ILLINOIS OFFICIAL REPORTS
Appellate Court
Lake County Grading Co. v. Village of Antioch, 2013 IL App (2d) 120474
Appellate Court LAKE COUNTY GRADING COMPANY, LLC, Plaintiff-Appellee, v.
Caption THE VILLAGE OF ANTIOCH, Defendant-Appellant (Neumann Homes,
Inc., Defendant).
District & No. Second District
Docket No. 2-12-0474
Filed February 20, 2013
Held In an action by plaintiff subcontractor to recover from defendant village
(Note: This syllabus for work performed in connection with public improvements required by
constitutes no part of the village for defendant contractor’s residential subdivisions, summary
the opinion of the court judgment was properly entered for plaintiff on its counts alleging breach
but has been prepared of contract under a third-party beneficiary theory, notwithstanding the
by the Reporter of village’s contention that plaintiff had to proceed under the Public
Decisions for the Construction Bond Act, since plaintiff was a third-party beneficiary of the
convenience of the village’s agreement with the contractor, the village’s failure to obtain a
reader.)
payment bond from the contractor made the Bond Act inapplicable, and
plaintiff’s breach-of-contract claims were timely.
Decision Under Appeal from the Circuit Court of Lake County, No. 08-L-329; the Hon.
Review Margaret J. Mullen, Judge, presiding.
Judgment Affirmed.
Counsel on Robert J. Long, of Daniels, Long & Pinsel, LLC, of Waukegan, and
Appeal Lawrence R. Moelmann and Nancy G. Lischer, both of Hinshaw &
Culbertson LLP, of Chicago, for appellant.
Bogdan Martinovich, of Ray & Glick, Ltd., of Libertyville, for appellee.
Panel PRESIDING JUSTICE BURKE delivered the judgment of the court, with
opinion.
Justices McLaren and Hudson concurred in the judgment and opinion.
OPINION
¶1 Defendant Neumann Homes, Inc., entered into two infrastructure agreements (the
contract) with defendant the Village of Antioch (Village), to make certain public
improvements in two residential subdivisions. Pursuant to the contract, Neumann provided
four surety bonds that guaranteed performance for the benefit of the Village. The bonds did
not also guarantee payment to subcontractors, which was required by section 1 of the Public
Construction Bond Act (Bond Act). 30 ILCS 550/1 (West 2010). Neumann defaulted on its
contract with the Village and also failed to pay plaintiff, Lake County Grading Co., LLC.,
a subcontractor that worked on the project.
¶2 Plaintiff filed a five-count second amended complaint to recover payment from the
Village. The trial court granted plaintiff summary judgment on counts II and IV, in which
plaintiff alleged breach of contract under a third-party-beneficiary theory. Plaintiff’s theory
was that (1) section 1 of the Bond Act (see 30 ILCS 550/1 (West 2010)) required the Village
to obtain from Neumann a payment bond for the benefit of subcontractors, (2) Neumann’s
bonds were only performance bonds and not payment bonds, and (3) the Village’s
noncompliance with section 1 of the Bond Act rendered it liable for third-party-beneficiary
breach of contract. On appeal, the Village argues that under section 1 a payment bond
provision was read into Neumann’s performance bonds, and therefore plaintiff’s recourse
was to file an action on the bonds under section 2 of the Bond Act, which was barred by the
180-day limitations period set out therein (30 ILCS 550/2 (West 2010)). We affirm.
¶3 I. FACTS
¶4 This action arises from construction work performed in two residential subdivisions in
Antioch, commonly known as the NeuHaven Subdivision and the Clublands Subdivision.
Pursuant to the contract, Neumann agreed to construct certain public improvements for the
Village’s benefit. Thereafter, Neumann and plaintiff entered into agreements for plaintiff to
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perform certain grading work required under the contract. The pleadings present no dispute
that plaintiff completed the work in compliance with the contract but was not paid in full for
its services. Neumann is not a party to this appeal. The Village issued two special service
area (SSA) bonds to cover some of the costs.
