Mormat Electrical & Construction Services, LLC v. Hunter Construction Services, Inc. ( 2019 )

2019 IL App (5th) 170316
NOTICE
Decision filed 04/18/19. The
text of this decision may be NO. 5-17-0316
changed or corrected prior to
the filing of a Peti ion for
Rehearing or the disposition of
IN THE
the same.
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
______________________________________________________________________________
MORMAT ELECTRICAL & CONSTRUCTION ) Appeal from the
SERVICES, LLC, ) Circuit Court of
) St. Clair County.
Plaintiff-Appellee, )
)
v. ) No. 15-L-197
)
HUNTER CONSTRUCTION SERVICES, INC., ) Honorable
) Christopher T. Kolker,
Defendant-Appellant. ) Judge, presiding.
______________________________________________________________________________
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
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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
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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.
¶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
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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
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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,
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.
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¶ 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,
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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
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
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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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2019 IL App (5th) 170316
NO. 5-17-0316
IN THE
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
MORMAT ELECTRICAL & CONSTRUCTION ) Appeal from the
SERVICES, LLC, ) Circuit Court of
) St. Clair County.
Plaintiff-Appellee, )
)
v. ) No. 15-L-197
)
HUNTER CONSTRUCTION SERVICES, INC., ) Honorable
) Christopher T. Kolker,
Defendant-Appellant. ) Judge, presiding.
______________________________________________________________________________
Opinion Filed: April 18, 2019
______________________________________________________________________________
Justices: Honorable Judy L. Cates, J.
Honorable Thomas M. Welch, J., and
Honorable Melissa A. Chapman, J.
Concur
______________________________________________________________________________
Attorney Daniel C. Lytle, HeplerBroom LLC, 130 North Main Street,
for P.O. Box 510, Edwardsville, IL 62025-0510
Appellant
______________________________________________________________________________
Attorneys Roger W. Pecha, Laura M. Robb, Jenkins & Kling, P.C., 150 North
for Meramec Avenue, Suite 400, St. Louis, MO 63105
Appellee
______________________________________________________________________________