Court Opinion

ID: 4412659
Source: CourtListenerOpinion
Date Created: 2019-06-28 21:03:55.479478+00
Date Added: 2024-06-11T14:52:42.283401
License: Public Domain

Digitally signed by
                                                                            Reporter of Decisions
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                          Illinois Official Reports                         the accuracy and
                                                                            integrity of this
                                                                            document
                                 Appellate Court                            Date: 2019.06.27
                                                                            15:37:42 -05'00'

  Mormat Electrical & Construction Services, LLC v. Hunter Construction Services,
                         Inc., 2019 IL App (5th) 170316

Appellate Court      MORMAT ELECTRICAL & CONSTRUCTION SERVICES, LLC,
Caption              Plaintiff-Appellee, v. HUNTER CONSTRUCTION SERVICES,
                     INC., Defendant-Appellant.

District & No.       Fifth District
                     Docket No. 5-17-0316

Filed                April 18, 2019

Decision Under       Appeal from the Circuit Court of St. Clair County, No. 15-L-197; the
Review               Hon. Christopher T. Kolker, Judge, presiding.

Judgment             Affirmed.

Counsel on           Daniel C. Lytle, of HeplerBroom LLC, of Edwardsville, for appellant.
Appeal
                     Roger W. Pecha and Laura M. Robb, of Jenkins & Kling, P.C., of
                     St. Louis, Missouri, for appellee.

Panel                JUSTICE CATES delivered the judgment of the court, with opinion.
                     Justices Welch and Chapman concurred in the judgment and opinion.
                                               OPINION

¶1       Plaintiff, Mormat Electrical & Construction Services, LLC (Mormat), an Illinois limited
     liability company, brought suit against defendant, Hunter Construction Services, Inc. (Hunter),
     an Illinois corporation, for breach of an oral contract related to electrical services performed
     during the construction of a Buffalo Wild Wings restaurant in Dickinson, North Dakota. After
     a bench trial in the circuit court of St. Clair County on December 20, 2016, the trial court ruled
     in favor of Mormat and awarded Mormat the principal sum of $59,400 plus interest. Hunter
     appeals contending the court did not properly interpret the oral contract between Mormat and
     Hunter and erred in awarding Mormat $58,000 of the total sum due under the contract. Hunter
     also contends the court erred in disregarding a November 21, 2014, unconditional lien waiver
     and release. We affirm.
¶2       The evidence reveals that in July 2014, Hunter entered into a general contract to construct a
     Buffalo Wild Wings restaurant in Dickinson, North Dakota. Hunter, owned by Hunter Yung
     and his wife, had built 14 similar stand-alone Buffalo Wild Wings prior to the North Dakota
     project. After receiving a contract from the owner of the Buffalo Wild Wings project, Hunter
     advised the electrical subcontractor he originally had chosen that the project was ready to
     proceed. The subcontractor unfortunately backed out of the bid. At this point, Hunter reached
     out to Mormat, owned by Christopher Carney and his wife, Denise, to see if Mormat could
     perform the electrical work for the restaurant. Mormat had worked on other Buffalo Wild
     Wing projects and understood the general scope and labor requirements even though this
     particular project was a little larger than most. Mormat agreed, and Hunter entered into an oral
     subcontract with Mormat for the electrical work. The electrical budget, per the general contract
     for the electrical scope of work, was $135,000. Under the contract, Mormat was responsible
     for all the electrical labor and wiring over 120 volts, including the wiring and installation of all
     light fittings and fixtures as well as all equipment connections related to heating and cooling,
     kitchen appliances, and mechanical equipment. In order to timely perform, the expected scope
     of work necessitated a four to five man electrical crew.
¶3       Prior to entering into the oral contract, Mormat, a nonunion contractor, informed Hunter it
     could not acquire a North Dakota electrical permit because it did not employ an electrician
     capable of being licensed in North Dakota. Hunter and Mormat agreed that a local contractor
     would be needed to pull the necessary electrical permits, perform inspections, and be on site
     throughout the project. Integrity Electrical, owned by Brandon Dimmick, a licensed North
     Dakota electrician, was hired on a time and material basis to provide the electrical permit and
     supervision for the project to meet North Dakota code requirements. Integrity was paid directly
     by Hunter.
¶4       In early August 2014, the electrical work began on the restaurant. Both Mormat and
     Integrity had two electricians on site. After some issues arose on the job, however, Integrity
     pulled its permit. For an extended period of time, little electrical work was done. During this
     “shut down,” Hunter directed Mormat to work at night or at times when inspectors were not
     present. Eventually Integrity came back to the job. By the end of the project, Integrity had
     submitted 10 invoices covering one to two employees for services between August 22 and
     December 8, 2014, totaling approximately $72,715. No back-charge was tendered to Mormat
     for Integrity’s work.

