Illinois Construction Law Blog : Illinois Construction Lawyer & Attorney : Foran Glennon Palandech Ponzi & Rudloff Law Firm : Chicago IL

In Abari Construction Co., Inc. v. State of Illinois, 59 Ill. Ct. Cl. 316, 2007 WL 7076039 (2007), the Illinois Court of Claims dismissed a contractor's complaint for the contractor's failure to timely file suit under the terms of its contract with the Illinois Department of Transportation ("IDOT").  Abari sought delay damages from IDOT for a bridge reconstruction project.  The contract mandated three levels of administrative review prior to commencement of suit before the Court of Claims, but also required that suit be filed within 60 days of the final decision from the IDOT third level reviewers.

Abari made a contract claim, which made its way through the administrative review process and a final decision was issued in January 2003.  Abari did not file suit in the Court of Claims until October 2003, over eight months after the final decision was rendered by IDOT.  The State, on behalf of IDOT, moved to dismiss the complaint as time-barred by the contractual limitations period.

The Court granted the State's motion to dismiss, noting that Illinois law is clear that parties can contractually agree to shorter limitations periods to replace statutory limitations periods, so long as the contractual period is reasonable.  Moreover, the Court of Claims Act specifically allows for the applicability of shorter limitations periods than those set forth by the Court of Claims Act.

What should we take away from the holding in Abari?  Quite simply, reasonable contractual limitations periods will be upheld in nearly any context.  Contractors must be knowledgeable concerning the limitations periods in their contracts and vigilant in enforcing those limitations periods. 

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News & Notes is a section we have dedicated to interesting items that do not contain enough information to have full entries but are certainly worth noting.

Blair Kamin over at the Chicago Tribune’s Cityscapes has posted the following article reporting that Chicago architects Adrian Smith and Gordon Gill have been selected by a Saudi Arabian investment firm to design a kilometer-high skyscraper on the fringes of the Saudi city of Jeddah, which would make it the world’s tallest building.

There has been a lot of discussion regarding the state of the Illinois Home Repair Act and the decisions handed down by the appellate courts. We have been monitoring Illinois SB 2540, introduced by Senator Wilhelmi, which will address at least part of the confusion regarding the remedy associated with the Home Repair Act. The proposed amendment will entirely replace Section 30 of the Act to clarify and more accurately identify the remedies available to private parties under the Act. SB 2540 was passed by the Senate on March 9, 2010 and arrived in the House on March 10, 2010. It was referred to the House Consumer Protection Committed on March 22, 2010 after its First Reading and a review by the Rules Committee. We will continue to keep you advised on the progress of SB 2540.

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From time to time we will report on new cases that have been filed that are related to the construction industry. 

Walsh Construction has filed suit against the City of Chicago requesting that the court declare that bids submitted by two other contractors for the Congress Parkway Interchange Improvements project are non-responsive and that its own bid is responsive.  In addition, Walsh is seeking an order enjoining the City from accepting either of the two bids.

Walsh, along with Paschen/Cabo and James McHugh, submitted a bid for the Congress Parkway Interchange Improvements project.  It is Walsh's contention that the City of Chicago violated its own Municipal Purchasing Act by even considering the other bids because they were non-responsive to the Bid Deposit specification.  Paschen/Cabo is alleged to have filed to include a bid deposit of any kind and McHugh is alleged to have provided the bid deposit in the form of a company check rather than the required certified check, cashier's check or money order.  Walsh alleges that it complied with the specification and, therefore, submitted the sole responsible and responsive bid.  It should also be noted that the Paschen/Cabo and McHugh bids were lower than Walsh's bid for the project.

We will continue to monitor this litigation and report on any important details.   

Just last week, a personal injury complaint was filed in the Circuit Court of Cook County against unknown architects, engineers, and designers of Golf Road in Des Plaines, Illinois.  The complaint, filed on behalf of Plaintiff Magdalena Walus, alleges that she was injured in a motor vehicle accident caused by an icy roadway on Golf Road near the Des Plaines River.  Specifically, the complaint alleges that Golf Road, where it meets the Des Plaines River, regularly floods with river water and freezes, causing dangerous conditions.  Furthermore, the complaint alleges that defendants had knowledge that such flooding took place at the time of designing, engineering, planning and constructing Golf Road and willfully disregarded said knowledge.

The complaint includes the City of Des Plaines, Cook County, and the State of Illinois as respondents in discovery and seeks discovery from those entities regarding similar motor vehicle accidents in the past in the same area.

The case presents interesting issues regarding the standard of care applicable to design professionals.

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You’re not alone. Recently, the Third District Appellate Court issued an opinion in direct conflict with what we thought we knew about the Home Repair & Remodeling Act (the “Home Repair Act”).   

