Father & Sons Home Improvement II, Inc. v. Stuart , 2016 IL App (1st) 143666 ( 2016 )

2016 IL App (1st) 143666No. 1-14-3666
Fifth Division
March 31, 2016
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT
______________________________________________________________________________
FATHER & SONS HOME IMPROVEMENT II, INC., ) Appeal from the Circuit
) Court of Cook County.
Plaintiff-Appellant, )
) No. 11 CH 29050
v. )
) The Honorable
TRACEE M. STUART and CEDRIC D. STUART, ) Robert Quinn,
Husband and Wife; MORTGAGE ELECTRONIC ) Judge Presiding.
REGISTRATION SYSTEMS, INC., a Corporation; )
COUNTRYWIDE HOME LOANS, INC., a Corporation )
Duly Licensed as an Illinois Residential Mortgage )
Licensee; )
)
Defendants-Appellees )
)
(Trans-Land Financial Services, Inc., a Corporation Duly )
Licensed as an Illinois Residential Mortgage Licensee; )
RBS Citizen’s NA, a Corporation Duly Licensed as an )
Illinois Residential Mortgage Licensee; and Nonrecord )
Claimants, )
Defendants). )
_______________________________________________________________________________
JUSTICE GORDON delivered the judgment of the court, with opinion.
Presiding Justice Reyes and Justice Neville concurred in the judgment and opinion.
OPINION
¶1 This appeal arises from plaintiff Father & Sons Home Improvement II, Inc.’s
mechanic’s lien action brought against defendants Tracee and Cedric Stuart (the
Stuarts); and Bank of America, N.A., and Mortgage Electronic Registration Systems,
No. 1-14-3666
Inc. (together, Bank of America 1). Plaintiff raises three issues on appeal: (1) whether
the circuit court erred in finding that plaintiff had committed constructive fraud and
granting summary judgment in favor of the Stuarts and Bank of America; (2) whether
the circuit court erred in awarding the Stuarts attorney fees pursuant to the Mechanics
Lien Act (770 ILCS 60/17(c) (West 2008)); and (3) whether the circuit court erred in
awarding Bank of America attorney fees pursuant to Illinois Supreme Court Rule 137
(eff. July 1, 2013). We affirm all three of the circuit court’s orders for the reasons set
forth below.
¶2 BACKGROUND
¶3 Plaintiff’s verified complaint alleges the following undisputed facts: defendants
Tracee and Cedric Stuart, husband and wife, own a house located on Peoria Avenue
in Chicago, Illinois. On March 9, 2005, the Stuarts obtained two mortgages on this
house from Bank of America, which timely recorded these mortgages with the Cook
County Recorder of Deeds’ Office on March 29, 2005.
¶4 In April 2009, the Stuarts entered into a written construction agreement with
plaintiff. Under this agreement, the Stuarts agreed to pay plaintiff $43,500 for the
construction of a deck, garage, and basement in their house. Six months later, on
September 10, 2009, plaintiff obtained a building permit from the Department of
Buildings and soon after, plaintiff began construction on the Stuarts’ house. 2 On
1
Defendant Bank of America, N.A., appears in this litigation as successor-in-interest to
Countrywide Home Loans, Inc. Defendant Mortgage Electronic Registration Systems, Inc., appears in this
litigation as nominee of Countrywide Home Loans, Inc.
2
The exact date construction on the Stuarts’ house began is not provided in the record. The Stuarts
claimed in their motion for summary judgment that construction began sometime in October or November
of 2009.
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No. 1-14-3666
September 12, 2009, the Stuarts and plaintiff agreed to modify this construction
agreement to include a retail installment contract, under which plaintiff agreed to
provide the Stuarts with financing for the costs of the construction project. 3
¶5 Over the next five months, as the project progressed, plaintiff had the Stuarts
sign “certificates” titled “Final Completion Certificate for Property Improvements.”
These certificates purported to report the Stuarts’ satisfaction with the construction
work on their house at various stages of the project. The Stuarts signed such
certificates in November 2009, January 2010, February 2010, March 2010, and May
2010. Construction on the Stuarts’ house was ultimately completed sometime in June
2010.
¶6 On September 17, 2009, eight months before plaintiff completed construction
on the Stuarts’ house, plaintiff recorded an “Original Contractor’s Claim for a Lien”
(the mechanic’s lien) with the Cook County Recorder of Deeds. This mechanic’s lien
included an affidavit, signed by Nancy Martinez, president of plaintiff’s company,
which stated:
“That on the 18th day of April, 2009 the Claimant, Father and Sons
Home Imp. II, Inc., entered into a contract &/or Change Order with (1)
said owner Tracee M. Stuart & Cedric D. Stuart (J). (2) to do a Deck,
Garage and Basement for the building, (3) erected on said land for the
sum of $43,500.00 and on the 12th day of September, 2009, completed
there-under (4) All work required by said contract.” (Emphasis in the
original.)
3
The retail installment contract did not modify the construction terms provided in the original
construction agreement.
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No. 1-14-3666
This affidavit further stated that the Stuarts owed plaintiff an additional sum of
$2,700 for “extra and additional work” completed “at the special instance and
request” of the Stuarts. In total, the balance of plaintiff’s mechanic’s lien was
$46,200, not including interest.
¶7 On August 17, 2011, plaintiff filed a four-count verified complaint with the
Cook County circuit court. Count I of this complaint sought foreclosure on the
mechanic’s lien; the other three counts, not at issue on appeal, raised claims for
breach of contract, unjust enrichment, and quantum meruit. Bank of America
responded by filing a motion to dismiss count I of plaintiff’s verified complaint under
section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2010)). In this
motion, Bank of America argued that plaintiff’s mechanic’s lien claim was not
recorded within four months of completing the construction project and was therefore
not enforceable against third-party creditors under the Mechanic’s Lien Act (770
ILCS 60/7(a) (West 2008)). On October 13, 2011, the Stuarts filed a pro se 4 motion
to dismiss arguing that plaintiff’s mechanic’s lien was invalid because it
misrepresented the amount due and the work completed as of the time of its
recording.