¶5 The contract required Neumann to provide surety bonds, the amounts of which were
based on the total cost of the improvements. Neumann provided four surety bonds, issued
by Fidelity and Deposit Company of Maryland (Fidelity), to cover the work. The four bonds
were substantively similar, each providing in part that “NOW THEREFORE, THE
CONDITION OF THIS OBLIGATION IS SUCH, that, if said principal [Neumann] shall
perform and complete said improvement(s) to said development in accordance with either
the plan(s)/specification(s)/agreement, then this obligation shall be void, otherwise to be and
remain in full force and effect. THIS BOND WILL TERMINATE upon written acceptance
of the improvements by the Obligee [Village] to the Principal [Neumann] and/or Surety
[Fidelity].” While the bonds guaranteed performance by Neumann, they were silent regarding
payments to subcontractors, like plaintiff.
¶6 Neumann was unable to complete the improvements or to pay plaintiff in full. On
November 1, 2007, Neumann declared bankruptcy. On February 18, 2008, plaintiff served
Neumann and the Village with notices of a lien claim on a public improvement (see 770
ILCS 60/23 (West 2010)) and notices of a bond claim (see 30 ILCS 550/1, 2 (West 2010)).
Plaintiff last performed work on the NeuHaven Subdivision on April 16, 2007, which made
the 180th day October 13, 2007. Plaintiff last performed work on the Clublands Subdivision
on December 23, 2006, which made the 180th day June 4, 2007. The parties do not dispute
that plaintiff made its notices of claims more than 180 days after last performing work or
providing materials. Mark Reich, a managing member of plaintiff, testified that he handles
lien and bond claims for plaintiff. Reich stated that plaintiff had delayed sending notices of
its claims because plaintiff did not want to risk its good business relationship with Neumann
and feared losing future work.
¶7 Plaintiff filed a five-count second amended complaint, seeking to recover payment from
the Village. Counts I and III were lien claims for public funds (see 770 ILCS 60/23 (West
2010)) and count V was a claim for unjust enrichment, but these claims ultimately were
dismissed and are not part of this appeal.
¶8 Counts II and IV alleged third-party-beneficiary breach of contract. Specifically, plaintiff
alleged that section 1 of the Bond Act and section 3.2(a) of the contract conferred third-party-
beneficiary status upon plaintiff. Plaintiff alleged that the Village has breached its duty to
require from Neumann a sufficient payment bond for the benefit of plaintiff.
¶9 Following cross-motions for summary judgment, the trial court granted plaintiff summary
judgment on counts II and IV. The Village timely appeals.
¶ 10 II. ANALYSIS
¶ 11 A. Standard of Review
¶ 12 The purpose of summary judgment is not to try a question of fact but, rather, to determine
whether a genuine issue of material fact exists. Adams v. Northern Illinois Gas Co., 211 Ill.
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2d 32, 42-43 (2004). Summary judgment is appropriate where the pleadings, affidavits,
depositions, and admissions on file, when viewed in the light most favorable to the
nonmoving party, show that there is no genuine issue of material fact and that the moving
party is entitled to a judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2010); Klitzka
v. Hellios, 348 Ill. App. 3d 594, 597 (2004). In reviewing a grant of summary judgment, this
court must construe the pleadings, depositions, admissions, and affidavits strictly against the
moving party and liberally in favor of the nonmoving party. Williams v. Manchester, 228 Ill.
2d 404, 417 (2008). Where reasonable persons could draw divergent inferences from the
undisputed material facts or where there is a dispute as to a material fact, summary judgment
should be denied and the issue decided by the trier of fact. Espinoza v. Elgin, Joliet &
Eastern Ry. Co., 165 Ill. 2d 107, 114 (1995). If a party moving for summary judgment
introduces facts that, if not contradicted, would entitle him to a judgment as a matter of law,
the opposing party may not rely on his pleadings alone to raise issues of material fact.
Klitzka, 348 Ill. App. 3d at 597.
