AUI Construction Group, LLC v. Vaessen
2016 IL App (2d) 160009
| Ill. App. Ct. | 2017Background
- GSG 7 obtained a recorded windpark easement from Louis & Carol Vaessen granting GSG 7 the exclusive right to install, operate, and later remove wind energy systems on the Vaessens’ property; GSG 7 would pay annual rent and remain owner of installed property per the easement.
- GSG 7 contracted with Clipper to supply a turbine; Clipper subcontracted tower/foundation work to Postensa; Postensa subcontracted construction to AUI (Postensa–AUI contract dated Nov. 3, 2011).
- AUI completed work in 2012 and later obtained an arbitration award against Postensa for roughly $3.5 million; Postensa then filed bankruptcy.
- AUI sued to foreclose a mechanic’s lien against the Vaessens’ property, claiming its labor and materials constituted a permanent improvement increasing the property’s value.
- The Vaessens moved to dismiss (735 ILCS 5/2-619) and Clipper moved for summary judgment, arguing the wind energy system (WES) remained GSG 7’s personal property and was a removable trade fixture, not a lienable land improvement; the trial court granted defendants’ motions and denied reconsideration.
- The appellate court affirmed, holding the parties’ intent (expressed in the easement) that the WES remain GSG 7’s property was controlling and precluded a mechanic’s lien against the Vaessens’ land.
Issues
| Issue | Plaintiff's Argument (AUI) | Defendant's Argument (Vaessen/Clipper/GSG 7) | Held |
|---|---|---|---|
| Whether AUI’s work produced a lienable improvement or a removable trade fixture | Tower and foundation are large, attached, necessary for new use and thus a permanent improvement subject to a mechanic’s lien | Easement shows parties intended WES to remain GSG 7’s personal property and be removable; lack of owner benefit to Vaessens | Held: trade fixture — easement intent controls; no lien against Vaessens’ fee |
| Whether AUI had notice of the easement so it could not assert lien rights against Vaessens | AUI performed some work before easement recording and lacked notice, so easement shouldn’t bind AUI | AUI’s Postensa contract identified GSG 7 as owner; no record evidence AUI worked before that contract; thus AUI had constructive/contractual notice | Held: AUI had notice via its contract and easement was binding on its lien claim |
| Whether removal difficulty or partial permanent remaining foundation converts fixture into lienable improvement | Impractical/expensive removal and buried foundation portions make the installation effectively permanent | Even if removal is costly, agreement allowed removal; impracticability does not overcome clear contractual intent to retain ownership and removability | Held: Costliness alone insufficient; removability permitted by contract means trade fixture |
| Whether statutory treatment (tax code) or subcontract terms require treating turbine as real property and permit a lien | Tax Code treats wind devices via real property valuation; Postensa contract contemplates "improvements" | Tax code isolates turbine for taxation but does not classify it as permanent land improvement; contract clauses require GSG 7 to keep property free of liens | Held: Tax treatment and contract language do not alter parties’ intent; no lien against Vaessens’ fee |
Key Cases Cited
- Crane Erectors & Riggers, Inc. v. La Salle Nat’l Bank, 125 Ill. App. 3d 658 (Ill. App. 1984) (three-factor test for fixture vs. land improvement; intent is controlling)
- Jones v. Jos. Greenspon’s Son Pipe Corp., 381 Ill. 615 (Ill. 1943) (where parties contract that annexed chattels remain removable, they are trade fixtures despite embedment)
- E.R. Darlington Lumber Co. v. Burton, 156 Ill. App. 82 (Ill. App. 1910) (improvements incapable of practical removal may inure to fee holder and be lienable)
- L.J. Keefe Co. v. Chicago & N.W. Transp. Co., 287 Ill. App. 3d 119 (Ill. App. 1997) (no lien where subcontractor’s work solely benefits a licensee/third party; landowner receives only attenuated rent)
- Matanky Realty Group, Inc. v. Katris, 367 Ill. App. 3d 839 (Ill. App. 2006) (an easement grants use rights but not ownership of the servient estate)