Case Studies

ARE TRUCKING AND HAULING SERVICES ON PUBLIC PROJECTS LIENABLE ACTIVITIES?

The issue of the lien-ability of trucking and hauling services had not been the subject of very much contention among judges and lawyers practicing in the area of mechanics liens until very recently. In November, 2000, a Judge in Chancery Division, Mechanics Lien Section of the Circuit Court of Cook County ruled that trucking and hauling services, absent any construction component, were not lien-able activities where a public project was involved. The decision was predicated on the Judge's narrow construction and interpretation of the language of Section 23 of the Mechanics Lien Act (the public lien section.). The matter is now on appeal. We believe that there is a substantial likelihood that the Judge's decision will be reversed by the Illinois Appellate Court. The Judge's decision was based on the specific language of the public lien section of the Mechanics Lien Act, and he suggested that he would have found such services lien-able if the case involved a private lien imposed on private property and not a lien on public funds. That aspect of the decision was based on the fact that the language of Section 1 of the Mechanics Lien Act (which, together with other sections, govern private liens) is broader than the language of Section 23 (which governs public liens). Please note that as far as we know only one judge has ruled trucking alone as unlien-able under the Public Lien Act. At least one other judge has specifically ruled that trucking is indeed lien-able. In any event, one providing trucking and/or hauling services for construction can protect themselves by making a bond claim. The law of this state requires that the general contractor, on all public projects, must purchase a Payment Bond and a Performance Bond. A trucking/hauling company should perfect its claim against the Payment Bond (as well as any other bond that may be applicable) as soon as possible after any delay in payment for services; labor; and materials rendered or supplied. The Payment Bond would, in general, provide for payment by the surety on that bond to the trucking and/or hauling subcontractor after a default in payment by the general contractor.

COMPLETION DATE IN LIEN, LIEN AGAINST LEASEHOLD; LIEN UNENFORCEABLE AGAINST A SUCCESSOR-LANDLORD WHERE CLAIM DID NOT INCLUDE A COMPLETION DATE

In this case, plaintiff had been retained to build out a tenant's restaurant space in a hotel. The plaintiff subsequently sought to foreclose on a mechanics lien. The owner argued that said lien had not been timely filed. The First District Appellate Court found that there was an issue of fact as to whether the installation of the eight ceiling grills on a date fewer than 90 days before the date the lien claim was filed was substantial enough work to extend the time for filing. The Court highlighted the fact that the date for the installation had been rescheduled on several occasions by one of the defendants. The Court found that the law of Illinois provides that work consisting merely of repairs, corrective or maintenance work was trivial and insubstantial whether done at the request of the owner or another party. The Appellate Court further found that the installation in question was not repair, corrective or maintenance work and was apparently done at the request of the owner of the restaurant; was essential to complete the contract; and that therefore the lien claim was, at least under the facts as known by the Appellate Court, sufficient to defeat summary judgment.

The Appellate Court, however, found that a subsequent-purchaser-owner of the hotel was entitled to summary judgment because the lien claim did not contain a completion date as required by Section 7 of the Mechanics Lien Act. The Court found that although Section 7 did not specifically require that the notice of claim for lien include a completion date, that no third party (such as the subsequent-purchaser-owner) examining the lien claim could possibly tell whether it was enforceable and filed within the statutory filing date requirements.

The Court's ruling led to an interesting result. The Court, in effect, held that the subcontractor's lien against the hotel-purchaser-owner was not enforceable. Accordingly, the subcontractor could not foreclose on its claim for lien against the hotel. However, the notice of claim for lien against the tenant was enforceable. The tenant, did not own the hotel but only had a right to remain in the restaurant pursuant to a lease. Accordingly, the Court held that the lien claim could only be enforced against the tenant's "leasehold." The holding illustrates how it is possible to foreclose a lien against the leasehold interest of a restaurant owner who occupies space in a hotel even where one cannot foreclose a lien against the hotel itself.

Merchants Environmental Industries, Inc. v. SLT Realty Ltd. Partnership 314 Ill.App.3d 848, 731 N.E.2d 394 (1st Dist. 2000)

THE RIGHT OF AN OWNER TO STOP WORK, ENFORCE SAFETY RULES AND COORDINATE WORK DOES NOT PLACE THE OWNER IN SUFFICIENT CONTROL AS TO MAKE THE OWNER LIABLE FOR INJURIES SUSTAINED BY AN EMPLOYEE OF THE CONTRACTOR.

The case of Hutchcraft v. Independent Mechanical Industries, Inc., an employee of a general contractor sued the owner of the project site for injuries sustained on the job site allegedly due to unsafe conditions having to do with a welding unit. The Appellate Court found that despite the fact that the owner had a trailer on the job site; could coordinate the work of the contractor and the subcontractor; and could stop or change the work was not sufficient in law or in fact to find the owner of the project in control. In view of the fact that the Court found that the owner was not in "control", the Court found that the owner did not have a duty in law to provide safety at said site. The Court further found that the general authority, residual in nature, retained by the owner to inspect work on its own premises did not impose any duty on the owner to inspect the welding unit. Accordingly, the Court found that the owner was entitled to summary judgement in its favor.

However, two subcontractors who supplied the welding units and whose employees used them to perform the work on the job site, were held in the lawsuit. The Court held that since the plaintiff had not yet determined or proven which of the two subcontractors had actually supplied the faulty unit, and which subcontractor's employees were using the welding unit and faulty lead at the time of the plaintiff's injury, the subcontractors were not entitled to summary judgment. The Court found that those issues were factual matters to be determined at trial.

Hutchcraft v. Independent Mechanical Industries, Inc., 312 Ill.App.3d 351, 726 N.E.2d 1171 (4th Dist. 2000), appeal denied, 198 Ill.2d 687 (2000)