¶ 13 The summary judgment procedure is to be encouraged as an aid in the expeditious
disposition of a lawsuit. Adams, 211 Ill. 2d at 43. However, summary judgment is a drastic
means of disposing of litigation and should not be granted unless the movant’s right to
judgment is clear and free from doubt. Forsythe v. Clark USA, Inc., 224 Ill. 2d 274, 280
(2007). We note that, by filing cross-motions for summary judgment, parties agree that only
a question of law is involved and invite the court to decide the issues based on the record.
Allen v. Meyer, 14 Ill. 2d 284, 292 (1958). However, the mere filing of cross-motions for
summary judgment does not establish that there is no issue of material fact, nor does it
obligate a court to render summary judgment. Andrews v. Cramer, 256 Ill. App. 3d 766, 769
(1993).
¶ 14 Where a case is decided through summary judgment, our review is de novo. Schultz v.
Illinois Farmers Insurance Co., 237 Ill. 2d 391, 399-400 (2010). De novo review is also
appropriate to the extent that this case turns on construction of the provisions of the Bond
Act, which presents a question of law. See Gaffney v. Board of Trustees of the Orland Fire
Protection District, 2012 IL 110012, ¶ 50. The fundamental objective of statutory
construction is to ascertain and give effect to the intent of the legislature, and the most
reliable indicator of legislative intent is the statutory language, given its plain and ordinary
meaning. Gaffney, 2012 IL 110012, ¶ 56. “When the statutory language is clear and
unambiguous, it must be applied as written without resort to extrinsic aids of statutory
interpretation.” Gaffney, 2012 IL 110012, ¶ 56. “We will not depart from the plain statutory
language by reading into it exceptions, limitations, or conditions that conflict with the
expressed intent of the legislature.” Gaffney, 2012 IL 110012, ¶ 56.
¶ 15 B. Bond Act
¶ 16 The Village argues that section 1 of the Bond Act incorporates payment and performance
provisions in all surety bonds for public construction even if the bonds do not expressly
include such provisions, and therefore the bonds that Neumann procured would satisfy
plaintiff’s claims for payment. However, the Village concludes, because plaintiff gave notice
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of its claims more than 180 days after last working on the project, the claims are barred by
the 180-day limitations period of section 2 of the Bond Act. We disagree. The Village’s
argument is based on the flawed premise that plaintiff’s only recourse is to bring an action
under the Bond Act. Counts II and IV of the second amended complaint state common-law
claims for third-party-beneficiary breach of contract, not claims under the Bond Act.
Although the Bond Act causes certain terms to be read into the contract, plaintiff’s breach-of-
contract action is distinct from an action brought under the statute, such that the Bond Act’s
statute of limitations does not apply.
¶ 17 Section 1 of the Bond Act provides that (1) political subdivisions contracting for public
work must require the contractor to furnish a surety bond to guarantee performance as well
as payment owed to subcontractors and (2) each such bond is “deemed to contain” certain
provisions, even if they are not expressly included in the bond. Section 1 provides in relevant
part as follows:
“Except as otherwise provided by this Act, all officials, boards, commissions, or agents
of this State in making contracts for public work of any kind costing over $50,000 to be
performed for the State, and all officials, boards, commissions, or agents of any political
subdivision of this State in making contracts for public work of any kind costing over
$5,000 to be performed for the political subdivision, shall require every contractor for the
work to furnish, supply and deliver a bond to the State, or to the political subdivision
thereof entering into the contract, as the case may be, with good and sufficient sureties.
The amount of the bond shall be fixed by the officials, boards, commissions,
commissioners or agents, and the bond, among other conditions, shall be conditioned for
the completion of the contract, for the payment of material used in the work and for all
labor performed in the work, whether by subcontractor or otherwise.
