FIRST DIVISION
March 10, 2003

Paul H. Schwendener, Inc. (PHS), sued Larrabee CommonsPartners (LCP) for breach of a construction contract. LCPcountersued and demanded a jury trial. Years later, on the eveof trial, LCP withdrew its jury demand. PHS promptly filed itsown demand for a jury trial on the counterclaim and on thecomplaint. The court denied the jury demand. After a benchtrial the court entered judgment in favor of LCP. We reverse andremand because section 2-1105 of the Civil Practice Law (735 ILCS5/2-1105 (West 1998)) protects the counterdefendant's right todemand a jury once the counterplaintiff withdraws its jurydemand. We also find, in light of the right to a jury trial onthe counterclaim, that the court abused its discretion by denyingthe late jury demand on the complaint.

Resolution of the dispositive issue for this appeal requiresno extensive discussion of the evidence in the 160-volume recordfiled in this court. Nonetheless we will discuss some of theproceedings and the evidence to provide guidance to the trialcourt for the retrial.

In March 1987, Tem Horwitz, on behalf of LCP, and MichaelSchwendener, on behalf of PHS, signed a contract in which LCPagreed to pay PHS $8.8 million for the construction of 49townhouse units in 10 buildings, to be completed by May 1988. The contract required PHS to document the progress of the work,and LCP agreed to make progress payments based on the workcompleted. LCP expressly stated in the contract that "themajority of the units *** ha[d] been presold."

Paragraph 21 of the contract provided:

"In the event Contractor [PHS] shall fail toperform any of its obligations hereunder, includingwithout limitation, its refusal or neglect to supply asufficiency of skilled laborers or materials of theproper quality and quantity [for] its failure toprosecute the Work with promptness and diligence ***,each of which shall constitute a default hereunder,Owner [LCP] shall have the right, after forty-eight(48) hours written notice to Contractor, to (i) remedy*** such default *** and recover from the Contractorthe amount of any loss or damage *** suffered orincurred as a result of such default, including,without limitation, attorneys' fees, *** in which eventOwner may deduct and withhold from payments otherwisedue Contractor any of the foregoing amounts, whichdeductions shall be deemed credits or back chargesagainst the Price, or (ii) terminate this Contract.

*** In the event of termination of this Contract,Owner may use Contractor's material and equipment tocomplete the Work, or may complete the Work in anyother expedient manner, and the Contractor shallreceive no further payments until the Work is complete. Upon completion, if the unpaid balance of the Priceexceeds Owner's cost of completion ***, such excessshall be paid to the Contractor, but if such cost ofcompletion exceeds the unpaid balance of the Price, theContractor shall pay the difference to the Owner ***."

The contract further permitted the parties any other remedies"existing at law or in equity."

Several delays affected the project. Poor work on somebuildings by the carpentry subcontractor and the masonrysubcontractor impeded progress significantly. Thosesubcontractors put up some walls out of plumb. PHS fired bothsubcontractors, tore out some walls and hired new subcontractorsto reconstruct the walls.

LCP held the initial open house in January 1988, showingrealtors the one model townhouse PHS had completed by that date. Sales remained slow in the months following the open house. InJuly 1988 LCP hired an outside marketing firm to sell thetownhouses. Many units sold for prices considerably lower thanthe prices LCP had listed.

PHS presented applications for progress payments to LCPregularly during the course of construction. Representatives ofboth parties reviewed the applications to determine the amountdue for the work completed. LCP then sent a copy of theapplication to the architect so that the architect could verifythat PHS had performed the work shown on the application. Oncethe architect approved the application, LCP forwarded it to thebank that loaned LCP funds for the development. The bankemployed its own consultants to verify that PHS had completed thework shown on the application. The bank then decided whether toloan LCP the amount requested for payment to PHS.

LCP made the first 19 progress payments promptly. In therevised twentieth pay application, PHS requested a final paymentof $520,217.35, claiming that it had completed its part of theconstruction project. After the usual discussion between LCP andPHS, the architect certified the request for payment on February19, 1991. Although the bank released most of the funds, LCPdecided not to forward the funds to PHS.

In 1992 PHS filed this lawsuit to recover the outstandingbalance. LCP countersued for breach of contract, arguing thatPHS failed to complete the project within the time designated inthe contract and it failed to complete work on some of the units. LCP filed a jury demand with its answer and counterclaim.

The parties engaged in years of highly contentious discoveryproceedings. Each party filed multiple motions seeking sanctionsfor the opposing party's refusal to respond to specifieddiscovery despite court orders. For example, LCP refused foryears to specify the alleged defects in the construction.

After six years of such proceedings, LCP sought to amend itscounterclaim to add claims for common law fraud and violation ofthe Consumer Fraud and Deceptive Business Practices Act (ConsumerFraud Act) (Ill. Rev. Stat. 1987, ch. 121