Construction Law

Condominium Homeowners Association (HOA) discovered that condominium roof was leaking and filed suit against real estate developer which had hired 2 roofing contractors to do roofing work on building it was constructing. Court erred in finding that 2 roofing subcontractors had no duty to defend developer against HOA's claims of breach of warranty and breach of implied warranty of habitability under indemnity provisions of their contracts. Court properly dismissed developer's counterclaims against 2 roofing subcontractors as to their duties to indemnify it against HOA's fraud claims. Indemnity provisions between developer and roofing subcontractors do not violate Construction Contract Indemnification for Negligence Act, as they do not allow developer to seek indemnification based on its own negligence or wrongdoing.(ELLIS and McBRIDE, concurring.)

(Court opinion corrected 10/25/16.) Parties' subcontract requires Contractor to pay Subcontractor, and does not impose any condition precedent on such a fundamental obligation. Thus, Contractor is liable for amounts due to a subcontractor even if property owner fails to make payment to Contractor for Subcontractor's work.(GORDON and LAMPKIN, concurring.)

Plaintiff construction company brought breach-of-contract and tort claims related to construction project in New York, and filed in Kane County pursuant to forum-selection clause in parties' contract.Court properly found that New York law rendered forum-selection clause void and unenforceable and that New York was the only proper forum. Under choice of law principles, application of Illinois law would be contrary to a fundamental New York policy, and New York has a materially greater interest than Illinois in determination of this issue. Thus, court properly dismissed case so that it may be refiled in New York. (SCHOSTOK and McLAREN, concucrring.)

Court properly entered judgment for $257,765 in favor of general contractor and against real estate developer. Contracts implied in fact arise from promissory expression that may be inferred from facts that show parties' intent to be bound. Thus, existence of contract implied in fact is a question for trier of fact to decide, and court's finding that contract existed is not against manifest weight of evidence. Plaintiff was paid in excess of $18 million by Defendant for its work on other construction projects performed under unsigned draft contracts, as was the case here. Defendant did not reject Plaintiff's work or instruct Plaintiff to cease work at any time.  Given ample evidence showing Defendant did not disclose its agency relationship to Plaintiff, court reasonably concluded Defendant is personally liable on contract implied in fact. (LAMPKIN and BURKE, concurring.)

As Defendant roofing company was contracted to perform work on roof, HOA's claim for breach of warranty and breach of implied warranty of habitability arising out of faulty work on roof falls within scope of indemnification agreement that counterdefendant developer entered into with roofing company. Under plain language of indemnity provision between developer and other roofing contractor had duty to defend and indemnify developer as to negligence and breach of implied warranty of habitability claims filed by HOA. Claim based on implied warranty of habitability is a contract claim and roofing company is obligated to defend and indemnify developer under its contract.(ELLIS and McBRIDE, concurring.)

(Modified upon denial of rehearing 8/2/16.) Jury found general contractor negligent in supervising construction site where Plaintiff was injured. General contractor's insurer refused to pay damages to Plaintiff, who was employee of subcontractor, claiming that general contractor had not complied with policy endorsement. Equitable principles estop insurer from asserting that endorsement against Plaintiff.  Thus, court erred in granting summary judgment for insurer and should have been granted to Plaintiff. Insurer had told general contractor, years prior to trial, that it was limiting its liability to $50,000, but never disclosed this to Plaintiff  in discovery. (PIERCE and SIMON, concurring.)