***
Each such bond is deemed to contain the following provisions whether such
provisions are inserted in such bond or not:
‘The principal and sureties on this bond agree that all the undertakings, covenants,
terms, conditions and agreements of the contract or contracts entered into between the
principal and the State or any political subdivision thereof will be performed and fulfilled
and to pay all persons, firms and corporations having contracts with the principal or with
subcontractors, all just claims due them under the provisions of such contracts for labor
performed or materials furnished in the performance of the contract on account of which
this bond is given, when such claims are not satisfied out of the contract price of the
contract on account of which this bond is given, after final settlement between the
officer, board, commission or agent of the State or of any political subdivision thereof
and the principal has been made.’ ” (Emphasis added.) 30 ILCS 550/1 (West 2010).
¶ 18 In turn, section 2 of the Bond Act prescribes a cause of action for an unpaid subcontractor
on the bond. The relevant version of section 2 provides in part as follows:
“Every person furnishing material or performing labor, either as an individual or as a
sub-contractor for any contractor, with the State, or a political subdivision thereof where
bond or letter of credit shall be executed as provided in this Act, shall have the right to
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sue on such bond or letter of credit in the name of the State, or the political subdivision
thereof entering into such contract *** for his use and benefit, and in such suit the
plaintiff shall file a copy of such bond ***, certified by the party or parties in whose
charge such bond *** shall be, which copy shall, unless execution thereof be denied
under oath, be prima facie evidence of the execution and delivery of the original;
provided, however, that this Act shall not be taken to in any way make the State, or the
political subdivision thereof entering into such contract, *** liable to such sub-contractor
*** to any greater extent than it was liable under the law as it stood before the adoption
of this Act.” 30 ILCS 550/2 (West 2010).
¶ 19 Any party seeking to enforce a claim for labor or materials has no right of action under
the Bond Act unless the party files a verified notice of the claim with the officer, board,
bureau, or department awarding the contract, “within 180 days after the date of the last item
of work or the furnishing of the last item of materials.” 30 ILCS 550/2 (West 2010).
Additionally, no action of any kind shall be brought under the Bond Act more than six
months after the State or political subdivision accepts the building project or work. 30 ILCS
550/2 (West 2010).1
¶ 20 The Village argues that the 180-day limitations period of section 2 bars the claims
contained in counts II and IV of the second amended complaint and, therefore, the trial court
should have entered summary judgment for the Village. However, section 2 of the Bond Act
states that “[t]he remedy provided in this Section is in addition to and independent of any
other rights and remedies provided at law or in equity.” 30 ILCS 550/2 (West 2010). Counts
II and IV alleged common-law third-party-beneficiary contract claims, which are independent
of the type of action prescribed by section 2. Thus, plaintiff’s claims turn on the language of
the contract.
¶ 21 The construction, interpretation, or legal effect of a contract is a matter to be determined
by the court as a question of law (Avery v. State Farm Mutual Automobile Insurance Co., 216
Ill. 2d 100, 129 (2005)), which we review de novo (Gallagher v. Lenart, 226 Ill. 2d 208, 219
(2007)). “ ‘The elements of a breach of contract claim are: (1) the existence of a valid and
enforceable contract; (2) performance by the plaintiff; (3) breach of contract by the
defendant; and (4) resultant injury to the plaintiff.’ ” Timan v. Ourada, 2012 IL App (2d)
100834, ¶ 24 (quoting Henderson-Smith & Associates, Inc. v. Nahamani Family Service
Center, Inc., 323 Ill. App. 3d 15, 27 (2001)).
¶ 22 “An individual not a party to a contract may only enforce the contract’s rights when the
contract’s original parties intentionally entered into the contract for the direct benefit of the
individual.” Martis v. Grinnell Mutual Reinsurance Co., 388 Ill. App. 3d 1017, 1020 (2009).
“There is a strong presumption that the parties to a contract intend that the contract’s
provisions apply only to them, and not to third parties.” Martis, 388 Ill. App. 3d at 1020.
Without contract language, the contracting parties’ knowledge, expectation, or even intention
that others will benefit from their agreement is not enough to overcome the presumption that
1
Public Act 97-487 (eff. Jan. 1, 2012) rewrote section 2 in part to extend from six months
to one year the period for bringing an action under section 2 of the Bond Act.
