Cyclonaire v. ISG Riverdale ( 2007 )

FIRST DIVISION
DECEMBER 31, 2007
No. 1-07-0421
CYCLONAIRE CORPORATION, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. ) No. 04 CH 21746
)
ISG RIVERDALE, INC., ) Honorable
) Clifford L. Meacham,
Defendant-Appellee. ) Judge Presiding.
JUSTICE ROBERT E. GORDON delivered the opinion of the court:
Plaintiff, Cyclonaire Corporation, appeals from a judgment of the circuit court of
Cook County, finding that plaintiff’s subcontractor’s mechanic’s lien was invalid for
failure to strictly comply with the 90-day written notice period mandated by section 24(a)
of the Mechanics Lien Act. 770 ILCS 60/24(a)(West 2006). The trial court found that
plaintiff’s notice of lien was sent outside the 90-day written notice period, and found that
any services performed and replacement parts provided by plaintiff during the 90-day
period preceding the notice of plaintiff’s lien constituted warranty service that could not
extend the time for written notice. On appeal, plaintiff contends that (1) the trial court’s
judgment was against the manifest weight of the evidence, and (2) the trial court erred by
excluding from evidence, plaintiff’s exhibits Nos. 45 and 46, constituting internal
No. 1-07-0421
shipping and invoicing documents, which plaintiff claims would have proved that
plaintiff’s last date of performance fell within the applicable 90-day period.
BACKGROUND
Defendant ISG Riverdale, Inc., owns and operates a steel mill in Riverdale,
Illinois. In July of 2003, defendant entered into a contract with general contractor
Fairfield Engineering Co. for a flux delivery system to convey lime, dolo lime, and coal
into a basic oxygen furnace at defendant’s steel mill facility. Fairfield elicited bids from
subcontractors for the delivery of the flux delivery system equipment. Plaintiff’s final
written proposal to Fairfield dated May 14, 2003, noted that installation of the equipment
was to be performed “BY OTHERS” rather than plaintiff.
Fairfield executed a written purchase order with plaintiff for the delivery of five
units of equipment at ISG’s facility. The written contract between plaintiff and Fairfield
consisted of Fairfield purchase order No. 24806-001A and three change orders. The
contract specified that the project would be completed in three phases. Phase I consisted
of conveyors 1 and 2. Phase II consisted of conveyors 3 and 4. Finally, Phase III
consisted of conveyor 5. The equipment contract provided that plaintiff was to deliver all
of its equipment by “approximately” December 15, 2003.
The equipment was delivered on December 16, 2003. At trial, all of the witnesses
testified that plaintiff’s equipment did not function properly. All of the witnesses
substantially agreed that the performance problems were due to the fact that certain parts
of the equipment were too small, which prevented sufficient airflow within the flux
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No. 1-07-0421
delivery system to allow the equipment to function properly. In response, plaintiff
serviced and provided replacement parts for the equipment. At trial, plaintiff contended
that these services constituted “start-up” services that were part of the parties’ written
contract. Plaintiff contends that the last day of performance was on February 6, 2004.
Defendant contended that these services constituted warranty services, which were not
part of the contract, but rather subsequent to it. Under defendant’s version, the last day
of performance under the contract was on or before December 31, 2003, when plaintiff
delivered its equipment to defendant’s steel mill.
A. Plaintiff’s Notice of Mechanic’s Lien Claim
Plaintiff cause an original subcontractor’s claim for lien in the amount of
$120,465.26 to be filed with the office of the Cook County Recorder of Deeds on June
22, 2004, as document number 0417432102. Written notice of plaintiff’s lien claim was
sent to defendant on May 4, 2004.
B. Plaintiff’s Equipment Warranty
Plaintiff’s equipment contract contained a “system performance guarantee” which
provided: “If it is determined that the cause of the non-performance (or potential non-
performance) was known or should have been known by [plaintiff], due to their
experience, then [plaintiff] will correct the performance issue at no additional cost to
Fairfield Engineering.” The “second-to-none” system performance guarantee was
written by Jim Ketcham, plaintiff’s regional sales manager, and guaranteed that
plaintiff’s equipment would perform as intended and without Fairfield offering or
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No. 1-07-0421
providing any engineering design assistance or any additional equipment based on
plaintiff’s final design.
