Find Legal Information

This breach of contract case arises out of a constructionagreement between the general contractor, plaintiff, DeanManagement, Inc., and a subcontractor, defendant, TBS Construction,Inc. Plaintiff terminated the contract and filed a verifiedcomplaint seeking damages, interest, and attorney fees and costs. Defendant filed a counterclaim for past-due payments under thecontract. The trial court denied each party relief, finding that(1) plaintiff had not properly served defendant with notice of itsintent to terminate the contract and (2) defendant failed to provethat it was entitled to additional payment. On appeal, plaintiffcontends that the trial court erroneously (1) concluded that thecontract prohibited plaintiff from serving defendant with notice byfacsimile transmission and (2) found that the defendant neveractually received notice. Rather than challenging the portion ofthe judgment denying its claim for past-due payments, defendantmerely asserts that we should affirm the judgment. We agree withboth of plaintiff's arguments, and we reverse the judgment andremand the cause with directions.

FACTS

The following facts are undisputed. Plaintiff is a Wisconsincorporation engaged in the business of general contracting andconstruction. Defendant is an Illinois corporation engaged in thebusiness of excavation and concrete installation. On December 22,1999, the parties entered into a written subcontract agreement (thecontract) pursuant to which plaintiff agreed to pay $158,293 fordefendant to excavate and install concrete and site utilities at aconstruction project commonly known as the Lion's Choice Restaurantin Warrenville. Article 5 of the contract permitted plaintiff toterminate the contract and provides in relevant part:

"Should [defendant] fail to perform his obligation hereunder,including but not limited to, failure to pursue completion ofsaid work with due diligence, [plaintiff] may terminate thisSubcontract by written notice to [defendant] from [plaintiff]. The determination as to whether [defendant] is pursuingcompletion of the work with due diligence shall be made solelyby [plaintiff] or it's [sic] representative.

In the event of termination, as herein provided,[defendant] will be paid for all work satisfactorily completedto the date of termination; provided, however, that[plaintiff] may withhold sufficient amounts from any suchpayment to cover any loss which [plaintiff] any [sic] sufferas a result of the failure of [defendant] to satisfactorilyfulfill his obligations hereunder. Acceptance of payment upontermination by [defendant] shall waive and [sic] furtherrights of defendant against [plaintiff] or Owner. Nothingherein shall limit [plaintiff's] rights to damages as a resultof [defendant's] failure to fulfill his obligation hereunder. The parties agree that, in the event [defendant] fails tocomplete the Subcontracted work according to the scheduleherein provided, the damages suffered by [plaintiff], as aresult of such delay, would be difficult to ascertain, and theparties thereby agree that, in the event of failure of[defendant] to complete said work within the time periodherein provided, [defendant] shall pay [plaintiff] liquidateddamages in the amount of One Hundred and No/100 ($100.00)dollars for each day beyond the scheduled completion date. Inthe event [plaintiff] has to take over [defendant's] job andterminate the Contract, said [plaintiff] shall give a twenty-four (24) hours written notice prior to it's taking over thejob. [Defendant] is responsible for differences betweenSubcontract Agreement price and completed price." (Emphasisadded.)

During January 2000, defendant completed certain work underthe contract. On March 2, 2000, representatives of an electricalworkers union began picketing the site because plaintiff hademployed a nonunion electrical subcontractor. Plaintiff instituteda gating system whereby it designated both a reserve gate wherepicketing was allowed and a neutral gate where picketing was notallowed. On March 3, 2000, plaintiff sent defendant a facsimiletransmission (fax) notifying it about the establishment of thegating system at the site. Citing the presence of the picketers,defendant removed its equipment and employees from the site andrefused to perform additional work pursuant to the contract.

At 5:27 p.m. on March 9, 2000, Timothy Nolan, plaintiff'sattorney, sent a fax on his law firm's letterhead to "Russ" atdefendant's place of business. The fax stated that plaintiff wouldtake over the project if defendant did not resume performance underthe contract within 24 hours of receiving the notice. Nolanincluded a "Fax Transmittal Sheet," identifying the date, theintended recipient, the fax numbers of the source and destinationmachines, and the number of pages in the transmission. Nolan's faxmachine generated a "transmission report," which indicated the dateand time of the transmission, the duration of the call, andverification that the fax was received. The following morning,defendant resumed working at the site. Later that afternoon, Nolanarranged for personal delivery of a copy of the notice viamessenger. The messenger signed and dated a statement of delivery,and his signature was notarized. Defendant concedes that "[t]herecan be no doubt that [defendant] received the document."