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the contract was intended for the direct benefit of the parties. Martis, 388 Ill. App. 3d at
1020.
¶ 23 A person’s status as a third-party beneficiary turns on whether the contract language
shows such an intent of the contracting parties. Martis, 388 Ill. App. 3d at 1020. The contract
language must show that the contract was made for the direct, not merely incidental, benefit
of the third party. Martis, 388 Ill. App. 3d at 1020. Such an intention must be shown by an
express provision in the contract identifying the third-party beneficiary by name or by
description of a class to which the third party belongs. “If a contract makes no mention of the
plaintiff or the class to which he belongs, he is not a third-party beneficiary of the contract.”
Martis, 388 Ill. App. 3d at 1020. “The plaintiff bears the burden of showing that the parties
to the contract intended to confer a direct benefit on him.” Martis, 388 Ill. App. 3d at 1020.
¶ 24 Plaintiff qualifies as a third-party beneficiary. The payment bond requirement found in
section 1 of the Bond Act is read into a public works contract between a public entity and a
general contractor. Ardon Electric Co. v. Winterset Construction, Inc., 354 Ill. App. 3d 28,
34 (2004). Specifically, section 1 states that, as part of its agreement with the general
contractor, the public entity “shall require every contractor for the work to furnish, supply
and deliver a bond,” and the bond shall be conditioned for the completion of the contract, for
the payment of material used in the work, and for all labor performed in the work, including
work completed by subcontractors. 30 ILCS 550/1 (West 2010).
¶ 25 “The Bond Act is remedial and ‘ “is liberally construed to effectuate the General
Assembly’s intent to encourage and protect artisans, materialmen, and tradesmen.” ’ ” Ardon,
354 Ill. App. 3d at 34 (quoting East Peoria Community High School District No. 309 v.
Grand Stage Lighting Co., 235 Ill. App. 3d 756, 759-60 (1992), quoting Chicago Housing
Authority v. United States Fidelity & Guaranty Co., 49 Ill. App. 2d 407, 410 (1964)).
Therefore, the Bond Act mandates that the public entity require the general contractor to
obtain a payment bond. Ardon, 354 Ill. App. 3d at 34 (citing East Peoria, 235 Ill. App. 3d
at 760). The Village violated section 1, and thus breached the contract, when it failed to
require Neumann to procure such a payment bond.
¶ 26 A subcontractor is a third-party beneficiary of a contract between a public entity and a
general contractor because, “ ‘[a]s a policy matter, it would be meaningless here to read the
Bond Act requirements into the [general contract] without reading in third-party rights to
enforce that statute.’ ” Ardon, 354 Ill. App. 3d at 34 (quoting East Peoria, 235 Ill. App. 3d
at 761).
¶ 27 Moreover, consistent with the payment bond provision, section 3.2(a) of the contract
provides that “[t]he Village agrees that [Neumann] shall construct the public improvements
using subcontractors and materialmen selected from time to time by [Neumann] in
[Neumann’s] sole discretion.” The payment bond provision read into the contract as well as
section 3.2(a) of the contract itself show the intent of Neumann and the Village to make
plaintiff a third-party beneficiary. See East Peoria, 235 Ill. App. 3d at 761-62 (“promises
regarding payment show that the parties anticipated that subcontractors’ services would be
provided on credit and that the parties wanted to make express arrangements for payment to
them”).
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¶ 28 The Appellate Court, First District, Second Division, reached a different result in Shaw
Industries, Inc. v. Community College District No. 515, 318 Ill. App. 3d 661, 667-69 (2000).
In Shaw Industries, the general contractor, Prairie State Associates, Inc. (PSA), hired Shaw
to complete work under a contract between PSA and Prairie State College. Like plaintiff in
this case, Shaw filed a complaint against the college alleging a breach of contract arising
from the college’s failure to require PSA to procure a payment bond as required by the Bond
Act. The college moved to dismiss the complaint, arguing, inter alia, that Shaw was barred
by the 180-day limitations period set out in section 2 of the Bond Act. The trial court granted
the motion to dismiss. Shaw Industries, 318 Ill. App. 3d at 664.
