November 1, 2012
Extras on a construction project are perhaps the single most litigated issue. A recent Illinois Appellate Court decision addressed what I think was a bizarre ruling by a trial court on a claim for extras and overturned the trial court’s ruling.
A general contractor was employed to expand the warehouse of a Menard’s store. A concrete subcontractor submitted a bid that did not include “winter protection of concrete or subgrade” nor “winter heat.” The project got delayed and revised bids were requested. This time the concrete sub included an up-charge for winter heat but again did not include winter protection. A contract was entered which had the usual provision that no extra work would be paid for unless there was a written change order signed by the general contractor that specified the amount of additional compensation.
The job got further delayed and in December the concrete sub wrote the general contractor a letter expressing concern regarding the necessity of performing winter protection work. The sub stated that it would move forward with its work to maintain the project schedule and document its additional costs and that upon completion of the disputed work it would resolve its claim under the terms of the contract. The general contractor’s position was that winter protection was included in the agreement and advised the sub that if it did not quickly complete its work the sub would be removed from the job. The concrete sub completed its work with winter protection which increased its cost by $171,262.
When the general contractor refused payment for the winter protection, a lawsuit was instituted. The trial court granted partial summary judgment to the general contractor on the issue of payment of the extra for winter protection. While the trial court held that winter protection was clearly outside the scope of the contract, it found there was nothing to show the general contractor ordered the work to be done nor did it agree to pay extra for the work.
There are five factors the courts look to when considering a claim for extra compensation:
1. The extras were outside the scope of the contract;
2. The owner or general contractor requested the extra;
3. The owner or general contractor by words or conduct agreed to pay extra;
4. The extra work was not done voluntarily; and
5. The extras were not necessitated by reason of some default of the general contractor or subcontractor.
The trial court held that the subcontractor should have done the work per the terms of the contract even though it knew that in doing so the work would not have been done in a good and workmanlike manner because it was being performed in the winter months and there would be no winter protection. I think the trial court’s ruling is bizarre because it put the subcontractor in an untenable position. If the work was done without the winter protection there would be claims for defective performance. If the sub went ahead and did the work with winter protection, then the trial court would say you are doing so for free and in this case the sub would lose $171,000. This would certainly not be a good position to be put in.
Fortunately, the Appellate Court came to the subcontractor’s rescue and overruled the trial court. The Appellate Court held that the subcontractor could not do its work knowing that it would be done in an unworkmanlike manner. The Appellate Court stated, “One who contracts to perform construction work impliedly warrants to do the work in a reasonably workmanlike manner.” In addition, the Appellate Court held that the trial court was also wrong that the sub could do the work in an unworkmanlike manner because the Menard’s building is open to the public and to allow work to be done in an unworkmanlike manner would be unrealistic and contrary to public policy. The Appellate Court ordered the case back to the trial court because it could be found that the general contractor impliedly ordered the sub to perform the winter protection work if in fact, doing so was necessary to do the work in a workmanlike fashion. The Appellate Court also noted that the general contractor was informed by the concrete subcontractor that it was going to perform the winter protection work and did not tell the sub to stop.
The lesson to be learned is that if you are placed in a position of being forced to do your work in an unworkmanlike manner, do not do it. Do what is necessary to perform the work properly. Inform the owner or general contractor you are doing so and properly document the claim you will be making and the additional costs incurred. You simply should not do the work in an improper fashion as the consequences of doing so are too grave.