Lazar Bros. Trucking, Inc. v. a & B Excavating, Inc. , 365 Ill. App. 3d 559 ( 2006 )

SIXTH DIVISION
April 7, 2006
No. 1-05-0384
LAZAR BROTHERS TRUCKING, INC., ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County
)
v. )
)
A&B EXCAVATING, INC.; CORUS BANK, N.A.; )
UNKNOWN OWNERS and NONRECORD CLAIMANTS, )
)
Defendants, )
)
and )
)
SCHMIDT & ASSOCIATES CONSTRUCTION, INC.,) Honorable
) Lewis M. Nixon,
Defendant-Appellee. ) Judge Presiding
PRESIDING JUSTICE McNULTY delivered the opinion of the
court:
Lazar Brothers Trucking sued to foreclose a mechanics lien
it filed against property Schmidt & Associates Construction
owned. The trial court dismissed the claim based on lien waivers
Schmidt obtained from its contractor. The lien waivers showed
that before Lazar filed its lien, Schmidt fully paid its
contractor for the work Lazar performed. We hold that the lien
waivers established a prima facie defense to Lazar's lawsuit, and
Lazar failed to present evidence that could support an inference
that Schmidt acted in bad faith or that it knew its contractor
provided false affidavits when Schmidt paid the contractor.
Therefore we affirm the judgment in favor of Schmidt.
BACKGROUND
Schmidt sought to develop land it owned in Northbrook.
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Schmidt decided to act as its own general contractor for the
project, directly hiring contractors to perform parts of the
work. In August 2002 Schmidt entered into a written contract
with A&B Excavating for excavation work at the site. Schmidt
agreed to pay $25,000 for the work.
In September 2002 the president of A&B sent Schmidt a waiver
of lien in which A&B acknowledged receipt of $20,000 from Schmidt
for the excavation. The lien waiver incorporated an affidavit in
which the president of A&B swore that no subcontractors worked on
the excavation. A&B sent a second lien waiver for the remaining
charge of $5,000 in February 2003, and again A&B's president
swore that no subcontractors worked on the excavation.
Schmidt's president, in his capacity as president of the
general contractor for the project, provided sworn statements
showing the total price for the construction, and listing all
contractors along with balances due each contractor. The
affidavit dated January 2003 listed A&B as the excavation
contractor and showed that Schmidt had paid A&B the full contract
price of $25,000. A total of more than $80,000 remained due to
the other contractors, and according to the affidavit, Schmidt as
owner owed itself a fee for its work as the general contractor.
The affidavit dated March 2003 showed a total due of $53,000, all
for the work of contractors for landscaping, paving and curb and
gutter work. No balance remained due to Schmidt for its work as
general contractor.
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According to the March affidavit, Schmidt had paid A&B an
additional $4,200 for "Retention Pond Grading." A&B provided a
final waiver, dated April 11, 2003, for the $4,200.
On April 14, 2003, Lazar recorded a notice of mechanics lien
against the property, and on April 16, 2003, Lazar served Schmidt
with notice of the lien.
Lazar sued Schmidt and A&B, amongst others, in 2004. Lazar
alleged that A&B hired Lazar to haul excavation debris from the
site. Lazar performed the work on January 16 and 17, 2003,
charging A&B $170 per truckload for the work. The total bill for
two days' work came to $28,730. A&B never paid the amount due.
In the first count of the complaint, Lazar sought to foreclose
its lien against Schmidt's property. The second count, directed
against A&B, sounded in breach of contract. Lazar served
discovery on Schmidt.
Schmidt did not respond to the discovery. Instead, Schmidt
moved, under section 2-619(a)(9) of the Code of Civil Procedure
(735 ILCS 5/2-619(a)(9) (West 2004)), to dismiss the foreclosure
claim, based on the lien waivers A&B provided. The president of
Schmidt swore in his affidavit that A&B did not inform Schmidt of
the contract with Lazar, and Schmidt did not learn of Lazar's
work before service of the notice of lien. Schmidt's president
also swore that Schmidt paid A&B a total of $29,200. The
affidavit corroborated the lien waivers.
The president of Lazar responded with an affidavit in which
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he swore:
"8. Pursuant to the usage and custom of the
industry, the trucking/removal of debris is the
expensive part of the work [A&B] was providing on
January 16, 2003 and January 17, 2003[] (i.e.,
trucking/removal of debris is substantially more
expensive than the site work).
