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FOURTH DIVISION
November 16, 2000

Modified Upon Denial of Rehearing

JUSTICE BARTH delivered the opinion of the court:

This appeal arises out of an action by William J. TemplemanCompany, f/k/a Premier Electrical Construction Company (Premier),individually and as assignee of Gim Electric Co. (Gim), againstUnited States Fidelity and Guaranty Company (USF&G) for paymentunder the terms and provisions of a labor and material paymentbond. The bond was furnished by USF&G as surety and J.W. HalmConstruction Company (Halm), as principal, to the RegionalTransportation Authority (RTA), as obligee, and was related toconstruction of a commuter train layover facility in Joliet,Illinois. Premier sought allegedly unpaid contract balances of$18,293.00 due on its own subcontract with Halm, and $28,750.00due on its sub-subcontract with Gim, and as assignee of Gim.

The trial court granted summary judgment to USF&G, findingthat an unverified letter dated May 7, 1987, from Premier toUSF&G which did not state an amount was not a notice of claimwithin the meaning of section 2 of the Illinois PublicConstruction Bond Act (30 ILCS 550/1 et seq. (West 1996)) (theAct or the Bond Act).

Our task on appeal is to determine whether the noticerequirements in section 2 of the Bond Act can be waived, and, ifso, whether USF&G waived such requirements.

The facts revealed by the record are as follows.

On or about August 30, 1984, the RTA (predecessor of Metra),contracted with Halm to construct a commuter railroad coachlayover facility known as RTA Project No. A50230 (the Project). Pursuant to the Bond Act, Halm was required to furnish a paymentand performance bond to the RTA for the value of the constructioncontract. Separate payment and performance bonds were issued byUSF&G in the total amount of $2,793,000.

On December 28, 1984, Premier entered into a subcontractwith Halm in the amount of $150,000 to perform undergroundelectrical work on the Project. Halm separately subcontractedwith Gim in the amount of $575,000 to furnish and install certainelectrical equipment on the Project. Gim then sub-subcontractedportions of its work to Premier.⁽¹⁾

While the parties do not agree as to when, if ever,acceptance of the Project occurred, it is undisputed that allwork in connection therewith was completed by the end of 1986,and the facility became operational at that time.

Subsequently, USF&G received an unverified letter dated May7, 1987, from Premier. That letter identified the Project bynumber, named Halm as the general contractor, and stated thatPremier had not yet been paid by Halm for work it performed onthe Project. The letter also stated that Gim had not been paidfor portions of its work on the Project. There was no mention ofthe assignment by Gim to Premier. Premier received no response.

Fifteen months later, on or shortly after September 28,1988, USF&G received a second letter from Premier. This lettercontained a demand for payment from USF&G for specific dollaramounts due and owing to Premier from Halm and to Premier fromGim, which, to Premier's knowledge, had not yet been paid in fullby Halm. There was also a request for payment based onmiscellaneous change work performed by Premier in connection withthe Project. USF&G acknowledged receipt of the September 28letter on September 30 and requested that Premier complete averified proof of loss form, a blank copy of which was provided.

Premier returned the verified proof of loss form on February25, 1989, but omitted the date of its last payment from Halm andthe date on which it last furnished material to the Project. OnMarch 7, 1989, Edward Wright, an outside consultant hired byUSF&G to handle the Premier claim, wrote a letter to Premieracknowledging receipt of the February 25 letter and requestingthat the information omitted from the proof of loss form besupplied. This letter was sent to the return address listed onPremier's last correspondence. Evidently, Premier had sincemoved and claimed never to have received Mr. Wright's March 7thletter and request.

In late 1992, Dennis O'Brien, an attorney for Premier,contacted Mr. Wright and requested an update on the Premierclaim. A meeting took place between Mr. Wright, Mr. O'Brien andBill Templeman on November 20, 1992, to discuss the claim. Following the meeting, Mr. Wright advised Mr. Templeman ofUSF&G's decision to deny the claim and that the decision wasfinal. On August 27, 1993, Premier filed this action.⁽²⁾

Premier's complaint consisted of five counts, four of whichwere dismissed pursuant to motion.⁽³⁾ Following the dismissal ofcounts III and IV, the case proceeded solely on count II,Premier's bond claim against USF&G. As part of that cause ofaction, Premier alleged that on May 7, 1987, it "notified USF&Gof non-payment of funds due from Halm Construction on its ownbehalf and on behalf of Gim." As part of its answer toplaintiff's complaint, USF&G asserted several affirmativedefenses. The first of these alleged that Premier did not servea notice of claim in the manner provided in section 2 of the BondAct. The second alleged that Premier failed to file suit withinsix months after acceptance of the Project by the RTA.

