Lake County Grading Company v. Village of Antioch
985 N.E.2d 638
Ill. App. Ct.2013Background
- Plaintiff Lake County Grading Co. performed grading work in two Antioch subdivisions under Neumann’s contract with the Village; Neumann provided four performance bonds, not payment bonds; bonds did not expressly cover subcontractor payments.
- Neumann defaulted; Neumann filed bankruptcy 11/1/2007; plaintiff timely served bond and lien claims 2/18/2008.
- Plaintiff’s five-count complaint sought payment from the Village; Counts II and IV alleged third-party-beneficiary breach of contract.
- Trial court granted summary judgment for plaintiff on Counts II and IV; Village appealed.
- Bond Act section 1 read into the contract allegedly created a payment-bond obligation; court held plaintiff was a direct third-party beneficiary and claims timely under the four-year construction-contract statute of limitations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Bond Act read-in creates third-party beneficiary right? | Plaintiff argues Bond Act Section 1 read into contract grants third-party-beneficiary status. | Village argues no such third-party benefit when payment bond not expressly present; Shaw Industries bars claims. | Yes; plaintiff is a third-party beneficiary; Village breached. |
| Is Bond Act §2 180-day limit applicable to breach-of-contract claims? | §2 applies only to actions on the bond, not breach-of-contract claims. | Bond Act limits when suing on the bond; breach claim barred by 180 days. | No; §2 does not bar breach claims; contract four-year limit applies. |
| What is the proper statute of limitations for plaintiff’s breach-of-contract claims? | Construction-contract claim has four-year limit. | Bond Act’s 180-day period governs all related actions. | Four-year statute of limitations (735 ILCS 5/13-214) applies. |
Key Cases Cited
- Ardon Electric Co. v. Winterset Construction, Inc., 354 Ill. App. 3d 28 (2004) (bond read-in; subcontractor remedy under Bond Act implied in contract)
- East Peoria Community High School District No. 309 v. Grand Stage Lighting Co., 235 Ill. App. 3d 756 (1992) (Bond Act remedial; read into public works contracts)
- Shaw Industries, Inc. v. Community College District No. 515, 318 Ill. App. 3d 661 (2000) (bond-act limitations apply when contract not showing direct beneficiary)
- A.E.I. Music Network, Inc. v. Business Computers, Inc., 290 F.3d 952 (2002) (Seventh Circuit disavowed Shaw; breach claim not limited by Bond Act §2; four-year limit for breach claims)
- Martis v. Grinnell Mutual Reinsurance Co., 388 Ill. App. 3d 1017 (2009) (third-party beneficiary requires express contract language showing direct benefit)