In late March or early April 2000, the presence of picketersagain caused defendant to remove its equipment and employees fromthe site. The appellate record contains a copy of a letter onplaintiff's letterhead that was prepared by Dustin Dostal,plaintiff's project manager. Like Nolan's fax, Dostal's letter wasaddressed to Russ at defendant's place of business and stated thatplaintiff would assume control of defendant's project and terminatethe contract if defendant did not return to the site within 24hours. Dostal's letter contained the following notation: "VIAFACSIMILE TRANSMISSION DATED MARCH 30, 2000 AND VIA MESSENGERDELIVERY ON MARCH 31, 2000." The exhibit in the record does notinclude a fax transmittal sheet like the one attached to Nolan'sfax. However, Dostal dated the letter April 7, 2000, and the topmargin contains a fax transmittal code indicating that the letterwas sent from plaintiff's fax machine at 8:35 a.m. on April 7,2000, and that the letter was the second page of the transmission.

James Kehm, plaintiff's site supervisor, testified that, onthe morning of April 7, 2000, Steven Snow, one of defendant'semployees, arrived at the site and began loading dirt into waitingtrucks. Union picketers were on site and had set up informationalpicketing directed to plaintiff's use of nonunion electrical,heating, and air subcontractors. Plaintiff's two-gate system was operating that morning.

Kehm stated that, at approximately 8 a.m., the business agentfrom Snow's union arrived and instructed Snow to leave the site. Snow and the agent left, and Kehm telephoned Dostal and told himthat defendant's operator had abandoned the project. Snow returned5 or 10 minutes later. At approximately 8:30 a.m., Kehm spoke withSnow's supervisor, Don Brummerstedt, who stated that the union haddemanded that defendant "pull off [the project] and not come back." Snow again left with the agent, and Kehm did not authorize him todo so. Kehm reported Snow's absence to Dostal, who instructed Kehmto locate replacement subcontractors who could complete defendant'sproject.

Dostal corroborated Kehm's testimony at trial. Immediatelyafter learning that Snow had left the site, Dostal directed hissecretary to send the "24-hour demand letter" by fax, but he neversent a copy of the notice via messenger. Dostal did not authorizedefendant to leave the site on April 7, 2000, or on any other day. No employee of defendant ever responded to the April 7 fax.

Snow testified that he was ready, willing, and able to work onApril 7, 2000, and that he started loading dirt onto trucks thatmorning. Snow confirmed that his union business agent arrived andinquired why Snow was working while picketers were present. Snowleft the site temporarily with the agent, and when they returned,Snow telephoned Don Brummerstedt, who told him to cease working. Snow's time records indicate that he left the site at 8:15 a.m. Snow admitted that much of defendant's excavation work had not yetbeen completed at the time he left the project.

Tim Brummerstedt, defendant's president, initiallyacknowledged at trial that he might have actually received theApril 7, 2000, notice twice. Brummerstedt then changed histestimony, insisting that he first learned of the fax afterplaintiff filed its suit. Plaintiff's counsel impeachedBrummerstedt with his prior deposition testimony in which he statedthat he received the fax on or about April 7 and "assumed[plaintiff] [was] going to take over performance of the job" atthat time. During the deposition, Brummerstedt conceded that hedid not direct any worker to return to the site after April 7because defendant "couldn't move the equipment back in 24 hours, sothere was no sense in trying."

After concluding that defendant would not return to theproject, plaintiff hired other subcontractors and suppliers tocomplete the subcontracting work. On January 9, 2001, plaintifffiled a verified complaint alleging breach of contract and seeking$28,293 in damages plus statutory interest, attorney fees, andcosts. Defendant filed an answer, two affirmative defenses, and acounterclaim seeking $14,933 for work completed before plaintiffterminated the contract. None of defendant's pleadings allegedthat plaintiff had delivered inadequate notice of its intent totake over the project and terminate the contract.

