Appeals Court Awards Damages to Subcontractor, Denying Set-Off For General Contractor 

An electrical subcontractor sued the general contractor after the general contractor withheld $58,000. The general contractor claimed that it was owed a setoff for work performed by other electricians, but the trial court found that the money spent by the general contractor was not within the scope of the original agreement, and the electrical contractor had performed additional work and worked overtime to complete the project, despite delays caused by other contractors. The Illinois appellate court affirmed, finding that the trial court had not made a determination against the manifest weight of the evidence.

Hunter Construction Services entered into a general contract to construct a Buffalo Wild Wings restaurant in Dickinson, North Dakota. Hunter had built 14 similar stand-alone Buffalo Wild Wings prior to the North Dakota project. Hunter reached out to Mormat Electrical & Construction Services, LLC to be the electrical subcontractor on the project. Mormat had worked on other Buffalo Wild Wings projects and understood the general scope and labor requirements, even though the North Dakota project was larger than most. Mormat agreed, and Hunter and Mormat entered into an oral subcontract for electrical work. The electrical budget was $135,000, and 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 the equipment connections related to heating and cooling, kitchen appliances, and mechanical equipment. The scope of work necessitated a four to five man electrical crew.

Prior to entering into the contract, Mormat, a nonunion contractor, informed Hunter that 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 need to be present on site to pull the necessary permits and perform inspections. Integrity Electrical was hired directly by Hunter on a time and material basis to provide the permit and supervision for the project.

The project began in August 2014, with Mormat and Integrity both having two electricians on site. After some issues arose on the job, Integrity pulled its permit. For an extended period of time, little work was done. During this time, Hunter directed Mormat to work at night or at times when inspectors were not present. Integrity eventually returned to the job, but it was significantly behind schedule. Mormat worked overtime to get the project completed, and also performed substantial work outside the scope of its original agreement. Mormat eventually submitted invoices for $145,731.25, of which Hunter paid $77,000. Mormat believed it was entitled to at least the remaining $58,000 of the electrical budget, while Hunter argued that it was entitled to a setoff for payments to other electricians. Mormat then sued. The trial court ultimately held that the subcontract did not include the costs of Integrity’s work, and thus Integrity’s costs were not chargeable against the $135,000 contract price and Mormat was not responsible for Integrity’s expenses. Hunter then appealed.

The appellate panel began by finding that it was clear from the evidence that Mormat agreed to provide all labor and material needed for the electrical wiring for the project, and that the parties all understood that Mormat could not perform all of the work in the contract because it did not have an employee licensed in North Dakota. The panel stated that while it was true that Integrity performed some of the work that was in the initial scope of the contract Mormat had with hunter, Mormat had performed additional work outside of the scope of the agreement, including carpentry services when the project was shut down. The panel stated that the expenses incurred because Hunter hired Integrity could not be charged against Mormat’s contract, as to do so would be to shift the risk of expenses from Hunter to Mormat. The panel concluded by stating that Mormat performed the work requested of it, substantial additional work, worked overtime and completed the project despite delays that were not its fault. Considering all this, the panel continued, the trial court’s determination was not against the manifest weight of the evidence. The panel, therefore, affirmed the decision of the trial court.

You can review the full decision of the Court here.

Super Lawyers named Chicago breach of contract lawyer Peter Lubin a Super Lawyer and Chicago business dispute attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Oak Brook and Elmhurst business dispute lawyers have over thirty years of experience in litigating, intellectual property cases including copyright infringement and trade secret cases, insurance coverage disputes, franchise and dealer termination, breach of contract, complex class action, copyright, partnership, and shareholder oppression suits, non-compete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes. Our Downers Grove and Wheaton franchise and dealer termination lawyers, civil litigation lawyers, and copyright attorneys handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely-held businesses and employee breaches of fiduciary duty. We also assist Chicago, Evanston and Oak Brook area businesses and business owners who are victims of fraud. You can contact us by calling at 630-333-0333.  You can also contact one of our business dispute lawyers near Oak Brook and Chicago online here.

Contact Information