C. Trial Witnesses
Several witnesses testified at trial. Jim Boger is defendant’s plant engineer who
oversaw the installation of the flux delivery system. Scott Schmid is plaintiff’s vice
president of engineering. As noted, Jim Ketcham is plaintiff’s regional sales manager.
John Andrews is plaintiff’s service manager and oversaw the project.
Jim Boger, defendant’s plant manager, testified that he maintained a log,
documenting important points and corresponding dates concerning the project. Based
upon this log, Mr. Boger testified that Phase I of the project, consisting of conveyors 1
and 2, was commissioned and on-line on December 22, 2003. He further testified that
Phase II, consisting of conveyors 3 and 4, was commissioned and on-line on January 9,
2004. Finally, he testified that the last conveyor was commissioned and on-line as of
January 15, 2004. By “commissioned,” Mr. Boger meant that the equipment was
“actually put into production.” Mr. Boger testified that pursuant to the written contract,
plaintiff was not to perform any “start-up” services; rather, Fairfield, defendant’s own
personnel, and another subcontractor, LML, performed “start-up” services. Mr. Boger
testified that plaintiff’s service personnel were present during the “start-up” and initial
operations. He stated that plaintiff’s personnel were on site because the equipment was
experiencing a “plugging” problem. Mr. Boger testified that the plugging was primarily
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No. 1-07-0421
due to the fact that the injection lines were too small, which prevented sufficient airflow
to propel material into the furnace(s).
Scott Schmid, plaintiff’s vice president, testified that he visited the steel mill on
December 29 through December 31 of 2003 to address the plugging problem and
determined it was due to improper sizing of valves and elbows. He modified the system
to increase airflow. Mr. Schmid testified that plaintiff did not bill defendant for these
visits because plaintiff treated the plugging problem as a warranty issue. He testified that
he was aware of three separate categories of warranty issues with respect to plaintiff’s
equipment: (1) plugging, which commenced at the initial start-up of Phase I; (2)
excessive and premature wear and abrasion (regarding pinch valves and flexible
connectors); and (3) problems getting Phase III, the coal injection system, operational
(this equipment did not function as designed until April 2004). With respect to Phase III,
Mr. Schmid testified that LML commissioned conveyor 5.
Jim Ketcham, plaintiff’s regional sales manager, testified that he attended a pre-
bid meeting with Fairfield on February 25, 2003. He reviewed the notes Fairfield
recorded at this meeting. He testified that no note made reference to plaintiff performing
any start-up services at the Riverdale property. Mr. Ketcham testified that he prepared
and signed plaintiff’s revision “B” proposal, which was dated May 2, 2003. He testified
that revision “B” stated that start-up services were not included unless “specifically
noted.” No start-up services were noted in the revision “B” proposal, although the
documents included a rate schedule for services. The rate schedule reflected rates that
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would be charged if such services were ordered. After plaintiff performed successful
trials using defendant’s raw materials, Mr. Ketcham sent a letter dated May 14, 2003, to
Fairfield stating, “based on our successful test, we can provide ‘Second to None’
Performance Warranty that this system will perform as quoted.” Mr. Ketcham also
testified that he prepared and signed the revision “C” proposal dated May 14, 2003, and
that proposal was accepted by Fairfield. Mr. Ketcham testified that revision “C” stated
that “installation” would be performed “BY OTHERS,” that start-up services were not
included unless specifically noted in the proposal, and that no such services were noted in
the proposal. Mr. Ketcham testified that the written contract between plaintiff and
Fairfield consisted of four documents: the purchase order and three change orders. Mr.
