text:
    (No. 89-CC-3482
    American Janitorial Services, Inc., Claimant, v. The State of Illinois, Respondent.

      Opinion filed February 27, 1998.

      Order filed May 6, 1998.

    Terrence M. Jordan, for Claimant.
    James E. Ryan, Attorney General (Marina Popovic, Assistant Attorney General, of counsel), for Respondent.
   OPINION

Frederick, J.

This cause is before the Court on Claimant, American Janitorial Service, Inc.’s, verified complaint seeking $3,400,000 from Respondent, State of Illinois, for wrongful termination of a janitorial contract. Claimant seeks $400,000 for loss of income and $3,000,000 for damage to good will. Jurisdiction is pursuant to section 8(b) of the Court of Claims Act. 705 ILCS 505/8(b). (formerly Ill. Rev. Stat., ch. 37, sec. 439.8(b) (1987)).

The complaint alleges that on June 30,1988, Respondent entered into a contract for the provision of janitorial services by Claimant at Respondent’s building at 100 West Randolph Street, Chicago, Illinois (hereinafter referred to as the “building”). A condition of the contract was that Claimant was required to pay its employees compensation equal to the prevailing wage. On December 29, 1988, Claimant received a letter from Director Tristano of the Department of Central Management Services (hereinafter referred to as the “Department”) informing Claimant that its contract was terminated on January 1, 1989, for failure to pay its employees the required prevailing wage. Claimant alleged that it had always paid all of its employees the prevailing wage and that it demonstrated this to Respondent by letter and supporting documentation submitted to the Department of Labor in September of 1988.

A trial was conducted on May 9, 1997, before Commissioner Hanley. Claimant presented three witnesses, namely Fernando Ortiz, an officer of Claimant, and Peg Morsch and Thomas Tocalis, employees of the Department. Respondent presented four witnesses, namely Peg Morsch, Thomas Tocalis, Michael Masterson and Scott Miller, employees of the Department of Labor.

Prior to the commencement of the hearing, Respondent presented a five-page written motion in limine. Claimant objected to the motion, based upon lack of notice and surprise, having received the motion the morning of the hearing. Claimant contended that section 790.200 of the Court of Claims Regulations provides for 15 days for the filing of an objection to a motion.

The purpose of Respondents motion was to prevent Claimant from contesting whether the Department of Labors purported finding that Claimant was not in compliance with the Prevailing Wage Act was correct. The Commissioner ruled that section 790.200 of the regulations does not apply to a motion in limine. The rationale for the ruling was that these motions are generally brought on the eve of trial and are intricately involved in the parties’ trial strategies. The Commissioner believes it critical to determine whether there was a hearing at the Department of Labor and Claimant was afforded an opportunity to participate. Additionally, section 11A of the Prevailing Wage Act (hereinafter referred to as the “Wage Act”) provides for a procedure of notifying contractors who, on two separate occasions, have been determined to have violated the Act. (Ill. Rev. Stat. 1991, ch. 48, par. 39s — 11A.) The contractor then has ten working days to request a hearing by the Department of Labor. The Director sets a hearing within 30 days.

The motion in limine was correctly denied by the Commissioner because Respondent did not establish that the procedures for determining a violation were ever instituted. Claimant was not provided notice of two prior violations and was not afforded an opportunity to invoke its right to a hearing before the Department of Labor.

Claimants Case

Ms. Peg Morsch testified that she was employed as a public service administrator in the Department on all relevant dates. Her duties included the administration of the contract and overseeing the nightly operations of the contract. Ms. Morsch was not involved in the decision to terminate the contract with Claimant. She also received a letter on October 20, 1988, which she understood to mean that Claimant was paying the prevailing wage on a weeldy basis, but the fringe benefits were issued on a separate check.

Ms. Morsch was aware that there was a question being raised in 1988 about Claimant not hiring the employees of the previous janitorial service. She did not have any contact with anyone from “Local 25” and was not aware if other State employees had any such contact.

Ms. Morsch orally notified Claimant that it was not required to employ the employees of the previous contract. At the pre-bid conference, Claimant was asked to interview the existing work force as a courtesy; however, their employment was not one of the conditions of the contract. She identified the agreement between the Department and Claimant commencing July 1, 1988, which was Claimant’s Exhibit No. 2.

On cross-examination, Ms. Morsch stated that, on or about October 20, 1988, she became aware that the Department of Labor had determined that Claimant was not in compliance with the Act for a period of time. On redirect examination, she acknowledged that she did not give a copy of the letter she received to Claimant.

Mr. Thomas Tocalis testified that he was employed by Respondent as the building manager of the building in 1988. He identified Claimants Exhibit No. 3 as a letter dated June 30, 1988, sent by him to Ortiz Fernando, transmitting to Claimant a copy of the signed janitorial service contract. He was not aware of any other notice going to Claimant to advise Claimant that it had been awarded the contract. He identified Claimant’s Exhibit No. 2 as the contract between the parties to which the June 30th letter refers. The contract was to commence on July 1, 1988. He could not recall any reason why Claimant was sent notice of the award one day prior to the commencement date.

Mr. Tocalis did not recall receiving a copy of Claimant’s Exhibit No. 4 which was a December 23,1988, letter from the Director of the Respondent stating that the contract was terminated as of January 1, 1989. He did not recall when he first became aware that Claimant’s contract was going to be terminated. He did not know whether Claimant was paying prevailing wage in December of 1988.

Mr. Tocalis also did not recall having seen Claimant’s Exhibit No. 5 which was a December 21, 1988, Department of Labor letter that indicated Claimant had cured any prevailing wage problem. He was not aware of the identity of the person that made the determination to terminate the contract. It was not necessarily part of his duties to be consulted concerning the cancellation of the cleaning service contract for the building. Either the Director’s office or the Bureau of Management’s Springfield office told him that the contract was to be awarded. He believes a decision to terminate the contract would be made by the Director. He also thought that Michael Bartoletti, the Bureau Manager, would be the one to make a recommendation to the Director to terminate the contract.

Mr. Fernando Ortiz testified that he was an officer of Claimant in December of 1988. He identified the following documents:

(a) Claimant’s Exhibit No. 6, Claimant’s bank statement from Metropolitan Bank;

(b) Claimant’s Group Exhibit No. 7, a list of copies of payroll checks for employees working in the building for December 9,1988;

(c) Claimant’s Group Exhibit No. 8, a series of payroll checks dated December 30, 1988, for employees working in the building;

(d) Claimant’s Exhibit No. 9, a payroll journal;

(e) Claimant’s Exhibit No. 9A, a statement of hours worked for each employee in the building;

(f) Claimant’s Exhibit No. 10, a payroll journal, dated December 23,1988;

(g) Claimant’s Exhibit No. 10A, the hour statement in relation to the December 23,1988, payroll.

Mr. Ortiz stated that the contract did not require him to hire the employees of the previous contractors. He was called on the telephone by Tom Tocalis on June 30, 1988, at approximately 4:00 p.m., and told that Claimant was awarded the contract and cleaning service was supposed to begin in the building at 12:00 a.m. on July 1, 1988. During the first week of July, Mr. Tocalis mentioned to Mr. Ortiz that he should hire the same employees as the previous contractor. Mr. Ortiz told Mr. Tocalis that Claimant would only keep some of the good employees from the previous contractor. He recalled having a subsequent conversation with Mr. Tocalis on the subject. He stated that, in December, 1988, Claimant was paying all the employees the fringe benefits.

On cross-examination, Mr. Ortiz stated that Claimant had one other cleaning contract with the Gould Center in Rolling Meadows which expired. Claimant had a collective bargaining agreement with Local 25 in DuPage County. He acknowledged that the Department complained about tire cleaning services in July when Claimant was in the process of putting new people to work. He believed the employees from the previous contractor were engaging in sabotage.

Mr. Ortiz stated on cross-examination that he was not aware that Claimant was being investigated by the Department of Labor regarding alleged Prevailing Wage Act violations. He received a letter dated August 25, 1988, from the Department of Labor requesting documents in relation to Claimant paying fringe benefits to employees. He denied that this led him to believe Claimant was being investigated but acknowledged that there was a concern regarding compliance with the Act.

On redirect examination, Mr. Ortiz identified Claimants Exhibit No. 11, a letter from Claimant responding to the Department of Labors August 25, 1988, letter. He identified Claimant’s Exhibit No. 11A as the enclosures referenced in Claimants response. He stated that Claimant could not renew the contract with Gould Center because “there was too much heat from Local 25.” Claimant went out of business after December, 1988, because the contract with the state was terminated. Mr. Ortiz testified that Claimant was paying prevailing wage for the entire period of the contract with the State.

On recross-examination, Mr. Ortiz stated that Claimant had no further communications with the Department of Labor after responding to the August 25, 1988, letter requesting documents. He did not call the Department of Labor after the termination notice in December of 1988. He did call Mr. Tocalis who said he had just learned of the termination and did not know anything about it. Mr. Ortiz also identified Claimants Exhibit No. 4A as an envelope dated December 27, 1988, in which he received the termination letter on December 30,1988.

Respondents Case

Ms. Peg Morsch explained the process by which the Department requests bids and awards contracts. A prevailing wage certification form was executed by Fernando Ortiz, a representative of Claimant, and is included in the contract. The prevailing wage for Cook County was $9 per hour and $1.15 per hour for fringe benefits.