¶ 29 The appellate court affirmed the dismissal, holding that the contract between PSA and
the college did not contain any provisions indicating that the contract was entered into for
Shaw’s direct benefit. The court distinguished East Peoria and Western Waterproofing Co.
v. Springfield Housing Authority, 669 F. Supp. 901 (C.D. Ill. 1987), explaining that in each
of those cases the contract was entered into for the direct benefit of a third party. Shaw
Industries, 318 Ill. App. 3d at 668-69. The Shaw Industries court recognized the well-settled
principle that a third-party-beneficiary contract action can be asserted by an unpaid
subcontractor against a public entity where such public entity has failed to procure from the
general contractor a payment bond as required by the Bond Act. Shaw Industries, 318 Ill.
App. 3d at 669. However, the court held that Shaw was not a direct beneficiary under the
express terms of the contract and that reading the payment bond provision into the contract
rendered Shaw’s third-party-beneficiary action vulnerable to the limitations provisions of the
Bond Act. Shaw Industries, 318 Ill. App. 3d at 672. In the view of the Shaw Industries court,
Shaw’s cause of action was limited to the protection offered by the Bond Act, and
accordingly the outcome was controlled by the provisions of the Bond Act, including the
180-day limitations period set forth in section 2. Shaw Industries, 318 Ill. App. 3d at 672.
¶ 30 In A.E.I. Music Network, Inc. v. Business Computers, Inc., 290 F.3d 952 (7th Cir. 2002),
the Seventh Circuit suggested that the applicability of section 2’s limitations period “has
divided Illinois’s intermediate appellate court.” A.E.I. Music Network, 290 F.3d at 954. The
court explained that Shaw Industries determined that the 180-day limitations period applied
because the suit, however captioned, was necessarily a suit to enforce the Bond Act, while
East Peoria implied that the 180-day limitations period did not apply, 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. A.E.I. Music Network, 290 F.3d
at 954.
¶ 31 The Seventh Circuit declined to follow Shaw Industries, holding that the statute of
limitations in section 2 of the Bond Act applies only to a suit on the bond; and where no
bond is procured, a suit on the bond is impossible. A.E.I. Music Network, 290 F.3d at 954.
Instead, the court reasoned, the “natural remedy” is a breach-of-contract claim by the
subcontractor against the public entity. Because the bond requirement in section 1 of the
Bond Act is read into public construction contracts to give subcontractors a remedy, the
third-party-beneficiary doctrine entitles a subcontractor to sue for breach of contract. Thus,
a subcontractor suing as a third-party beneficiary under a general contract has four years to
file a complaint under section 13-214 of the Code of Civil Procedure. A.E.I. Music Network,
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290 F.3d at 955; see also Ardon, 354 Ill. App. 3d at 39.
¶ 32 We disavow Shaw Industries to the extent that it incorrectly applied the Bond Act’s
limitations period to a breach-of-contract claim. Conversely Ardon, A.E.I. Music Network,
and East Peoria correctly applied the statute of limitations for a breach-of-construction-
contract action under similar facts. Because a public works contract is deemed to include a
payment bond requirement with specific verbiage pursuant to section 1 of the Bond Act, a
subcontractor’s third-party-beneficiary action is not a suit on the bond and the Bond Act’s
limitations provisions do not apply. Rather, unless the surety is being dunned, the
subcontractor’s action is on the terms contained in the contract. Further, we note that this
case is factually distinguishable from Shaw Industries, where the express terms of the
contract did not make the subcontractor a third-party beneficiary.
