Justia Construction Law Opinion Summaries

The Homeowners Association alleged that M/I’s subcontractors caused construction defects in a Hanover Park development by using defective materials, conducting faulty workmanship, and failing to comply with building codes. The Association alleged that it would be required to repair the defects and “damage to other property caused by the [d]efects.” M/I demanded a defense from Acuity as the additional insured on a commercial general liability policy that Acuity issued to one of its subcontractors on which M/I was an additional insured. Acuity sought a declaratory judgment, arguing that the complaint failed to allege any “property damage” caused by an “occurrence” as those terms are defined by the policy and interpreted by Illinois law. The circuit court granted Acuity summary judgment.The Illinois Supreme Court held that the allegations sufficiently fall within the initial grant of coverage requirement that there be “property damage” caused by an “occurrence.” The court remanded for further consideration of whether policy exclusion bar coverage. To hold that all construction defects that result in property damage to the completed project are always excluded would mean that the exclusions in the policy related to business risk become meaningless. The business risk exclusions contemplate that some construction defects that result in property damage are covered and some are not, depending on various factors. View "Acuity v. M/I Homes of Chicago, LLC" on Justia Law

The Village alleged that the defendants breached a 2003 recorded annexation agreement executed by the Trustee that was then the legal owner of the property, which now consists of an annexed 114-acre subdivision. The Village alleged that the defendants were subject to the annexation agreement as successors to the Trustee when they purchased undeveloped portions of the property from Plank, which had acquired the property from the Trustee. The Village alleged that the defendants refused its request for a letter of credit in the amount proportionate to the number of lots the defendants owned in the subdivision, to secure the completion of roads in the subdivision.The defendants argued that, although the annexation agreement was a covenant that ran with the land, it did not confer successor status to an entity that purchased only a portion of the property subject to annexation, as opposed to the whole of the property. The Appellate Court reversed the dismissal of the action. The Illinois Supreme Court affirmed. Reading the annexation agreement as a whole, the court found that its plain language required its provisions to be binding and enforceable on the parties’ successors. Defendants are successors in title to the landowner who agreed to those obligations. The obligations imposed upon any particular purchaser depend upon the obligations of the original developer that remain unsatisfied with respect to the specific parcel sold. View "Village of Kirkland v. Kirkland Properties Holdings Co., LLC I" on Justia Law

Munoz sued general contractor, Bulley & Andrews, for injuries he sustained while an employee of its subcontractor, Bulley Concrete. Bulley & Andrews had paid workers’ compensation insurance premiums and benefits for the subcontractor and its employees. Each company has its own distinct federal tax identification number and files separate federal and state income tax returns. The companies have different presidents and employ different workers.The circuit court dismissed, finding that the genderal contractor was immune from the lawsuit under the exclusive remedy provisions of the Workers’ Compensation Act (820 ILCS 305/5(a). The appellate court affirmed.The Illinois Supreme Court reversed. The exclusive remedy provisions do not extend to a general contractor who is not the employee’s immediate employer. Immunity does not hinge on the payment of benefits. Bulley & Andrews had no legal obligation to provide workers’ compensation insurance for Bulley Concrete employees. The fact that Bulley Concrete was a subsidiary of Bulley & Andrews is of no import. If a parent company and its subsidiary are operated as separate entities, only the entity that was the immediate employer of the injured worker is entitled to immunity. The Act bars an employee from bringing a civil suit directly against his employer but does not limit the employee’s recovery from a third-party general contractor. View "Munoz v. Bulley & Andrews, LLC" on Justia Law

