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

    It's not often that we get a 97 page opinion from an appellate court, even more rare is the occasion that any such opinion would be of interest to the industry.  This week, we were happy to find both in Cordeck Sales, Inc., v. Construction Systems, Inc., et al., (Doc. No. 1-06-3702, 1^st Dist).

    In Cordeck, a developer had gone belly-up on a multi-million dollar condo development.  Multiple mechanics liens were filed by the various entities involved in the construction for work performed, the lender filed a claim to foreclose its mortgage, and a receiver had been appointed to sell the individual units and collect the proceeds into a pot from which the resolved disputes would be compensated.  The opinion doesn't go too far in creating any substantively new nuances to the statute that Representative George Scully has called "a patchwork of quilts...of patches put on this quilt over the past hundred years" (Slip op. at 44).  Some clarifications and holdings are still important.  Of interest are:

• A reminder that the dates of the contracts are the attachment dates for the liens of contractors and subs.  They will be instrumental in establishing the priority of liens against third parties and other claimants.
• The date of recordation for a mortgage will establish the date of a mortgage for the determination of priority in the scheme of liens and claims against third parties.
• Construction Managers can have liens, even on contracts prior to the 2004 and 2006 amendments to the Act.
• Amendments to a recorded lien for amounts of work done over time past the date of the first recorded lien can still affect the assertions of rights against the owner, but may not have affect as to the right in priority or assertions against third parties.
• Fees earned on a project are not inherently "unalienable."

Of note to many practitioners:

• If a deponent is claiming a fifth-amendment right against self incrimination in answer to questions, the determination regarding the propriety of such an assertion will be made on a question by question basis in the trial court.

• Email This
• Print
• Comments
• Trackbacks

Here's a reminder from the Northern District of Illinois Bankruptcy Court.  In Vancil v. Tres Amigos (docket #06-71254) the owner of a property, Tres Amigos, was looking to extinguish liens filed by two subcontractors of Vancil.  Tres Amigos brought the action to extinguish the liens where the two subs had not properly served Tres Amigos with their 90 day notices under the Illinois Mechanic's Lien Act.

A problem arose when the Court noted the Tres Amigos had never made one of the subs a party to the action and that it failed to assert a claim against the other sub, which was a co-defendant.  The Court pointed out the Tres Amigos would likely have prevailed on its claim, had it not failed to properly plead actions for which relief could be granted against the subcontractors.

• The lesson learned here:  Make sure all your ducks are in a row before time, effort and money are spent asking the Court for relief that cannot be granted.

• Email This
• Print
• Comments
• Trackbacks

In what is sure to be a contested issue, the new House Bill 5572 is a proposition to require written notice from the contractor to the owner of a single-family, owner-occupied dwelling, prior to filing a lien against any property of the owner.

• Given that there is no time provision installed in this legislation, and that it does not include a method for serving the notice, and that the term "any" could be construed in multiple ways, it is likely that we'll see some revisions of this bill before it could be incorporated into the mechanic's lien act.

• Email This
• Print
• Comments
• Trackbacks

            This is an interesting decision from the Northern District, the plaintiff, a surety company paid out on bonds to subcontractors when the bank that a general had deposited the money into took the funds the general had for payment to the subs to satisfy the general's obligations to the bank.

            The surety had three theories, conversion, a claim for a trust under the mechanic's lien act, and constructive trust.  The court found that because the surety was not suing as subrogee to the general, but rather as subrogee on the funds it paid out to the subs and because it had failed to allege that the bank had knowledge that the funds were for the subcontractors none of the counts could lie.  The Court also held that the bank was not implicated or obligated under the terms of the mechanic's lien act.

            While it initially looks like the failure of the plaintiff to properly plead the facts necessary to maintain the claim resulted in the dismissal, much of the language used implied that in order to maintain the actual claims, the surety should step in as subrogee to the general and not to the sub. 

• Email This
• Print
• Comments
• Trackbacks

    For those interested in timing requirements on their mechaninc's liens and those having had the arduous experience of title searches or property transfers recorded but not appearing of record during the process, the Illinois House Bill 4698 may come as a welcome relief.  HB 4698 proposes a change to the Conveyances Act and the Counties Code, which, if enacted would require, not only that deeds be filed within 7 days of execution, but would also require that any party with an interest in the property be notified of the deed as well.

    Previously, the recorders office only sent notice to the previous owner of record.  Now, with recorders sending notice to any "party with a record of interest in the property," could the recorders' notices be relied on in filing the lien claims and naming parties?  Will a recorder's determination of a "party with recorded interest", or the failure to notify a recorded party of interest be actionable?

• Email This
• Print
• Comments
• Trackbacks