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

Restrictive covenants can make or break the real estate purchase/financing underlying the project. They run the gamut of justifications from restrictions for safety and public welfare all the way to terms for convenience of access and rules governing aesthetic choices. Generally they are enforced by the courts and a recent Appellate Court case shows that there may be creative alternatives for circumventing restrictions that might otherwise keep a project from going forward.

The restrictive covenant that a developer wanted to invalidate in Vo-Land, LLC, v. The Village of Bartlett (Doc. No. 1-08-0632) was an agreement to keep land developed in 1987 from being used as something other than open-space.

Vo-Land was the subsequent owner of a 107 acre parcel of property in the Village of Bartlett. In 1987, the previous owner had entered into a covenant with the Village that allowed it to construct 1,875 residential unites on its property provided that 96 acres of the site be maintained as a golf course or other open space. Vo-Land later took ownership of the property.

In 2004, Vo-Land sought to amend the zoning for the property and wanted to close the golf course, reduce the 96 acre open space mandate to 51 acres and build 350 new residential units on the remaining golf course land. The Village board denied Vo-Land’s request and refused to release the restrictive covenant and also denied Vo-Land’s request to have the zoning of the parcel amended.   That wasn’t the end to Vo-Land’s quest.

The owner brought an action asking the court to void the restrictive covenant, or, in the alternative, to force the village to allow it to apply for amended zoning – a petition for disconnection for the property from the village pursuant to Section 7-3-6 of the Illinois Municipal Code.

“Section 7-3-6 of the Illinois Municipal Code provides that property owners may have land disconnected from a municipality by court proceeding if the property: "(1) contains 20 or more acres; (2) is located on the border of the municipality; (3) if disconnected, will not result in the isolation of any part of the municipality from the remainder of the municipality, (4) if disconnected, the growth prospects and plan and zoning ordinances, if any, of such municipality will not be reasonably disrupted, (5) if disconnected, no substantial disruption will result to existing municipal service facilities, such as, but not limited to, sewer systems, street lighting, water mains, garbage collection and fire protection, (6) if disconnected the municipality will not be unduly harmed through loss of tax revenue in the future." 65 ILCS 5/7-3-6 (West 2002). The Code further provides that "[i]f the court finds that the allegations of the petition are true and that the area of land is entitled to disconnection it shall order the specified land disconnected from the designated municipality." 65 ILCS 5/7-3-6 (West 2002).”

The trial court supported the validity of the covenant and even went so far as to hold that Vo-Land was estopped from challenging its validity. The previous owner had agreed to keep the restrictive covenants conditions in place for 35 years in exchange for being allowed to develop portions of the property. Much like any other form of contract, Vo-Land would not be allowed the benefit of the zoning variance that allowed the initial construction without the open-space restrictions that gave a benefit to the village. The appellate court agreed.

The appellate court also agreed that Vo-Land was entitled to have its property disconnected from the municipality, thus rendering the restrictive covenant moot. Of the six factors listed above, the village fought the disconnection based on the third factor arguing that a water station would become isolated if the 107 acres were no longer part of the village. The water station was actually across a road from the acreage and that road, with a highway right-of-way owned by the village, was the only place that the village actually touched the water station’s parcel as well. The courts found that disconnecting the Vo-Land land would not lessen the touching between the water station property and the village.

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In July of this year Governor Quinn signed the Illinois Green Buildings Act (20 ILCS 3130/1 et seq.) into law. The bill outlines instructions and guidelines for Green Building Standards to be used in the development, design and construction of Capital Development Board projects. The bill mandates that the projects conform to LEED, Green Globes or some other “equivalent certification.” In addition to the bill, the CDB has instituted Green Building Guidelines for State Construction which do not offer the same “out” language of “or equivalent certification” as the Act and instead mandate LEED NC, with no exception for another standard.

It’s a safe assumption that we’re all in favor of sustainable development and design… even if we weren’t it’s a safe assumption that “green building laws” have a rational basis sufficient to withstand scrutiny with regard to pushing for that sustainable goal. What is unclear is whether state sponsorship of a private entity’s green rating system to the exclusion of other systems can be countenanced where it means that the competing rating systems are adversely affected and could possibly lead to the citizenry being denied the right to express the viewpoint of a comparable “green rating system.”