Claimant was not the lowest responsible bidder and, in fact, it was the fifth bidder. Ms. Morsch recognized Respondents Exhibit No. 1, a June 3, 1988, letter from the Department of Labor. The Department had requested the Department of Labor to interview bidders to determine whether the companies had paid prevailing wages on other jobs. Claimant was determined to be in compliance with the Act. Respondents Exhibit No. 1 was not offered into evidence.

On cross-examination, Ms. Morsch stated that the contract does not specify how often the fringe benefits are to be paid, nor does it state how they are to be paid. She did not recall the name of the union with which Claimant was to have a collective bargaining agreement. The determination of whether a bidder has a collective bargaining agreement is a factor the Department considers in its process of awarding a contract.

Mr. Tocalis stated that he did not recall or recognize Respondents Exhibit No. 2, a September 12, 1988, letter from the Department of Labor addressed to him.

Michael Masterson testified that he has been employed by the Department of Labor since May of 1989, and currently is the manager of the conciliation and mediation division. The division does investigations under the Prevailing Wage Act. He explained the procedures of conducting an investigation of possible violations of the Act which includes requesting payroll documents from the employer, interviewing employees, and conducting an audit. The employer is kept abreast of all findings by the Department of Labor. The contractor is notified in writing if it is not in compliance with the Act. He explained that there are times when the notice of violation is not in writing, such as, when, “you deal directly face to face with the owner” or when “the company is aware of your audit and they would go ahead and pay their workers directly to make up for the differences in wages.”

On cross-examination, Mr. Masterson stated that not all investigators kept a log of all oral communications with contractors.

Mr. Scott Miller, the general counsels chief hearing officer for the Department of Labor (hereinafter referred to as “Labor”) was present for the purpose of testifying about his review of Labors file and the records produced by Mr. Ortiz. The whereabouts of Mr. Hubbs, the investigator, is unknown and Mr. Hubbs did not testify. Claimant objected to the testimony of Mr. Miller. The objection was overruled and Mr. Miller was allowed to testify but only to matters that he had reviewed in the file.

Mr. Miller stated that he has worked for Labor since 1990. The file presented to Mr. Miller was marked as Respondents Group Exhibit No. 3. Mr. Miller looked at the payroll records. Respondents counsel attempted to have the witness testify as to whether the investigator or Labor made a decision regarding whether Claimant was complying with the Act or whether Mr. Miller believed Claimant was paying prevailing wage during the time period in the file. Claimant objected. It was ruled that the witness could testify under these circumstances as to a decision of another employee if that employee documented his decision and that documentation was objectively available for review.

Mr. Miller stated that, based upon his review of the records, Claimant was not initially paying its employees the prevailing wage. David Hubbs found that, for the period of July and August, 1988, Claimant was not paying the fringe portion of the prevailing wage. It was paying the cash portion only. Subsequent to Hubbs’ finding, the company paid the workers directly the fringe portion in checks in September, 1988. Mr. Miller could not ascertain from the file what happened between September and November of 1988.

On cross-examination, Mr. Miller was requested to identify any document in Labors file that contained a finding by Hubbs. An August 31, 1988, two-page memo to David Hayes states, “initial findings indicate contractor has violated.” A September 22, 1988, letter to the building manager states that, “as a result of his investigation, Mr. Hubbs — of alleged noncompliance, he advised that CMS authorize the contract payments not to be withheld any further.” The September 22, 1988, letter does not use the word, “finding.”

Mr. Miller acknowledged that the certified transcript of payroll for July 18 through July 22, 1988, shows payments of $9 per hour and fringe benefits of $1.15 per hour for all employees, except for a supervisor, paid $12 per hour. There appeared to be notes taken by Mr. Hubbs of interviews with employees indicating that they were paid cash only and did not receive fringe benefits. The three pages of handwritten notes were marked as Respondents Group Exhibit No. 3A. A handwritten letter explaining when the interviews took place was marked as Respondents Group Exhibit No. 3R. It is the same as the September 12, 1988, typed version. The interviews took place on August 8, 1988, prior to the initial findings and prior to the transmittal from Claimant of the certified payroll. The payroll journals from July 15th through the 22nd show:

“that there is no reflection of a fund. The certified payroll denotes notes on the bottom that if fringe benefit rate is paid into a fund, please not a (sic) by placing the letter F behind the fringe benefit rate. If the fringe benefit rate is included on an employee’s payroll check, please note by placing a P behind the fringe benefit rate, but when I look at the current period payroll journal from the [claimant], I don’t see that in their payroll journal.”

There is no requirement that an employee receive only one payroll check for a particular period. Labor did not specifically ask for copies of checks. There was no subsequent communication from Labor requesting further information or checks from Claimant. There is nothing in Labor’s file that would cause Mr. Miller to conclude that Claimant was not paying prevailing wage from November 15th through the end of December, 1988. Labor’s file did not contain a notice of hearing or any documents indicating oral conversations between the investigator and Claimant.

Claimant moved to strike the testimony of Mr. Miller, arguing that he was provided only certain documents which formed an incomplete file to tailor the information, so as to create the result of an opinion sought by the Respondent. Although the motion was denied at the hearing, this Court will limit its consideration of Mr. Miller’s testimony to those facts within his personal knowledge.

Rebuttal Witnesses

Claimant indicated a desire to call rebuttal witnesses; however, none were present and Claimant was not prepared to proceed. Claimant’s oral motion to set this matter for another day was denied.

The question before the Court is whether the Director of the Department had the right to terminate the contract. The December 23, 1988, letter from the Director states that the reason for the termination was Claimant’s failure to pay its employees the required prevailing wage.

There is no dispute the contract specifies, in paragraph 15, that, pursuant to the Prevailing Wage Act, “the Contractor must pay the prevailing wage rate.” The parties agree that the pertinent prevailing wage was $9 per hour and $1.15 per hour for fringe benefits.

The contract contemplates that the contractor may be in breach, and provides, in paragraph 29:

“Breach: Failure of the Contractor to perform as specified is cause for immediate termination of the contract at the option of the State.”

The contract does not include any provisions whereby the State is obligated to notify the contractor of a default or perceived breach. There are no provisions affording the contractor any opportunity to cure a breach or default. There are no expressions requiring the State to give notice of termination or otherwise act within a specified time frame if it believes the contractor is in breach of its obligations. The contract is silent on whether the State may take action to terminate two to three months after it becomes aware of a breach.

The contract is silent as to what happens if the contractor does cure the breach prior to termination. Although not identified as such by the parties, it may be argued that there is an ambiguity in paragraph 29 because it states that a failure of the contractor is cause for immediate termination. The questions would be whether the contract requires immediate action, and whether delay operates to cause the States termination right to expire. In Albion Carlson & Company v. State (1996), 48 Ill. Ct. Cl. 245, the Court found in favor of a Claimant contractor on the pertinent issue because Respondent had not acted within a 20-day period as required by the contract. The Court stated that it was clear that the Respondents right to deny a minority business enterprise waiver request expired after the 20-day period. On a separate, nondeterminative issue, the Albion court noted that, an ambiguous contract is construed against the party who drafted it, since he chose the language, and it is therefore responsible for the ambiguity. (48 Ill. Ct. Cl. at 250.) This Court also recognized the rule of contra proferentem in McCarthy Brothers Co., et al. v. State (1995), 47 Ill. Ct. Cl. 15.

Respondent submits that the contractor was not paying the $1.15 in fringe benefits to its employees for the months of July and August, 1988. Respondent asserts that the Department of Labor investigated the alleged failure and determined that Claimant had not paid the fringe benefits.

Claimant asserts that Respondent did not determine that it had not paid the fringe benefits. Claimant appears to argue in the-alternative that, even if Respondent did determine that it had not paid the fringe benefits to its employees during July and August, 1988, it subsequently did so by separate check. The Respondent does not contest this alternative point. Claimant also maintains, without refutation by the Respondent, that it was in compliance minimally from September, 1988, through December 23, 1988, the date of the letter terminating the contract.

The contract does not expressly require the State to submit the question of a violation of the Act to the Department of Labor for an official finding or determination. The fact that the Department requested Labor to investigate the matter does not contractually prohibit the Department from terminating the contract without a strict compliance with the procedures available to Claimant pursuant to the Act. There is no evidence that Claimant was notified in writing of Labors or the Departments determination of failure to pay fringe benefits during July and August, until the December 23rd letter, and no-one testified that Claimant was orally informed.

Claimants evidence is sufficient in its case-in-chief to demonstrate that it was in compliance with the Act. The question is whether the Respondent proved at the hearing that its termination was for cause, namely a failure to pay prevailing wage.

The October 20th and December 21st letters contained in Respondents Exhibit No. 5 are sufficient to support a finding that Claimant was not in compliance with the Act in July and August. The issue then is whether or not the State had the authority to terminate the contract in December for violations in July and August.

Claimant’s position would be that Respondent’s right to terminate for a July/August breach had expired before December 23rd, and Respondent could not terminate the contract pursuant to paragraph 29 of the contract. This position is supported by the fact that apparently Claimant cured the violation and the Respondent did not act on the cause for immediate termination. We find that Respondent did not have the right to immediately terminate the contract on December 23,1988.