¶ 33 We hold that the Village breached the contract when it failed to require Neumann to
furnish a payment bond for the benefit of subcontractors. Section 1 of the Bond Act requires
the general contractor to post a payment bond, and that requirement is read into a public
construction contract precisely to give the subcontractor a remedy; thus a payment bond
became a term of the contract between Neumann and the Village. As a direct third-party
beneficiary, plaintiff had the right to sue on the contract. See Ardon, 354 Ill. App. 3d at 39.
The limitations period of section 2 of the Bond Act applies only to a suit on the bond; where
no bond was procured, a suit on the bond is impossible. A.E.I. Music Network, 290 F.3d at
954. Applying the Bond Act’s limitations period to a breach-of-contract suit, as Shaw
Industries did, is a non sequitur. Plaintiff’s breach-of-contract claims are not time barred
because the four-year statute of limitations for construction contracts (see 735 ILCS 5/13-214
(West 2010)) applies rather than the 180-day limitations period in section 2 of the Bond Act.
¶ 34 In its reply brief, the Village argues that we need not follow Ardon, A.E.I. Music
Network, and East Peoria because, in those cases, the general contractors failed to procure
a bond of any kind, while in this case the Village obtained performance bonds. The Village
contends that, while we must read section 1’s subcontractor payment provision into
Neumann’s performance bonds, such a provision could not be read into a bond in Ardon,
A.E.I. Music Network, and East Peoria where no bonds existed. We disagree.
¶ 35 Admittedly, in A.E.I. Music Network, “no bond was posted; and as a result A.E.I. could
not turn to a surety when it was stiffed.” A.E.I. Music Network, 290 F.3d at 953. However,
the actions brought in Ardon and East Peoria were based only on the absence of a payment
bond; it is unclear whether the public entities procured any other kind of bond into which the
payment provision of section 1 could be read. Ardon, 354 Ill. App. 3d at 30 (“no payment
bond was available” (emphasis added)); East Peoria, 235 Ill. App. 3d at 759 (“The first issue
for review is whether the Bond Act mandated that [the high school] require [the general
contractor] to obtain a payment bond.” (Emphasis added.)). The Village makes an
unsupported factual statement about Ardon and East Peoria.
¶ 36 Furthermore, after providing that the public entity must require the contractor to furnish
a surety bond to guarantee payment owed to subcontractors, section 1 of the Bond Act states
that “such bonds” are deemed to include certain language set forth in the section. If a bond
does not mention payment to subcontractors, it is not “such [a] bond.” The specific language
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to be included in the bond pursuant to section 1 is intended to clarify what might otherwise
be seen as ambiguous bond language, not to expand a performance bond into a payment
bond. In other words, the statute’s specific language relating to payment is deemed to be
included in the bond only after the public entity satisfies the predicate condition of requiring
the contractor to procure a payment guarantee. To hold otherwise would create the practical
absurdity of the claimant having to seek recovery on a bond that does not exist.
¶ 37 If we were to adopt the Village’s argument, we would improperly shift from the Village
to Fidelity the burden of ensuring compliance with section 1 of the Bond Act. Section 1
states that a public entity like the Village “shall require every contractor for the work to
furnish, supply and deliver a bond” for the benefit of subcontractors, but the statute imposes
no such duty on the surety. Furthermore, because Fidelity was not a party to the contract, its
exposure was calculated based on contract terms over which it had no control.
¶ 38 III. CONCLUSION
¶ 39 Section 1 of the Bond Act, as well as section 3.2(a) of the contract itself, made plaintiff
a direct third-party beneficiary with the right to sue on the contract. See Ardon, 354 Ill. App.
3d at 39. Because the Village did not require Neumann to procure a payment bond, a suit on
such a bond is impossible and the statute of limitations of section 2 of the Bond Act does not
apply. A.E.I. Music Network, 290 F.3d at 954. Plaintiff’s breach-of-contract claims are timely
under the four-year statute of limitations for construction contracts (see 735 ILCS 5/13-214
(West 2010)).
¶ 40 For the reasons stated, the summary judgment entered in favor of plaintiff is affirmed.
¶ 41 Affirmed.
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