There are currently not any specific federal standards for the regulation of “green rating systems.”   Private entities advance different methods, systems, goals and ratings which have yet to be either subjected to government oversight and accountability or run through the gamut of consumer protection lawsuits that could shed light on the practices and procedures for making a decision to favor one material over another, one method to an alternative.

While LEED has undoubtedly advanced to the front of the pack with the dominant market share in sustainable building standards, it is still a system run by a private organization that is advancing its method against others. A government’s singular implementation of the LEED system not only excludes other systems from competing for or consideration in government projects (profits are made from the certification process), it may also silence dissent regarding alternative private viewpoints about sustainability. If there is no government or regulated objective standard regarding a green rating system, what and how it must accomplish, why is one private individual’s viewpoint any less valid, or entitled to less consideration than another’s by the state? 

Where is the recourse, outlet, or method for appealing a decision about what is “sustainable” or “green”? Where is access to the public forum for expression of “sustainable” or “green” by other private entities or individuals? 

As we push toward sustainable construction and, hopefully, the eventual state and local regulations enacted after careful study of environmental issues that it will entail, it is best to recognize lessons learned from our past about letting private entities become quasi-state actors or the codification of one viewpoint to the exclusion of another.

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If people really bought into the adage that you can’t fight city hall, or at least the asserting-your-rights-against-a-state-seeking-to-infringe-on-them principle that it represents, we’d all be British subjects. In truth, we’d be a lot of things, likely all the same things given the unusual mandate authority consistently seems to have for homogeny. But this post isn’t a lesson about the Shakman decrees or the recent end of the Chicago Desegregation order or any other lesson in the history of fighting city hall. It’s a new chapter in the fight and it involves challenging public works projects... anyone thinking they might need to fight city hall or challenge bid awards when Chicago’s 2016 Olympic dreams are realized will want to bone up on the proper procedures for fighting city hall… which is what today’s case is all about.

The plaintiff’s in Ziller v. Rossi (Doc. Nos. 2-09-0511 and 2-09-0592) were fighting town hall, literally… they wanted to keep it from being built, and based on their town board’s inadequate notices for the issues to be discussed at town meetings and improper requests for funding in light of pending requests to present the issues to the electors of Grafton Township, they were successful. 

The board was attempting to enter into lengthy installment contracts and pledge public funds in excess of $3.5 million in debt certificates in order to purchase land and construct a new town hall. Plaintiffs were a group of individuals who sought to challenge the board’s authority for the action given the board’s failure to follow the proper statutory procedures and rules for acting in such a manner.

In 2007 and in 2008, the board had voted to purchase land for, and construct, the town hall, but had failed to properly place notification of these actions on the notice of the meeting that was required to be distributed prior to the meetings. They had also passed an ordinance in a similar manner for financing the projects. The plaintiffs challenged the action and sought an injunction from the court to stop the board from taking any steps towards purchasing the land, financing the purchase, entering into construction contracts for the town hall, or constructing the town hall because the notices for the meetings were in violation of the Illinois Township Code (60 ILCS 1/1 et seq.).

In addition to claiming that the board had violated the Township Code and that because of the violation, the boards actions were void, the plaintiff’s also followed the code and submitted their own petition to submit the town hall issue to the electorate during an election rather than allowing the town board to vote on the matter and bind the citizens. (In addition to other issues, the town code allows citizens to submit petitions requiring that question of constructing a town hall, be put to the electorate during the general election and not decided by the town board when appropriate). The plaintiffs sought a second injunction compelling the clerk to certify the question in their petition to the proper election officials to be submitted to the electorate at the general election.

The trial court granted the plaintiff’s request for an injunction and told the board that it could not obligate the township and that its previous actions had not comported with the requirements of the township code and required clerk to certify the question. The town board appealed the decision and the appellate court’s opinion upheld the decision of the trial court. The township code must be followed and the petition should be submitted to the electorate for a vote.

Few issues are as publicly contentious as the use of common property, this is why the procedures for addressing these issues are so heavily detailed in statute. The greater guidance for public deliberation and decision regarding the commons, the less chance a party has to feel like they were not given a voice and heard… This assumes the procedures were followed. When the procedures aren’t followed, not only is it more likely that trouble will result, it is more likely that someone is attempting to assert their rights over another and that the assertion may not be entirely justified or proper.

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This month’s legislation update is no surprise to those who have been following our posts on the mechanic’s lien act amendments and the amendments to the counties code.