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¶5        By the time Integrity returned to the project, the job was significantly behind schedule.
     Mormat worked overtime in order to help get the project completed and performed substantial
     extra work beyond its original scope. Some of the items included extra labor and materials for
     installation of a fire alarm, trenching for electrical wire, carpentry work, and correcting others’
     work, in addition to extra costs incurred during the downtime when the permit was pulled, all
     of which increased Mormat’s overhead. While Integrity performed some of Mormat’s base
     contract work, the cost savings compared to Mormat’s extra work was, according to Mormat, a
     wash. Mormat performed and completed its work on the project during the period of August 1,
     2014, through December 8, 2014. Mormat submitted invoices to Hunter totaling $145,731.25
     of which Hunter paid Mormat $77,000. Given that the contract price was $135,000, Mormat
     believed it was owed $58,000, even though the difference was in fact higher. Hunter did admit
     that Mormat was entitled to an additional $1400 for materials for a low voltage fire alarm,
     which is not a part of this appeal, but otherwise did not believe Mormat was entitled to any
     additional monies. Rather, Hunter claimed a right of setoff or credit for work performed within
     the scope of the subcontract by other electricians.
¶6        The trial court ultimately held that the electrical subcontract did not include the costs of
     Integrity’s work, consequently the costs associated with Integrity were not chargeable against
     the $135,000 contract price and Mormat was not responsible for Integrity’s expenses. The
     court therefore awarded Mormat $58,000 that was still due under the oral contract, plus
     interest.
¶7        Hunter argues on appeal that the trial court erred in interpreting the oral subcontract
     between Hunter and Mormat to exclude any labor and materials for electrical services provided
     by Integrity that were within the scope of the electrical subcontract. Hunter points out the court
     failed to assess whether Mormat fully performed under the contract and further failed to issue
     Hunter a credit for Mormat’s partial performance. Additionally, Hunter contends the trial court
     failed to acknowledge the effect of the unconditional lien waiver, dated November 19, 2014,
     and signed by Mormat.
¶8        Generally the construction or interpretation of a contract is a matter to be determined by the
     trial court as a question of law with de novo review by this court. See Avery v. State Farm
     Mutual Automobile Insurance Co., 216 Ill. 2d 100, 129 (2005). When an oral contract is
     involved, however, the standard of review is different because the trial court is required to
     observe the conduct and determine the credibility of the witnesses when making findings of
     fact about the existence and terms of an oral contract (see Emmenegger Construction Co. v.
     King, 103 Ill. App. 3d 423, 427 (1982)). The intent of the parties to an oral contract is
     determined by the trier of fact, and a reviewing court should not set aside the trial court’s
     findings unless they are contrary to the manifest weight of the evidence. Ceres Illinois, Inc. v.
     Illinois Scrap Processing, Inc., 114 Ill. 2d 133, 141 (1986). A judgment is against the manifest
     weight of the evidence only when an opposite conclusion is apparent or when the findings
     appear to be unreasonable, arbitrary, or not based on the evidence. Ceres Illinois, 114 Ill. 2d at
     142.
¶9        It is clear from the evidence presented that Mormat agreed to provide all labor and material
     needed for the electrical wiring for the restaurant project. It is also clear that the parties
     understood that Mormat could not perform all of the electrical work under the contract because
     Mormat did not have an employee who was licensed in North Dakota who could obtain the
     necessary permits. Hunter agreed to provide the permit and supervision at Hunter’s own cost,