Ketcham testified that the third change order specified that delivery of all equipment was
to be made by December 15, 2003. He testified that delivery occurred on December 16,
2003. Mr. Ketcham further testified that plaintiff issued only four invoices under the
agreement: (1) an October 29, 2003, invoice for $158,685; (2) a November 17, 2003,
invoice for $1,325; (3) a December 13, 2003, invoice for $1,325; and (4) a December 31,
2003, invoice for $60,613. Mr. Ketcham conceded that several items included in
plaintiff’s mechanic’s lien claim were for warranty charges that he would not expect a
customer to pay for.
John Andrews, plaintiff’s service manager, testified concerning several service
visits he made to the Riverdale property. On cross-examination, Mr. Andrews was asked
if the December 19, 2003, service visit was a warranty visit. He stated that he did not
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know if the visit was a warranty visit, but he did state that plaintiff did not charge
Fairfield for labor costs because plaintiff want to show “good will.” When confronted
with his discovery deposition testimony, Mr. Andrews changed his testimony and stated
that the December 19, 2003, service visit was a warranty visit. Mr. Andrews, like Mr.
Ketcham, testified that plaintiff’s mechanic’s lien included warranty charges. Finally,
Mr. Andrews testified that plaintiff does not provide start-up services for all customers,
as some perform start-up procedures on their own.
D. Plaintiff’s Rebuttal
On the last day of trial, plaintiff sought to introduce into evidence, plaintiff’s
exhibits Nos. 45 and 46, which constituted internal shipping and invoicing documents,
which plaintiff claims would have proved that plaintiff’s last date of performance fell
within the applicable 90-day period mandated by the Mechanic’s Lien Act and would
have rebutted Mr. Boger’s testimony that the last conveyor was commissioned and on-
line by January 15, 2004.
Defendant objected to the introduction of plaintiff’s exhibits Nos. 45 and 46,
arguing that the documents had not been disclosed to defendant during discovery.
Plaintiff voluntarily withdrew plaintiff’s exhibit No. 45 before the trial court
could rule on defendant’s objection.
After reviewing defendant’s requests for production Nos. 28 and 34, the trial
court found that the documents comprising plaintiff’s exhibit No. 46 “[fell] within the
universe of documents that were requested” and “should have been produced earlier.”
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No. 1-07-0421
The trial court also noted that there was no valid justification for plaintiff’s “eleventh
hour” discovery delay tactics.
Request for production No. 28 requested production of “all invoices, bills,
correspondence, records of payment or other communications issued by Cyclonaire to
Fairfield or between Cyclonaire and Fairfield in connection with, or referring or relating
to, the Equipment, the Fairfield Purchase Order or [defendant].” Plaintiff did not object
to this request for production.
Request for production No. 34 requested production of “all Documents used,
reviewed, consulted, referred to, relating to or relied upon in preparing your responses to
any of these discovery requests or identified, referred to or referenced therein.” Plaintiff
objected to this request for production, but referred defendant to a number of documents
produced in response to the request.
After the trial court’s ruling, plaintiff made an offer of proof. Plaintiff contended
that the documents would have rebutted Mr. Boger’s testimony that the last day of
performance was on January 15, 2004, because plaintiff’s exhibit No. 46 would have
shown that the installation of the replacement parts necessary to the commission of
conveyor 5 occurred after January 15, 2004.
E. The Trial Court’s Ruling
The trial court found that notice of plaintiff’s subcontractor’s lien claim was sent
outside of the 90-day written notice period mandated by section 24(a) of the Mechanic’s
Lien Act. 770 ILCS 60/24(a)(West 2006). The court also found that the service
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No. 1-07-0421
performed and replacement parts provided by plaintiff during the 90-day period
preceding the notice of plaintiff’s mechanic’s lien constituted warranty service that could
not extend the time for serving notice.
This appeal followed.
ANALYSIS
As noted, the trial court found that notice of plaintiff’s subcontractor’s lien claim
was sent outside of the applicable 90-day period mandated by section 24(a) of the Act.
This finding was a finding of fact and, as such, is entitled to great deference. Findings of
fact are reviewed under the manifest weight of the evidence standard. Samour, Inc. v.