The Claimant has the duty to prove his damages by a preponderance of the evidence. This burden applies in a-contract case as well as in a negligence case. Gildehaus v. State (1993), 46 Ill. Ct. Cl. 176.

On the issue of damages, it appears that the contract specifies that Claimant was to be paid $51,896 per month. This appears to be a gross amount and there is no evidence in the record in relation to Claimant’s profit on such payment.

The Claimant presented absolutely no evidence regarding the value of the goodwill of the company to support its claim for $3,000,000 for damage to its goodwill. No experts or professionals testified to the value of Claimant’s goodwill, or any damages to that goodwill. Therefore, Claimant’s request for $3,000,000 in damages to Claimant’s goodwill is denied for lack of any supporting proof.

The issue of Claimant’s claim for $400,000 for loss of income is also veiy difficult for the Court because Claimant presented very little proof as to its loss of income. The Claimant only proved the monthly payment due of $51,896 under the contract. There was no proof presented as to net income or Claimant’s efforts to mitigate its damages. There is some merit to an argument that the Court could deny this claim on the basis of Claimant’s failure to prove its damages by a preponderance of the evidence. Additionally, the contract, in paragraph 36, also authorizes the State the unilateral right, without cause, to cancel the contract upon 30 days written notification. Neither party has addressed this provision and its potential applicability to the issues.

We find that the Respondent had the unilateral right to cancel the contract with 30 days’ notice, and the December 23, 1988, letter effectuated that right. The Court finds that, by virtue of the notice mailed on December 27, 1988, and received by Claimant on December 30, 1988, the contract was terminated, effective January 31, 1989. Claimant should receive the benefit of the 30-day written notice prior to cancellation.

As we find that the contract was canceled rather than terminated, we find that Claimant would be due the amount of $51,896 for the month of January, 1989, for which it was not paid. Claimant has failed to prove any other damages by a preponderance of the evidence.

Our inquiry does not end here. Neither party presented evidence as to whether any funds lapsed under the contract. In a contract case, this Court is limited to an award of damages equal to the amount of lapsed funds. Global Fire Protection Co. v. State (1994), 46 Ill. Ct. Cl. 195; Altman v. State (1991), 44 Ill. Ct. Cl. 8.

Based on the foregoing, it is the order of the Court as follows:

A. That the Respondent shall file a notice with the Court indicating what amount of funds lapsed under the contract or which could be transferred into the line item for this contract.

B. That the Court will enter a final order upon the Department filing the lapsed funds information.

ORDER

Frederick, J.

This cause comes on to be heard on the Courts own motion following receipt of the Respondents response to the decision entered herein on February 27, 1998. The Court finds:

In the aforesaid opinion damages were found to be $51,896 but judgment was withheld pending filing of certain financial data. Respondent has since filed the necessary information. Sufficient GRF money lapsed to cover an award.

It is therefore ordered that the Claimant be, and hereby is, awarded $51,896.

       Respondent made a continuing objection to this line of questioning, however, the objection was overruled. Claimant maintained that the State terminated the contract because Claimant did not hire the employees of the prior contractor.

       Although referred to as Labor’s file throughout the examination, it became apparent that Labor’s actual file no longer existed intact. Respondent’s Exhibit No. 3 was ultimately ruled inadmissible.

       It was ruled that Claimant should not have been surprised that Respondent would use the alleged prevailing wage violation as a defense. The documents, Respondent’s Exhibit No. 3A, Claimant desired to rebut were ruled inadmissible and it was noted that the Court would narrowly construe Miller’s testimony. Claimant was invited to present a motion with a proper showing of an evidentiary basis indicating what testimony the proposed rebuttal witnesses would provide. None was ever filed.

       Respondent’s Exhibit No. 3 contains sufficient evidence to support the conclusion that fringe benefits were not paid; however, it was ruled inadmissible because there was no foundation and it was not included in the Department Report. (Respondent’s Exhibit No. 5) The investigator did not testify. Two labor employees who began their employment after December 31, 1988, attempted to authenticate the file. More importantly, it was revealed by Respondent’s counsel that Respondent’s Exhibit No. 3 was not the actual and complete Labor file but was a file that she created or from which she had at least removed certain documents.


source: Caselaw Access Project

author: Epstein, J. Epstein, J.

license: Public Domain

text:
    (No. 90-CC-0234)
    William Haendel, Claimant, v. The State of Illinois, Respondent.

      Opinion filed April 22, 1996.

      Order filed January 5, 1998.

    Edward F. Diedrich (Jean M. Diedrich, of counsel), for Claimant.
    James E. Ryan, Attorney General (Rorert J. Sklamrerg, Assistant Attorney General, of counsel), for Respondent.
   OPINION ON MOTION TO DISMISS

Epstein, J.

Claimant, a professor of sculpture at Northern Illinois University (the “University”), now retired, brought this two-count claim against the University seeking recovery for flood damage to his artwork which had been kept on University-leased premises. These claims, as alleged in Claimants amended complaint, are before the Court on the Respondent University’s motion to dismiss which, though undesignated, is a section 2 — 619 motion that asserts four affirmative bars to Claimant’s tort (count I) and contract (count II) claims.

1. The Amended Complaint

Claimant alleges that in 1985 he was a member of the University’s art department faculty, in which capacity he maintained his art studio and artwork in a building leased by the University for this and other art department purposes, when the building flooded which caused $160,000 of damage to his artworks. Count I alleges that the University was negligent in its operation of the building and its alteration of the property. Count II, on a third-party beneficiary theory, alleges that the University breached the insurance covenant of its premises lease with the landowner which required it to procure insurance for, inter alia, property damage.

2. The Section 2 — 619 Motion to Dismiss

The university’s section 2 — 619 motion raises four issues: (1) failure to exhaust remedies as required by section 25 of the Court of Claims Act (735 ILCS 505/25), seemingly directed at both counts; (2) lack of jurisdiction over the count II third-party beneficiary claim under section 8(b) of the Act (735 ILCS 505/8(b)) due to lack of privity between Claimant and the University on the premises lease; (3) the bar of the catch-all two-year statute of limitations of section 22(g) of the Act (735 ILCS 505/22(g)) as to the count I tort claim; and (4) the written agreement between the Claimant and the University that provided that the University was not to be responsible for Claimant’s personal property, which is apparently asserted as a bar to both counts I and II.

3. The Count I Negligence Claim

(a) Assumption of Risk

Respondent’s argument is based upon Claimant’s execution of a “letter of agreement” with the University that included the following exculpatory language:

“4. NIU carries no insurance and cannot assume responsibility for personal materials or works of art.” (letter of agreement, par. 4; departmental report, pp. 1-2.)

The applicable doctrine is assumption of risk, which is still a viable though limited tort defense in Illinois. Most commonly applied as a defense to products liability actions (see, e.g. Hanlon v. Airco Industrial Gases (1st Dist. 1991), 219 Ill. App. 3d 777, 579 N.E.2d 1136), assumption of risk remains applicable to negligence actions, at least in cases involving a contractual or employment relationship or, as here, an express assumption of risk. See Barrett v. Fritz (1969), 42 Ill.2d 529, 248 N.E.2d 529.

However, the Court cannot apply this express assumption of risk defense to this negligence claim because of a law that neither party mentions, but which we must nonetheless apply. Exculpatory clauses as to lessors’ negligence have been outlawed in Illinois since 1971. (Lessor’s Liability Act, section 1, Public Act 77-1569, 765 ILCS 705/1.) The General Assembly has voided agreements, like the one presented by this Respondent, which would have the effect of:

“exempting the lessor from liability for damages for injuries to person or property caused by or resulting from the negligence of the lessor, his or her agents, servants or employees, in the operation or maintenance of the demised premises * * Section 1, Lessor’s Liability Act, 765 ILCS 705/1.

This statutory public policy is as applicable to the State as landlord as it is to a private landowner as landlord, as this Court has held. Shalgos v. State (1994), 46 Ill. Ct. Cl. 331 (lease of stable in State Fairgrounds to horse owner).

The exculpation of the “letter of agreement” clearly falls within the Act’s operative language, quoted above, as to Claimant’s personal property. The operation of the exculpatory clause against count I — a negligence action relating to the operation or maintenance of the premises— is clearly barred if the statute applies to this agreement. Whether this “letter of agreement” is covered by the Act, in turn, is determined by the following language of section 1, which establishes the statute’s reach:

“every covenant, agreement or understanding in or in connection with or collateral to any lease of real property * *

Under this statutory language it is not necessary for us to determine whether or not the “letter of agreement” itself constituted a lease or sublease. It is sufficient for present purposes that we find, as we do, that the letter of agreement would apply “in connection with” (or at least “collateral to”) whatever oral or written lease governed Claimants occupancy of the University’s premises.

Accordingly, the exculpatory clause of this agreement is “void as against public policy and wholly unenforceable” and is not a bar to the count I negligence claim. This aspect of the Respondent’s motion to dismiss is denied, with prejudice.

(b) Statute of Limitations

The parties do not dispute that the two-year period of section 22(g) of our Act (735 ILCS 505/22(g)) is the applicable limitation period for this negligence action. Its application here is disputed.