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       and never back-charged Mormat for any of the expenses associated with Integrity, the
       subcontractor who could obtain the necessary permits. The testimony revealed that neither
       Mormat nor Integrity believed or were informed that Integrity was working for Mormat or that
       the two companies were somehow in a joint venture. We note that it is impossible to form a
       joint venture without the joint venture’s partners having actual knowledge and intent to form
       such an enterprise. O’Brien v. Cacciatore, 227 Ill. App. 3d 836, 843 (1992). Hunter maintains
       still that it is entitled to a credit against the contract for the electrical work that Integrity
       performed on the project in place of Mormat. See Royal Ornamental Iron, Inc. v. Devon Bank,
       32 Ill. App. 3d 101, 108 (1975). While it is true that Integrity and other electricians provided
       some portion of the original scope of Mormat’s contracted-for work, Mormat also provided
       additional services to Hunter beyond the original scope of the work, including carpentry
       services while the job was shut down for lack of an electrical permit. As the trial court
       concluded, the expenses incurred because Hunter hired Integrity cannot be charged against
       Mormat’s contract. To do so would be shifting the risk of expenses from Hunter to Mormat
       beyond any reasonable interpretation of their contractual relationship.
¶ 10        Hunter counters that Mormat signed an unconditional waiver and release for all labor and
       materials through November 19, 2014, in consideration for another payment of $10,000.
       Hunter points out that when a written release is clear and explicit, the court must enforce the
       release as written, with the meaning and intention of the parties being gathered from the face of
       the document. First National Bank of Geneva v. Lively, 211 Ill. App. 3d 1, 4 (1991). According
       to Hunter, the court erred in disregarding the language of the unconditional lien waiver and
       release and therefore should not have awarded Mormat any additional monies on the contract.
       The court determined, however, that neither party thought that the signing of the waiver and
       release documents had the effect of preventing Mormat from getting paid what it was still
       owed on the oral contract. And, even if the November waiver were to be construed as a full
       release, then there was a mutual mistake of fact as to the idea that it would release Hunter from
       paying Mormat or that Mormat was waiving any amounts still owed under the contract. We
       agree.
¶ 11        General contractors routinely require execution of lien waivers in order for payments to be
       processed. See Edward Hines Lumber Co. v. Dell Corp., 49 Ill. App. 3d 873, 883-84 (1977).
       Such was the practice in this instance. Mormat signed a series of dated lien waivers and
       releases during the course of the project in order to be paid. In fact, Hunter required Mormat to
       sign lien waivers to get paid, which in turn allowed Hunter to get paid on the original
       construction contract, and allowed the restaurant to get opened. Even though the lien waivers
       claimed all amounts owing up to the signature date had been paid, that certainly was not true in
       this instance. The evidence revealed that neither party thought that signing the documents had
       the effect of preventing Mormat from getting paid what was owed on the oral contract.
¶ 12        Hunter points out that the November unconditional lien waiver at issue here specifically
       waived and released “any and all *** claims against the Project, Owner, Surety, Lender, if any,
       and any other parties who have an interest in the Project and any other individual or entity, for
       such labor, skills, equipment, tools, supplies, services or associated items furnished prior to
       and including the 19th day of November, 2014.” Mormat had not received any payment on the
       contract for several weeks at this point and substantial monies were owed to Mormat. There
       was no testimony adduced to indicate that Mormat intended to release or waive payment of the

                                                   -4-
       remainder of the funds due to Mormat for work and materials already provided for the project.
       In fact, as Denise Carney testified on behalf of Mormat, when asked:
                    “Q. And was there ever any discussion with you and brought to your attention that
                if you signed a lien waiver you would somehow be giving up your rights to get paid for
                the rest of your work?
                    A. No, and they—they were well aware that this was for payouts and they owed
                additional amounts.”
       The only reason Mormat signed the November lien waiver was because Hunter represented
       that, in order to get paid any monies, the waiver had to be signed. The evidence also revealed
       that Hunter requested additional funds to pay Mormat for electrical work after the lien waiver
       had been signed, and Mormat still had men on site working at the time of signing. We agree
       with the trial court that neither party thought that the signing of the waiver and release
       documents had the effect of preventing Mormat from getting paid what it was still owed on the
       oral contract.
¶ 13       Mormat performed the work requested of it under the oral contract, performed substantial
       additional work, worked overtime, and completed the project, despite delays that were not
       Mormat’s fault. After taking all of this into consideration while weighing the credibility of the
       witnesses, the trial court entered judgment in favor of Mormat for $59,400 plus interest, the
       amount still owed under the oral subcontract plus the additional materials that Hunter
       acknowledged were due. Under the circumstances presented, the court’s determination was not
       against the manifest weight of the evidence.
¶ 14       For the foregoing reasons, we affirm the judgment of the circuit court of St. Clair County.

¶ 15      Affirmed.

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