Restore was asked to mitigate and repair significant fire damage at Proviso East High School, having provided similar service to the District in the past. The District’s customary practice when contracting for repair and payment of losses covered by insurance was to proceed without a recorded vote of its Board. The fire loss was covered by insurance. The District’s superintendent executed contracts with Restore.The District was subject to the School District Financial Oversight Panel (FOP) and Emergency Financial Assistance Law (105 ILCS 5/1B-1) and the Financial Oversight Panel Law (105 ILCS 5/1H-1). The FOP’s chief fiscal officer attended construction meetings and approved numerous subcontracts, quotations, bids, sales orders, change orders, and invoices. Although there was no recorded vote, “a majority of the Proviso Board knew and informally approved" the work. Restore was paid by the insurers for all but $1,428,000. Restore sued, seeking recovery from the District based on quantum meruit. The District argued that it had no obligation to pay because the contracts had not been let out for bid and approved by a majority vote as required by the School Code (105 ILCS 5/1-1).The Illinois Supreme Court affirmed the reinstatement of the case following dismissal. The failure of a governmental unit to comply with required contracting methods is not fatal to a plaintiff’s right to recover based on quasi-contract or implied contract principles. The Board was subject to the FOP; the FOP was fully apprised of and approved the work. Any misconduct was on the part of the Board; allowing Restore to recover presents no “risk of a raid on the public treasury.” View "Restore Construction Co., Inc. v. Board of Education of Proviso Township High Schools District 209" on Justia Law

The Metropolitan Water Reclamation District entered into a contract with the Joint Venture, for the “Primary Settling Tanks and Grit Removal Facilities” project to be carried out at the Calumet water reclamation plant. Under the contract, the Joint Venture was responsible to determine the procedures and methods for the work and furnish all temporary structures and safety equipment and was responsible for the safety of all personnel on the worksite. The contract required the Joint Venture to submit plans for the work to the District’s engineer but state that the engineer’s acceptance of the plans did not relieve the Joint Venture of its responsibility for safety, maintenance, and repairs on the project. Andrews, a Joint Venture employee, suffered severe, career-ending head injuries while working on the project.In a suit alleging construction negligence, willful and wanton construction negligence, and loss of consortium, the District alleged immunity under the Local Governmental and Governmental Employees Tort Immunity Act (745 ILCS 10/2-109, 2-201). The Illinois Supreme Court concluded that the District was not entitled to summary judgment of immunity. The Act immunizes a local governmental entity from liability for injuries arising out of its employee’s acts or omissions while determining policy and exercising discretion. The District did not provide evidence that its employees made discretionary or policy decisions with respect to the two-ladder configuration that resulted in Andrews’s injuries. Seven witnesses testified that no District employees weighed in on worksite safety decisions. View "Andrews v. Metropolitan Water Reclamation District of Greater Chicago" on Justia Law

The owners of units in Sienna Court Condominiums, a newly-constructed 111-residential-unit Evanston property sued, alleging that the developer, TR, sold the units with latent defects that resulted in water infiltration and other conditions that rendered the individual units and common areas unfit for habitation. The complaint alleged breach of an express warranty and breach of an implied warranty of habitability against TR, the general contractor, the architect and engineering design firms, material suppliers and several subcontractors. TR and the general contractor were bankrupt. The unit owners obtained relief from the automatic bankruptcy stay. TR and the general contractor had two separate insurance policies, each providing coverage of $1 million per occurrence with $2 million aggregate limits. Plaintiffs had recovered approximately $308,000 from TR through a warranty escrow fund required by Evanston ordinance. Subcontractors and the material suppliers asserted that they were not subject to an implied warranty of habitabililty. The circuit court denied their motion to dismiss. The Illinois Supreme Court reversed, holding that a purchaser of a newly constructed home may not assert a claim for breach of an implied warranty of habitability against a subcontractor who took part in the construction of the home, where the subcontractor had no contractual relationship with the purchaser. View "Sienna Court Condominium Assoc. v. Champion Aluminum Corp." on Justia Law

In 2006, Union Pacific Railroad (UP) invited contractors to bid on the purchase and removal of three abandoned railroad bridges that spanned Chicago streets. Happ’s, a scrap contractor, had worked railroads for 25 years recycling steel and railroad ties. Carney (dba Chicago Explosive) had a 20-year business relationship with Happ; the two entered “a handshake agreement” concerning the bid. UP accepted Happ’s bid, unaware of the agreement between Happ’s and Carney. Removal of the first bridge proceeded without incident. During the demolition of the larger Polk Street Bridge, a crossbeam snapped. The west girder, which was not secured or supported, fell. Plaintiff, standing north of the bridge on a gravel-covered steel plate, slid forward under the falling girder. Plaintiff’s legs were severed below his knees. Plaintiff sued UP, alleging negligence in failing to discover and disclose to Happ’s or plaintiff the presence of the steel plate and in hiring Happ’s. The trial court granted UP summary judgment. The appellate court reversed. The Illinois Supreme Court reinstated summary judgment. UP owed plaintiff no duty. There was nothing in the contract indicating that UP retained control such that Happ’s was not entirely free to do the work in its own way, nor was UP’s conduct inconsistent with the agreement. Plaintiff was an employee of Carney, not a “bystander.” UP did not build the bridge, did not possess the plans for the bridge, did not use the bridge, and had no reason to know that the steel floor plate extended several feet into the roadbed, precluding plaintiff’s premises liability claim. View "Carney v. Union Pacific R.R. Co." on Justia Law