Respondent asserts, correctly, that the Claimant admits he knew of the flood of the premises within the two-year limitation period. This, however, is not dispositive. Claimant asserts the discovery rule applicable to statutes of limitations in Illinois (Vogt v. Bartelsmeyer (5th Dist. 1994), 264 Ill. App. 3d 165, 636 N.E.2d 1185), and asserts that he in fact did not know and, under the particular circumstances, could not reasonably have discovered the actual damage to his artwork until some days after the flood, within the two-year period. Claimants contention, if accepted, would commence the running of the statute within two years prior to his filing in this Court, which would avoid the bar of the statute.

The Respondent relies factually on the Claimants deposition testimony to support this aspect of its section 2 — 619 motion. Claimant, in turn, disputes Respondent’s reading of his testimony and has filed an affidavit which, inter alia, reviews his discovery of the damage to his artworks that were stored in his studio and in a loading area of the building. (Affidavit of William Haendel, 9/8/95; Exhibit A to Claimant’s response to Respondent’s motion to dismiss, par. 3(A)-(E).)

Claimant’s deposition testimony is inadequate to support Respondent’s conclusions about Claimant’s actual or inferred knowledge of injury to his artwork. Claimant’s admission that he knew of the flood and knew that it had reached his studio (more than two years before filing) does not quite reach the critical facts. Moreover, in light of Claimant’s affidavit, which flatly denies knowledge of the injury and states that he was denied access to the area and was prevented from examining his artwork until a later date (within the two-year statute), the most that can be said is that the issue, tritely put, of what Claimant knew and when he knew it must be resolved by a trier of fact. This presents a fact issue as to the discovery rule’s application in this case.

Accordingly, this aspect of Respondent’s motion to dismiss is denied without prejudice and subject to trial.

(c) Exhaustion of Remedies

Respondent’s exhaustion of remedies argument is based on the Claimant’s failure to pursue two alternate sources of potential recovery for the damage to his artwork: (1) Claimant’s abandonment of his lawsuit against the landlord of the University-leased building, and (2) his failure to seek damages from the designer of the retaining wall that the University built on the property and that may have caused the flood by channeling rainwater runoff into the building.

Respondents exhaustion arguments require that the Claimant have (or had) a plausible claim against the suggested alternative source of recovery. If an alternative source of recovery for the claimed injury is shown to exist, in whole or in part, our Act and our rule command that no judgment can be entered by this Court until that potential recovery is resolved and reduces the States liability. (735 ILCS 505/25, 74 Ill. Admin. Code section 790.60) If it is shown that the Claimant could have but now cannot pursue a real alternative source of recovery for the injury, then this Court will dismiss the claim against the State for failure to exhaust that remedy.

Respondent urges that Claimants 1992 dismissal of his circuit court lawsuit against the landlord demonstrates a failure to pursue an alternative remedy (and one which, presumably, cannot now be pursued due to the apparent running of the statute of limitations), and requires us to dismiss these claims against the University. Claimant responds that the landlords deposition testimony disclosed that the University, as a tenant, had the sole and exclusive responsibility for operation and maintenance of the property under the lease and that therefore, as a matter of law, the landlord cannot be culpable for either of the negligent acts alleged in this case: the design of the retaining wall that allegedly funneled rainwater into the building, and the failure to turn on, or keep on, the sump pumps that would have protected the lower level of the building from floodwaters.

As with Respondents earlier reliance on the Claimants deposition (on the limitation issue), the Claimant’s reliance on the landlords deposition (on this issue) is misplaced. The landlords deposition testimony says what Claimant says it says, to be sure. However, he was wrong, and thus, Claimant winds up being wrong too. Unlike the Claimant (and apparently unlike the Respondent as well), the Court read the lease. And contrary to the landlords testimony that the lease delegated the entire responsibility for maintenance and operation of the leased premises to the tenant University, the lease in fact contains an allocation of maintenance and improvement responsibilities between the landlord and the University:

“VIII. REPAIRS AND MAINTENANCE
The Lessee 888 shall maintain and keep the Premises, including 888 windows, doors, skylights, interior walls and air conditioning systems in good repair. The Lessor shall maintain the structural system of the Building 888 except the windows, and the sidewalks on the Premises in good condition and repair. The Lessee shall be responsible for the maintenance of the grounds and snow removal. All necessary caulking, tuckpointing and other maintenance of the exterior walls shall be the Lessor’s responsibility 8 8 °.
IX. ALTERATIONS AND INSTALLATIONS
The Lessee shall not make any alterations in or additions 8 8 8 without first procuring the Lessor’s written consent and delivering to Lessor the plans, specifications, names and addresses of the contractors, copies of the proposed contracts and the necessary permits, 8 8 8 satisfactory to the Lessor 8 8 8.” (Lease, sections VIII, IX (contained in departmental report).)

In this posture, the Claimant cannot invoke the general rule of law that a leasehold transfer of the entirety of the responsibility and control of the premises to the tenant exculpates the landlord from liability for the condition of the premises. This rule applies when the lease transfers the entire control and responsibility of the property:

“Generally, a landlord is not hable for injuries caused by a defective condition on the premises leased to a tenant and under the tenant’s control. (Rowe v. State Bank of Lombard (1988), 125 Ill. 2d 203, 126 Ill. Dec. 519, 531 N.E.2d 1358.) A lease is a conveyance of property ending the landlord’s control over the leased premises, which is a prerequisite to tort liability. (Wright v. Mr. Quick, Inc. (1985), 109 Ill. 2d 236, 93 Ill. Dec. 375, 486 N.E.2d 908.) Only the tenant, as the party in possession and control of the leased premises, could be liable to persons injured on the premises. (Wright [citation omitted].)” Almendarez v. Keller (1st Dist. 1990), 207 Ill. App. 3d 756, 556 N.E.2d 441, 444, 152 Ill. Dec. 754, 757, leave to appeal den’d., 137 Ill. 2d 663 (1991) (emph. added)
* * a lessor is not liable for injuries caused by a dangerous or defective condition on the premises leased to a tenant and under the tenant’s control. (Rowe v. State Bank (1988), 125 Ill. 2d 203, 220-21, 126 Ill. Dec. 519, 527, 531 N.E.2d 1358, 1366; Almendarez v. Keller (1990), 207 Ill. App. 3d 756, 759, 152 Ill. Dec. 754, 757, 556 N.E.2d 441, 444, appeal denied (1991), 137 Ill. 2d 663,156 Ill. Dec. 559, 571 N.E.2d 146.) As our supreme court put it in Wright v. Mr. Quick, Inc. (1985), 109 Ill. 2d 236, 238, 93 Ill. Dec. 375, 376, 377, 486 N.E.2d 908, 909: “The basic rationale for lessor immunity has been that the lease is a conveyance of property which ends the lessor’s control over the premises, a prerequisite to the imposition of tort liability.” A lessor has no duty to maintain premises that are leased to and under the control of the tenant. Gilbreath v. Greenwalt (1980), 88 Ill. App. 3d 308, 309, 43 Ill. Dec. 539, 541, 410 N.E.2d 539, 541.’’ Jackson v. Shell Oil Co. (1st Dist. 1995), 272 Ill. App. 3d 542, 208 Ill. Dec. 958, 650 N.E.2d 652 (emph. added)

The record before us affirmatively reflects an allocation rather than an exclusive delegation of the maintenance and control of this property. Thus, on the present factual record on the motion to dismiss, we cannot find the landlord exculpated from responsibility as to the retaining wall improvement, over which he retained some control. Claimant has not demonstrated that its suit against the landlord was unmaintainable or frivolous due to the lease terms.

On the other hand, this Court cannot determine, on the record now before us, whether the landlord may have actually borne some liability for the flood and whether he was ultimately culpable for the damage to the Claimants property. Among other things, that determination turns on whether the retaining wall construction (or design) was actually negligent, whether its construction or design or both caused or exacerbated the flood conditions inside the building, and whether or not such flood causation, if proved, was the proximate cause of the damages. Under the facts before us, it is at least possible that the proximate cause of the damage was the University’s negligent failure to operate the sump pumps that allegedly would have prevented the flood damage. This generates a series of questions of fact, to be determined initially by the trier of fact and not by us on this motion.

This Courts discussion in a recent case of similar posture, well covers the point:

“Here the Respondent is asking us to dismiss a case prior to trial. We therefore may not * * # have all of the facts necessary to decide as a matter of law whether the acts of [the alleged tortfeasor] were a proximate cause 0 * *. The Illinois Supreme Court addressed a similar issue in s * * Briske v. Village of Burnham, 397 Ill. 193. The Court there stated:
‘If a negligent act or omission does nothing more than furnish the condition malting an injuiy possible, and such condition, by the subsequent independent act of a third person, causes an injury, the two acts are not concurrent and the existence of the condition is not the proximate cause of the injury/
Similar results were reached in Carr v. Shirland Township, 66 Ill. App. 3d 1033, 23 Ill. Dec. 655, 384 N.E.2d 449 (2d Dist. 1978); Cannon v. Commonwealth Edison Co., 250 Ill. App. 3d 379, 190 Ill. Dec. 183 (1st Dist. 1993); and Thompson v. County of Cook, 154 Ill. 2d 374, 181 Ill. Dec. 922, 609 N.E.2d 290 (1993).
All of these cases stand for the proposition that if a defendant’s negligence does nothing more than furnish a condition by which injury is made possible, that negligence is not the proximate cause of the injury.” Simmons v. State (May 23, 1995) (Patchett, J.)