¶8 On December 2, 2011, the circuit court denied both motions to dismiss and the
parties went on to engage in extensive written and oral discovery. A key part of this
discovery involved plaintiff’s responses to Bank of America’s requests for
admissions, in which plaintiff admits that “it completed work at the subject property
4
The Stuarts’ pro se motion to dismiss did not specify the section of the Code of Civil Procedure
under which the motion was filed. The Stuarts have subsequently acquired professional representation.
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No. 1-14-3666
in or about June, 2010” and not on September 12, 2009, as the sworn and signed
affidavit attached to the mechanic’s lien attests.
¶9 On June 5, 2014, the Stuarts and Bank of America each moved for summary
judgment on count I of plaintiff’s verified complaint. In these motions, both Bank of
America and the Stuarts argued that plaintiff committed constructive fraud by
misrepresenting in its mechanic’s lien and in the affidavit attached to the lien the
work performed and the amount owed at the time the lien was recorded. In addition,
Bank of America’s motion argued that plaintiff’s lien was not enforceable against
third-party creditors because plaintiff had not recorded its mechanic’s lien within four
months of completing the construction project, as required under the Mechanic’s Lien
Act (770 ILCS 60/7(a) (West 2008)).
¶ 10 On June 12, 2014, plaintiff filed a response to defendants’ motions for summary
judgment arguing that the lien was timely filed as plaintiff had already performed
architectural, permitting, and survey work before recording the lien and that the
“erroneous overcharges and overstatements” in the lien did not rise to the level of
constructive fraud as the Stuarts and Bank of America alleged.
¶ 11 On July 8, 2014, the circuit court granted the Stuarts’ and Bank of America’s
motions for summary judgment, finding that plaintiff had committed constructive
fraud in its mechanic’s lien claim. The circuit court explained that “overstatement in
and of itself is not sufficient with regard to constructive fraud. There has to be
something more. In this particular situation there is something more. There is the
affiant on behalf of Fathers and Sons stating that the work was completed some
months after, after the claim for the lien was actually filed.”
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No. 1-14-3666
¶ 12 The circuit court also granted both defendants leave to file petitions for attorney
fees, explaining that plaintiff’s mechanic’s lien action was nothing less than “an
egregious case of constructive fraud” and that in previous cases the court had already
warned plaintiff to stop overstating its lien claims. 5
¶ 13 The Stuarts filed their petition for attorney fees in the amount of $13,675
pursuant to section 17 of the Mechanics Lien Act (770 ILCS 60/17(c) (West 2008)).
Bank of America filed its amended petition for attorney fees in the amount of
$26,291.02 pursuant to Illinois Supreme Court Rule 137. The circuit court granted
both petitions, finding that:
“the plaintiff knew or should have known that its September 19, 2009
mechanics lien on which it based this litigation falsely stated that all
work due under the contract was complete on September 12, 2009,
when in fact the work was not complete until June 2010. Plaintiff
verified that false fact or denied its corollary in various documents filed
with the court. This false fact was the cornerstone of the litigation.”
¶ 14 The circuit court’s order granting Bank of America’s attorney fees also listed
the following five instances in which plaintiff filed pleadings in violation of Illinois
Supreme Court Rule 137: (1) in paragraph 23 of the verified complaint where
plaintiff incorporated its mechanic’s lien, which falsely stated that “[a]ll work
required by said contract” was completed by September 12, 2009; (2) in paragraph 23
of the verified complaint where plaintiff incorporated its mechanic’s lien, which
falsely stated that plaintiff “delivered extra labor and materials” and completed “extra
5
The circuit court did not name specific cases.
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No. 1-14-3666
and additional work” by September 12, 2009; (3) on page 2 of plaintiff’s response to
Bank of America’s motion to dismiss, where it falsely stated that “[p]laintiff’s lien
notice was filed at a proper time”; (4) in plaintiff’s answer to paragraph 5 of Bank of
America’s affirmative defenses, where plaintiff denied not having completed the
work until after September 17, 2009; and (5) in plaintiff’s answer to paragraph 6 of
Bank of America’s affirmative defenses, where plaintiff denied not having filed its
claim for the lien within four months after completion of the work.
¶ 15 Plaintiff’s remaining claims for breach of contract, unjust enrichment, and
quantum meruit remain pending in the circuit court below. On November 3, 2014,
however, the circuit court entered an order pursuant to Illinois Supreme Court Rule
304 finding that there is no just reason for delaying the enforcement of its judgments
or appeal therefrom. This appeal follows.
¶ 16 ANALYSIS
¶ 17 On appeal, we consider whether the circuit court erred in: (1) entering summary
judgment in favor of Bank of America and the Stuarts, (2) awarding the Stuarts
attorney fees pursuant to section 17 of the Mechanics Lien Act (770 ILCS 60/17(c)
(West 2008)), and (3) awarding Bank of America attorney fees pursuant to Illinois
Supreme Court Rule 137. We address each of these issues in turn.
¶ 18 I. Jurisdiction
¶ 19 As an initial matter, we must discuss our appellate jurisdiction, given the fact
that plaintiff has several claims that remain pending before the circuit court. “A
reviewing court must ascertain its jurisdiction before proceeding in a cause of action,
regardless of whether either party has raised the issue.” Secura Insurance Co. v.
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No. 1-14-3666
Illinois Farmers Insurance Co., 232 Ill. 2d 209, 213 (2009). “Jurisdiction of appellate
courts is limited to reviewing appeals from final judgments, subject to statutory or
supreme court rule exceptions.” In re Marriage of Verdung, 126 Ill. 2d 542, 553
(1989) (citing People ex rel. Scott v. Silverstein, 87 Ill. 2d 167, 171 (1981), and
Village of Niles v. Szczesny, 13 Ill. 2d 45, 47 (1958)). “A judgment is considered final
‘if it terminates the litigation between the parties on the merits or disposes of the
rights of the parties, either on the entire controversy or a separate part thereof.’ ” In re
Curtis B., 203 Ill. 2d 53, 59 (2002) (quoting R.W. Dunteman Co. v. C/G Enterprises,
Inc., 181 Ill. 2d 153, 159 (1998)).
