A.E.I. v. Business Computers

Argued November 7, 2001 This appeal by A.E.I. Music Network, Inc., a subcontractor, from the dismissal of its diversity suit against the Chicago Board of Education (the other defendants having dropped out of the case) presents questions of Illinois contract and construction law. The Board had hired Business Computers, Inc. (BCI) to install an audio-visual system in a high school, and BCI had subcontracted a part of the job to A.E.I. A.E.I. did the work called for in the subcontract but was not paid by BCI, which is broke. The Illinois Bond Act requires a public entity such as the Chicago Board of Education to require its contractors to post bonds to assure the payment of any money owed by the contractors to their subcontractors. 30 ILCS 550/0.01 et seq.; MQ Construction Co. v. Intercargo Ins. Co., 742 N.E.2d 820, 825 (Ill. App. 2000); Shaw Industries, Inc. v. Community College Dist. No. 515, 741 N.E.2d 642, 645, 647 (Ill. App. 2000); Aluma Systems, Inc. v. Frederick Quinn Corp., 564 N.E.2d 1280, 1297 (Ill. App. 1990). The Board, in violation of the Act, failed to require BCI to post a bond; no bond was posted; and as a result A.E.I. could not turn to a surety when it was stiffed by BCI. Out $159,000, it brought this suit, charging that the statutory requirement of a bond was an implied-by-law term of the contract between the Board and BCI that it can enforce as a third-party beneficiary, and also seeking to impress a mechanic's lien, 770 ILCS 60/23; R.W. Dunteman Co. v. C/G Enterprises, Inc., 692 N.E.2d 306, 313 (Ill. 1998); MQ Construction Co. v. Intercargo Ins. Co., supra, 742 N.E.2d at 825, on any funds that the Board has set aside to pay BCI on the contract. The district judge dismissed the breach of contract claim as barred by the 180-day statute of limitations in the Bond Act and dismissed the mechanic's lien claim as barred by an admission by A.E.I. that the Board had paid BCI all that was owing it before A.E.I. filed the notice of lien. The applicability of the 180-day statute of limitations to a suit by a subcontractor complaining about a public agency's having failed to require the contractor to post a bond has divided Illinois's intermediate appellate court. Shaw Industries, Inc. v. Community College Dist. No. 515, supra, 741 N.E.2d at 648, holds that the 180-day limitation, though found in the Bond Act rather than in the common law of contract, is applicable to such a suit because the suit however captioned is necessarily a suit to enforce the Act. Id. at 649. East Peoria Community High School Dist. No. 309 v. Grand Stage Lighting Co., 601 N.E.2d 972, 975 (Ill. App. 1992), implies that the 180-day period is inapplicable, because the court described the subcontractor's suit against the agency as a third-party-beneficiary suit for breach of contract rather than as a suit under the Bond Act. We think this is clearly right and that the Supreme Court of Illinois would so hold if presented with the issue.