Illinois Contract Law: Parol Evidence Rule, ‘No Damages for Delay’ Clauses

In Asset Recovery vs. Walsh Construction, 2012 IL App (1st) 101226, the First District affirmed  a bench trial judgment for a general contractor sued by a demolition subcontractor for breach of contract and quantum meruit.  The lawsuit stemmed from numerous delays over the course of a multi-million dollar demolition subcontract in connection with the redevelopment of the Palmolive Building, a high profile building on Michigan Avenue, Chicago.

In affirming the trial court, the First District held that all the delays sued upon by the plaintiff were within the contemplation of the parties and also enforced a “no damages for delay” clause contained in both the subcontract (between plaintiff and defendant) and the prime contract (between defendant and building owner).  In the lengthy opinion, the Asset Recovery Court – citing Illinois precedent – provides a good synopsis of several legal principles which commonly crop up in breach of contract litigation.

The key contract formation, interpretation and damages propositions cited in Asset Recovery include:

– Illinois applies the “four corners rule” and looks to the language of the contract to determine its meaning;

– Contractual ambiguity exists if the contract language is susceptible to more than one meaning; 

– If an ambiguity is present, parol evidence may be admitted to aid the court in resolving the ambiguity;

– If the contract is unambiguous, extrinsic evidence isn’t provisionally admitted to show an external ambiguity;

– Where a contract is signed after its effective date, it relates back to the effective date;

– A party can accept a contract by course of conduct, but it must be clear that the conduct relates to the specific contract in question;

– the parol evidence rule precludes (a) the admissibility of evidence to alter, vary or contradict a written agreement and (b) bars evidence of understandings not reflected in the contract reached before or at the time of execution that vary or modify the contract terms;

– the parol evidence rule does not preclude a contracting party from offering proof of terms (such as an oral agreement to change in schedule) that supplement rather than contradict the contract; 

– Contracting parties may waive delays in performance by words or conduct;

– In such a case, the court may extend the term of a contract for a “reasonable time”;

– “No damages for delay” clauses are enforceable but are construed strictly against the party seeking the provision’s benefit;

– Exceptions to “no damages for delay” clauses include (1) bad faith delay; (2) delay “not within the contemplation of the parties”; (3) delay of unreasonable duration; and (4) delay attributable to inexcusable ignorance or incompetence;

– Under waiver and estoppel rules, a party to a contract may not lull another party into false belief that strict compliance isn’t required and then sue for noncompliance. 

The Asset Recovery case contains detailed facts and an exhaustive chronology. The case illustrates the interplay between prime contracts and subcontracts – the latter of which often mirror the prime contract terms.  The opinion serves as an excellent resource for quick bullet-point research on contract formation, construction and enforceability issues; particularly in the construction law context.

PBP

Admissibility of Internet Photos under Illinois Rules of Evidence

 

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In re Marriage of Perry, 2012 IL App. (1st) 113054 examines the foundation requirements to admit Internet photos into evidence at trial.  The respondent husband downloaded what he claimed were photos of his wife from an Internet escort site and tried to use the provocative pictures against her in a custody fight.

In finding that the husband laid a proper foundation for the flash drive photos, the Court first applied Illinois Evidence Rule 901 which sets forth a two-part test for authenticity: (1) a witness must testify that a matter is what it is claimed to be and (2) he must offer evidence that describes a process or system used to produce a result and which shows that the process or system produces an accurate result is sufficient for authentication.  Ill. R. Evid. 901(b)(1), (9).

Under Evidence Rule 1001, the Court noted that a duplicate is defined as [paraphrasing] a counterpart produced by means of photography, or by other equivalent techniques  that accurately reproduce the original.  A duplicate is admissible to the same extent as the original unless there is a genuine issue concerning the original’s authenticity or if it would be unfair to admit the duplicate in lieu of the original.  Perry, ¶ 47; Ill. R. Evid. 1001(4), 1003.  In Illinois, photographs are admissible if they are identified by a witness who has knowledge of the subject matter depicted in the photographs and the witness testifies that the photos are a fair and accurate representation of the subject matter at the relevant timePerry, ¶ 47.  Expert testimony is not required to provide a foundation for a photograph if the person testifying as to the photo’s contents has personal knowledgePerry, ¶ 48.