The trial court entered its memorandum opinion and order onJune 24, 2002. The court initially concluded as a matter of lawthat any notice to terminate the contract that plaintiff might havesent defendant by fax would have been ineffective because theparties did not stipulate in the agreement that they could serveone another written notice by fax. The court also found that "theApril 7, 2000, 24-hour notice by fax was claimed to never have beenreceived by the Defendant. Therefore, there was no actual notice. Since facsimile was not an agreed method of service, there was noservice given. The plaintiff would not be entitled to damagesbecause there was no breach of the contract." (Emphasis inoriginal.)

The court ruled that, because plaintiff failed to provideadequate notice of its intent to terminate the contract, plaintiffhad breached the contract and was not entitled to damages, attorneyfees and costs, or interest. Finally, the court held thatdefendant failed to present sufficient evidence to support itsclaim for $14,933 in past-due payments under the contract. Plaintiff timely filed a notice of appeal on July 19, 2002.

ANALYSIS

On appeal, plaintiff argues that the trial court erred when it(1) concluded as a matter of law that the contract barred writtennotice by fax and (2) found that defendant did not, in fact,receive written notice of plaintiff's intent to terminate thecontract on April 7, 2000.

When the language of a contract is clear and unambiguous, construction of the contract is a matter of law that is subject tode novo review. A court must construe the meaning of a contract byexamining the language and may not interpret the contract in a waycontrary to the plain and obvious meaning of its terms. Unless thecontract clearly defines its terms, the court must give thecontractual language its common and generally accepted meaning. Furthermore, the court must place the meanings of words within thecontext of the contract as a whole. A contract term is ambiguouswhen it may reasonably be interpreted in more than one way. Themere fact that the parties disagree on some term, however, does notrender the term ambiguous. J.M. Beals Enterprises, Inc. v.Industrial Hard Chrome, Ltd., 194 Ill. App. 3d 744, 748 (1990). "Acourt will neither add language or matters to a contract aboutwhich the instrument itself is silent, nor add words or terms to anagreement to change the plain meaning of the parties as expressedin the agreement." Sheehy v. Sheehy, 299 Ill. App. 3d 996, 1001(1998).

If the language of the contract is facially unambiguous, thenthe "four corners" rule requires the trial court to interpret thecontract as a matter of law without the use of parol evidence. If,however, the language of the contract is susceptible to more thanone meaning, then an ambiguity is present and parol evidence may beadmitted to aid the trier of fact in resolving the ambiguity. AirSafety, Inc. v. Teachers Realty Corp., 185 Ill. 2d 457, 462-63(1999).

In this case, Article 5 of the contract provides thatplaintiff had the right to terminate the contract under certaincircumstances by giving 24 hours' "written notice." Because thecontract does not define "written notice," we must give the termits common and generally accepted meaning. See J.M. Beals, 194Ill. App. 3d at 748. It is clear that a letter sent by fax is a"writing" as that term is commonly defined. Furthermore, Dostal'sletter expressed plaintiff's intent to terminate the contract andtake over the project if defendant did not return to the sitewithin 24 hours. Therefore, we conclude that the unambiguous plainmeaning of "written notice" under Article 5 of the contractincludes fax transmissions like the one purportedly sent by Dostal.

The contract is silent on the method of delivering the notice,and the trial court construed this silence as barring plaintifffrom using a fax machine. In reaching its conclusion, the trialcourt relied upon Denis F. McKenna Co. v. Smith, 302 Ill. App. 3d28 (1998). In McKenna, the defendant agreed to sell the plaintiffa parcel of real estate. The contract permitted the defendant'scounsel to reject the sale as long as notice of the rejection was"in writing," addressed to the plaintiff, and delivered by personaldelivery, certified or registered mail, or facsimile transmission. McKenna, 302 Ill. App. 3d at 30. The defendant's counsel faxed hisrejection to the plaintiff's broker rather than to the plaintiff,but the notice was forwarded to the plaintiff. The defendantnegotiated a more favorable contract with another buyer, and theplaintiff sued to invalidate the second transaction. The trialcourt ruled for the defendant after concluding that the plaintiffreceived actual notice of the rejection. McKenna, 302 Ill. App. 3dat 31.

The plaintiff appealed, and the appellate court held that,although service of the notice of rejection on the broker was atechnical breach of the contract, the breach was immaterial underthe principles of inherent justice. McKenna, 302 Ill. App. 3d at32. The court further concluded that the actual notice wassufficient because the purpose of a contractual notice provision isto ensure that notice is delivered. The court declined toinvalidate the defendant's second contract because the plaintiffhad actually received the notice of rejection on the day thedefendant sent it to the broker. McKenna, 302 Ill. App. 3d at 31.