House Bill – 236 has now become Public Act 96-0654 – Amends the Illinois Mechanic’s Lien Act (770 ILCS 60/1 et seq.) - GC lien claimants on owner-occupied single-family residences now need to give an owner written notice of the filing of a lien against the property within 10 days of the filing.

Senate Bill – 1511 has now become Public Act 96-721 – Amends the Illinois Counties Code (55 ILCS 5/1 et seq.)- Allows county boards outside incorporated towns are now allowed to require occupancy permits for residential dwellings located outside the incorporated areas. Removes the right to charge fees for the residential permits unless the residential fees are grandfathered in.

Senate Bill – 138 has now become Public Act 96-0704 – Amends the Capital Development Board Act (20 ILCS 3105/10.09-1) – Orders local governments without building codes to adopt the model codes or inform the Capital Development Board of the adopted codes. Sets requirements for building inspectors enforcing code requirement under the act.

For design professionals who operate under a limited liability company structure, a certificate of registration is now required from the Department of Financial and Professional Regulation. Public Act 96-0679  - This appears to be in addition to the professional design firm registration already required.

And on an off-blog note, bowling alleys now have a safe harbor of their own.

Senate Bill – 1335 has now become Public Act 96-0713, the Bowling Center Act.

The Bowling Center Act, establishes the requirements for certain exemptions from personal injury suits for bowling alleys caused by patrons wearing bowling shoes outside the alley if the proper signs are posted at all entrances and exits. Citizens can rest easy knowing that the definitions of both “bowler” and “bowling shoes” are now statutorily codified.

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Not if it’s against the express language of a statute or the contract requires written modification.

With all the public projects coming on-line thanks to the stimulus package it is time to make sure that you understand the contractual limitations and requirements for getting add-services paid for under your contracts.

The recent case of U.S. NeuroSurgical, Inc. v. City of Chicago (7^th Cir., Doc. Nos. 07-3520 and 08-2851) is an express warning to anyone thinking about performing additional services based on an oral or written representation that they'll be paid for from a municipality’s representative.

In NeuroSurgical, an entity that NeuroSurgical is the successor to, GHS, had a 1995 contract with the City of Chicago’s Department of Health to design and implement a computer information system for use in its clinics. The information system agreement contemplated a system that would accept entries of patient information that were made by input from a keyboard and the possibility of extending the system to include patient information entered by scanning in a form document that would automatically be placed in the system without the need for keyboard input.

The contract between GHS and the City contained a section requiring that no changes to the contract were valid unless they were in writing and signed by the parties.  The contract also had a provision governing the procedure for requesting additional services from GHS which included an obligation that after such a request GHS submit a written work plan and project estimate and description and then, if approved by the City, the agreement was to be codified in a formal “work order” and submitted for approval in accordance with the contractual provision requiring that it be signed by both parties.

During contractual performance, the City requested that GHS implement a system capable of scanning data forms at one of the clinics. Scanning is a difficult process and implementing such a system required what GHS felt was additional service work. GHS claimed it had been given oral authorization to perform the additional work by the City employee responsible for monitoring the project. After the scanning system was implemented, GHS billed the City for the additional work which amounted to $532,033.35. The money wasn’t paid and in 2002, a suit was brought by GHS’ successor against the City for payment of the $532,033.35.

After a bench trial, the district court denied any relief to GHS. In addition to determining that the work was part of the contract, the district court also found that even if the work had been outside the scope of the contract, the fact that the contractual modification wasn’t executed by the City’s chief procurement officer and wasn’t in writing as required both by the City’s municipal code and the contract precluded recovery.

GHS appealed and the Seventh Circuit rendered an opinion upholding the verdict.

So, what’s important for the industry?

The Seventh Circuit held that anyone contracting with a municipality is presumed to know that both the Illinois Municipal Purchasing Act (65 ILCS 5/8-10-16) and any Municipal ordinances pertaining to the contract (in this case Chicago Municipal Code 2-92-050) are in effect. The contractor is also presumed to understand that the authority conferred by such statutes may not confer the authority to authorize payment or alter agreements to the city official who is dealing with the contractor – even though that person may be stating that the additional services are authorized and that payment will be maid.

The appellate court agreed that pursuant to the acts, GHS wasn’t entitled to payment because the procurement officer for the municipality had not approved of the additional services and signed an agreement approving those services, the City was not bound by any agreements to pay for those services. Additionally, because the contractual process for altering the contract was not followed, the City did not have a duty to pay for those additional services. Also, the fact that the city did pay for a small portion of the additional services did not mean that the City could be legally obligated to pay for the rest of the services.

