Roy Zenere Trucking & Excavating, Inc. v. Build Tech, Inc.
2016 IL App (3d) 140946
Ill. App. Ct.2016Background
- Jefferson Reger, LLC contracted with Build Tech to develop a Walgreens; Build Tech subcontracted paving (Oak Lawn) and concrete (Alpine).
- Oak Lawn sued asserting a $36,655 mechanics lien (subcontract $112,800; paid $85,500; lien recorded Nov. 26, 2008; completion claimed Sept. 16, 2008). A partial lien waiver incorrectly listed the subcontract as $95,000 (filled out and notarized by Oak Lawn office manager Helen).
- Alpine sued asserting a $30,522 mechanics lien (subcontract $208,000; paid $187,230; completion claimed Sept. 14, 2008; lien recorded Nov. 25, 2008).
- Jefferson Reger counterclaimed for constructive fraud and slander of title, alleging plaintiffs knowingly overstated liens by including unsigned/unapproved change orders and clerical errors.
- Trial court awarded Oak Lawn $27,300 and Alpine $20,770 (balance of subcontracts), denied owner’s counterclaims, and denied plaintiffs’ request for attorney fees.
- On appeal, the appellate court affirmed lien awards and denial of counterclaims, reversed the denial of attorney fees and remanded for calculation and imposition of fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entitlement to mechanics liens (timeliness & completion) | Plaintiffs: liens timely; completion dates as stated; notices served. | Reger: notice timing unclear; pay apps/contractor sworn statements show earlier completion; liens untimely. | Court: plaintiffs proved completion dates and notice (stipulated); liens timely and enforceable. |
| Amount recoverable (Oak Lawn waiver discrepancy) | Oak Lawn: waiver error was clerical; subcontract was $112,800; entitled to balance. | Reger: Oak Lawn is bound by waiver stating $95,000, limiting recovery. | Court: waiver mistake was clerical (filled using Build Tech info); Oak Lawn entitled to full subcontract balance. |
| Constructive fraud (intent to defraud by overstating extras) | Plaintiffs: change orders were approved/represented approved by Build Tech; no intent to defraud owner. | Reger: overstatements/unsigned change orders show intent to defraud owner. | Court: no intent to defraud; claimants had colorable claim based on contractor representations; counterclaim failed. |
| Slander of title | Plaintiffs: asserted colorable lien claim in good faith. | Reger: publication of inflated liens disparaged title and was malicious. | Court: no malice or reckless disregard; reasonable grounds to assert liens; slander claim failed. |
| Prejudgment interest | Plaintiffs: entitled to interest from when payment was due under subcontracts. | Reger: no amount was actually ‘due’ until court decision because of disputed overcharges. | Court: interest properly awarded; obligation arose upon completion per subcontracts, not from court order. |
| Attorney fees under Mechanics Lien Act §17(b) | Plaintiffs: owner withheld full contract price without just cause; statute permits fees. | Reger: disputed entitlement; trial court denied fees. | Appellate court: trial court abused discretion in denying fees; remanded to calculate and award fees to plaintiffs. |
Key Cases Cited
- Chicago Transparent Products, Inc. v. American National Bank & Trust Co. of Chicago, 337 Ill. App. 3d 931 (affirming standard for reversing factual findings) (standard for manifest-weight review)
- Nokomis Quarry Co. v. Dietl, 333 Ill. App. 3d 480 (clarifying deference to trial court on clerical errors and factual findings)
- Cordeck Sales, Inc. v. Construction Systems, Inc., 382 Ill. App. 3d 334 (overstated lien amounts alone insufficient to show intent to defraud)
- Peter J. Hartmann Co. v. Capitol Bank & Trust Co., 353 Ill. App. 3d 700 (intent to defraud shown by executed documents overstating amount plus other evidence)
- Father & Sons Home Improvement II, Inc. v. Stuart, 2016 IL App (1st) 143666 (noting overstated liens require additional evidence of fraud)
- Bank of America Nat. Trust & Sav. Ass’n v. Zedd Investments, Inc., 276 Ill. App. 3d 998 (cases where multiple or intentionally inflated liens supported intent to defraud)
- Lohmann Golf Designs, Inc. v. Keisler, 260 Ill. App. 3d 886 (overstated liens creating appearance of greater encumbrance support fraud finding)
- Fedco Electric Co. v. Stunkel, 77 Ill. App. 3d 48 (double-billing and failing to credit payments can show intent to defraud)
- Chicago Title & Trust Co. v. Levine, 333 Ill. App. 3d 420 (elements of slander of title and requirement to prove malice)
- Midwest Glass Co. v. Stanford Dev. Co., 34 Ill. App. 3d 130 (reasonable grounds to believe in a claim precludes slander of title liability)