Lake County Grading Co., LLC v. Forever Construction, Inc.
2017 IL App (2d) 160359
| Ill. App. Ct. | 2017Background
- Waukegan Savings obtained a foreclosure judgment on 133 S. Genesee St., became mortgagee in possession, and recorded lis pendens before a Salvation Army warehouse burned down.
- The City, on behalf of Waukegan Savings, hired Lake County Grading Co., LLC (LCG) to demolish the burned structure; LCG recorded a mechanic’s lien for $112,098.02.
- Waukegan Savings served LCG a section 34 demand to sue to enforce the lien; LCG filed a separate mechanic’s-lien foreclosure action within 30 days.
- While LCG’s separate suit was pending, the foreclosure court confirmed the sheriff’s sale and Waukegan Savings received a judicial deed; FDIC later transferred Waukegan Savings’ assets (including the property) to First Midwest.
- The trial court dismissed LCG’s mechanic’s-lien claim, holding lis pendens barred the claim because LCG should have intervened in the foreclosure; the court also denied leave to add an equitable-lien claim. LCG appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether lis pendens barred LCG’s separate mechanic’s-lien suit | LCG: Waukegan Savings induced LCG to perform and demanded suit under §34, so Waukegan Savings is not an innocent purchaser and cannot invoke lis pendens | First Midwest: Lis pendens gave constructive notice; LCG was required to intervene and is bound by foreclosure result | Court: Waukegan Savings waived lis pendens protection by inducing performance and making §34 demand; lis pendens does not bar LCG’s claim under these facts |
| Whether LCG was required to intervene in the foreclosure action | LCG: Intervention was not required because §34 demand directed LCG to bring a separate action; moreover, LCG lacked standing to use pre-confirmation remedies | First Midwest: LCG could and should have intervened under foreclosure statutes | Court: LCG could have intervened under §15-1501 but was not required to do so given Waukegan Savings’ conduct and §34 demand |
| Whether LCG’s mechanic’s lien is defective under Mechanics Lien Act §7 | LCG: Lien sufficiently described the parties, contract, and amount due | First Midwest: Lien misidentified owner and parties to contract, rendering lien invalid | Court: Alleged misidentifications were de minimis or supported by allegations (bank acted as owner/agent); lien not invalid on face of pleadings |
| Whether equitable lien amendment should have been allowed | LCG: If statutory lien fails, equitable lien should be permitted | First Midwest: Equitable lien inappropriate because LCG had a statutory remedy it could pursue | Court: Trial court did not abuse discretion denying equitable-lien amendment because statutory mechanic’s-lien remedy was available |
Key Cases Cited
- Wells Fargo Bank, N.A. v. McCluskey, 2013 IL 115469 (Illinois Supreme Court 2013) (limits available challenges after sale confirmation and explains borrower remedies pre- and post-confirmation)
- R.W. Boeker Co. v. Eagle Bank of Madison County, 170 Ill. App. 3d 693 (Ill. App. Ct. 1988) (lis pendens can bar contractor’s outside lien when contractor had constructive notice and purchaser was innocent)
- General Motors Corp. v. Pappas, 242 Ill. 2d 163 (Illinois Supreme Court 2011) (notice-of-appeal specificity principles)
- Evanston Insurance Co. v. Riseborough, 2014 IL 114271 (Illinois Supreme Court 2014) (limits use of motion to reconsider to newly discovered evidence, changes in law, or errors)
- Patrick Engineering, Inc. v. City of Naperville, 2012 IL 113148 (Illinois Supreme Court 2012) (standards for reviewing section 2-619 motions to dismiss)