In 1996, Premier sought summary judgment on the notice andsuit limitations defenses, and this was denied by the trialcourt. Specifically, as to the notice defense, the trial court(Judge Durkin) found that there were questions of fact as towhether USF&G had been able to demonstrate prejudice based onPremier's allegedly defective notice.

In 1998, USF&G sought summary judgment of its own on thenotice and suit limitations defenses. In support of its motion,USF&G submitted the affidavit of Donato Brescia, an engineer atthe RTA, who had supervisory duties over the project. In hisaffidavit, Mr. Brescia stated that all work on the project wascompleted by the end of 1986, that all contractors had ceasedwork, and that the RTA had commenced operation of the layoverfacility.

On January 26, 1999, the trial court (now Judge Hett)granted summary judgment in favor of USF&G on its notice defense. The court explained that section 2 of the Bond Act, which givessubcontractors the right to sue thereunder, is quite specific inthe requirements it lists for the contents of a notice. SincePremier's May 7, 1987, letter failed to comply with two of thoserequirements (verification and the recitation of an amount dueand owing), Premier's notice was inadequate as a matter of law. Premier filed a motion to reconsider, in which two argumentsnot previously raised were advanced. First, that the grant ofsummary judgment constituted an improper reconsideration of the1996 denial (by Judge Durkin) of Premier's motion for summaryjudgment. And second, that the contract between Halm and USF&Gstated that a direct subcontractor to the bond principal need notprovide notice, and therefore USF&G waived the requirement ofnotice under section 2 of the Bond Act. The trial court deniedthe motion to reconsider on August 5, 1999, without specificallyruling on either of the new arguments.

From the trial court's order denying its motion toreconsider, Premier now appeals.

ANALYSIS

In its motion for summary judgment, USF&G argued that Premier's May 7, 1987, letter did not constitute a notice ofclaim under section 2 of the Bond Act, in that it failed to statethe amount allegedly due under the subcontract and wasunverified. Section 2 of the Bond Act bears the heading "Rightto Sue" and provides, in relevant part:

         "Every person furnishing material or performing labor,either as an individual or as a subcontractor for anycontractor, with the State, or a political subdivision thereof where bond or letter of credit shall be executed as provided in this Act, shall have the right to sue on suchbond ***. Provided, however, that any person having a claimfor labor, and material as aforesaid shall have no such right of action unless he shall have filed a verified notice of said claim with the officer, board, bureau or department awarding the contract, within 180 days after the date of the last item of *** materials *** and shall havefurnished a copy of such verified notice *** with the agencyawarding the contract.

         The claim shall be verified and shall contain (1) the name and address of the claimant ***; (2) the name of the contractor for the government; (3) the name of the person, firm or corporation by whom the claimant was employed or to whom he or it furnished materials; (4) the amount of the claim; (5) a brief description of the public improvement sufficient for identification.

         No defect in the notice provided for shall deprive the claimant of his right of action under this article unless it shall affirmatively appear that such defect has prejudiced the rights of an interested party asserting the same.

         Provided, further, that no action shall be brought until the expiration of 120 days after the date of the last item of work or the furnishing of the last item of materials ***; nor shall any action of any kind be brought later than 6 months after the acceptance by the State or political subdivision thereof of the building project or work." 30 ILCS 550/2 (West 1996).

Concluding that Premier's May 7, 1987, letter to USF&Gfailed to provide adequate notice under the Bond Act in that itwas not verified and did not specify the amount claimed to be dueand owing (as required by the Act), the trial court grantedsummary judgment in favor of USF&G.⁽⁴⁾

After the trial court's order granting summary judgment,Premier filed a motion for reconsideration in which it raised thecontention that USF&G waived compliance with the Bond Act'snotice requirements by the plain language contained in its bond. The trial court denied that motion.