This proximate cause analysis applies equally to the Respondent’s other suggested recovery source, i.e., the designer of the retaining wall. We cannot, on this meager record, determine the potential culpability of the designer of something that may or may not have caused the flooding in the first instance, and that may or may not be the proximate cause of the damage sought to be recovered from the State. Those underlying fact issues must be tried.

Accordingly, the exhaustion of remedies portion of the Respondent’s motion to dismiss is denied without prejudice and subject to trial.

4. The Count II Third-Party Beneficiary Contract Claim

Respondent attacks the count II third-party beneficiary contract claim on three grounds: (1) exhaustion of remedies (the identical argument addressed, ante, as to count I); (2) subject matter jurisdiction; and (3) waiver, based on the “letter agreement” between it and the Claimant.

(a) Subject-matter jurisdiction over third-party beneficiary claim

We necessarily address the jurisdictional issue first. Respondent contends that the Court of Claims lacks jurisdiction over third-party beneficiary claims, such as count II, under section 4(b) of our Act. 735 ILCS 505/4(b).

Respondents jurisdictional argument is based on the point that third-party beneficiary claims are not based on privity of contract, and are therefore not “contract” claims in the strict sense of a direct claim on an express contract. Respondents argument is also based on the language of our statutory grant of jurisdiction over contract claims in section 8(b) of our Act. Respondent argues that our section 8(b) jurisdiction is limited to claims on express contracts which do not include quantum meruit or quasi-contractual liabilities, relying on Brighton Building Maintenance Co. v. State (1982), 36 Ill. Ct. Cl. 36.

Initially, we note that this jurisdictional issue appears to be a matter of first impression, even though this Court has adjudicated third-party beneficiary claims (see, e.g., Pal-Mar Steel v. State (1991), 44 Ill. Ct. Cl. 13; First National Bank of Springfield v. State (1990), 43 Ill. Ct. Cl. 1; Sargent & Lundy v. State (1996), 48 Ill. Ct. Cl. 333, seemingly without this jurisdictional issue having been raised. Brighton, supra, on which Claimant relies, is another of our decisions that adjudicated (and rejected) a third-party beneficiary claim on its merits, but did not involve a jurisdictional issue over that claim. (Of course, our decisions adjudicating third-party beneficiary claims without jurisdictional objections or rulings are not precedent on the jurisdiction issue.)

We must reject Respondents jurisdictional objection as unfounded in the language of section 8(b), as unprecedented, and as unsupported by a cogent policy or historical basis. Respondent has not cited, and our research has not disclosed, any jurisdictional ruling in this Court or in any other court of limited jurisdiction that is at all pertinent on this issue. Similarly, we have found nothing in the legislative history of our statute, or its predecessor, that leads us to read the section 8(b) language any narrower than its plain meaning.

Our decision ultimately rests on the language of our statutory grant of jurisdiction over contract claims in section 8(b) of our Act (705 ILCS 505/8(b)), which reads as follows:

“§8. Jurisdiction. The court [of claims] shall have exclusive jurisdiction to hear and determine the following matters:
(b) All claims against the State founded upon any contract entered into with the State of Illinois.”

Under this language, this Court has jurisdiction over any action that is “founded upon” an express oral or written contract “entered into with the State * * The “entered into” language limits the provision to express contracts, and thus excludes contracts that arise by means other than through agreement with the State. Respondents observation that this Court has construed its section 4(b) jurisdiction to exclude quantum meruit and quasi-contract claims, and the Brighton decision reflecting that holding, is accurate but inapposite. A third-party beneficiary claim is fundamentally different than quantum meruit and quasi-contract claims, which are implied contracts that arise as a matter of public policy in the absence of an express agreement.

That is not the issue in this case. More pertinent here is the “founded upon” language, which is the only other limiting phrase in section 8(b). This phrase is broad enough to encompass ex contractu claims based on an express contract with the State that assert any established legal theory. The crucial nexus is the express contractual basis.

A third-party beneficiary claim ordinarily is “founded on” an express contract — perhaps one that the Claimant is not a party to, and perhaps even one between parties with whom the Claimant is not in privity, but an express contract nonetheless. And that is the test imposed by the statute. So long as a third-party beneficiary claim is predicated on an express contract with the State, as this one is, we perceive no jurisdictional impediment under section 8(b).

Privity of contract, urged by Respondent as the test, is just not an element of section 8(b) and is thus immaterial to the jurisdictional analysis. We simply do not find a privity requirement in the Act. We cannot and will not insinuate it into the statute.

This third-party beneficiary claim is alleged to arise out of an express contract between the State and a third party. Accordingly, the count II claim is an action “founded upon a contract entered into with the State of Illinois” within the meaning of section 4(b). Respondents motion to dismiss count II for lack of subject matter jurisdiction is denied.

(b) Waiver

Respondent asserts the exculpatory provision of the “letter of agreement” between the University and the Claimant as a waiver of the count II claim. This waiver argument parallels the assumption-of-risk defense that was interposed against the count I tort claim, which also was based on the exculpatory clause of the letter of agreement. Here, however, the exculpatory clause is presented as a bar to a contract claim rather than to a negligence claim.

The Lessors Liability Act (765 ILCS 705/1), invoked above, applies to contract or lease provisions that exculpate a lessor from,

“liability for damages for injuries to * * ' property caused by or resulting from the negligence of the lessor * * *.”

The focus of the statute is lessors’ negligence. The legislative intent reflected in the statutory language is directed solely at lessors’ negligence liability, not their breaches of contracts. The statute cannot fairly be read as applying to exculpatoiy clauses that waive contractual liabilities.

We are constrained to hold that the statute does not bar the exculpatory clause in the letter of agreement from waiving the count II claim of this complaint, which asserts a liability that is not alleged to arise from a lessor’s or sub-lessor’s negligence but instead is predicated solely on a breach of a contract (to maintain insurance). The damages sought by count II are the loss of insurance benefits, not tort damages. This exculpatory clause, as applied to count II, does not “exempt” the respondent-lessor from “liability for 6 * * negligence * * * in the operation or maintenance of * * * real property,” as the clause did as applied to count I. For the purpose of operating as a waiver of a contract claim, the letter of agreement is not unenforceable under the statute, and thus the letter of agreement bars Claimant’s third-party beneficiary contract claim.

We recognize that it can be argued that the prohibited exculpation under the statute is from “injuries * * * caused by or resulting from # * negligence,” irrespective of the theory of the cause of action that generates liability. That would be a considerably broader reading of the Act. However, such a mechanical reading of the statutory language belies its clearly indicated purpose. Such an expansive interpretation would read out of the statute its reference to lessors’ “negligence.” That phrase would be rendered meaningless if the statute were given across-the-board effect beyond negligence actions. In order to give effect to that statutory phrase, as we are required to do by tire canons of construction and by deference to the legislature’s enacted words, we must read the “negligence” phrase as a limitation on the application of tire Act.

We need only dispose of Claimants alternate argument that the letter of agreement should be voided as a misrepresentation, based on its assertion that “NIU carries no insurance * * Claimant contends that the statement was misleading because the University was obliged, under its lease, to obtain the very insurance that it announced to Claimant and other faculty members would not be obtained. This obviously duplicitous pair of pronouncements could not mislead Claimant or his peers: the University did not obtain insurance, and that is precisely what its “letter” told the art department faculty it would not do. Whatever else may be said, the University accurately told Claimant what it was not going to do.

Respondent’s motion to dismiss count II as barred by the waiver of the “letter of agreement” is granted, and count II will be dismissed.

5. Order

For the foregoing reasons, it is hereby ordered:

A. Respondent’s motion to dismiss count I (negligence):

(1) as barred by Claimant’s express assumption of risk in the letter of agreement of February 12, 1985, is denied with prejudice; and

(2) as barred by the section 22(g) two-year statute of limitations is denied without prejudice, and subject to further proceedings;

(3) as barred by Claimant’s failure to exhaust alternative sources of recovery is denied without prejudice, and subject to further proceedings; and

B. Count I is remanded to the assigned Commissioner for further proceedings;

C. Respondent’s motion to dismiss count. II (third-party beneficiary breach of contract):

(1) for lack of jurisdiction is denied-, but

(2) as waived by Claimant’s express exculpation of the Respondent in the letter of agreement of February 12,1985, is granted-, and

D. Count II is dismissed with prejudice.

ORDER

Epstein, J.

This matter coming to be heard upon the joint stipulation of the parties to settle the claim herein, due notice having been given and the Court being fully advised in the premises.

It is ordered that Claimant be awarded the sum of seventeen thousand five hundred and no/100 dollars ($17,500) in full and final satisfaction of the claim herein.

It is further ordered that the Court, while not bound by the settlement, does approve it, and that the award of $17,500, as the agreed amount, is entered in favor of Claimant.

       Respondent’s articulation in its motion of a failure “to state a cause of action in which relief may be granted” is plainly not the intended objection to the complaint, is not argued by the Respondent, and will be disregarded by the Court.

       The Court also leaves for later determination, on a better record than is presented on this motion, the question of what kind or degree of damage to the artwork must have been known to trigger the running of the statute of limitations under the discovery rule.

       We also reject Respondents unsupported and unfathomable argument that tills Court lacks contract claim jurisdiction under section 8(b) to adjudicate damages to personalty as distinguished from “property or premise damage.” (Respondents motion to dismiss, part II, par. 3, at 4.)


author: Epstein, J.

text:
    (No. 90-CC-1659
    Kinney Contractors, Inc., Claimant, v. The State of Illinois, Respondent.