In this case, the trial court misinterpreted McKenna to holdthat a party may not send a notice by fax if the contract does notexpressly provide for that particular method of writtencommunication. In McKenna, the parties elected to define theacceptable methods of delivering written notice. However, theparties' failure to expressly designate delivery by fax as anacceptable method of written communication in this case does notrender plaintiff's notice ineffective because the plain meaning ofthe term "written notice" encompasses faxes. Therefore, weconclude that the trial court erroneously ruled as a matter of lawthat plaintiff was barred from sending its notice by fax.

Defendant insists that the term "written notice" is ambiguousand that therefore, we must consider parol evidence to determinethe parties' intent. It appears that the trial court consideredparol evidence and relied upon Supreme Court Rule 11(b)(4) (145Ill. 2d R. 11(b)(4)) in interpreting the contract. Rule 11(b)contemplates personal, substituted personal, mail, or facsimileservice of certain pleadings. 145 Ill. 2d R. 11(b); Lewis v.Collinsville Unit No. 10 School District, 311 Ill. App. 3d 1021,1028 (2000). Under Rule 11(b)(4), papers served by transmittingthem via facsimile must be sent to the office of the attorney orparty who has consented to receiving service by facsimiletransmission. A party or attorney electing to serve pleadings byfacsimile must include the telephone number of the sender'sfacsimile transmitting device on the certificate of servicetransmitted. Use of service by facsimile shall be deemed consentby that party or attorney to receive service by facsimiletransmission. 145 Ill. 2d R. 11(b)(4).

Here, the trial court concluded that, because there was noevidence that defendant ever sent plaintiff a fax in the course ofthe parties' performance, defendant did not consent to receivingplaintiff's notice by fax. However, the contract does not mentionRule 11(b)(4), and we conclude that the plain meaning of the broadterm "written notice" left the parties free to use any method fordelivering written notice under Article 5 of the contract. Inapplying Rule 11(b)(4) to the issue of whether plaintiff could faxnotice of its intent to terminate the contract, the trial courterroneously added a limitation to the contract about which theinstrument was silent. See Sheehy, 299 Ill. App. 3d at 1001.

Even if we were to conclude that the contract is ambiguous,the parties' conduct indicates that they contemplated the use offax machines for written communication in this instance. "A customor usage becomes binding upon parties if it has been uniformlyacquiesced in and applied by the parties for such a period of timeso as to indicate that the custom was contemplated by the partiesat the time formation of the contract was undertaken. A custom orusage should be established by the testimony of several witnesses." Ledbetter v. Crudup, 114 Ill. App. 3d 401, 403 (1983).

The undisputed evidence shows that the parties communicated byfax at least twice in their course of performance before April 7,2000. For example, defendant removed its employees and equipmentfrom the site early in March 2000, and on March 9, plaintiff'scounsel sent a fax demanding that defendant return to the sitewithin 24 hours. Frank Thiel, one of defendant's project managers,admitted at trial that he received the notice on March 10 anddirected his employees to resume working that morning. Plaintiffalso sent defendant a copy of the notice by personal delivery onMarch 10, but it appears that the March 9 fax was effective becausethe notice sent by personal delivery arrived after defendantresumed working. Although the occasional use of faxes does notsuggest that the parties contemplated their use for allcorrespondence, the undisputed facts reveal that defendantacquiesced in that particular method of receiving "written notice"under Article 5 of the contract.

After concluding that the contract authorized plaintiff tosend its notice by fax, we next address whether the evidencesupports the trial court's finding that defendant did not actuallyreceive plaintiff's notice to terminate the contract. Plaintiffcontends that defendant admitted in its answer that it receivedactual notice of plaintiff's intent to terminate the contract onApril 7, 2000. Defendant's answer contained numbered paragraphsthat addressed the corresponding numbered paragraphs in thecomplaint. For instance, in paragraph 9 of the answer, defendantstated, "[t]he Defendant admits the allegations contained inParagraph #9 of the Plaintiff's Complaint."

