Extra! Extra! Read All About It! Illinois Court Clarifies Contractor’s Right to Recover for Extra Work

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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The Illinois Appellate Court from the Fourth District broadly interpreted the elements necessary for contractors and subcontractors to recover for extra work, allowing for recovery based on the implicit approval of the owner. Stark Excavating, Inc. v. Carter Construction Services, Inc., 2012 IL App (4th) 110357, 2012 WL 1025891 (4th Dist. 2012). Stark provides additional guidance to contractors and subcontractors when attempting to recover for extra work. In Stark, a subcontractor filed suit against the general contractor for breach of contract for its failure to pay for additional winter protection work necessary to complete the project. The Stark opinion expands on the elements necessary for recovery of extras outlined in the seminal 1967 case, Watson Lumber Co. v. Guennewig.

In Watson Lumber, the court summarized the elements for recovery of extras by contractors or subcontractors, stating contractors must establish that (1) the work was outside the scope of the contract; (2) the extra items were ordered by the owner (or upper-tier contractor if the subcontractor is making the claim); (3) the owner (or upper-tier contractor) agreed to pay extra, either by words or conduct; (4) the extras were not furnished by the contractor voluntarily; and (5) the extras were not rendered necessary by any fault of the contractor.

The Stark court elaborates on the second, third, and fourth elements from Watson Lumber.  First, the Stark court found that an owner implicitly orders a contractor to perform extra work if the court finds that work was necessary to complete the contractor’s scope of work in a workmanlike manner. The court’s rationale for this rule was based on the notion that contractors impliedly warrant to do work in a reasonably workmanlike manner, based on a 1977 case, Dean v. Rutherford. In addition, public policy is not served by forcing a contractor to either proceed in an unworkmanlike manner or perform extra work necessary to perform the job in a workmanlike manner and risk nonpayment.

Next, the Stark court found that the contractor had implicitly agreed to pay for the extra work as a result of the contractor’s conduct. The subcontractor had sent the contractor a letter prior to starting the concrete work stating that it considered winter protection work to be additional work but that it had to perform the work because it was necessary for completion of the construction in a workmanlike manner. As a result of the letter, the contractor was on notice that the subcontractor was going to perform the winter protection work, considered it an extra, and expected to be paid for the work. After receipt of the letter, the contractor did not direct the subcontractor to stop its work on the project. Consequently, according to the Fourth District Appellate Court, the contractor impliedly agreed to pay for the winter protection work.

The Stark decision is significant for several reasons. First, it highlights the importance of good project documentation. The subcontractor’s letter to the contractor (which could easily have been a letter from the contractor to the owner) satisfied the first, third, and fourth elements of Watson Lumber and provided the subcontractor with a strong case that the extra work should be reimbursable. Second, the decision also provides contractors and subcontractors with an additional argument in its efforts to recover for extra work, i.e. that the extra work was necessary to complete the project in a good and workmanlike manner. However, contractors and subcontractors should not rely exclusively on such an argument. Proper documentation and communication are always the best practice.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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