Board of Election Commissioners of the City of Chicago, 224 Ill. 2d 530, 542 (2007).
This standard is met only “ ‘where the opposite conclusion is clearly evident or where the
findings *** are unreasonable, arbitrary and not based upon any of the evidence.’ ”
[Citation.] Maple v. Gustafson, 151 Ill. 2d 445, 454 (1992). “A reviewing court should
not overturn a trial court’s finding merely because it does not agree with the lower court
or because it might have reached a different conclusion had it been the fact finder.”
Clean World Engineering, Ltd. v. MidAmerica Bank, FSB, 341 Ill. App. 3d 992, 997
(2003). “The trial judge, as the trier of fact, is in a position superior to a reviewing court
to observe witnesses while testifying, to judge their credibility, and to determine the
weight their testimony should receive.” Clean World Engineering, Ltd., 341 Ill. App. 3d
at 997.
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Plaintiff contends that the trial court’s finding in the case at bar, that notice of
plaintiff’s lien claim was outside of the applicable 90-day period, was against the
manifest weight of the evidence.
Under section 24(a) of the Mechanics Lien Act (Act), a subcontractor must send
or serve its notice of lien claim within 90 days after “completion” of his work in order for
the claim to be enforceable. 770 ILCS 60/24(a) (West 2006). “This notice requirement
is substantial and not merely a limitation on the remedy.” Merchants Environmental
Industries, Inc., v. SLT Realty Ltd. Partnership, 314 Ill. App. 3d 848, 856 (2000), citing
Lundy v. Boyle Industries, Inc., 46 Ill. App. 3d 809, 812 (1977) (notice to owner “has
been determined to be the very substance upon which a mechanic’s lien may be
predicated”). Section 24 provides in pertinent part:
“Sub-contractors, or parties furnishing labor, materials, fixtures,
apparatus, machinery, or services, may at any time after making his or her
contract with the contractor, and shall within 90 days after the completion
thereof, or, if extra or additional work or material is delivered thereafter,
within 90 days after the date of completion of such extra or additional
work or final delivery of such extra or additional material, cause a written
notice of his or her claim and the amount due or to become due
thereunder, to be sent by registered or certified mail, with return receipt
requested, and delivery limited to addressee only, to or personally served
on the owner of record or his agent or architect, or the superintendent
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having charge of the building or improvement and to the lending agency,
if known *** .” 770 ILCS 60/24(a) (West 2006).
Thus the notice must be sent or served within 90 days after completion of the
furnishing of labor or materials. Plaintiff’s notice of mechanic’s lien claim was dated
May 4, 2004.
If the completion date were February 6, 2004, as plaintiff claims, then its notice
would be timely under the Act. In that regard, defendant argues that the last date of
performance under the contract was on or before December 31, 2003, when plaintiff
delivered its equipment to defendant’s steel mill. Defendant also argues that any work
performed during the 90-day period preceding notice of plaintiff’s lien claim was non-
lienable warranty work.
After reviewing the record of the case at bar, we cannot say that the trial court’s
judgment that plaintiff’s mechanic’s lien claim was not timely noticed within 90 days
after the completion of its contract was against the manifest weight of the evidence.
All witnesses testified that the contract between plaintiff and defendant called for
plaintiff to provide equipment only and no start-up services. The evidence at trial
establishes that plaintiff shipped all equipment to be provided under the contract to
defendant’s facility on December 16, 2003.
Furthermore, Mr. Ketcham testified that plaintiff issued four invoices under the
agreement and that the last such invoice was issued on December 31, 2003. As this court
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held in Caruso v. Kafka, 265 Ill. App. 3d 310, 314 (1994), a subcontractor’s “final
invoice establishes a completion date for the project.”
Furthermore, it is well settled under Illinois law that subsequent repair work
cannot extend the Act’s strict notice and filing deadlines with respect to the original
lienable work or material. Merchants Environmental Industries, Inc., 314 Ill. App. 3d at
859, citing Miller Bros. Industrial Sheet Metal Corp. v. La Salle National Bank, 119 Ill.