¶ 20 Plaintiff claims that the trial court has jurisdiction pursuant to Illinois Supreme
Court Rules 301, 303, and 304. “Every final judgment in a civil case is appealable
pursuant to Supreme Court Rule 301 [citation], and jurisdiction is vested in the
appellate court to hear the appeal of that final judgment upon the filing of a notice of
appeal.” F.H. Prince & Co. v. Towers Financial Corp., 266 Ill. App. 3d 977, 981-82
(1994). However, “[w]hen a final judgment or order does not dispose of all matters
presented to the court, Supreme Court Rule 304(a) governs.” F.H. Prince & Co., 266
Ill. App. 3d at 982. Rule 304(a) provides that “[i]f multiple parties or multiple claims
for relief are involved in an action, an appeal may be taken from a final judgment as
to one or more but fewer than all of the parties or claims only if the trial court has
made an express written finding that there is no just reason for delaying either
enforcement or appeal or both.” Ill. S. Ct. R. 304(a) (eff. Feb. 26, 2010). In the case
at bar, the trial court included a written finding pursuant to Rule 304(a) concerning
the grant of summary judgment, the award of the Stuarts’ attorney fees, and the award
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No. 1-14-3666
of Bank of America’s attorney fees. However, “the mere presence of Rule 304(a)
language cannot make a nonfinal order final and appealable.” People ex rel. Block v.
Darm, 267 Ill. App. 3d 354, 356 (1994); Cinch Manufacturing Co. v. Rosewell, 255
Ill. App. 3d 37, 42-43 (1993). Thus, we must consider whether the three orders at
issue in the instant case are final orders as to those claims.
¶ 21 With respect to the grant of the Stuarts’ and Bank of America’s motions for
summary judgment, the grant of summary judgment resolved the issues concerning
the validity of the mechanic’s lien. “An order granting summary judgment is a final
order.” Schilli Leasing, Inc. v. Forum Insurance Co., 254 Ill. App. 3d 731, 739
(1993); Diggs v. Suburban Medical Center, 191 Ill. App. 3d 828, 836 (1989). As
such, the addition of Rule 304(a) language to the order renders it appealable.
¶ 22 Similarly, the grant of the Stuarts’ attorney fees under the Mechanic’s Lien Act
and Bank of America’s attorney fees under Rule 137 are final orders that are
appealable with the inclusion of Rule 304(a) language. “A request for attorney fees is
a claim within the meaning of Supreme Court Rule 304(a) [citation]. [Citation.] This
is so whether the fees are sought pursuant to statute, such as the entry of sanctions for
false pleadings, or pursuant to a contract provision.” Brown & Kerr, Inc. v. American
Stores Properties, Inc., 306 Ill. App. 3d 1023, 1028 (1999). Thus, an order resolving
those claims is appealable when Rule 304(a) language is included. See West
American Insurance Co. v. J.R. Construction Co., 334 Ill. App. 3d 75, 88 (2002)
(finding jurisdiction to review the denial of a request for sanctions under section 155
of the Insurance Code (215 ILCS 5/155 (West 1998)) with the inclusion of Rule
304(a) language). We note that the requests for attorney fees concern only the
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No. 1-14-3666
attorney fees that relate to the mechanic’s lien action, not the attorney fees concerning
plaintiff’s pending claims. Accordingly, we find we have jurisdiction to consider the
orders at issue in the instant appeal.
¶ 23 II. Summary Judgment
¶ 24 A trial court is permitted to grant summary judgment only “if the pleadings,
depositions, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.” 735 ILCS 5/2–1005(c) (West 2008). The trial court
must view the pleadings, depositions, admissions, affidavits, and exhibits in the light
most favorable to the nonmoving party. North Shore Community Bank & Trust Co. v.
Sheffield Wellington LLC, 2014 IL App (1st) 123784, ¶ 60 (citing Home Insurance
Co. v. Cincinnati Insurance Co., 213 Ill. 2d 307, 315 (2004)).
¶ 25 A defendant moving for summary judgment bears the burden of proof.
Nedzvekas v. Fung, 374 Ill. App. 3d 618, 624 (2007). The defendant may meet this
burden either by affirmatively showing that some element of the case must be
resolved in its favor, or by establishing the absence of evidence supporting the
nonmoving party’s case. Nedzvekas, 374 Ill. App. 3d at 624 (citing Celotex Corp. v.
Catrett, 477 U.S. 317, 325 (1986)).
¶ 26 In short, “summary judgment is a drastic measure” only granted when the
movant’s right to judgment is clear and free from doubt. Outboard Marine Corp. v.
Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102, (1992). “Mere speculation,
conjecture, or guess is insufficient to withstand summary judgment.” Sorce v.
Naperville Jeep Eagle, Inc., 309 Ill. App. 3d 313, 328 (1999).
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¶ 27 We review a trial court's decision to grant a motion for summary judgment de
novo. Outboard Marine Corp., 154 Ill. 2d at 102. De novo consideration requires us
to perform the same analysis that a trial judge would perform. Khan v. BDO Seidman,
LLP, 408 Ill. App. 3d 564, 578 (2011). Ultimately, we may affirm the trial court’s
decision on any basis that appears in the record before us, whether or not the trial
court in fact relied on that basis, and even if the trial court's reasoning was
incorrect. Ray Dancer, Inc. v. DMC Corp., 230 Ill. App. 3d 40, 50 (1992).
¶ 28 In their motions for summary judgment both Bank of America and the Stuarts
claimed that plaintiff’s mechanic’s lien fraudulently stated that plaintiff completed all
the work required under the construction agreement by September 12, 2009, when in
fact, plaintiff did not even begin construction on the Stuarts’ house until sometime in
October or November of 2009. The Stuarts further claimed that plaintiff’s mechanic’s
lien falsely stated that they owed plaintiff $46,200 as of September 12, 2009, when
the first payment under the parties’ retail installment contract was not due until
November 1, 2009. Plaintiff does not dispute these allegations. Instead, plaintiff
maintains that the false statements in its mechanic’s lien amount to nothing more than
“erroneous overcharges and overstatements” and that the record does not support the
circuit court’s finding that it recorded the mechanic’s lien with the intent to defraud
defendants. We do not find this argument persuasive.
¶ 29 We begin our discussion by reiterating the well-established principles that guide
our analysis of the Mechanic’s Lien Act (the Act) (770 ILCS 60/1 et seq.