      Opinion filed November 19, 1997.

    Calandrino, Logan & Lamarca (Michael J. Logan, of counsel), for Claimant.
    James E. Ryan, Attorney General (Verne E. Denting, Assistant Attorney General, of counsel), for Respondent.
   OPINION

Epstein, J.

This is a contractors three-piece claim for $17,710.99 of additional compensation for FY1988 road-patching work under a competitively-bid contract with the Department of Transportation (“IDOT”). This 1990 claim over a 1988 dispute was tried to our Commissioner in 1991 and is finally before the full court on the pleadings, the trial record and the Commissioners extraordinarily delayed 1997 report.

The Contract

Claimant, Kinney Contractors, Inc. (“Kinney”), brought this claim seeking additional compensation on three payment components of IDOT contract no. 42938 for FY88 road-patching work in IDOT District No. 2 (Boone, Carroll, JoDavies, Stephenson, and Winnebago counties). The contract was awarded to Kinney, as low bidder, in December 1987.

Under the contract, the Claimant was to, and did, perform road-patching work in District No. 2. Under this type of contract, the exact quantity and location of work to be done, as well as the ultimate compensation, is unknown at the time of bidding and contracting. The actual work is designated in work orders later issued by IDOT to the contractor. The contractors compensation is determined by various unit costs and work charges specified in the contract.

Claimants final billing for the contract period was $192,387.79; IDOT approved and paid $174,676.80 under the contract. Kinneys $17,710.99 claim is for the difference. IDOT disputes Kinneys entitlement to any additional compensation under this contract.

The Claims

Claimants $17,710.99 claim has three distinct and independent components:

(1) Charges for “call-outs,” for which Claimant seeks an additional $4,500.

This claim turns on the interpretation of the contract definition, for payment purposes, of the term “call-out” and its application to the work performed by Kinney. This term, undisputedly, affects or determines the number of compensable “call-outs” under the contract.

(2) Charges for “non-lateral” movement of traffic control devices, for which Claimant seeks an additional $1,537.61.

This claim turns on the interpretation of the contract language defining a “location” of traffic control. This term is claimed to affect or determine the number of compensable traffic control “locations” and hence the total charges for “non-lateral” (i.e., longitudinal, referring to the roadway directions) movements of traffic control devices between locations.

(3) Charges for traffic control devices (“markers”), for which Claimant seeks an additional $11,673.38.

This claim is based on the interpretation of the “length” aspect of “traffic control areas” prescribed in the “2316-10” diagram in the contract specifications. This length specification, as applied, is claimed to affect the quantity of traffic control devices required and compensable, and hence the total charges for such devices.

The Trial

Trial of this claim was held on May 2, 1991, before Commissioner Stephen R. Clark. The documentary evidence included the contract, the billing, work order, IDOT regulations and IDOTs departmental report. Two witnesses testified: James R. Kinney, the president of the Claimant, and Darryl Stiemstra, then the district construction engineer for IDOT.

Analysis

The three contract construction issues in this case arise out of IDOTs general specifications (“Standard Specifications for Road and Bridge Construction,” sometimes called the “Red Book”) or IDOTs “Supplemental Specifications and Recurring Special Provisions.” Both are part of contract no. 42938 by incorporation. The Red Book and various selected supplemental/recurring provisions are incorporated into most IDOT road contracts.

There is no dispute as to the applicability of the contract provisions in issue or as to any facts. IDOT does not dispute the quantity, quality or contract-conformance of Kinneys work. The issues are purely matters of contract interpretation and application.

A. The “Call-Out” Issue

Claimant was paid $1,500 for one “call-out” under this contract, based on the single IDOT work order that was issued (Respondent’s Exhibit No. 3), which covered three routes in and around Rockford, in Winnebago County. IDOT maintains that that work order constituted one “call-out” under the contract. Claimant contends that the work order constituted three “call-outs,” because it included three routes. Claimant also contends that a separate work order addendum that extended its patching work on U.S. Route 20 resulted in an additional “call-out” under the contract, bringing to three the number of claimed, but unpaid, “call-outs.” Claimant’s position is based on the interpretation that a “call-out” is limited to a single county and to a single route.

The contract definition of “call-out” is contained in the special/recurring provisions of the contract (special provisions, sheet 3), and provides as follows:

“CALL-OUT: This work shall consist of the preparation and operations necessary for the movement of personnel, equipment, supplies and incidentals for each call-out to the job site designated by the Engineer.
A work order will not be sent unless a minimum of 48 square ya'ds of patching has been located; °°e.
Basis of Payment: This work will be paid for at the contract unit price each for each CALL-OUT as described above * ”

Claimant contends that this provision is ambiguous, and that therefore parol evidence of the parties’ intent and extrinsic evidence of IDOTs course of dealing on this recurring contract term are admissible with respect to its interpretation. Relying on the apparent facial circularity of this “definition,” the Commissioner agreed and allowed parol evidence.

Having opened the door to extrinsic evidence, Claimant advanced its “one-county, one-route” interpretation of “call-out.” Claimant’s interpretation would impose geographical limits on this facially-unbounded term through extrinsic evidence. To this end, Claimant presented testimony: (i) of Mr. Kinney’s understanding of this term at the bidding time, fortified by the work order example contained in the bid documents (which was for a single route in a single county), (ii) of IDOTs payment to Kinney under another contract for two “call-outs” on one work order that had directed work on one route in two counties, and (iii) that in performing the work, Kinney was required to move equipment on separate routes up to ten miles.

IDOT countered with evidence of billings and payments for “call-out” on other contracts; testimony of the purpose and of IDOTs application of this provision; and testimony as to the purpose and application of another recurring provision, also contained in this contract, for “mobilizations.” The “mobilization” provision compensates the contractor $500 for each movement of its equipment between job sites.

Although we are disinclined to reverse the Commissioner’s allowance of parol evidence in the absence of objection from a party, which is missing here, we must comment on the “ambiguity” issue and on the nature of the Claimant’s extrinsic interpretation argument, as we are not fully convinced that there was adequate justification for the parol evidence in this case, although the point is harmless in light of our ultimate conclusion.

Some things are clear about this “definition” in IDOTs special provisions: (1) it is strikingly inartful; (2) it is facially circular (in that it defines the term in terms of the same term); (3) because it is circular, it is not an objective definition of “call-out”; and (4) its language in no way supports or suggests either the "route” or “county” limitations urged by this Claimant. Indeed, the contract text does not support any physical limitations on “call-outs” other than those that may be embodied in the term “job site” which is an element of this definition.

However, we are unconvinced that this provision is ambiguous in the classic sense, or that it is ambiguous in any way that might help Claimant’s argument. We are also unconvinced that this “definition” cannot function sufficiently clearly to accomplish its contractual purpose notwithstanding its lack of objectivity or of quantitative specificity.

Ambiguity denotes a multiplicity of meanings that are each fairly conveyed by the text. That is classic linguistic ambiguity, in which competing meanings emanate from the words and phrases and sentence structure employed. The competition between multiple meanings, when unresolved by the rules of language or the canons of construction, may be resolved by resort to extrinsic evidence in an effort to glean the drafter’s actual or constructive intent.

This “call-out” definition does not present competing meanings: none are identified by the parties. However, Claimant’s contention is not so much that this definition is classically ambiguous, as that it is vague and indefinite. Claimant really objects that this definition is unbounded. This court does not accept the proposition that an absence of quantitative limits per se is vagueness that opens the door to parol evidence, although it surely is sometimes.

We would strike the extrinsic evidence in this case if the law were that only a classic ambiguity supports admission of parol evidence on a disputed contract term. But tire law is somewhat broader than that. For purposes of opening the door to extrinsic evidence on a contract term, “ambiguity” encompasses severe vagueness as well as classic ambiguity:

“The existence of ambiguity in a contract is a question of law for the court. (Joseph v. Lake Michigan Mortgage Co. (1982), 106 Ill. App. 3d 988, 62 Ill. Dec. 637, 436 N.E.2d 663.) An ambiguous contract is one capable of being understood in more than one sense [citation omitted] or an agreement obscure in meaning through indefiniteness of expression or having a double meaning.” Pioneer Trust & Savings Bank v. Lucky Stores, Inc. (1980), 91 Ill. App. 3d 573, 47 Ill. Dec. 36, 414 N.E.2d 1152; Mid-City Industrial Supply Co. v. Horwitz (1st Dist. 1985), 132 Ill. App. 3d 476, 87 Ill. Dec. 279, 476 N.E.2d 1271 (emph. added); see also, 17A Am. Jur. 2d, Contracts section 403 (1991).

Thus, parol evidence admissible on the basis of “vagueness” or “indefiniteness” can open the door to an interpretation that does not emanate from the words and phrases employed in the contract, as this Claimant seeks to do here. We conclude that there is a basis — albeit a barely adequate one — for parol evidence in this case in the absence of objection by a party.

However, this court is skeptical of extrinsic meanings brought — by either side — to a contract whose text does not suggest such meaning. In this case, the Claimant seeks to evidence an interpretation that would impose two geographical limitations on a contract “definition” that are nowhere contained nor suggested by the words of the contract.

