and Cambridge Plaza Limited, Plaintiffs-Appellants, v. TREMCO INCORPORATED, Kawneer Company, Inc., Swanson Cast Stone Company and R & R Precast Co., Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 1045

505 N.E.2d 1045

153 Ill.App.3d 136, 106 Ill.Dec. 254,

Prod.Liab.Rep. (CCH) P 11,404

WHEELING TRUST & SAVINGS BANK and Cambridge Plaza Limited Plaintiffs-Appellants, v. TREMCO INCORPORATED, Kawneer Company, Inc., Swanson Cast Stone Company and R & R Precast Co., Defendants-Appellees.

No. 85-3626.

Appellate Court of Illinois First District, Second Division.

Jan. 13, 1987.

Rooks, Pitts & Poust, Chicago (Stephen E. Sward and Clifford E. Berman, of counsel), for plaintiffs-appellants.

Pretzel & Stouffer, Chtd., Chicago (Robert March Chemers, of counsel), French, Rogers, Kezelis & Kominiarek, P.C., Jerome M. Brooks and Russell P. Velendez, James R. Quinn and Daniel Dadabo, Chicago, for defendants-appellees.

Justice STAMOS delivered the opinion of the court:

Plaintiffs appeal from the circuit court's rulings dismissing plaintiffs' contract/warranty and tort claims against defendants. Plaintiffs appeal alleging that: (1) the trial court erred in ruling that plaintiffs were not third-party beneficiaries to contracts between defendants (materialmen) and subcontractors; (2) the trial court erred in dismissing plaintiffs' tort claims against materialmen because plaintiffs lacked an adequate contract remedy against materialmen; and (3) the trial court's rulings, denying plaintiffs recovery under contract/warranty and tort, violated Article 1, Section 12 of the Illinois Constitution.

On March 1, 1979, Richard J. Brown d/b/a Cambridge Plaza entered into a contract with Quin-C, Inc., a general contractor to oversee and direct the design and construction of the Cambridge Plaza Office Building (hereinafter "office building"). On the same day, Richard J. Brown assigned the rights under his contract with Quinn-C to plaintiffs, Wheeling Trust & Savings Bank and trustee under trust 78-522 and Cambridge Plaza Limited Partnership.

Quin-C hired two subcontractors, Paulwin Associates, Inc. (hereinafter "Paulwin") and Architectural Products. Paulwin furnished all glass and glazing work including furnishing and erecting the exterior curtain walls and/or exterior windows. Paulwin then hired two materialmen, Kawneer Company, Inc. (hereinafter "Kawneer") and Tremco, Inc. (hereinafter "Tremco"). Kawneer was hired to supply exterior curtain walls and windows for the project. Tremco was hired to supply all caulking and taping materials for the installation of the exterior windows. Architectural Products furnished all of the exterior pre-cast concrete work. Architectural Products then hired Swanson Cast Stone Company, which thereafter changed its name to R & R Precast Co., (hereinafter "Swanson") as a materialman to supply the exterior precast concrete.

Quin-C and its subcontractors constructed the office building in January of 1980 and the plaintiffs immediately occupied the building. In June of 1981, the glass windows began to develop streaks below the exterior precast concrete. The plaintiffs notified Quin-C, Paulwin, Kawneer, Architectural Products, Tremco and Swanson of the problem requesting that it be rectified. Despite remedial work, the "problem began to intensify in both scope and severity."

The plaintiffs filed the instant lawsuit on May 23, 1983, against Quin-C, Paulwin, Tremco, Kawneer, Architectural Products, and Swanson. Plaintiff made the following claims: (1) breach of contract and breach of implied warranties against Quin-C; (2) breach of third-party beneficiary contract and breach of implied warranties against Paulwin; (3) breach of third-party beneficiary contract and breach of implied warranties against Architectural Products; (4) breach of UCC warranties and strict liability against Tremco; (5) breach of UCC warranties and strict liability against Swanson.

Subsequently, Quin-C and Tremco answered the complaint with general denials. Paulwin, Architectural Products, Kawneer and Swanson moved to dismiss all claims against them. On October 18, 1984, a hearing on the motions to dismiss was held before Judge William R. Quinlan of the circuit court of Cook County. Judge Quinlan dismissed the following claims: (1) breach of third-party beneficiary contract against Paulwin; (2) breach of implied warranties against Architectural Products; (3) and strict liability claims against Kawneer and Swanson. Plaintiffs, later, moved for reconsideration of Judge Quinlan's rulings.

On June 12, 1985, plaintiffs filed a fourteen-count amended complaint. The amended complaint made the following claims: (1) breach of contract and implied warranties against Quin-C; (2) breach of express, implied warranties and negligence against Paulwin; (3) breach of express, implied warranties and negligence against Architectural Products; (4) strict liability against Tremco; (5) breach of implied warranties, strict liability and negligence against Kawneer; (6) and breach of implied warranties, strict liability, and negligence against Swanson.