9. Furthermore, it is the usage and custom of the
industry to have trucking/removal of the debris
contemporaneous with the site work, otherwise, it is
more costly to perform the site work, pile up the
debris and then later fill the trucks and truck the
debris from the site.
10. Moreover, the trucking/removal of the debris
in the case at bar was actually done contemporaneous
with the site work at issue.
11. Additionally, as general contract and owner,
SCHMIDT knew LAZAR was providing the Trucking/removal
of debris services for the site, in that:
a. At the relevant time, LAZAR operated
approximately 40 trucks, all with Lazar
Brothers Trucking, Inc. on the doors.
b. At the time of trucking/removal of
debris from the Property, Affiant, upon best
information and belief, saw agents/employees
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of SCHMIDT on site of the Property."
After hearing argument the court granted Schmidt's motion to
dismiss count I, and the court added language to make the
judgment immediately appealable. See 155 Ill. 2d R. 304(a).
ANALYSIS
We review de novo the dismissal of the lien foreclosure
action pursuant to section 2-619. See A.P. Properties, Inc. v.
Goshinsky, 186 Ill. 2d 524, 531 (1999). Lazar argues first that
defendant's evidence leaves unresolved issues of fact, and
therefore the court should not have dismissed the complaint. In
particular, Lazar objects that the evidence does not specify the
time and method of Schmidt's payments to A&B, and Schmidt failed
to establish facts that prove that it acted in good faith when it
paid A&B.
The Mechanics Lien Act (770 ILCS 60/0.01 et seq. (West
2004)) comprehensively defines the rights and responsibilities of
parties to construction contracts (Sanaghan v. Lawndale National
Bank, 90 Ill. App. 2d 254, 257-58 (1967)) in a manner that
balances the rights and duties of owners, contractors and
subcontractors (Struebing Construction Co. v. Golub-Lake Shore
Place Corp., 281 Ill. App. 3d 689, 694 (1996)). To protect
itself from paying twice for the same work, the owner must demand
from the contractor, prior to payment, a sworn statement listing
all subcontractors providing labor and materials to the
contractor. 770 ILCS 60/5 (West 2004). The contractor's
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affidavits and lien waivers do not protect the owner if the owner
has notice that the affidavits are false. Knickerbocker Ice Co.
v. Halsey Bros. Co., 262 Ill. 241, 245 (1914).
To protect its right to receive payments, each subcontractor
must provide timely written notice to the owner of the amount
owed to the subcontractor for work on the project. 770 ILCS
60/24 (West 2004). Even timely notice may not protect the
subcontractor, if the owner made proper payments to the
contractor prior to receiving notice of the subcontractor's
claim. 770 ILCS 60/5, 21 (West 2004); Contractors' Ready-Mix,
Inc. v. Earl Given Construction Co., 242 Ill. App. 3d 448, 458
(1993). The subcontractor has the right to file its lien once it
agrees to work on the project. See 770 ILCS 60/24 (West 2004).
Schmidt demanded an appropriate statement from its
contractor, A&B, and A&B provided a sworn statement that falsely
failed to list Lazar as its subcontractor. The lien waiver
applies to all of the excavation work. Lazar had not, at the
time A&B executed the lien waivers, served notice on Schmidt of
its right to payment for work on the excavation.
Lazar contends that the lien waivers do not provide
sufficient support for the judgment in favor of Schmidt, because
Schmidt failed to present evidence proving that it relied on the
affidavits in good faith. We disagree. The lien waivers from
A&B established a prima facie defense to Lazar's claim for a
mechanics lien. William Aupperle & Sons, Inc. v. American
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National Bank & Trust Co. of Chicago, 28 Ill. App. 3d 573, 576
(1975). Lazar had the burden of avoiding the effect of the
waivers. Aupperle, 28 Ill. App. 3d at 576. Because Lazar argues
that Schmidt acted in bad faith, in that Schmidt did not
reasonably rely on the lien waivers, Lazar needed to present
evidence sufficient to "raise a genuine issue of material fact as
to whether there was such reliance." Merchants Environmental
Industries, Inc. v. SLT Realty Ltd. Partnership, 314 Ill. App. 3d
848, 866 (2000).
Lazar contends that the affidavit of its president creates
sufficient factual issues to require reversal of the judgment.
According to Lazar's president, "the trucking/removal of debris
is the expensive part of the work [A&B] was providing on January
16, 2003 and January 17, 2003." The lien waivers showed that
Schmidt had already paid A&B $20,000 out of a total contract
price of $25,000 before Lazar began its work removing the debris.