Applying these rules, the Court held that the husband laid a sufficient foundation that the photos in question depicted his wife. But in finding that the husband failed to lay a foundation that the photos were specifically from the “Chix Escorts” Web site, the Court noted that on-line evidence is naturally suspect since anyone can create phony social media accounts.  Perry, ¶ 50.  Still though, the Court noted a growing national trend to allow screenshots into evidence based on witness authentication by live testimony or affidavit.”  Perry, ¶ 51.

The First District ruled that there was improper authentication evidence that the photos were from the escort site, noting that only one photo bore the “Chix Escorts” logo.  In addition, the wife challenged the photo’s veracity by testifying that the flash drive photos were old photos she sent her husband and that were stored on his cell phone.  The court further found that none of the photos consisted of screenshots or contained the Internet address on them.  Because photos can be digitally manipulated and the wife offered testimony that the photos originated not from the Net but from her husband’s own cell phone, the Court concluded that the husband failed to lay a proper foundation that the photos originated from the “Chix Escorts” site.  Perry, ¶ 53.

Even so, the Court held that the trial court’s admission of the photos as originating from the “Chix Escorts” escort site was harmless error. That’s because there was other evidence that the wife was working as an escort and the court did not base its custody decision  on what escort agency the wife happened to be working for.  Id., ¶ 54.

 The take-away: the Perry case is a good primer on the evidence rules that dictate photograph admissibility at trial – especially in the modern-day Web context.  The court liberally applied the Illinois evidence rules’ authentication requirements for downloaded Internet content. 

From this case, it seems clear that “screenshot” evidence can be powerful – especially as an impeachment tool.  If you can show that the challenged photograph is more likely than not a true screenshot, which bears some distinctive marks such as the domain name, the date or other evidence (such as the court itself witnessing the site from its own computer – see Perry, ¶ 51) which tends to show that the photo was in fact printed from a Web site, the Court will likely allow it in.  Obviously, the proponent of the evidence will have to first establish the photo’s relevance.

 

Condo Assessment Liens And Slander of Title

Section 9 of the Illinois Condominium Property Act (765 ILCS 605/9) allows a condominium association to place a lien on a unit for unpaid assessments.    

But what if an association records an inflated assessment lien against a unit owner? Does the unit owner have any recourse? 

The First District answered these questions in Kurtz v. Hubbard, 2012 IL App (1st) 111360.

The plaintiff, a Gold Coast condo unit owner, filed a multi-count action against her condo association alleging slander of title and the tort of presenting someone in a false light when the association sued for possession of plaintiff’s unit and recorded a lien two weeks later.

The plaintiff sued the association, alleging the lien was false and impaired the unit’s marketability and placed her in a false light before the community since the lien was a public record.

The lien stated that the plaintiff owed over $15,000 in delinquent assessments.  Plaintiff eventually paid off the lien (under protest) and then filed suit.  The  trial court dismissed all claims on the association’s 2-619 motion.  Plaintiff appealed dismissal of the false light and slander of title claims.

The First District reversed the dismissal of the slander of title and false light claims.  It first held that unlike court pleadings (which are absolutely privileged), assessment liens don’t merit th same level of protection.  Assessment liens are only qualifiedly privileged.  A qualified privilege can be defeated by a showing of malice.  Malice means knowledge of a statement’s falsity or a reckless disregard as to its truth or falsity. ¶¶ 10, 22.  Otherwise, the court wrote, “unscrupulous condominium associations could record fraudulent assessment liens against homeowners with impunity.”  ¶ 18. 

Yeah?  So?

Kurtz teaches important lessons for associations and unit owners alike.  It vindicates the power that associations have to record liens and sue to evict defaulting unit owners.  But the case also cautions associations to lien the proper amount.  Otherwise, the owner may have valid slander of title and false light claims against the association.  However, the unit owner will still have the burden of proving the association’s knowledge of the lien’s falsity or reckless disregard as to the lien’s accuracy.