(West 2008)). The Act is a comprehensive statutory enactment that outlines the rights,
responsibilities, and remedies of parties to construction contracts, including owners,
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contractors, subcontractors, and third parties. Lazar Brothers Trucking, Inc., v. A & B
Excavating, Inc., 365 Ill. App. 3d 559, 562 (2006); Struebing Construction Co. v.
Golub–Lake Shore Place Corp., 281 Ill. App. 3d 689, 694 (1996). The overall
purpose of the Act is “ ‘to require a person with an interest in real property to pay for
improvements or benefits which have been induced or encouraged by his or her own
conduct.’ ” Stafford–Smith, Inc. v. Intercontinental River East, LLC, 378 Ill. App. 3d
236, 240 (2007) (quoting Leveyfilm, Inc. v. Cosmopolitan Bank & Trust, 274 Ill. App.
3d 348, 352 (1995)).
¶ 30 The right to a mechanic's lien claim is nevertheless a statutory right in derogation
of the common law and a contractor therefore must strictly comply with the
requirements of the Act to be eligible for relief. Matanky Realty Group, Inc. v. Katris,
367 Ill. App. 3d 839, 841 (2006); Tefco Construction Co., Inc. v. Continental
Community Bank & Trust Co., 357 Ill. App. 3d 714, 719 (2005) (explaining that
“[w]hile the Act should be construed liberally as a remedial one, being in derogation
of common law, it is strictly construed with reference to the requirements upon which
the right to a lien depends”).
¶ 31 With these general principles in mind we turn to the relevant provisions of the
Act. Section 7 of the Act provides that: “[n]o such lien shall be defeated to the proper
amount thereof because of an error or overcharging on the part of any person
claiming a lien therefor under this Act, unless it shall be shown that such error or
overcharge is made with intent to defraud.” 770 ILCS 60/7 (West 2008). “ ‘Intent to
defraud may [be] inferred from documents containing overstated lien amounts
combined with additional evidence.’ ” Cordeck Sales, Inc. v. Construction Systems,
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Inc., 382 Ill. App. 3d 334, 373 (2008) (quoting Peter J. Hartmann Co. v. Capitol
Bank & Trust, Co. 353 Ill. App. 3d 700, 708 (2004)). The requirement that there be
intent to defraud is designed “to protect an honest lien claimant who makes a mistake
rather than a dishonest claimant who knowingly makes a false statement.” Peter J.
Hartmann Co., 353 Ill. App. 3d at 706. When there is evidence, however, that the lien
claimant knowingly filed a lien claim containing false statements the claim will be
defeated because “the effect of such a lien claimant’s claim is to give the appearance
of a greater encumbrance on the property than that to which he is entitled.” Peter J.
Hartmann Co., 353 Ill. App. 3d at 706.
¶ 32 Thus, not only will courts invalidate a mechanic’s lien on the basis of actual
fraud, but also on the basis of constructive fraud. Lohmann Golf Designs, Inc. v.
Keisler, 260 Ill. App. 3d 886, 891 (1994) appeal allowed, cause remanded, 157 Ill. 2d
504 (1994), and supplemented, 260 Ill. App. 3d at 894; see also LaSalle National
Trust, N.A. v. Board of Directors of the 1100 Lake Shore Drive Condominium, 287
Ill. App. 3d 449, 455 (1997) (“ ‘[fraud] is no less fraudulent, either in law or in
morals, because it is called constructive fraud’ ” (quoting Warner v. Flack, 278 Ill.
303, 313 (1917))).
¶ 33 In Lohmann, for example, we held that a contractor engaged in constructive
fraud when the contractor filed separate lien claims on three different properties
seeking in each of the claims the aggregate value of all the properties combined and
effectively tripling the amount of its lien claim. Lohmann, 260 Ill. App. 3d at 891; see
also Bank of America National Trust & Savings Ass’n v. Zedd Investments, Inc., 276
Ill. App. 3d 998, 1001 (1995) (finding that a contractor’s filing of two separate liens
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No. 1-14-3666
for each parcel of land in the subdivision it had worked on constituted constructive
fraud because it exaggerated the amount owed to the contractor); Fedco Electric Co.
v. Stunkel., 77 Ill. App. 3d 48, 51 (1979) (finding that a contractor’s overstatement in
a mechanic’s lien claim amounted to constructive fraud due to the size of the
overstatement and the contractor’s knowledge of the overcharges).
¶ 34 Even under the theory of constructive fraud, however, a mechanic’s lien claim
will not be defeated simply because the lien claim contains overstatements or
overcharges. Cordeck Sales, 382 Ill. App. 3d at 373. Rather, to invalidate a lien claim
on the basis of constructive fraud, there must be additional evidence demonstrating
that the contractor knowingly made the overstatement or overcharge. See Cordeck
Sales, 382 Ill. App. 3d at 371 (finding that an overstatement in a mechanic’s lien
claim did not constitute constructive fraud because aside from the lien claim itself
there was no other evidence from which fraudulent intent could be inferred); Peter J.
Hartmann Co., 353 Ill. App. 3d at 710 (finding that a contractor's filing of multiple
notices and claims did not constitute constructive fraud because the notices and
claims considered as a whole clearly indicated a single lien claim encumbering the
same property); North Shore Community Bank & Trust Co. v. Sheffield Wellington
LLC, 2014 IL App (1st) 123784, ¶ 149 (finding that an overcharge in a contractor’s
mechanic’s lien claim was not substantial enough to constitute constructive fraud).
¶ 35 The additional evidence required to establish constructive fraud may, however,
come in the form of an affidavit, signed by an agent of a contractor’s company, which
is attached to the mechanic’s lien claim, and which falsely attests to the truth of
overstatements and overcharges made by the contractor. See Lohmann, 260 Ill. App.
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3d at 892 (finding that a contractor knowingly overstated its lien claim when the
president of the contractor’s company signed affidavits attesting to the truth of the
statements made in the contractor’s mechanic’s lien claims); see also Fedco Electric
Co., 77 Ill. App. 3d at 50 (finding that a contractor knowingly overstated its lien
claim when the president of the contractor’s company admitted in his deposition that
the contractor failed to credit the defendant’s past payments).
