Korte & Luitjohan Contractors v. Thiems Construction Company

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State: Illinois

Court: 5th District Appellate

Docket No: 5-05-0516 Rel

Case Date: 04/30/2008

Preview:N O T IC E Decision filed 04/30/08. The text of this dec ision m ay b e changed or corrected prior to the P e t i ti o n for filing of a or the

NO. 5-05-0516 IN THE APPELLATE COURT OF ILLINOIS

Re hea ring

FIFTH DISTRICT ________________________________________________________________________ KORTE & LUITJOHAN CONTRACTORS, INC., ) Appeal from the ) Circuit Court of Plaintiff-Appellee and Cross-Appellant, ) Montgomery County. ) v. ) No. 02-CH-34 ) THIEMS CONSTRUCTION COMPANY, INC., ) ) Defendant-Appellant and Cross-Appellee, ) ) and ) ) THE DEPARTMENT OF TRANSPORTATION, ) Honorable ) Mark M. Joy, Defendant-Appellee and Cross-Appellee. ) Judge, presiding. ________________________________________________________________________ JUSTICE GOLDENHERSH delivered the opinion of the court: Plaintiff, Korte & Luitjohan Contractors, Inc., filed a three-count complaint against the Illinois Department of Transportation (IDOT) and Thiems Construction Company, Inc. (defendant), in the circuit court of Montgomery County. The circuit court dismissed the claim against IDOT, entered a summary judgment for defendant on plaintiff's claims for breach of contract, and awarded plaintiff interest for late payment. Defendant appealed and plaintiff cross-appealed. The appeals raise issues regarding (1) whether IDOT is a proper party, (2) whether the circuit court erred by entering a summary judgment in favor of defendant on the claim for breach of contract, and (3) whether the circuit court erred by awarding interest to plaintiff for an improper retainage. We affirm in part and reverse in part.

disposition of the same.

1

FACTS Defendant, a general contractor, won a bid for the construction of a highway project. Defendant then subcontracted with plaintiff to excavate a trench, supply trench backfill, and install a sewer pipe. The parties entered into a contract requiring them to abide by the plans and specifications set forth in the general contract between defendant and IDOT. The contract between plaintiff and defendant contained additional terms addressing such issues as the distribution of payments, which we will discuss. Plaintiff filed suit against IDOT and defendant. Plaintiff alleged a breach of contract and a violation of the State Prompt Payment Act (30 ILCS 540/0.01 et seq. (West 2000)) and sought to foreclose a lien on public funds. Pursuant to a motion to dismiss, the trial court dismissed IDOT as a party. Plaintiff and defendant each filed a motion for a summary judgment on the breach-of-contract claim underlying the first two counts of the complaint. The court found that plaintiff was not entitled to payment for the material delivered and installed in excess of the contract amount, and the court granted a summary judgment to defendant on the claim of a breach of contract. Later, the court held a hearing on the remaining count for late payment. The court found that defendant had improperly retained payments on amounts due, and the court awarded interest pursuant to the State Prompt Payment Act. The end result was that the court ruled in favor of defendant on the claim of a breach of contract but ordered defendant to pay interest to plaintiff for amounts that had been retained until the completion of the project. Defendant appealed, and plaintiff cross-appealed, naming IDOT as a party. ANALYSIS I. IDOT The initial issue is whether IDOT was a proper defendant before the circuit court. In count I of its complaint, plaintiff sought to foreclose a lien on public finds and named 2

IDOT as a defendant. Plaintiff requested "that IDOT be ordered and directed to pay to the plaintiff the amount found due with interest and costs." On appeal, plaintiff contests the court's dismissal of IDOT as a party. We conclude that the dismissal was appropriate. The State of Illinois may be named as a defendant in only a few limited circumstances. The State Lawsuit Immunity Act provides a general bar, with limited exceptions, to naming the State as a defendant. 745 ILCS 5/1 (West 2004). One of those exceptions is for claims founded on a contract entered into with the State. 745 ILCS 5/1 (West 2004); see 705 ILCS 505/1 et seq. (West 2004) (the Court of Claims Act). Even for those contract claims, however, the court of claims has exclusive jurisdiction. 705 ILCS 505/8(b) (West 2004). Plaintiff erroneously contends that IDOT is a proper party under the Mechanics Lien Act (Act) (770 ILCS 60/0.01 et seq. (West 2004)). Indeed, section 23(c) of the Act provides a mechanism for a party to file a lien against public funds. 770 ILCS 60/23(c) (West 2004). Under the procedure outlined in section 23(c), a lienholder is required to give notice to the contractor having the contract for public improvement and the director of the State agency whose duty it is to let the contract. 770 ILCS 60/23(c) (West 2004). The director is required to withhold a sum sufficient to cover the claim until the matter is adjudicated. 770 ILCS 60/23(c) (West 2004). The lienholder is directed to file suit, but the State is not to be a party defendant. 770 ILCS 60/23(c) (West 2004); see In re Guerra Construction Co., 142 B.R. 826, 830 (Bankr. N.D. Ill. 1992). At the relevant time, section 23(c) provided as follows: "The person so claiming a lien shall, within 90 days after giving such notice, commence proceedings by complaint for an accounting, making the contractor having a contract with the State and the contractor to whom such material, apparatus, fixtures, machinery[,] or labor was furnished[] parties defendant[] and shall, within the same period[,] notify the Director of the commencement of such suit by 3

delivering to him a copy of the complaint filed ***." 770 ILCS 60/23(c) (West 2004). Plaintiff provides no basis to bring IDOT before the circuit court. The cases cited by plaintiff concern the liability of municipalities, not the State of Illinois. See Consolidated Construction Co. v. Malan Construction Corp., 42 Ill. App. 2d 272, 277, 192 N.E.2d 263, 266 (1963); Board of Library Trustees of the Village of Westmont v. Cinco Construction, Inc., 276 Ill. App. 3d 417, 422, 658 N.E.2d 473, 477 (1995). In contrast, section 23 specifically limits lawsuits against the State, and its officers, to claims of a derogation of an official duty. Section 23(d) allows the director of the State agency to be named as a party in circuit court only if he violates the duties outlined in section 23(c)

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