Having considered the parties’ parol evidence, the Court is utterly unconvinced that the Claimant’s “one-county” or “one-route” limitations can, or should, be en-grafted onto this contract definition. We also conclude that this provision is not as unclear as it first appears on its face.

Claimants evidence of past IDOT practice is inadequate. Claimants meager evidence of prior billings and payments is ambiguous at best and does not reflect “county” and “route” limitations. Claimants evidence is far short of a consistent usage that might persuade this Court to adopt an extrinsic meaning that is textually unsupported. Claimants evidence simply does not support its argument.

Moreover, review of this definition in its contractual context shows that it is workable. The function of this provision in this contract, undisputedly, is to establish the basis for applying the contract’s $1,500 payment rate for “call-outs.” This, we find, it does.

The contract states that this payment is for “the preparation and operations necessary for the movement of personnel, equipment, supplies and incidentals for each call-out to the job site designated by the Engineer.” (Emphasis added.) Although there is an element of circularity in this phraseology, it is clear enough that the ultimate determinant of a call-out — and the key operative phrase relative to any geographical or distance factors — is the “job site.” The job site, in turn, is contractually specified to be the site “designated by the Engineer.” Thus, in the absence of any further contract definition of “job site” — and in the absence of any contractual limitations on the [IDOT] engineer’s designation of “job sites”— none of which are identified in this contract by either of the parties, this provision says only that a call-out for payment purposes is the engineer’s call-out to whatever job site he or she designates.

It is immaterial that this provision does not qualify as an artful or as an objective “definition.” It is clear enough to function as a specification of the work that is to be compensated as a “call-out” at $1,500 per call-out. Claimant’s complaint was more appropriately aimed at the engineer who wrote the work order, rather than at this Court, which lacks a contractual basis for second-guessing the job site under that work order.

Finally, we note the presence in the contract of a different payment provision for moving equipment between job sites: “mobilization,” which are compensated at a $500 contract rate for each such movement. This separate contract provision clearly disposes of Claimant’s contention as to the extension of the Route 20 work order.

For these reasons, we find no contractual basis for this “call-out” claim, and reject this first component of this claim for $4,500 of additional compensation.

B. The “Non-Lateral Movement” Issue

The second component of the Claimant’s contract claim is for additional “installation” charges that are compensable for each separate “set-up” or “installation” of a work area in a “new location” under article 109.04 of the contract. The narrow contract construction dispute presented here focuses on the difference between “lateral” and “longitudinal” movements of the work area, both of which require movement of the protective “traffic control devices” but only one of which is separately compensable under the contract.

The material provisions of section 648.05 of the Red Book read as follows:

“b) Traffic control and protection required under Standards 2309, 2310, 2317 and 2318 will be measured at each location specified on an each basis. Standard 2316 will be paid for on an each basis when the traffic control and protection applies to isolated stationary work areas and does not involve or is a part of other protected areas.
Where the contract work to be performed requires longitudinal movement of the work area, each installation of a Standard in a new location will be paid for in accordance with Article 109.04. A contiguous lateral movement of the work area causing a change in the location of traffic control devices, but not a longitudinal relocation of the work area, will not be considered a new installation.”

Claimant argues for a strict application of “lateral movement” so as “not [to] encompass any longitudinal movements” (Claimant’s Brief, at 6) so that “the moving of barricades for lane change, unless straight across from the original repair, should be an additional expense item.” {id., at 7) On that strict construction, supported by the principal of construing [ambiguous] contracts against the drafter [here IDOT], Claimant urges that Mr. Kinney’s testimony that “the required movement of traffic control devices was to some extent longitudinal and not purely lateral,” {ibid.) requires additional compensation for non-lateral traffic control set-up charges.

We disagree in two respects. First, Claimant’s proffered construction is not merely strict. Claimant’s construction is “pure,” as it concedes, and is so pure as to exceed the bounds of reasonableness as well as the Ivory Snow test [99 44/100], We need not here explore the academic distinctions between truly lateral and truly longitudinal movements of road “work areas,” but we observe that the contract’s “non-lateral” standard must be read in light of its explicit purpose, which is to distinguish genuine “relocation[s] of the work area” that are compensable, from non-compensable lateral movements on the same stretch of road. In that context, we find no basis for a “pure” non-longitudinal standard for “new locations.”

Second, we find the Claimant’s evidence on this claim inadequate to support an award, much less to convince us to make an award, on any view of the' standard. Simply put, the Claimant did not produce competent quantitative evidence of longitudinal movements of work areas under this contract that could warrant additional compensation.

For these reasons, we reject this second component of this claim.

C. The Traffic Control Markers Issue

The third and final component of the Claimants contract claim is for $11,673.38 of additional charges for supply and use of traffic control markers. Claimant’s basis is the “2316-10” diagram in the contract specifications. This diagram, entitled “Typical Application of Traffic Control Devices — Highway Construction and Contract Maintenance,” is a general IDOT directive on how and where to set up traffic control devices. As explained by IDOT’s engineer at trial, and undisputed by Claimant, this diagram is applicable generally, if not universally, to several kinds of highway projects, including road patching and road repair.

Kinney contends that the diagram establishes the maximum length of a work area, and thus, that additional compensation is owed for the additional markers required for those work sites that exceeded the 2316-10 specifications under the subject contract, i.e., the excess markers. We must reject this claim for three reasons.

First, we do not find any maximum length of work areas or work sites specified in the 2316-10 document, and we do not find the diagram at all ambiguous in this omission (as Claimant erroneously contends, thereby seeking to invoke construction against IDOT as drafter). The diagram is a placement specification, is plainly intended to cover work areas of varying lengths, and does not purport to define or limit the work area length at all, but only to specify the placement and density of traffic control devices within, and adjacent to, the actual work area. The scale-break markings on the diagram are standard drawing protocol, and affirmatively show that the work-area lengths are not to scale. Claimant’s interpretation of the diagram is baseless.

Second, there is an inadequate evidentiary basis in this record for this Court to award damages for additional work areas or for additional markers. The sole basis identified by Claimant is a letter, which is argumentative and perhaps sufficient as a pleading, but far short of the mark as competent quantitative evidence. There is no evidence of additional set-ups at all.

Third, we are unpersuaded that there is an applicable compensation element or specific provision of this contract that applies to this issue. Claimant has not specifically pointed to one, except for the set-up charges, which are blatantly inapplicable to “additional markers” required for a hypothetically overlong work area. In the context of this “as-needed” repair contract, which the Court has reviewed extensively, we remain unconvinced that this third sub-claim presents a genuine claim for a separately compensable item under this contract.

Conclusion and Order

For the reasons set forth above, this claim is denied in its entirety. Judgment is entered for the Respondent and against the Claimant.


author: Sommer, C.J.

text:
    (No. 90-CC-3356
    Locations & Places, JMS Inc., Claimant, v. The State of Illinois, Department of Transportation, Respondent.

      Opinion filed February 24, 1998.

    Harris and Lambert, (Robert H. Howerton, of counsel), for Claimant.
    James E. Ryan, Attorney General (Mark W. Marlott, Assistant Attorney General, of counsel), for Respondent.
   OPINION

Sommer, C.J.

The Claimant seeks an award against the Respondent for damages in the amount of $3,471.90 sustained by the Claimant in the removal and replacement of an advertising billboard at the intersection of Illinois Route 13 and Illinois Route 148 in Herrin, Williamson County, Illinois. The Claimant alleges that on July 1,1982, the placement and maintenance of highway advertising signs were controlled by the Highway Advertising Control Act of 1971, and that it was the duty of the Illinois Department of Transportation (IDOT) to enforce the provisions of the Act. The Claimant alleges that it owned and maintained a billboard at the site which had been previously approved by the Illinois Department of Transportation under the Act administered by the Department. The Claimants damages arise out of the Department of Transportation ordering the Claimant to remove the billboard that had previously been approved by the same Department.

This claim was submitted to the Commissioner on a written stipulation of the parties to submit the case on a bifurcated basis, trying first the issue of liability, and then, if necessary, the issue of damages.

The liability issue in this case is simply whether or not the State is equitably estopped because the State had previously issued permits for the structure in question. The Respondent argues that the State should not be estopped or held liable and cites Hickey v. Illinois Central Railroad Company (1966), 35 Ill. 2d. 427, 220 N.E.2d 415; Cities Service Oil Company v. City of Des Plaines (1961), 21 Ill. 2d 157, 171 N.E.2d 605; City of Chicago v. Unit One Corporation (1991), 218 Ill. App. 3d 242, 578 N.E.2d 194; Armond v. Sawyer (1990), 205 Ill. App. 3d 936, 563 N.E.2d 900. The Claimant cites the following cases in support of its position: Hickey v. Illinois Central Railroad Company, supra; Schumann v. Kumarich (1981), 102 Ill. App. 3d 454, 430 N.E.2d 99, 58 Ill. Dec. 157; Jack Bradley Inc. v. Department of Employment Security (1991), 146 Ill. 2d 61, 81, 585 N.E.2d 123, 165 Ill. Dec. 727; Board of Trustees v. Stamp (1993), 241 Ill. App. 3d 873, 608 N.E.2d 1274,181 Ill. Dec. 800; Wachta v. Pollution Control Board (1972), 8 Ill. App. 3d 436, 289 N.E.2d 484.