The contractor cannot expect the municipality to pay for the services if the statutes are not followed and the process for amending the contracts isn’t adhered to. A contractor performs additional services at its own peril if the conditions are not met.

On the flip-side, a municipality may find a method through this decision for challenging the additional services performed by a contractor.

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It’s a case worth parsing through if you have the time because the Municipalities you deal with could be exacting costs from you that are not allowed under State law and that you could recoup.

In Raintree Homes, Inc. and Raintree Builders, Inc. v. The Village of Long Grove (2^nd Dist. Doc. No. 2-06-1105) the second district appellate court was faced with the review of a district court’s determination that the provisions of the Village of Long Grove’s “impact fees” that were assessed on those applying for building permits were void under the Illinois Municipal Code (65 ILCS 5/1-1-1 et seq.)

The Village had been assessing “impact fees” which had increased in cost over the years from 1993 to 1997 against anyone applying for a building permit pursuant a village ordinance (Section 4—1—4 of the Long Grove Municipal Code which was repealed in 2003 and new “fees” have since been implemented). A statement contained in the “impact fee” provision of the code contained a description regarding the purpose of the fee as being for parks and schools, but the application of the money showed that some went to the Village, some went to the schools and parks for different purposes, and the district court found that none of the uses comported with what was allowed under the Illinois Municipal Code.

The appellate court upheld the ruling and the court’s order that the Village pay back to Raintree some $114,700 in impact fees that it had paid from 1993 to 1997.

The appellate court’s decision found that because the funds from the impact fees were put into a general operation fund rather than being used for the purpose of improving/funding or having to do with “school grounds” which is a term elaborated upon by a 2002 opinion (Thompson v. Village of Newark) and augmented by a 2003 amendment to the code to include “land or site improvements, which include school buildings or other infrastructure.”

The appellate court also held that the portion of the fee attributed to the parks and other various land improvements or “open space” was not tailored pursuant to the Illinois Municipal Code to limit the use of the fee to “only newly acquired open space.”

The opinion also contains a lengthy analysis and discussion of “duress” concerning a business’ need to pay for a fee given the need to have the license or benefit conferred by paying the fee for the operation of the business and its later ability to contest the fee without losing that right under the voluntary payment doctrine.

The important part here is that Raintree got the fees back. This was in large part due to the specific manner in which the purpose portion of the municipal code was drafted and the distinct method in which the funds were distributed and used. It is likely that a statute that was more vague and less accurate testimony regarding the application of the fees would have offered a different result even if the fees were applied the same.

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The Sun-Times has a short piece today on SB 0456 which became Public Act 95-0998. We first reported on this bill back in May of 2008. The Sun-Times’ article reflects that the bill will go into effect on June 1. If you scroll down to Sec. 3-102(h), you’ll see that the failure of the notary to get the fingerprint as part of the record doesn’t mean much outside an allegation of fraud:

(h) The failure of a notary to comply with the procedure set forth in this Section shall not affect the validity of the Residential Real Property transaction in connection to which the Document of Conveyance is executed, in the absence of fraud.

Also, if you’re a property owner with some reason to worry about providing your thumbprint, the act has a provision regarding how and when these records will be disclosed:

(i) The Notarial Record or other medium containing the thumbprint or fingerprint required by subsection (c)(6) shall be made available or disclosed only upon receipt of a subpoena duly authorized by a court of competent jurisdiction. Such Notarial Record or other medium shall not be subject to disclosure under the Freedom of Information Act and shall not be made available to any other party, other than a party in succession of interest to the party maintaining the Notarial Record or other medium pursuant to subsection (d) or (e).

The weirdest part about the whole act is that most of the changes will be nullified by the statute’s own language on July 1, 2013 unless the legislature acts by then to amend the law:

(k) Subsections (a) through (i) shall not apply on and after July 1, 2013.

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Stimuluswatch.org is reporting on the stimulus package and the projects proposed for Illinois. A link to the Illinois projects is here. The database is searchable and includes the localities, descriptions of the projects and the amounts proposed.

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            Any business engaged in the construction industry in Illinois should be aware of the rules and requirements for filing a mechanics lien, or at least have someone they can reach out to in order to answer those questions.