Appellate review of an order granting summary judgment is denovo. Kotarba v. Jamrozik, 283 Ill. App. 3d 595, 596, 669 N.E.2d1185 (1996). On de novo review, we are free to consider anypleadings, depositions, admissions, and affidavits on file at thetime of the hearing regardless of whether facts contained thereinwere presented to the trial court in response to the motion forsummary judgment. See 735 ILCS 5/2-1005 (West 1998); Purtill v.Hess, 111 Ill. 2d 229, 240, 489 N.E.2d 867 (1986); Lawrence &Allen, Inc. v. Cambridge Human Resource Group, Inc., 292 Ill.App. 3d 131, 136, 685 N.E.2d 434 (1997).

Paragraph 3 of the labor and material payment bond, signed by both parties but drafted by USF&G, contains a notice provisionwith respect to the filing of suits and claims. That paragraphprovides, in relevant part:

"No suit or action shall be commenced hereunder by anyclaimant:

a) Unless claimant, other than one having a direct contract with the Principal, shall have given written notice to any two of the following: the Principal, the Owner, or the Surety above named, within ninety (90) days ***."

Premier contends that, by including the above language in itsbond, USF&G has waived the right to require notices of claims incompliance with the Bond Act. We agree.

It is well established that parties who enter into contractsmay waive provisions beneficial to them (Barker v. Leonard, 263Ill. App. 3d 661, 663, 635 N.E.2d 846 (1994); Geier v. HamerEnterprises, Inc., 226 Ill. App. 3d 372, 391, 589 N.E.2d 711(1992); Jung v. Zemel, 189 Ill. App. 3d 191, 196, 545 N.E.2d 242(1989)), and a contractor and its surety are free to contract forprotection that exceeds the minimum statutory provisions (seegenerally Aluma Systems v. Frederick Quinn Corp., 206 Ill. App.3d 828, 855, 564 N.E.2d 1280 (1990); Illinois State Toll HighwayCommission ex rel. Patten Tractor & Equipment Co. v. M.J. Boyle &Co., 38 Ill. App. 2d 38, 51, 186 N.E.2d 390 (1962)).

The notice provision of statutes governing bonds ofcontractors constructing public buildings and suits bymaterialmen in connection therewith protects the contractor andthe contractor's surety from having to account to unknownsuppliers and subcontractors (United States ex rel. W.E. Foley &Bro. v. United States Fidelity & Guaranty Co., 113 F.2d 888 (2dCir. 1940)), by putting the burden on claimants to advise thecontractor and surety of their participation on the project andto advise if they are not promptly paid (School Board ex rel.Major Electrical Supplies of Stuart, Inc. v. Vincent J. Fasano,Inc., 417 So. 2d 1063 (Fla. App. 1982)), and by giving theprincipal contractor the earliest possible notification that amaterialman has not been paid and that the materialman may makeeither a future demand for payment or a future claim against thebond (Fidelity & Deposit Co. v. Herbert H. Conway, Inc., 14 Wash.2d 551, 128 P.2d 764 (1942)). Thus, the notice provisioncontained in the Bond Act is unquestionably of benefit to asurety. City of DeKalb ex rel. International Pipe & CeramicsCorp. v. Sornsin, 32 Ill. 2d 284, 289, 205 N.E.2d 254 (1965).

The language contained in the bond issued by USF&Gspecifically exempts those who have a direct contract with theprincipal from giving written notice to the principal, owner orsurety of their intent to make a claim. Premier had a directcontract with Halm, the principal, and thus, according to thelanguage of the bond, was not required to give notice prior tomaking a claim. Gim too had a direct contract with Halm, and hasassigned its claim in this cause to Premier. Because of theassignment, which USF&G does not challenge, we consider Premier'sstatus with respect to the Gim claim to be that of one in privitywith the principal. See Community Bank of Greater Peoria v.Carter, 283 Ill. App. 3d 505, 508, 669 N.E.2d 1317 (1996) (theassignee, by acquiring the same rights as the assignor, stands inthe shoes of the assignor).

As it acknowledged during oral argument, USF&G issues bondsin a number of states and, as set forth in its appellate briefand as recognized by this court, bond acts differ from state tostate with respect to notice requirements prior to filing aclaim; some with provisions more stringent than Illinois' Act,some less so. See generally 48 A.L.R.4th