Legal Question in Construction Law in Illinois

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Flip It Developers is a St. Louis MO company that buys commercial stores, fixes them up, obtains a Lessee then sells them as soon as possible. They bought a small strip mall in Belleville IL. For the largest store in the complex they signed a lease with Puppy Mills Inc., a very well know national chain of pet stores.

Puppy Mills Inc. (a Delaware Corp) has a standard store appearance, as do most chain stores, which incorporates their logo and colors. As part of the lease agreement, Flip It was to perform a build out to corporate standards of Puppy Stores. Puppy Mills Inc. provided plans and specs for their standard store as drawn by Big Architects and Engineers (BAE), a Birmingham AL firm, to Flip It Developers for this purpose.

Flip It then signed an AIA101 Owner-Contractor Agreement with We Build Stuff (WBS) General Contractors to modify the store for Puppy Mills. WBS took BAE’s plans to the Belleville Building Department for building permits. The City of Belleville noted that a number of items in the general plans did not meet code for Illinois. WBS informed Flip It who asked Puppy Mills to have modifications made to the plans and specs by BAE sufficient to get the City Building permits. Puppy did so and the permits were issued.

WBS did not get the build out finished on time and Puppy Mills declared the lease materially breached by Flip It and broken. Eventually an amendment was made to the lease to reinstate it with a new date established. WBS missed that date and the lease was declared materially breached and broken again. At this point WBS had RFI’s they claimed they needed answered to finish the Work and Flip It wanted the Work to continue so as to negotiate a solution to the lease with Puppy Mills, so Flip It paid BAE directly to answer the RFI’s and issue Supplemental Instructions (SSI). No contract was signed for this work.

Dates were missed, declarations of a broken lease followed by an amendment reinstating the lease occurred 4 times before Puppy Mills occupied the store. At that point WBS sued Flip It for construction claims and Flip It counter sued for delay and economic losses. WBS prevailed in that lawsuit.

Now Flip It is suing BAE for the cost of the WBS lawsuit due to bad plans. Damages are the losses and costs in the BAE lawsuit, lost rent due to concessions to Puppy Mills in Amendment #4 $900,000), lost rent for other stores in the mall not available due to the anchor store being unfinished ($7Mil), and Flip It’s costs during the construction delays such as extended electric bills ($2Mil). The key to their theory is that during the periods when the lease was “broken” that whatever the contract was between BAE and Puppy Mill flowed to Flip It and that Flip It “assumed” that full design contract by paying for the RFI’s and SSI’s. There is no signed contract between BAE and Flip It. The building was sold 6 months after it was completed with Puppy Mills as the tenant for 5 years.

What is your IRAC analysis? It may help to diagram the players.

Can you help me out solve this hypothetical case as a forward moving step for my law studies. It would be great if you can advise me on this as my mentor.

Thank you

Asked on 10/14/17, 6:51 pm

1 Answer from Attorneys

Sorry no hypotheticals.

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Answered on 11/01/17, 11:02 am

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