We see nothing pernicious in the apparent advance payment. We
hold that without some further evidence, the advance payment to
A&B does not support an inference that Schmidt knew that A&B
falsely swore that it hired no subcontractors.
Lazar also points to its evidence that it operated 40 trucks
at the site, all labeled with Lazar's name in large letters.
Lazar's president swore that he saw at the site persons he
believed to be agents of Schmidt. Under Supreme Court Rule 191
(145 Ill. 2d R. 191), an affidavit must show that the affiant
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could competently testify to its contents at trial. Burks
Drywall, Inc. v. Washington Bank & Trust Co., 110 Ill. App. 3d
569, 576 (1982). Affidavits based on information and belief,
rather than the affiant's personal knowledge, usually do not
suffice because the affiant cannot testify to the facts he
believes. Burks Drywall, 110 Ill. App. 3d at 576; Beattie v.
Lindelof, 262 Ill. App. 3d 372, 382 (1994). The affidavit does
not present admissible evidence that an agent of Schmidt saw
Lazar's trucks on the site. Thus, Lazar has not presented
evidence that could support an inference that Schmidt knew of
Lazar's work at the site or the falsity of A&B's affidavit when
it paid A&B.
Lazar's timely lien establishes its right to payments made
to A&B after Lazar filed its lien, but Schmidt presented
evidence, from A&B's lien waivers and Schmidt's affidavits of
payments made. The documents show that by March 2003, Schmidt
had already paid A&B all amounts due before Lazar filed its lien.
Lazar also claims a right to share in any payments Schmidt
made to itself as general contractor after Lazar filed its lien.
We note some conflict in Illinois authority on the issue.
Compare Season Comfort Corp. v. Ben A. Borenstein Co., 281 Ill.
App. 3d 648, 656 (1995), with Struebing Construction, 281 Ill.
App. 3d at 693. We find that we need not resolve the conflict.
Even assuming Lazar had a claim on payments from the owner to
itself as general contractor, Schmidt presented unrebutted
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evidence that it, as owner, made no payments to its general
contractor after March 2003. The affidavit dated March 2003
showed no balance due to the general contractor. Lazar did not
show that Schmidt made any payments to the general contractor
after that date. Thus, the evidence shows that Schmidt paid its
contractor all amounts due for excavation work, and it completed
payment to its general contractor, before Lazar filed its
mechanics lien. Lazar has not presented evidence that could
support an inference that Schmidt made the payments improperly.
Lazar contends that the trial court incorrectly relied on
the affidavit of Schmidt's president in which he said that
Schmidt paid A&B. If Schmidt's president testified at trial,
Lazar would have the opportunity to ask him about the exact date
and method of payment, and Lazar claims that answers to these
questions might show the impropriety of Schmidt's payments.
Regardless of the possible success of cross-examination, we see
no basis for precluding Schmidt's president from testifying to a
fact in his personal knowledge, that Schmidt paid A&B the amounts
shown in the lien waivers. Moreover, we see no indication that
the trial court relied on the affidavit Schmidt's president
prepared for this litigation. That affidavit only corroborates
the affidavits prepared in 2002 and 2003, during the course of
construction, and those affidavits show that Schmidt fully paid
its general contractor and A&B prior to April 14, 2003.
Finally, Lazar suggests that we should reverse the judgment
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because Schmidt did not respond to discovery. Like the plaintiff
in Miller v. Thomas, 275 Ill. App. 3d 779 (1995), Lazar here
filed no affidavit indicating a need for discovery for its
response to Schmidt's dispositive motion. In Miller the court
said:
"Rule 191(b) allows a party to file an affidavit
stating that material facts are known only to parties
whose affidavits the affiant is unable to procure by
reason of hostility or otherwise. [Citation.] Because
the plaintiffs did not use Rule 191(b) to address their
discovery need, they cannot ask for a reversal on the
basis that they required additional discovery to oppose
the motion." Miller, 275 Ill. App. 3d at 790.
Following Miller we hold that Lazar waived any issue concerning
Schmidt's failure to respond to discovery.
The lien waivers, showing that Schmidt fully paid for
excavation work before Lazar filed its mechanics lien,
established a defense to the foreclosure action. The evidence,
including the affidavit of Lazar's president, failed to support
an inference that Schmidt acted in bad faith or that it knew A&B
supplied false affidavits when Schmidt paid A&B. Therefore, we
affirm the judgment dismissing Lazar's claim for foreclosure on
its mechanics lien.
Affirmed.
TULLY and O'MALLEY, JJ., concur.
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