Here’s what we thought we knew. When a contract does not comply with the Home Repair Act, it is invalid and cannot form the basis of a breach of contract action or an action to foreclose a mechanic's lien. See K. Miller Constr. Co. v. McGinnis, 394 Ill. App. 3d 248, 913 N.E.2d 1147 (1^st Dist. 2009); Smith v. Bogard, 377 Ill. App. 3d 842, 879 N.E.2d 543 (4^th Dist. 2007); Central Illinois Electrical Services, LLC v. Slepian, 358 Ill.App.3d 545, 831 N.E.2d 1169 (3^rd Dist. 2005). 

Then, the Second District issued its opinion in Artisan Design Build, Inc. v. Bilstrom (2^nd Dist. September 22, 2009), which stated that a violation of the Home Repair Act did not automatically preclude a contractor from recovering at law (foreclosure of mechanic’s lien) or equity (quantum meruit). 

More recently, the Third District Court sided with the McGinnis line of cases in issuing its opinion in Roberts v. Adkins on January 7, 2010. Our discussion on the Artisan Design Build and Roberts cases are posted here. 

However, just one week latter, it appears as though the Third District has changed its mind. In Fandel v. Allen, the Third District Court stated that the Illinois Legislature did not intend for the Home Repair Act to give a private right of action to consumers or to create an affirmative defense to mechanic’s liens.  

The Fandel case involved a roofing contractor who had submitted a bid to replace the roof on the defendant’s home. The contractor provided the defendant with a written, itemized work order for the roofing work, which totaled over $9,000. The work order was not signed by the defendant, and the contractor failed to provide the defendant with the consumer rights brochure as required by the Home Repair Act. After the work was completed, the defendant issued a check for payment in full but later stopped payment on the check. The contractor filed a mechanic’s lien and then brought an action to foreclose on the lien. The trial court granted summary judgment for the defendant based on the contractor’s failure to comply with the Home Repair Act in obtaining a signed contract and providing the consumer rights brochure.  

However, the Third District Appellate Court reversed in stating that the Home Repair Act contains no explicit or implicit language indicating that the Legislature intended to provide homeowners with a private right of action to enforce the Home Repair Act or that the Home Repair Act provide an affirmative defense to mechanic’s liens. The Third District Court further noted that the defendant did not claim that she was not aware of her rights; rather, she simply maintained that the roofing contractor’s procedural errors in failing to comply with the Home Repair Act invalidated the mechanic’s lien as there was no valid contact. In its decision, the Court cited the Mechanic’s Lien Act (“MLA”) in stating that the MLA does not distinguish between oral and written contracts. Additionally, the Court stated that violations of the Home Repair Act do not automatically invalidate a contract. Instead, the Court explained that the roofing contractor’s violations of the Home Repair Act were simply due to oversights “grounded in ignorance of the statute” and that the consumer protection interests were not injured as the defendant received the benefit of the bargain. Moreover, all of the elements of a valid contract were present (offer, acceptance, and consideration).  

Accordingly, the Fandrel Court held that a valid and enforceable oral contract existed and that the contractor’s performance created a right to a mechanic’s lien. The Third District Court also added that a homeowner’s rights under the Home Repair Act may be asserted in a private cause of action under the Illinois Consumer Fraud Act where the homeowner sustains actual damages resulting from a violation of the Home Repair Act.

So, what do we now know? Given the different treatment of the Home Repair Act between the different courts, the Illinois Supreme Court may accept an appeal on this issue. Also, we will keep you updated on SB 2540, which would partially clarify parties’ remedies under the Home Repair Act. Until then, contractors must educate themselves on the Home Repair Act to ensure compliance as “ignorance of the statute” will, at best, subject you to lengthy and costly litigation.

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The Second District held as much in its recently released opinion in Thompson v. Gordon.  There, Plaintiff’s husband and daughter were fatally injured when the driver of a vehicle moving in the opposite direction lost control and vaulted over the concrete median separating traffic.  Plaintiff sued the engineer that designed the bridge deck and traffic area where the median was located, alleging the engineer was negligent in failing to design a median barrier that would have prevented the vehicle from crossing the median and causing the accident.  The trial court granted the engineer’s motion for summary judgment, relying on the services contract and holding that it did not require an assessment of the sufficiency of the median barrier and did not require the engineer to modify or redesign the median barrier.

On appeal, the Second District looked first to the plain language of the contract.  The court held that the contract required the engineer to submit design plans for a bridge deck “replacement.”  Viewing the contract as a whole, the court read “replacement” to mean that the engineer’s role was limited to submitting designs to recreate the bridge deck exactly as it had existed, rather than submitting designs for an improved or altered deck.  However, the contract also contained a provision stating that “[t]he standard of care for [defendants’] services will be the degree of skill and diligence normally employed by professional engineers or consultants performing the same or similar services.”  The court therefore concluded that the engineer labored under both of the above-mentioned duties.