In 2005, Masterklad built a house in Glenview, including a brick patio that extended off the rear of the house. Because the ground underneath the patio sloped down, dirt and gravel were placed underneath it to support the bricks and make them level with the house's rear entrance. A retaining wall was built to contain the fill. In 2007, the house was sold by Masterklad to a Lubeck for $1,710,000. In the contract Lubeck “knowingly, voluntarily, fully and forever,” waived the implied warranty of habitability in exchange for an express warranty provided by Masterklad, with a one-year term. In 2010, Lubeck sold the house to Fattah, for $1,050,000, with a document stating that the house was being sold “as is” and that the seller made no representations or warranty regarding its condition. In 2011, parts of the retaining wall around the rear patio gave way and part of the patio collapsed. The owner sued. The circuit court found that the patio wall had given way due to latent defects in its construction, but that plaintiff could not recover because Masterklad had executed a valid, enforceable waiver of the implied warranty of habitability with Lubeck. The appellate court reversed. The Illinois Supreme Court reversed. The implied warranty of habitability may not be extended to a second purchaser of a house when a valid, bargained-for waiver of the warranty has been executed between the builder-vendor and the first purchaser. View "Fattah v. Bim" on Justia Law

In 2011, Henderson Square Condominium Association sued, alleging: breach of the implied warranty of habitability, fraud, negligence, breach of the Chicago Municipal Code’s prohibition against misrepresenting material facts in marketing and selling real estate, and breach of a fiduciary duty. The defendants were developers that entered into a contract with the city for a mixed use project, the Lincoln-Belmont-Ashland Redevelopment Project. Sales in the project had begun in 1996. The trial court dismissed, finding that plaintiffs failed to adequately plead the Chicago Municipal Code violation and breach of fiduciary duty and that counts were time-barred under the Code of Civil Procedure (735 ILCS 5/13-214). The appellate court reversed. The Illinois Supreme Court affirmed. A condominium association generally has standing to pursue claims that affect the unit owners or the common elements. A question of fact remains as to whether defendants’ failure to speak about construction deficiencies or to adequately fund reserves, coupled with earlier alleged misrepresentations, amounted to fraudulent concealment for purposes of exceptions to the limitation and repose periods. It is possible that minor repairs, along with the limited nature of water infiltration, reasonably delayed plaintiffs’ hiring of professional contractors to open the wall and discover latent defects. The date when plaintiffs reasonably should have known that an injury occurred and that it was wrongfully caused was a question of fact. View "Henderson Square Condo. Ass'n v. LAB Townhomes, LLC" on Justia Law

Henderson Square Condominium Association sued the developers, alleging: breach of the implied warranty of habitability, fraud, negligence, breach of the Chicago Municipal Code’s prohibition against misrepresenting material facts in the course of marketing and selling real estate. The court dismissed with prejudice, finding that plaintiffs failed to adequately plead the Chicago Municipal Code violation and breach of fiduciary duty and that those counts were time-barred. The appellate court reversed the dismissal of those counts and the Illinois Supreme Court affirmed. The claims at issue are construction-related and governed by the limitation and repose of section 13-214 of the Code of Civil Procedure, but the fraud exception applied and issues of material fact remained concerning misrepresentations or actions that could support a finding of fraudulent concealment. The defendants were alleged to be “more than silent” regarding insulation and funding of the reserves. The Municipal Code allows private parties to seek damages under its provisions and there were allegations that defendants had a fiduciary duty to budget for reasonable reserves, given allegedly known latent defects. View "Henderson Square Condo. Assoc'n v. LAB Townhomes, LLC" on Justia Law