¶ 36 In the case at bar, we find that the record before us leaves no room for doubt
over whether plaintiff, at the very least, committed constructive fraud. The allegations
of fraud here, unlike the allegations of fraud discussed in Cordeck Sales, Peter J.
Hartmann Co., and Sheffield Wellington, are not merely based on overstatements or
overcharges, but rather on patently false statements that plaintiff used to establish its
right to a mechanic’s lien in the first place. See Cordeck Sales, 382 Ill. App. 3d at
371; Peter J. Hartmann Co., 353 Ill. App. 3d at 710; Sheffield Wellington LLC, 2014
IL App (1st) 123784, ¶ 149.
¶ 37 First, plaintiff’s mechanic’s lien, recorded on September 17, 2009, falsely stated
that all the work required under the construction agreement, including the
construction of the garage, basement, and deck, was completed by September 12,
2009. This statement was proven false by plaintiff’s own admission that “it completed
work at the subject property in or about June, 2010.” Plaintiff must have known that it
had not completed all the work required under the construction agreement as the
Department of Buildings only issued plaintiff a building permit on September 10,
2009. Likewise, the “completion certificates,” which plaintiff had the Stuarts sign as
the project progressed, clearly indicate that plaintiff knew that as of September 17,
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No. 1-14-3666
2009, it had not constructed any of the land improvements (the garage, deck, and
basement) required under the construction agreement.
¶ 38 Beyond providing a fabricated completion date, plaintiff’s mechanic’s lien also
stated falsely that the Stuarts owed plaintiff $46,200 as of September 12, 2009. This
statement was proven false by the clear and unambiguous terms of the parties’ retail
installment contract, under which the Stuarts were not required to make the first
installment payment until November 1, 2009.
¶ 39 Finally, here, as in Lohmann, plaintiff attached to its mechanic’s lien the signed
and sworn affidavit of Nancy Martinez, president of plaintiff’s company, falsely
attesting to the truth of the overstatements and overcharges made in its mechanic’s
lien claim. See Lohmann, 260 Ill. App. 3d at 892. The circuit court thus reasonably
inferred that plaintiff knew that its mechanic’s lien contained false statements.
Indeed, even construing the pleadings, admissions, exhibits, and affidavits strictly
against defendants and liberally in favor of plaintiff the circuit court here had no
choice but to conclude that plaintiff’s mechanic’s lien, based on patently false
statements, constituted constructive fraud.
¶ 40 Plaintiff’s assertion on appeal that the circuit court’s decision “rewrites the Act”
by making every mistaken overcharge or overstatement in a mechanic’s lien a per se
violation is simply not true. See 770 ILCS 60/7 (West 2008) (“[n]o such lien shall be
defeated *** unless it shall be shown that such error or overcharge is made with
intent to defraud”). As we explained above, even under the theory of constructive
fraud, a mechanic’s lien will not be defeated unless there is additional evidence
demonstrating that the contractor knowingly made the overcharges and
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No. 1-14-3666
overstatements. Cordeck Sales, 382 Ill. App. 3d at 373. The false statements in
plaintiff’s mechanic’s lien, however, cannot be characterized as mere overstatements
or overcharges, but rather as knowingly false statements that were clearly designed to
allow plaintiff to bring a fraudulent mechanic’s lien action against defendants.
¶ 41 We further find it irrelevant that plaintiff performed architectural, permit, and
survey work before recording its mechanic’s lien. See First Bank of Roscoe v.
Rinaldi, 262 Ill. App. 3d 179, 184 (1994) (“architects, structural engineers,
professional engineers, land surveyors, and property managers who perform any
service or incur any expense for any purpose are entitled to a lien under the Act”).
Even if plaintiff’s architectural, permit, and survey work was lienable, plaintiff had
no right to falsely claim that all the work required under the construction agreement
was completed by September 12, 2009. Plaintiff also fraudulently claimed $46,200,
which was the full value of the construction agreement.
¶ 42 We thus agree with the circuit court that no issue of material fact existed as to
whether plaintiff’s mechanic’s lien constituted constructive fraud, and we accordingly
find that the circuit court properly concluded that the Stuarts and Bank of America
were entitled to summary judgment.
¶ 43 Having established that the circuit court properly granted summary judgment in
favor of both defendants on the basis of constructive fraud, we find it unnecessary to
discuss Bank of America’s alternative argument that plaintiff’s mechanic’s lien was
not timely filed within four months of completing construction on the Stuarts’ house.
See 770 ILCS 60/7(a) (West 2008).
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¶ 44 III. Attorney Fees Under Section 17 of the Mechanic’s Lien Act
¶ 45 In addition to granting summary judgment to both defendants, the circuit court
awarded the Stuarts $13,675 in attorney fees pursuant to section 17 of the Mechanic’s
Lien Act (770 ILCS 60/17 (West 2008)). The circuit court based this award on the
Stuarts’ petition for attorney fees, which identified the responsible attorneys,
described their expertise and hourly rate, and detailed all the relevant work entries
involved in the case. On appeal, plaintiff argues that this award was “excessive.” In
particular, plaintiff argues that it was not objectively reasonable for the Stuarts’
attorneys to spend nearly 55 hours on a “straightforward” mechanic’s lien action.
Plaintiff also claims that it was not objectively reasonable for the Stuarts’ attorneys to
spend eight hours on researching and drafting a motion for summary judgment. We
do not find plaintiff’s argument to be persuasive, and we find no basis to disturb the
circuit court’s award of attorney fees.
¶ 46 Section 17(c) provides that “[i]f the court specifically finds that a lien claimant
has brought an action under this Act without just cause or right, the court may tax the
claimant the reasonable attorney's fees of the owner who contracted to have the
improvements made and defended the action, but not those of any other party.” 770
ILCS 60/17(c) (West 2008). The terms “without just cause or right” are defined as “a
claim asserted by a lien claimant or a defense asserted by the owner who contracted
to have the improvements made, which is not well grounded in fact and warranted by
existing law or a good faith argument for the extension, modification, or reversal of
existing law.” 770 ILCS 60/17(d) (West 2008).