App. 2d 23, 30 (1969) (work that is in the nature of maintenance or correction of a
completed job rather than work needed for “the completion of the contract itself” will not
extend the time in which to file a lien claim).
All of the witnesses at trial testified that plaintiff’s equipment failed to operate
properly when installed and started. As a result, plaintiff performed warranty services
and provided replacement parts under its “second-to-none” system performance
warranty. As noted, Mr. Schmid, plaintiff’s vice president of engineering, testified that
he treated his visits to address the systems plugging problem as a warranty issue. Mr.
Ketcham, plaintiff’s regional sales manager, conceded that several services that plaintiff
billed for were warranty issues that he would not expect a customer to pay for.
Accordingly, we find that the trial court’s finding that the services performed during the
90 days preceding plaintiff’s notice of lien claim were warranty service that did not
extend the time for notice was not against the manifest weight of the evidence.
Defendant then argues that the trial court erred by excluding from evidence
plaintiff’s exhibits Nos. 45 and 46, which plaintiff contends would have proved that the
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last date of performance fell within the 90-day period preceding plaintiff’s notice of
mechanic’s lien.
Initially, we note that plaintiff voluntarily withdrew its request to admit plaintiff’s
exhibit No. 45. As such, plaintiff’s assignment of error cannot be heard on appeal.
We now address the trial court’s exclusion of plaintiff’s exhibit No. 46. As noted,
request for production No. 28 requested production of “all invoices, bills,
correspondence, records of payment or other communications issued by Cyclonaire to
Fairfield or between Cyclonaire and Fairfield in connection with, or referring or relating
to, the Equipment, the Fairfield Purchase Order or [defendant].” Request for production
No. 34 requested production of “all Documents used, reviewed, consulted, referred to,
relating to or relied upon in preparing your responses to any of these discovery requests
or identified, referred to or referenced therein.” Plaintiff did not object to request for
production No. 28. Plaintiff objected to request for production No. 34 as being
overbroad, but referred defendant to a number of documents produced in response to the
request.
“The imposition of sanctions against a party for noncompliance with discovery
rules is a matter within the broad discretion of the trial court.” Gausselin v.
Commonwealth Edison Co., 260 Ill. App. 3d 1068, 1081 (1994). “The exercise of such
discretion will not be disturbed unless an abuse is apparent.” Gausselin, 260 Ill. App. 3d
at 1081. “In determining whether noncompliance with discovery rules is unreasonable,
the standard is whether the offending party’s conduct can be characterized as a deliberate
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and pronounced disregard both for the discovery rules and for the court.” Gausselin, 260
Ill. App. 3d at 1081. “Factors to be considered include surprise to opposing counsel,
prejudicial effect, diligence of opposing counsel in seeking discovery, timely objection
and good faith.” Gausselin, 260 Ill. App. 3d at 1081.
Considering the foregoing factors, we cannot say that the trial court abused its
discretion in excluding plaintiff’s exhibit No. 46. Plaintiff sought to introduce the exhibit
on the very last day of trial. The prejudicial effect to defendant in not showing that this
information was going to be used at trial would have been great, if the documents sought
to be introduced would have, as plaintiff claims, proven that the last day of performance
of the written contract fell within the 90-day period preceding plaintiff’s notice of
mechanic’s lien. Opposing counsel was diligent in seeking discovery as evidence by the
aforementioned requests for production. Opposing counsel also timely objected to the
introduction of plaintiff’s exhibit No. 46.
Furthermore, even if the trial court abused its discretion in excluding plaintiff’s
exhibit No. 46, the exclusion was harmless error as the documents sought to be
introduced only invoiced the replacement parts that the trial court had already held
constituted warranty service and could not extend the time for noticing plaintiff’s
mechanic’s lien. This evidence would not have changed the result of the trial.
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CONCLUSION
For the foregoing reasons, we affirm the judgment of the circuit court of Cook
County.
Affirmed.
WOLFSON and GARCIA, JJ., concur.
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