Asset Recovery Contracting, LLC v. Walsh Construction Company of Illinois
980 N.E.2d 708
Ill. App. Ct.2012Background
- ARC entered a subcontract with Walsh to perform interior demolition at the Palmolive Building redevelopment, dated September 12, 2003; ARC executed March 19, 2004 and Walsh executed May 5, 2004.
- The project faced CFD order delaying demolition and Arden Agreement restrictions, plus financing and tenant occupancy issues affecting the schedule.
- Exhibit J rider modified time-related terms, including Walsh's right to adjust sequence and pace without monetary compensation and an altered claims process for any Subcontractor requests.
- Revised schedules in October 2003 and January 2004 extended ARC’s work; ARC reviewed cost projections but did not initially seek delay damages.
- Section 5.1 of the subcontract waived damages from site-resource allocations; Section 1.2 limited ARC’s rights to those provided in the subcontract; the prime contract limited delay damages and set time-extension as the sole remedy absent intentional interference.
- ARC sought delay damages and destruction-of-business damages; the trial court struck the destruction claim and the appellate court ultimately affirmed barring delay damages and rejecting extrinsic-evidence errors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether extrinsic evidence was properly used to interpret the subcontract's effective date and schedule | ARC contends extrinsic evidence should not alter the contract terms. | Walsh argues extrinsic evidence is permissible to interpret schedule and effective date when ambiguity exists. | Extrinsic evidence permitted for ambiguity; date ambiguity not required to be resolved, but harmless error on date. |
| Whether no damages for delay barred ARC's damages despite owner delays and schedule changes | ARC seeks delay damages due to owner-caused delays not contemplated by the parties. | No damages for delay clause bars such damages; carve-outs do not apply here. | Delay damages barred; exceptions not satisfied; ARC waived by conduct and contract. |
| Whether ARC's destruction of business claim could be struck | ARC contends destruction of business damages are recoverable under contract principles. | Consequence damages are barred by the subcontract and prime contract. | Destruction of business damages struck; barred by no-damages-for-consequential clause. |
Key Cases Cited
- Armstrong Paint & Varnish Works v. Continental Can Co., 301 Ill. 102 (Illinois 1921) (four-corners rule; parol evidence limited to ambiguities)
- River’s Edge Homeowners’ Ass’n v. City of Naperville, 353 Ill. App. 3d 874 (Ill. App. 1st Dist. 2004) (ambiguity requires extrinsic evidence; de novo contract interpretation)
- J&B Steel Contractors, Inc. v. C. Iber & Sons, Inc., 162 Ill. 2d 265 (Ill. 1994) (parol evidence allowed for schedule changes not contradicting fully integrated contract)
- Monahan v. Fidelity Mutual Life Insurance Co., 148 Ill. App. 171 (Ill. 1909) (effective date principles in contract execution)
- Grubb & Ellis Co. v. Bradley Real Estate Trust, 909 F.2d 1050 (7th Cir. 1990) (relation back of contract terms to earlier coverage; integration context)