            The statute is possibly the best method available to any contractor, architect, sub any other person working on a project for ensuring payment.  It creates an encumbrance on the land that allows not only for foreclosure, but also forces subsequent buyers to deal with the encumbrance before moving forward by either bonding around the lien or attempting to extinguish it.  Whether the claim is for $1,000 in work or for $10,000,000, no matter what the amount, if the requirements are met, you can avail yourself of the act and pursue payment.  Depending on the exact situation, the act may force you to get something filed and deliver notice anywhere from 90 days to four months after your last date of work, and knowing and complying with the act’s guidelines helps ensure another method for getting paid (the act also allows for attorney’s fees).  If you don’t you will lose your rights and while the amounts of each account receivable may not seem like a lot, if everyone starts to skimp on the receivables, the effect of non-payment can become calamitous to your business.  In the current economic climate, even if you know that payment is down the road, it’s best not to sit on these rights and lose them… talk to someone and get it done right.  Because if its not done right, you could end up like the plaintiff in Speedy Gonzalez Landscaping, Inc. v. O.C.A. Construction, Inc., (1^st Dist., Doc. No. 1-07-2370).

The plaintiff was a sub-contractor hired to perform services for the removal, hauling and disposal of rock and gravel from a site for the construction of a new school.  The plaintiff performed its work and sought payment for some $637,382.53 that it was owed.  Because the project was for a public building improvement built with public funds, section 23 of the Illinois Mechanics Lien Act applied.  The plaintiff complied with the applicable notice required by the section for delivering notice of its lien to the Public Building Commission of Chicago.  The plaintiff then properly filed its complaint against the defendants asking for an accounting within the applicable 90-day time limit from the filing of the notice, but failed to abide by the statute and also deliver a copy of the complaint to the public body within the time limits.  The GC filed a motion to dismiss the claim based on the failure of the plaintiff to follow the applicable time requirements and the court granted the motion, thereby barring the plaintiff from its count for a mechanics lien.  The appellate court upheld the decision of the trial court. 

For the simple failure to provide a copy of the complaint to the right person, the plaintiff has lost its mechanics lien claim.

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Malec v. City of Belleville (5^th Dist., Doc. No. 05-07-0456) is a case worth noting.  The City of Belleville adopted a group of ordinances in 2006 that provided for the formation of a tax-increment-financing district (TIF) pursuant to the TIF Act.  The city also adopted an ordinance creating a business district, approved a redevelopment plan, tax increment allocation financing for the Developers, a tax within the created business district and authorized the use of general sales tax revenues to reimburse the Developers for project development costs.  A complaint filed by the plaintiff alleges that these ordinances were to help finance a Wal-Mart, Lowe's, housing development and some other businesses.

Plaintiff, a taxpayer, brought suit challenging the city's enactment of the taxes under the TIF Act.  The district court dismissed the plaintiff's claim, finding that he lacked standing to bring his action as a taxpayer.  The 5^th District reversed and found that if the actions of the city in creating the TIF and business district did affect the general revenue of the city, then a taxpayer would have standing.  The court also held that the taxpayer could challenge the creation of the TIF through claiming that the areas that had been created did not meet the criteria of being "blighted" as the Act required (under the act "blighted" is a term of art that requires a area meet a myriad of factors in order to qualify for the TIF districting).  See 74.4-3(a) of the Act.  The argument was that the areas would have developed as business districts on their own, and as such, the creation of the special districts to generate revenue that would be paid to the developers affected the general revenue of the city because the city would have generated the revenue for itself and would therefore have no need to pay developers to do it.  (No mention of the timing was made, i.e., whether an argument that a development district would create business in a matter of a year as opposed to a naturally occurring district developing over, say, ten years).

While the case is not a blow to the creation of the districts for development, it does lend individuals another form of suit which could be used to slow down any form of development relying on TIF funding and is a case we'll keep an eye on.

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This is a case from the first district about the collapse of a building in Chicago.  The Chicago Province of the Society of Jesus (a Jesuit organization) had a building and demolition work adjacent to the building went awry causing the collapse of the Jesuit's structure.

The parties (and there are many) sued each other and some of the defendants decided to settle.  In total, the Jesuits sought close to $3 Million in damages from the defendants on theories of negligence, violation of the Adjacent Landowner's Excavation Protection Act and violation of the Illinois Municipal Code.  Six of the defendants offered a total of $1,185,000 to settle the claims made against them.

