Peabody-Waterside Development, LLC v. Islands of Waterside, LLC
2013 IL App (5th) 120490
Ill. App. Ct.2013Background
- Islands of Waterside LLC is a Delaware LLC with two 50% members: Peabody-Waterside and Praxis Waterside, LLC.
- Peabody-Waterside performed site preparation and grading for Islands under a cost-plus contract and billed $4,543,799.77.
- Regions Bank held a revolving mortgage of $7.5 million on Islands’ development property.
- Peabody-Waterside recorded a mechanic’s lien on August 13, 2008 and sued for breach of contract and lien foreclosure on March 18, 2010.
- The circuit court granted Regions summary judgment voiding the lien by treating Peabody-Waterside as a co-owner; the LLC structure and statute treating LLC members as non-owners were not applied initially.
- An Illinois LLC member owns only its membership interest in the LLC, and a member is not a co-owner of LLC property; thus Peabody-Waterside was not co-owner of Islands’ property.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Peabody-Waterside may assert a mechanic’s lien against Islands despite LLC membership | Peabody-Waterside argues LLC membership does not confer ownership in Islands’ property | Regions argues Peabody-Waterside is a co-owner by sharing in profits and control | Lien valid; Peabody-Waterside not a co-owner |
Key Cases Cited
- Fitzgerald v. Van Buskirk, 16 Ill. App. 3d 348 (1974) (owner cannot lien own property; joint venture concept rejected for co-owners of property)
- Bonhiver v. State Bank of Clearing, 29 Ill. App. 3d 794 (1975) (co-ownership and lien issues in property development)
- Yokel v. Hite, 348 Ill. App. 3d 703 (2004) (definition of joint venture under Illinois law)
- Bank of America, N.A. v. Freed, 2012 IL App (1st) 110749 (2012) (LLC member ownership and property interest concepts)
- First Mid-Illinois Bank & Trust, N.A. v. Parker, 403 Ill. App. 3d 784 (2010) (LLC member ownership and property distinctions in lien context)