Paragraph 10 of the complaint alleged that "[o]n or aboutApril 7, 2000, [plaintiff] served [defendant] a second demandletter in accordance with Article 5 of the parties' SubcontractAgreement calling for [defendant] to resume its performance underthe Subcontract Agreement." In response, defendant stated inparagraph 10 of the answer that "[t]he Defendant admits theallegations contained in Paragraph #9 [sic] of the Plaintiff'sComplaint."

The parties agree that paragraph 10 of the answer representsa scrivener's error. Plaintiff argues that defendant intended toadmit the allegations of paragraph 10 of the complaint rather thanrestate its admission to paragraph 9 of the complaint. Defendantresponds that it never intended to answer paragraph 10 of thecomplaint and that the statement should be ignored.

A judicial admission is a party's deliberate, clear,unequivocal statement about a concrete fact within the party'speculiar knowledge. It is well settled that the party making theadmission is bound by that admission and cannot contradict it. Eidson v. Audrey's CTL, Inc., 251 Ill. App. 3d 193, 195-96 (1993). In this case, paragraph 10 of the answer is neither deliberate norclear. Under these circumstances, the trial court did not err infinding that defendant did not admit in the answer that it receivedplaintiff's notice on April 7, 2000.

Plaintiff next argues that the remaining evidence,particularly Tim Brummerstedt's deposition testimony, indicatesthat defendant actually received the notice. The supreme courtcase of Bazydlo v. Volant sets forth the well-settled standard ofreview that applies here, and provides in pertinent part:

"A reviewing court should not overturn a trial court'sfindings merely because it does not agree with the lower courtor because it might have reached a different conclusion had itbeen the fact finder. The trial judge, as the trier of fact,is in a position superior to a reviewing court to observewitnesses while testifying, to judge their credibility, and todetermine the weight their testimony should receive. Consequently, where the testimony is conflicting in a benchtrial, the trial court's findings will not be disturbed unlessthey are against the manifest weight of the evidence.[Citation.] A judgment is against the manifest weight of theevidence only when an opposite conclusion is apparent or whenfindings appear to be unreasonable, arbitrary, or not based onevidence." Bazydlo v. Volant, 164 Ill. 2d 207, 214-15 (1995).

" ' "There may be cases in which admissions at pre-trialdepositions are so deliberate, detailed, and unequivocal, as tomatters within the party's personal knowledge, that they willconclusively bind the party-deponent, and he will not be heard tocontradict the admissions at the trial" (Haskell v. Siegmund(1960), 28 Ill. App. 2d 1, 170 N.E.2d 393).' " Lindenmier v. Cityof Rockford, 156 Ill. App. 3d 76, 87 (1987), quoting Young v.Pease, 140 Ill. App. 3d 720, 723 (1986).

Although one part of Dostal's letter incorrectly indicatesthat he sent the fax on March 30, 2000, the letter is dated April7, 2000, and the top margin contains a fax transmittal codeindicating that the letter was sent from plaintiff's fax machine at8:35 a.m. on April 7, 2000. The exhibit corroborates Dostal'stestimony regarding the transmission of the notice.

Moreover, it appears that defendant created its theory ofinadequate notice as an afterthought on the eve of trial when thesignificance of the issue became apparent. Tim Brummerstedt,defendant's president, admitted during his October 16, 2001,deposition that he received Dostal's April 7, 2000, notice and thathe consciously decided to abandon the project. Also, defendantfiled two affirmative defenses at the start of the case and neitheralleged that plaintiff did not deliver notice of its intent to takeover the project and terminate the contract. Brummerstedt'spretrial admission and defendant's failure to raise the noticeissue in its pleadings indicate that Brummerstedt's denials attrial were self-serving and disingenuous. The trial court's findingthat "there was no actual notice" was against the manifest weightof the evidence.

We conclude that the trial court erred in ruling that thecontract barred plaintiff from faxing its notice to terminate thecontract. We further conclude that the court's finding thatdefendant did not receive the notice was manifestly erroneous. Therefore, we reverse the trial court's judgment and remand thecause for the trial court to determine plaintiff's right todamages, attorney fees and costs, and statutory interest asrequested in the complaint.

For the preceding reasons, the judgment of the circuit courtof Du Page County is reversed and the cause is remanded withdirections.

Reversed and remanded with directions.

GROMETER and GILLERAN JOHNSON, JJ., concur.