Korte & Luitjohan Contractors, Inc. v. Thiems Construction and IDOT (5th Dist, Doc. No. 5-05-0516)
In this case, subcontractor brought a suit against the Illinois Department of Transportation (IDOT), and the general contractor on a project. The bid on the project was to perform services for the general to excavate a trench, install a sewer pipe, and supply backfill. The contract required that the parties abide by the IDOT Standard Specifications and the plans specified in the general contract. The suit alleged a claim for foreclosure under the mechanics lien act, in which IDOT was named a party, a claim for breach of contract, and a claim that the GC had violated the State Prompt Payment Act (30 ILCS 540/0.01 et seq.) The trial court dismissed IDOT from the case, and found that the IDOT specs precluded the breach of contract and lien actions. The trial court then determined that retaining payment was improper and awarded interest under the State Prompt Payment Act. The parties appealed.
Here, the appellate court concluded that the trial court was right in dismissing IDOT given that the mechanics lien act authorizes the funds to be set aside before resolution of the issue, but does not authorize making a state agency party to a foreclosure action. The opinion discusses a topic that should be of interest to those contracting with the state when it considers payment under the mechanics lien act. §23 of the act authorizes subcontractor remedies through liens against public funds for state projects, but the act has never applied to contractors. Additionally, suing pursuant to this section means that a subcontractor will be bringing an action for an accounting within 90 days of providing the required notice, and the only way to bring in an officer of the state under the act is in an action claiming they failed to comply with §23 of the statute.
The breach of contract claim filed against the GC was premised on an interpretation of IDOT Standard Specifications. (This may bore some of our readers, but it is actually pertinent to anyone looking for courts to favorably interpret government specs.) §208.03(b) governs methods of measurement quantities for trench backfill, and contains a clause stating that any backfill required in excess of the maximum quantity as calculated but he specs "shall be furnished by the Contractor at his/her own expense." The plaintiff argued that there was no established width to the trench and tried to say that use of the word "shall" in §550.04 (the IDOT spec which states exactly how wide a trench should be on such a project) didn't really mean shall, but meant something like "shall not be less than," which, you don't have to be Bryan A. Garner to understand, is bad form in just about every school of legal interpretation... especially when the court can read other sections of the IDOT specs and see that when IDOT meant to set a minimum limit on something, it used some variant of "shall not be less than" and not just "shall."
Utilizing this reading of §208.03 the court upheld the trial courts determination that the plaintiff was not owed monies for the excess it was required to provide and the dismissal of the breach of contract claim was proper.
With regard to the final argument, the court held that it was IDOT that failed to make prompt payments to the GC who, pursuant to provisions of the contract and federal regulations was then to turn around and hand the money over to the plaintiff. Contrary to the trial court's opinion, the GC was not in error when it did not turn over monies that had not been forwarded by IDOT. The GC would only be in error if IDOT had turned over the funds and then the GC failed to pay them to the subcontractor. The appellate court also said that the trial court had properly interpreted the State Prompt Payment Act, but because the GC did not owe money to the plaintiff, there was no violation of the act.
[NOTE: In addition to the State Prompt Payment Act, there are other prompt payment acts that can be alternative sources for causes of action regarding getting paid such as the Contractor Prompt Payment Act, the Local Government Prompt Payment Act, any of which, along with a host of other methods, can be utilized under the law in securing payments owed.]