Quin-C answered the amended complaint with general denials. Paulwin, Architectural Products, Tremco, Kawneer and Swanson filed motions to dismiss all claims against them in plaintiffs amended complaint. On November 5, 1985, a hearing was held on plaintiffs' motion to reconsider Judge Quinlan's earlier order, and on defendants' motions to dismiss. Judge O'Brien denied plaintiffs' motion to reconsider and dismissed all counts in favor of movants, Paulwin, Architectural Products, Tremco, Kawneer and Swanson.

This appeal is brought solely as to the rulings dismissing the materialmen, Tremco, ¹ Swanson and Kawneer. Judge O'Brien's rulings dismissing the tort claims against these defendants was based upon his interpretation of the definition and application of economic loss damages in tort actions. He ruled that the nature of the damages, streaking of windows and etching of the glass, was not the type of injury that could sustain an action in tort. He also determined that plaintiffs did have an adequate contract remedy. In dismissing plaintiffs' contract/warranty claims against materialmen, Kawneer and Swanson, Judge O'Brien ruled that plaintiffs, as owners of the office building, were not third-party beneficiaries of the contracts between materialmen and subcontractors. Judge O'Brien reasoned that the mere listing of the destination of materialmen's, Kawneer and Swanson, products as "Cambridge Plaza Project, Libertyville, Illinois" on purchase orders was not enough to demonstrate that plaintiffs were intended to be third-party beneficiaries.

The plaintiffs initially contend that the trial court erred in ruling that plaintiffs, owners of a construction project, were not third-party beneficiaries to the contracts between materialmen, Kawneer and Swanson, and subcontractors, and thereby erred in dismissing the plaintiffs' warranty claims against materialmen. It is well settled in Illinois that only when parties intentionally enter into a contract for the direct benefit of a third person may that person, who is not a party to the contract, enforce any rights therein. (Carson Pirie Scott & Co. v. Parrett (1931), 346 Ill. 252, 257, 178 N.E. 498.) The test is whether the benefit to the third person is direct to him or is but an incidental benefit to him arising from the contract. (346 Ill. 252, 257, 178 N.E. 498.) The outcome of each case depends upon the intention of the parties as that intention is to be gleaned from a consideration of the contract and the circumstances surrounding the parties at the time of its execution. (346 Ill. 252, 258, 178 N.E. 498; People ex rel. Resnik v. Curtis & Davis, Architects & Planners, Inc., et al. (1980), 78 Ill.2d 381, 385, 36 Ill.Dec. 338, 400 N.E.2d 918.) In Illinois, the promisor's intention must be evidenced by an express provision in the contract identifying the third-party beneficiary. 78 Ill.2d 381, 385, 36 Ill.Dec. 338, 400 N.E.2d 918.

The exact question here is whether a reference to plaintiffs' construction location as delivery site for goods requested by subcontractors' purchase orders, issued to material suppliers, is sufficient to make plaintiffs intended third-party beneficiaries. We rule that more than this is required to make plaintiffs third-party beneficiaries.

Plaintiffs rely upon People ex rel. Resnik v. Curtis & Davis, Architects & Planners, Inc., et al. (1980), 78 Ill.2d 381, 36 Ill.Dec. 338, 400 N.E.2d 918 to support their argument. In Resnik, the State of Illinois was permitted standing to sue with respect to a contract made between the Illinois Building Authority, then an independent public corporation, and defendant architectural firm. The contract specifically provided that defendant was to design a prison for the use of the State of Illinois. Moreover, the contract required defendant architects to consult with the State of Illinois and to revise specifications as required by the State. 78 Ill.2d 381, 385-86, 36 Ill.Dec. 338, 400 N.E.2d 918.

In the instant case, the only evidence that plaintiffs were intended as a third-party beneficiaries were two purchase orders. One purchase order was issued by Architectural Products and accepted by defendant Swanson. This purchase order requested the fabrication of 1,270 feet of precast concrete wall panels and delivery to "Cambridge Plaza Project, Libertyville, Illinois." The other purchase order was issued by Kawneer and accepted by Paulwin for window frames and other installation materials. The purchase order listed the site of the job as "Cambridge Plaza."

In contrast to Resnik, there was no language in any document, including the purchase orders, which stated that the window materials provided were specifically for plaintiffs. Rather, the language of the purchase orders merely referred to the delivery site for goods requested by a sub-contractor's purchase order issued to a material supplier. Moreover, there was no provision in any agreement which provided for discussions or consultations between plaintiffs and defendants with regard to the materials provided to plaintiffs. Theref...