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¶ 47 A trial court’s decision awarding attorney fees under section 17 of the
Mechanic’s Lien Act is reviewed under the abuse of discretion standard. Central
Illinois Electric Services, L.L.C. v. Slepian, 358 Ill. App. 3d 545, 550 (2005). Under
this standard, a trial court does not abuse its discretion “ ‘unless, in view of all the
circumstances, its decision so exceeded the bounds of reason that no person would
take the view adopted by the trial court.’ ” Gambino v. Boulevard Mortgage Corp.,
398 Ill. App. 3d 21, 51 (2009) (quoting In re Marriage of Demar, 385 Ill. App. 3d
837, 852 (2008)). The rationale for this standard is that a party challenging a trial
court’s decision regarding attorney fees “is actually challenging the trial court's
discretion in determining what is reasonable.” Guerrant v. Roth, 334 Ill. App. 3d 259,
263 (2002); see also Peleton, Inc. v. McGivern’s Inc., 375 Ill. App. 3d 222, 225
(2007). A trial court therefore has “broad discretionary powers in awarding attorney
fees.” Mirar Development, Inc. v. Kroner, 308 Ill. App. 3d 483, 485 (1999) (citing In
re Estate of Callahan, 144 Ill. 2d 32, 44 (1991)).
¶ 48 In the case at bar, plaintiff challenges the circuit court’s award of attorney fees
solely on the basis that the award was “excessive.” Merely characterizing an award of
attorney fees as “excessive,” however, does not amount to establishing that the trial
court abused its discretion. “The determination as to what constitutes reasonable
compensation is a matter peculiarly within the discretion of the trial court.” Chicago
Title & Trust Co., Trustee Under Trust No. 89-044884 v. Chicago Title & Trust Co.,
Trustee Under Trust No. 1092636, 248 Ill. App. 3d 1065, 1072 (1993). A trial court is
indeed permitted to use its own knowledge and experience in assessing the time
required to complete particular services or activities. Chicago Title & Trust Co., 248
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No. 1-14-3666
Ill. App. 3d at 1073 (citing In re Estate of Healy, 137 Ill. App. 3d 406, 411 (1985)). A
court of review, in contrast, may not reverse the trial court’s award of attorney fees
merely because it may have reached a different conclusion. Chicago Title & Trust
Co., 248 Ill. App. 3d at 1073; In re Estate of Healy, 137 Ill. App. 3d at 411.
¶ 49 Furthermore, the record in the present case makes it clear that the Stuarts’
petition for attorney fees provided the circuit court with all the required detailed
information: it identified the responsible attorneys, described the expertise and hourly
rate of the attorneys, and detailed all the relevant work entries involved in this case.
See Gambino, 398 Ill. App. 3d at 66 (“the petition for fees must specify the services
performed, by whom they were performed, the time expended thereon, and the hourly
rate charged therefor”); see also Ealy v. Peddy, 138 Ill. App. 3d 397, 400 (1985).
Plaintiff, on the other hand, has failed to include in the record any transcripts from the
circuit court’s hearing awarding the Stuarts their attorney fees. See Mars v. Priester,
205 Ill. App. 3d 1060, 1066 (1990) (“[a]n appellant has the burden to present a
sufficiently complete record of the proceedings at trial to support a claim of error”).
We are accordingly required to presume that the circuit court, relying on its
experience and knowledge, carefully reviewed the Stuarts’ petition for attorney fees
and found this petition as reasonable. Mars, 205 Ill. App. 3d at 1066 (“[i]n the
absence of such a record on appeal, and upon a claim of error, it will be presumed
that the order entered by the trial court was in conformity with law and had a
sufficient factual basis *** doubts which may arise from the incompleteness of the
record will be resolved against the appellant.”); see also Chicago Title & Trust Co.,
248 Ill. App. 3d at 1075.
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¶ 50 We thus decline plaintiff’s invitation to make a de novo determination as to the
reasonableness of the circuit court’s award of attorney fees and we accordingly find
that the circuit court did not abuse its discretion in awarding the Stuarts $13,675 in
attorney fees.
¶ 51 IV. Sanctions Under Supreme Court Rule 137
¶ 52 In addition to awarding attorney fees to the Stuarts, the circuit court sanctioned
plaintiff and awarded Bank of America $26,291.02 in attorney fees pursuant to
Illinois Supreme Court Rule 137. Ill. S. Ct. R. 137 (eff. July 1, 2013). Plaintiff
appeals this award of attorney fees on numerous grounds. First, plaintiff argues that
sanctions were not warranted in the present case because its mechanic’s lien claim
was based on a legal theory grounded in existing law, namely, the theory that a
contractor is not required to complete all the work required under a construction
agreement before recording a mechanic’s lien claim.
¶ 53 Second, in the alternative, plaintiff argues that even if sanctions were warranted,
the attorney fees awarded to Bank of America were “unreasonably excessive.” In
support of this argument, plaintiff claims that “it defies logic” that Bank of America
expended 105 hours defending a “non-complex” mechanic’s lien action that the
Stuarts were able to defend successfully by expending only 54 hours. Plaintiff further
claims that Bank of America’s petition for attorney fees included “double billings”
and duplicative entries. For example, according to plaintiff, Bank of America
improperly included in its petition four separate entries that were all marked for the
same task of researching applicable mechanic’s lien case law. Finally, plaintiff argues
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that the circuit court erred in awarding Bank of America over $1,000 in paralegal
fees, which constitute office overhead expenses that are not recoverable.
¶ 54 We address each of plaintiff’s arguments in turn. However, here too, we find no
reason to disturb the circuit court’s award of attorney fees.
¶ 55 Illinois Supreme Court Rule 137(a) provides:
“(a) *** Every pleading, motion and other document of a party
represented by an attorney shall be signed by at least one attorney of
record ***. The signature of an attorney or party constitutes a
certificate by him that he has read the pleading, motion or other
document; that to the best of his knowledge, information, and belief
formed after reasonable inquiry it is well grounded in fact and is
warranted by existing law or a good-faith argument for the extension,
modification, or reversal of existing law, and that it is not interposed
for any improper purpose, such as to harass or to cause unnecessary
delay or needless increase in the cost of litigation.” Ill. S. Ct. R. 137(a)
(eff. July 1, 2013).