In Illinois, parties can seek a "good faith finding of settlement" under the Illinois Joint Tortfeasor Contribution Act allowing a party that settled to be discharged not only in settlement with the plaintiff, but also from all liability to any other party that might be pointing a finger in their direction.

Here, some of the parties that did not settle objected to the attempts by the settling defendants to obtain a good faith finding because that finding would mean that the non-settling defendants could not seek any more contribution from the settling defendants and would be left paying for whatever damages might be assessed down the road.

In addressing the matter, the court provided a decent summary of the relevant case law and standards regarding "good faith" findings of settlement and upheld the trial court's determination that the settlements were made in good faith.  Effectively allowing the settling defendants to have their liability capped and be removed from the case.

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In this case, subcontractor brought a suit against the Illinois Department of Transportation (IDOT), and the general contractor on a project.  The bid on the project was to perform services for the general to excavate a trench, install a sewer pipe, and supply backfill.  The contract required that the parties abide by the IDOT Standard Specifications and the plans specified in the general contract.  The suit alleged a claim for foreclosure under the mechanics lien act, in which IDOT was named a party, a claim for breach of contract, and a claim that the GC had violated the State Prompt Payment Act (30 ILCS 540/0.01 et seq.)  The trial court dismissed IDOT from the case, and found that the IDOT specs precluded the breach of contract and lien actions.  The trial court then determined that retaining payment was improper and awarded interest under the State Prompt Payment Act.  The parties appealed.

Here, the appellate court concluded that the trial court was right in dismissing IDOT given that the mechanics lien act authorizes the funds to be set aside before resolution of the issue, but does not authorize making a state agency party to a foreclosure action. The opinion discusses a topic that should be of interest to those contracting with the state when it considers payment under the mechanics lien act.  §23 of the act authorizes subcontractor remedies through liens against public funds for state projects, but the act has never applied to contractors.  Additionally, suing pursuant to this section means that a subcontractor will be bringing an action for an accounting within 90 days of providing the required notice, and the only way to bring in an officer of the state under the act is in an action claiming they failed to comply with §23 of the statute.

The breach of contract claim filed against the GC was premised on an interpretation of IDOT Standard Specifications.  (This may bore some of our readers, but it is actually pertinent to anyone looking for courts to favorably interpret government specs.)  §208.03(b) governs methods of measurement quantities for trench backfill, and contains a clause stating that any backfill required in excess of the maximum quantity as calculated but he specs "shall be furnished by the Contractor at his/her own expense."  The plaintiff argued that there was no established width to the trench and tried to say that use of the word "shall" in §550.04 (the IDOT spec which states exactly how wide a trench should be on such a project) didn't really mean shall, but meant something like "shall not be less than," which, you don't have to be Bryan A. Garner to understand, is bad form in just about every school of legal interpretation... especially when the court can read other sections of the IDOT specs and see that when IDOT meant to set a minimum limit on something, it used some variant of "shall not be less than" and not just "shall."

Utilizing this reading of §208.03 the court upheld the trial courts determination that the plaintiff was not owed monies for the excess it was required to provide and the dismissal of the breach of contract claim was proper.

With regard to the final argument, the court held that it was IDOT that failed to make prompt payments to the GC who, pursuant to provisions of the contract and federal regulations was then to turn around and hand the money over to the plaintiff.  Contrary to the trial court's opinion, the GC was not in error when it did not turn over monies that had not been forwarded by IDOT.  The GC would only be in error if IDOT had turned over the funds and then the GC failed to pay them to the subcontractor.  The appellate court also said that the trial court had properly interpreted the State Prompt Payment Act, but because the GC did not owe money to the plaintiff, there was no violation of the act.

[NOTE: In addition to the State Prompt Payment Act, there are other prompt payment acts that can be alternative sources for causes of action regarding getting paid such as the Contractor Prompt Payment Act, the Local Government Prompt Payment Act, any of which, along with a host of other methods, can be utilized under the law in securing payments owed.]

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We've previously discussed the Illinois construction statute of repose (735 ILCS 5/13-214).  The benefits it conferred to design professionals and others by the statute's ten-year limitation cannot be underestimated. 

In Ryan v. Commonwealth Edison Company (Doc. No. 1-06-3309, 1^st Dist. Ill. App.) the Illinois first district appellate court has broken with itself and sided with the third district in asserting a "status/activity" distinction for claims that will be barred under the statute of repose.