In Hickey, supra, the Illinois Supreme Court held that it was elementary that ordinary limitations statutes and principles of laches and estoppel do not apply to public bodies under usual circumstances, particularly when the governmental unit is the State. However, the Court went on to point out that the State may, in peculiar circumstances, be estopped when acting in a proprietary, as distinguished from its sovereign or governmental capacity. The Court went on to point out that it had always adhered to the rule that mere non-action of governmental officers is not sufficient to work an estoppel and that, before the doctrine can be invoked against the State, there must have been some positive acts by the officials which may have induced the action of the adverse party under circumstances where it would be inequitable to permit the Corporation to stultify itself by retracting what its officers had previously done. (220 N.E.2d 415, 425-426.) In Schumann, supra, the First District Appellate Court reversed a trial court and held that the affirmative act of a sovereign that would induce reliance sufficient to support a finding of estoppel against a public body must be the act of the government body itself, rather than the unauthorized act of a ministerial officer or a ministerial misinterpretation. (430 N.E.2d 99, 103.) In Bradley, supra, the Illinois Supreme Court held that tire State was not estopped by the actions of the Department of Employment Security in previously telling an employer that only services of a food demonstrator who had written contracts with the employer would be subject to unemployment contributions, and later determining that the services in question were “employment” under the Unemployment Compensation Act. The Court stated:

“Likewise, in the present case, even if the Department determination represented an actual change in its policy towards Bradley Inc., which we are not convinced is the case, the result here is no more burdensome or unjust than a re-examination of an assessment of unemployment contributions * * *. Under such circumstances, we do not find it necessary to apply estoppel.” 585 N.E.2d 123, 132.

In Board of Trustees, supra, the Second District Appellate Court held that equitable estoppel would apply against the State only where some positive act by State officials may have induced actions by an adverse party where it would be inequitable to hold the adverse party liable for its actions. (608 N.E.2d 1274, 1280.) In Wachta, supra, the Second District Appellate Court held that where developers, in reliance upon the action of a water board in issuing sewer permits, had expended substantial sums of money and incurred heavy continuing liability in connection with a construction project, the Environmental Protection Agency and the Pollution Control Board which had assumed the responsibilities of the Water Board and which, for eight months after assuming such responsibility, had remained silent while developers were acting in reliance upon authorizations given them by Water Board were estopped from withdrawing sewer connection permission earlier granted to developers by the Water Board. 289 N.E.2d 484, 487-488.

The stipulation of the parties on the issue of liability in this case reveals that the billboard in question was originally approved in June of 1976 by IDOT for the previous owner. Thereafter, IDOT inventoried the sign on January 14, 1982. In May of 1982, the sign was destroyed by a tornado and was rebuilt by the Claimant in July of 1982. Thereafter, a “new tag” was issued by IDOT on June 14, 1983, but on October 2,1984, the Claimant was notified by IDOT that the sign violated the Highway Advertising Control Act. On March 9, 1987, IDOT reiterated its finding of non-compliance with the Act and ordered that the Claimant must modify the previously approved structure.

In this case the State was not acting in a proprietary manner, but was instead, exercising a governmental function in administering an act regulating signing and outdoor advertising. It is not known whether inattention or mishandling of the States employees resulted in the previous error. In any event, the Claimant is entitled to rely on the actions of the State no more in this instance than he would be upon the re-examination of a previously approved tax form. The interest of the public in the proper enforcement of statutes regulating outdoor advertising could be defeated if the State were to be estopped from the proper enforcement of the statutoiy scheme.

It is therefore ordered that this claim is denied.


author: Frederick, J.

text:
    (No. 91-CC-0261
    Barney Lonzo, Claimant, v. The State of Illinois, Respondent.

      Opinion filed August 28, 1997.

    Kenneth W. Flaxman, for Claimant.
    James E. Ryan, Attorney General (Jennifer M. Link, Assistant Attorney General, of counsel), for Respondent.
   OPINION

Frederick, J.

Claimant, Barney Lonzo, filed his complaint sounding in tort on July 26, 1990. Claimant alleges that $10,000 worth of his personal property was converted, lost and destroyed by Respondent. The cause was tried before Commissioner Fryzel.

The Facts

In July of 1988, Claimant was at work for his employer, the City of Chicago, at the taxi cab inspection facility. Claimant owned a CMC van. In the van, Claimant had tools, a hot dog vending cart, a radio, and stereo. Claimant valued the tools at $1,091.44 which is the amount he paid for the tools. The van was valued by Claimant at $2,800 which is the amount he paid for the van. On October 19, 1987, Claimant put tires on the van which cost $460. The hot dog vending cart cost Claimant $2,500.

While at work in July of 1988, Claimant was arrested. There were five people involved in Claimants arrest. Two of the people were in plain clothes and three were wearing Chicago Police Department uniforms. Claimant spoke with the two plain clothes officers who told Claimant they were from the Illinois Department of Corrections Apprehension Unit and that they were there to execute a warrant that had been issued by the Department of Corrections. Claimant was then taken into custody. The officers from the Department of Corrections would not allow Claimant to take his van or give his keys to a co-worker when he was taken into custody. One of the Department of Corrections officers took Claimants keys and drove the van to the police station. That was the last time Claimant saw his van and the items of personal property that he had in the van.

Joe Kain, Claimants stepfather, testified at the trial that he attempted to retrieve Claimants van at the police station. Two of the men who were not in uniform but who were involved in Claimants arrest told Mr. Kain that they were from a State agency and that he could not have the van. One of these men told Mr. Kain that they would hold the keys to the van and that Mr. Kain could not have the van while Claimant was in custody.

Two of the Claimant’s former co-workers, Jesus Sanchez and Robert Dolatowski, testified that they saw men in plain clothes drive the van away after Claimant was arrested. When Claimant last saw his vehicle, it was parked in the Chicago police lot at the police station. Claimant did not sue the City of Chicago.

The departmental report indicates that Claimant was arrested by officers of the Chicago Police Department. Fugitive Apprehension Investigator, Greg Hannett, logged the warrant. The report indicates that it is the policy of the Department not to take control of personal property when arresting a fugitive with the Chicago Police Department. The apprehension investigation report indicates Claimant was arrested by the Chicago Police Department. The report indicates the arrest was made on July 27,1988.

A City of Chicago towing notice dated June 14, 1989, indicates Claimant’s vehicle was towed by the Chicago Police Department to the auto pound. Apparently the vehicle was destroyed although there is no evidence in the record to that effect. The only evidence presented was that Claimant never received his vehicle back. The towing notice, apparently sent to Claimant at a Chicago, Illinois, street address, indicates the vehicle would be sold for storage and towing charges.

The Respondent presented no testimonial evidence and the Respondent failed to file a brief. This is a very difficult case for the Court. The Court must decide the case based on the evidence. The Court cannot decide the case based on innuendo, argument not based on evidence, and guesswork. The only evidence before the Court was that an agent of Respondent took sole possession of the Claimant’s personal property against the apprehension unit’s policy not to take control of personal property.

The Claimant testified that the plain clothes State officers took the property and this testimony was corroborated by Claimants witnesses. The Respondent presented no evidence in opposition. The State has a duty to safeguard an inmates property through the use of reasonable care and a duty to return the property to the inmate. The loss of bailed property raises a presumption of negligence. (Holland v. State (1992), 45 Ill. Ct. Cl. 343.) In this case, it is undisputed in the evidence that the fugitive unit took control and possession of Claimants property. A bailment was created and the Respondent failed to rebut the presumption of negligence. While the Respondent probably could have rebutted the presumption of negligence and proved what occurred to the vehicle, for reasons unknown to the Court, die Respondent failed to present any evidence upon which die Court could find the presumption rebutted. The Court of Claims is a real court. Rules of evidence are followed in this Court. An adversarial process requires that the Claimant and Respondent present their cases. The Court cannot, and will not, be anything but neutral in the process.

Rased on the evidence before the Court, we find that Respondent is hable for the loss of Claimants property.

The issue of damages is much more difficult. For some unknown reason, Claimant failed to bring receipts to Court to corroborate his testimony in regard to damages. The Claimant must prove his damages by a preponderance of the evidence in order to prevail. (Rivera v. State (1985), 38 Ill. Ct. Cl. 272.) The age and nature of the property must be taken into consideration in making an award. (Stephenson v. State (1985), 37 Ill. Ct. Cl. 263; Lindsey v. State (1993), 45 Ill. Ct. Cl. 121.) Claimant proved to the Courts satisfaction that he owned the van. His only proof as to value was that he purchased the van for $2,800 the year before. Claimant presented no documents of proof as to the fair market value and ownership of the tools. His testimony indicated a purchase price figure of $1,091.44. Claimant testified that in October of 1987, he put $460 worth of tires on the van. However, Claimant failed to enter into evidence any receipts for the tires or testimony as to their fair market value on the date of loss. The hot dog cart also lacks a fair market value on tire date of loss and proof of ownership. The amount of depreciation as to each item of property is also lacking from the evidence. However, rather than deny the claim, the Court will attempt to set fair damages for Claimants loss which includes a reasonable amount for depreciation. We will award nothing for the alleged lost tools as there was-no corroborating evidence as to the amount of tools in the van and the age of the tools. We will award Claimant $2,000 for the van and tires and $1,000 for the hot dog vending cart.

For the foregoing reasons, Claimant is awarded $3,000 in full and complete satisfaction of his claim.