¶ 56 “ ‘The purpose of [Rule 137] is to prevent abuse of the judicial process by
penalizing claimants who bring vexatious and harassing actions based upon
unsupported allegations of fact or law.’ ” Lake Environmental, Inc. v. Arnold, 2015 IL
118110, ¶¶ 13, 39 (quoting Fremarek v. John Hancock Mutual Life Insurance Co.,
272 Ill. App. 3d 1067, 1074 (1995)); see also Espevik v. Kaye, 277 Ill. App. 3d 689,
697 (1996) (explaining the same). Rule 137 is thus penal in nature and must be
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strictly construed. Citi Mortgage, Inc. v. Johnson, 2013 IL App (2d) 120719, ¶ 41
(citing Sadler v. Creekmur, 354 Ill. App. 3d 1029, 1045 (2004)).
¶ 57 Rule 137 is not, however, intended to punish litigants for making losing
arguments. Indeed, a trial court considering whether sanctions are warranted in a
particular case should not engage in hindsight, but rather determine what was
reasonable at the time the attorney or party signed the document or made its motion.
Arnold, 2015 IL 118110, ¶ 39 (citing Fremarek, 272 Ill. App. 3d at 1074). Courts
should also not impose sanctions solely because the facts ultimately determined in a
particular case are adverse to the facts set forth originally in the pleadings.
Commonwealth Edison Co. v. Munizzo, 2013 IL App (3d) 120153, ¶ 35 (citing
Rubino v. Circuit City Stores, Inc., 324 Ill. App. 3d 931, 946 (2001)).
¶ 58 The determination of whether to impose sanctions under Rule 137 ultimately
rests with the sound discretion of the trial court. In re Marriage of Schneider, 298 Ill.
App. 3d 103, 109 (1998) (citing Senese v. Climatemp, Inc., 289 Ill. App. 3d 570, 581-
82 (1997)). The trial court’s decision to impose or deny sanctions is thus entitled to
great weight on appeal, and its decision will not be disturbed absent an abuse of
discretion. Bennett & Kahnweiler, Inc. v. American National Bank & Trust Co. of
Chicago, 256 Ill. App. 3d 1002, 1007 (1993) (citing In re Estate of Wernick, 127 Ill.
2d 61, 78 (1989)). Under this standard, a trial court is only said to have abused its
discretion where no reasonable person would take the view adopted by the trial court.
Arnold, 2015 IL 118110, ¶ 16. We thus limit our review to “whether the trial court's
decision was informed, based on valid reasoning, and follows logically from the
facts.” Munizzo, 2013 IL App (3d) 120153, ¶ 33.
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¶ 59 We first address plaintiff’s argument that sanctions were not warranted in the
present case. Plaintiff argues that its mechanic’s lien claim was well grounded in the
theory that a contractor does not need to complete all the work required under a
construction agreement before recording a mechanic’s lien claim. Plaintiff is correct;
a contractor does not need to complete all the work required under a construction
agreement before recording a mechanic’s lien claim. Cordeck Sales, Inc. v.
Construction Systems, Inc., 382 Ill. App. 3d 334, 389 (2008) (explaining that the term
“completion” as used in the Mechanic’s Lien Act does not refer to completion of the
contract, but rather to completion of the work for which the contractor seeks to
enforce its lien).
¶ 60 The circuit court here, however, did not sanction plaintiff for recording its
mechanic’s lien claim prematurely, but rather for repeatedly submitting documents to
the court containing false statements about plaintiff’s right to enforce its mechanic’s
lien claim. See Lohmann, 260 Ill. App. 3d at 886 (affirming a circuit court’s decision
imposing sanctions on a contractor who filed an excessive mechanic’s lien claim that
wrongly encumbered the subject property and clouded the property owner’s title).
¶ 61 In particular, the circuit court here listed five instances where plaintiff violated
Rule 137: (1) in paragraph 23 of the verified complaint where plaintiff incorporated
its mechanic’s lien falsely stating that “[a]ll work required by said contract” was
completed by September 12, 2009; (2) in paragraph 23 of the verified complaint
where plaintiff incorporated its mechanic’s lien falsely stating that plaintiff “delivered
extra labor and materials” and completed “extra and additional work” by September
12, 2009; (3) on page 2 of plaintiff’s response to Bank of America’s motion to
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No. 1-14-3666
dismiss, where plaintiff falsely stated that “[p]laintiff’s lien notice was filed at a
proper time”; (4) in plaintiff’s answer to paragraph 5 of Bank of America’s
affirmative defenses, where plaintiff denied not having completed the work until after
September 17, 2009; and (5) in plaintiff’s answer to paragraph 6 of Bank of
America’s affirmative defenses, where plaintiff denied not having filed its claim for
the lien within four months after completion of the work.
¶ 62 In conclusion, there was no theory grounded in existing law that permitted
plaintiff to falsely state in its mechanic’s lien claim that all the work required under
the construction agreement was completed, when in fact the work had not been
completed. There was also no theory grounded in existing law that allowed plaintiff
to misrepresent the amount owed by the Stuarts at the time the lien claim was
recorded. Any such a theory would indeed defeat the vary purpose of the Mechanic’s
Lien Act, which is to ensure that persons with an interest in real property pay for the
actual improvements and benefits that they have induced. Stafford–Smith, Inc. v.
Intercontinental River East, LLC, 378 Ill. App. 3d 236, 240 (2007) (citing Leveyfilm,
Inc. v. Cosmopolitan Bank & Trust, 274 Ill. App. 3d 348, 352 (1995)).
¶ 63 There can thus be little argument over whether the circuit court’s decision to
impose sanctions against the plaintiff was informed, based on valid reasoning, and
followed logically from the facts of this case. We accordingly find that the circuit
court did not abuse its discretion in imposing sanctions on the plaintiff.
¶ 64 Plaintiff’s second and alternative argument that the attorney fees awarded to
Bank of America were unreasonably “excessive” is equally unpersuasive. According
to the plaintiff, it was not “objectively reasonable” for Bank of America to expend
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105 hours defending a “non-complex” mechanic’s lien action that the Stuarts were
able to defend successfully by expending only 54 hours. Plaintiff further argues that
Bank of America improperly included in its petition four duplicative entries that were
all marked for the same task of researching mechanic’s lien case law. We disagree.