The court was confronted with the issue of whether Com Ed's duty to maintain a transformer that exploded and injured the plaintiff was separate and apart from its installation work and therefore, not subject to the statute of repose.  The court found that Com Ed's status as an installer and any claims that arose from the installation might fall under the statute of repose, but made a determination that since Com Ed had a duty to maintain the equipment (derived from its capacity as the power supplier and not its status as the installer) the statute would not apply.

• Now that we have a definite split, we could see the Illinois Supreme Court address the "status/activity" distinction.  More importantly, because the court made the determination regarding Com Ed's duty in this case, we should be alert for more judicial determinations of ongoing duty.  Will the decision only apply to utility companies supplying services which necessitate a duty to maintain equipment?  Even apart from any undertaking to maintain structures/equipment after installation?  Even when the duty has been contracted or left in the hands of some other entity like a municipality?

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In Trtanj v. The City of Granit City (Ill. App. Ct., 5^th District, No. 5-07-0002), the plaintiffs owned a house that was filled with sewage after a thunderstorm.  During the thunderstorm, three sewage lift stations that normally operated to transport sewage through the city's system were left without power.  The city took two to three hours in getting the sewage systems back online.  As a result of the rainfall and issues with a clay pipe connecting the plaintiffs' property to the city's system, water and sewage backed up into the plaintiff's home.  Prior to the motion for summary judgment brought by the city, the city's superintendent of water testified that it should only take 15 minutes to set up a temporary lift system and 15 minutes to get it operational.

The plaintiffs brought an action in 2002 and later amended their complaint in 2005 alleging negligence in the design, construction, operation and maintenance of the sewer system, that the backup was a temporary nuisance, and also brought an action in trespass against the city.  The city responded in a motion for summary judgment that the claims were barred under the statue of repose (735 ILCS 5/13-214), that the tort immunity act applied (745 ILCS 10/2-201) to protect the city from suit, and that it was not liable because the backup occurred during an extraordinary rainstorm.

The trial court granted the motion for summary judgment and the plaintiffs appealed.

The appellate court found that material issues of fact existed where the city had known about the outside water infiltration into the sewer system through the plaintiff's clay pipe; and where the city's own superintendent of streets had testified that it should only take 15 minutes to set up the temporary pumps, not the two to three hours that it did take.

In adjudicating the repose claim, the court said that the statute of repose applied only to the construction and improvements of real property.  Because the plaintiff had alleged that the design installation and construction of the sewer station was at fault, the court found that these allegations were barred by the statute of repose when the design, construction and installation had occurred more than ten years prior to the filing of the lawsuit. 

The court went on to find that the statute did not protect the city from the claims that the maintenance and operation of the sewer system and the lift stations that occurred after their installation and within the ten year period were negligent.

The court cited a previous case, Prochnow v. Elpaso Golf Clib, Inc., 253 Ill. App. 3d 387, finding that while those claims that involved the design, construction, supervision, observation or management of the construction were exempt if the acts were outside of the ten year period, the persons responsible for possession or control and suppliers of the materials used in the maintenance and operation were subject to liability for reason of construction defects.

The court then went on to address the city's claim of immunity.  Holding that the statute protects only those acts of a municipality that are shown to be both an exercise of discretion and a policy determination, the court stated that acts which are ministerial are not protected.  After a discussion of the differences between policy determinations, acts of discretion, and ministerial acts, the court found that because the city's operation of the sewage system was subject to statutory and regulatory guidelines the actions were ministerial, and that there were material issues of fact concerning whether or not the city complied with those guidelines.  "Once a municipality decides to perform pubic work, the municipality must perform the public work with reasonable care and in a nonnegligent manner" (Slip Op. at 13).

The court also found that the determination of what might amount to an extraordinary sum of rainfall was not before the court and presented a question of fact for the jury.

The appellate court reversed the trial court's grant of summary judgment to the extent it was inconsistent with the appellate opinion.

Of note to design professionals and construction companies is the application of the ten year statute of repose.  Getting done with the work and getting out will start the clock running on the ten year period.  However, if follow up maintainance work is performed, that work is still potentially the subject of litigation. More importantly for many claimants is the willingness of the court to interpret the immunity statute and discern between policy, discretion, and ministerial acts.  It should not be overlooked that too often courts are willing to apply the immunity statute without adherence to the guidelines or undertaking the analysis to determine the exact nature of the act, perhaps inspections, construction, and maintenance can all be pled correctly to make certain the municipality has to explain its actions rather than simply pleading immunity.

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