Having determined the engineer’s duty, the issue then became whether the plaintiff provided any evidence that the engineer breached its duty.  In the court’s eyes, the plaintiff had proffered such evidence in the form of an expert report indicating that an engineer acting within the standard of care while creating plans to replace the bridge deck would have considered and designed an improved median barrier.  The court noted, “although the interpretation of defendants’ contract is indeed a question of law, our interpretation of that contract leads us to conclude that the contract imposed a professional duty of care on defendants’ work, and the extent of that duty (and whether it was breached) creates a factual question subject to expert testimony.”  Plaintiff’s expert report was, in the Second District’s opinion, sufficient to create questions of fact regarding defendants’ breach of duty and the judgment of the trial court was reversed.

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You may recall our discussion of the Second District’s decision in Artisan Design Build, Inc., v. Bilstrom, in which the Second District was faced with the same decision as the other districts have been faced with… what, if anything, does a contractor’s failure to comply with the Act mean for its claims against the homeowner?

The Second District interpreted the Act to mean that the contractor’s failure to provide the consumer with the brochure does NOT remove the contractor’s right to recover in either equity (quantum meruit) or law (breach of contract, mechanic’s lien).

“To hold that a failure to provide a consumer with the brochure allows the consumer to defeat all legal and equitable claims by the contractor would lead to mischief and a result the legislature could not have intended.”

In reaching this conclusion, the Court said it was looking to legislative intent, which is a phrase and methodology addressed in many of the cases involving this Act. However, the Court attempted to discover the legislative intent through reading the “plain language” of the statute but does not examine what the legislature had to say about the bill in debate or committee.

In Roberts d/b/a Roberts Cleaning, Maintenance and More v. Adkins, the Third District has now added its voice to the discussion and disagreed with the Second District. In, Roberts a contractor sued to enforce a mechanic’s lien and the homeowner asserted, as an affirmative defense, that the contractor violated the Home Repair Act by failing to provide a consumer rights brochure or a written agreement. The Court determined that the failure to obtain a written contract was a violation of the Home Repair Act and further determined that, “[W]hen a contract does not comply with the Act, it is invalid and cannot form the basis of a breach of contract action or an action to foreclose a mechanic’s lien.”

Stay tuned for further discussions regarding SB 2540, introduced by Senator Wilhelmi to address at least part of the confusion regarding the remedy associated with the Home Repair Act. The proposed amendment will entirely replace Section 30 of the Act to clarify and more accurately identify the remedies available to private parties under the Act.

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Owners, developers and builders working in the renovation arena please note that the EPA’s new regulations on lead paint take effect on April 22, 2010.  The regulations are contained at Title 40, Part 745 of the Code of Federal Regulations.  The importance of this legislation and its impact on contractors is clear. However, it should also be noted that it is anticipated that preparation and cleanup alone may double the work time and the costs of extra time on projects and training required may be passed on to the consumer.  

There are some very important highlights:

• Effective April 21, no contractor may offer or perform renovations in “target housing” without certification.  Target housing means any housing constructed prior to 1978, so renovators working in homes, apartments or condominiums built prior to 1978 need to take this seriously.
• There are only very limited exceptions, such as where a certified inspector has determined the project is free of lead paint beyond permitted levels.  Projects with no children or pregnant woman that are owner occupied can also qualify for excluding coverage, but only if the owner signs off that the contractor is not required to meet the regulatory practices.
• Contractors performing renovations have extensive obligations to give disclosure and notice to building occupants in writing prior to renovation, including providing EPA publications.  Persons and contractors performing work in this arena must provide their customers the EPA’s brochure, Renovate Right (pdf).
• The regulations further include specific work practice standards, so watch out for potential employee personal injury claims and OSHA inspections and violations as well.
• Even relatively minor work is swept up in the requirements: generally work disrupting more than 6 square feet of painted area is regulated.
• When working with possible lead issues, workers will need to place heavy plastic sheets on the ground, seal the room, seal off vents to the area where the project is taking place, remove or cover furniture in the area, cover the ground and plants outside of the work area, close all windows, and mark off the work area to keep non-workers away. Contractors will be required to post warning signs, restrict occupants from work areas, prevent dust and debris from spreading, conduct a thorough cleanup and verify that the cleanup was effective.
  
  

This legislation has contractors and building inspectors working to get up to speed on the new rules and licensing requirements. Contractors also must be EPA-certified to work in buildings that could have lead paint. Contractors must be certified by April 22, 2010.  Meetings will be offered for contractors to become certified to work in buildings that might have lead paint. The Illinois Department of Public Health has issued a news release (pdf) which includes list of meetings and locations at which contractors can become certified.

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