¶ 65 First, contrary to plaintiff’s argument, a cursory comparison of the hours
expended by one defendant to the hours expended by another defendant is not
determinative in reviewing the reasonableness of an award of attorney fees. The mere
fact that Bank of America expended more time than the Stuarts defending this lawsuit
does not establish that the circuit court’s award of attorney fees was unreasonably
excessive. As the record reflects, Bank of America was directly involved in this
litigation for over three years. During this period, the attorneys representing Bank of
America participated in extensive oral and written discovery and motion practice.
¶ 66 Bank of America was also involved in this litigation in a different manner than
the Stuarts. It was Bank of America’s attorneys that introduced the argument that
plaintiff’s mechanic’s lien claim was untimely filed and was not enforceable against
third party creditors. See 770 ILCS 60/7(a) (West 2008). It was also Bank of
America’s attorneys that researched and drafted the motion to dismiss, which Bank of
America brought at the onset of this litigation. There is, therefore, no reason to
assume that the amount of time expended by Bank of America in this action should
mirror the amount of time expended by the Stuarts.
¶ 67 There is also nothing in the record that suggests that Bank of America’s entries
were “duplicative” as plaintiff suggests. On the contrary, it is clear from the record
that during the hearing on the reasonableness of Bank of America’s petition the
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No. 1-14-3666
circuit court carefully scrutinized each of the entries made by Bank of America in its
petition for attorney fees. Indeed, the hearing transcripts establish that plaintiff was
given the opportunity to object to the entries included in Bank of America’s petition,
that plaintiff objected to some of these entries, and that the circuit court struck down
and adjusted the entries that it deemed to be unreasonable. We thus find nothing in
the record that supports plaintiff’s claim that the circuit court abused its discretion by
awarding Bank of America duplicative and unreasonably excessive attorney fees.
¶ 68 Moreover, we must reiterate that because Rule 137 sanctions are penal in nature,
we are not required to review each and every reimbursable component of an award of
attorney fees that was imposed as a sanction against a party filing a frivolous lawsuit.
Riverdale Bank v. Papastratakos, 266 Ill. App. 3d 31, 43 (1994) (“[t]he isolated focus
on each reimbursable component part of preparation and trial is not necessary where
false allegations made without reasonable cause are determined to be the cornerstone
of the entire baseless lawsuit”); Robertson v. Calcagno, 333 Ill. App. 3d 1022, 1028
(2002) (“[f]ees are recoverable under Rule 137 even where they are ‘lumped,’ and
even for unaccounted-for time entries”). The circuit court here explicitly noted that it
considered the false statements made by plaintiff in its mechanic’s lien claim to be
“the cornerstone of the litigation.” We accordingly decline to review isolated entries
made in Bank of America’s petition for attorney fees.
¶ 69 Finally, plaintiff incorrectly assumes that paralegal work may never be
recovered as part of an award of attorney fees. Under Rule 137, a party may recover
attorney fees incurred as a result of the sanctionable paper or pleading. Robertson,
333 Ill. App. 3d at 1028. This limitation generally precludes the recovery of office
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No. 1-14-3666
overhead expenses, which an attorney incurs regardless of specific litigation. See
Harris Trust & Savings Bank v. American National Bank & Trust Co. of Chicago,
230 Ill. App. 3d 591, 599 (1992) (citing Kaiser v. MEPC American Properties, Inc.,
164 Ill. App. 3d 978, 989 (1987)). Such office overhead expenses typically include
“telephone charges, in-house delivery charges, in-house photocopying, check
processing, newspaper subscriptions, and in-house paralegal and secretarial
assistance.” Johnson v. Thomas, 342 Ill. App. 3d 382, 401 (2003). When paralegals or
other non-attorneys, however, perform special legal tasks, which would otherwise
have to be performed by an attorney, the fees incurred from those tasks are
recoverable because they cannot be regarded as overhead office expenses that are
already included in the attorney’s hourly rate. See Merchandise National Bank of
Chicago v. Scanlon, 86 Ill. App. 3d 719, 728 (1980) (distinguishing services
performed by a law student, which would otherwise have been performed by an
attorney, from general administrative tasks “which would be more properly included
in the attorneys’ hourly rates as part of their general overhead costs”); see also Todd
W. Musburger, Ltd. v. Meier, 394 Ill. App. 3d 781 (2009) (finding that work done by
a law firm’s non-attorney in-house consultant was recoverable).
¶ 70 In the present case, the circuit court carefully reviewed all the entries pertaining
to paralegal work that were included in Bank of America’s petition for attorney fees.
In considering those entries, the circuit court explained that Bank of America was
only entitled to recover for the paralegal work involving legal tasks that would
otherwise have to be performed by an attorney.
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¶ 71 After reviewing those entries, the circuit court found that some of the paralegal
work described in Bank of America’s petition involved work of the kind that would
otherwise have to be completed by an attorney. For example, the circuit court found
that Bank of America’s paralegals performed “legal tasks” when they researched the
title history of the property subjected to plaintiff’s mechanic’s lien claim and when
they drafted a memorandum to the supervising attorneys summarizing the results of
this title search. Conversely, the circuit court did not allow Bank of America to
recover for the entries involving the paralegals performing general administrative
tasks, such as updating the case status reports and organizing the case file.
¶ 72 The record thus makes it clear that the circuit court did not simply rubber-stamp
Bank of America’s petition for attorney fees. Rather, the circuit court applied its
discretion and reviewed each of the entries involving work performed by paralegals.
We thus find no basis in the record supporting plaintiff’s argument that the circuit
court abused its discretion by erroneously reimbursing Bank of America for office
overhead expenses.
¶ 73 Having addressed each of plaintiff’s objections to the circuit court’s award, we
find that the circuit court appropriately awarded $26,291.02 in attorney fees to Bank
of America as a sanction under Rule 137.
¶ 74 CONCLUSION
¶ 75 For the foregoing reasons, we affirm the judgment of the circuit court of Cook
County.
¶ 76 Affirmed.
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