Inter-Rail Systems, Inc. v. Ravi Corp.

FIRST DIVISION
Date Filed: December 22, 2008
No. 1-07-2369
INTER-RAIL SYSTEMS, INC., ) Appeal from the
a Missouri Corporation, ) Circuit Court of
) Cook County.
Plaintiff and Counter- )
defendant-Appellant, )
)
v. )
)
RAVI CORPORATION, VISHNU GOR, ) No. O6 CH 08600
L.C. MERTZ, NATIONAL WASTE )
SERVICES, INC., CAPITAL )
ACQUISITIONS AND DEVELOPMENT, )
INC., MARQUETTE NATIONAL BANK, ) Honorable
RPM RECYCLING, UNKNOWN OWNERS ) Clifford L. Meacham and
and NONRECORD CLAIMANTS, ) Robert J. Quinn,
) Judges Presiding.
Defendants and Counter- )
plaintiffs-Appellees. )
JUSTICE HALL delivered the opinion of the court:
The plaintiff, Inter-Rail Systems, Inc., filed a multicount
complaint against the defendants, Ravi Corporation, Vishnu Gor,
L.C. Mertz, National Waste Services, Inc., Capital Acquisitions
and Development, Inc., Marquette National Bank, RPM Recycling,
unknown owners and nonrecord claimants (collectively the
defendants). Counts I and IV sought foreclosure of mechanic's
liens filed against two properties owned by the defendants. The
remaining counts alleged causes of action for breach of contract
and quantum meruit. The circuit court granted the defendants'
motion for partial summary judgment as to counts I and IV of the
complaint and found that there was no just reason to delay
No. 1-07-2369
enforcement or appeal of its order.
The plaintiff appeals. The sole issue on appeal is whether
the defendants were entitled to partial summary judgment because
the removal and disposal of waste pursuant to a United States
Environmental Agency order is not a lienable activity under the
Mechanics Lien Act (770 ILCS 60/1 et seq. (West 2004)) (the Act).
The pertinent facts are taken from the pleadings, exhibits,
depositions and affidavits contained in the record on appeal.
In July 2005, responding to a request from the City of
Chicago department of the environment, the United States
Environmental Emergency Response Branch (the EPA) inspected a
parking lot located at 6147 West 65th Street in Bedford Park,
Illinois. In the parking lot were 14 semi-trailers filled with
drums and totes containing unknown chemicals; some of the
containers were leaking. The substances appeared to be perfume
agents used in the manufacture of industrial cleaners.
The EPA also inspected a warehouse at 6158 West 65th Street,
across the street from the parking lot. The inspection of the
warehouse revealed over 500 55-gallon drums and a number of totes
throughout the building. Many of the drums were in poor
condition. There was material present on the outside of the
drums; some were leaking their contents onto the floor. Many of
the drums had labels indicating they contained acids, caustics
2
No. 1-07-2369
and oxidizers. There were numerous pallets stacked with bags of
raw materials, including sodium hydroxide; many of the bags were
ripped open, releasing their contents. The totes reportedly
contained waste water from previous operations at the site.
In August 2005, the EPA met with a representative of
defendant Ravi Corporation at the warehouse. There was a slight
haze in the warehouse most likely due to fumes from the acid
reacting with rain water. The acid was leaking from a nitric
acid tank; a strong acid odor was noted in the vicinity of the
tank.
According to the complaint, in August 2005, the defendants
contracted with the plaintiff for the removal and disposal of the
drums from both the parking lot and the warehouse (hereinafter
referred to collectively as "the site"). In the meantime, the
defendants and the EPA entered into a consent decree requiring
the defendants to clean up the site by testing and removing the
trailers, drums and totes. The cleanup also required scraping,
sweeping, decontaminating or removing any areas of the trailers
or on the site where spills occurred in order to remove the
contamination. The plaintiff's work was completed on December 1,
2005. When the defendants failed to pay the balance due on the
contract, the plaintiff recorded mechanic's liens against the
site and filed the instant complaint.
3
No. 1-07-2369
In their motion for partial summary judgment, the defendants
maintained that, contrary to the plaintiff's claim that it
performed cleanup, removal and transport of hazardous waste from
the site, the plaintiff was contracted only to remove certain
drums containing various substances. The defendants further
maintained that the plaintiff did not perform any work which
resulted in any improvements to the site. Therefore, the
plaintiff did not meet the requirements for a lien claim under
the Act. In support of their motion, the defendants relied on
the affidavits of defendant Vishu Gor, president of defendant
Ravi Corp., and Thomas Powell, a former employee of the
plaintiff.
Mr. Gor averred that the plaintiff was hired to remove
certain drums containing various materials from the sites. The
materials were all contained in drums prior to the arrival of the
plaintiff on the site. Neither the plaintiff nor its personnel
was engaged to perform any cleaning or decontamination services
on the site. In his affidavit, Mr. Powell averred that he was
the plaintiff's primary on-site employee for the project with the
defendants. The plaintiff's work on the site consisted of
testing, removal and transport of drums containing various
materials. At no time did the plaintiff perform or provide any
cleanup or decontamination of any spills, leaks or other
4
No. 1-07-2369
contamination on the site.
The defendants' motion was also supported by an April 16,
2006, EPA pollution report that described the plaintiff's
activities on the site as follows:
"Beginning in September 2005, the LC Mertz/Gor Drum
contractor began staging and inventorying drums and
containers located in both the warehouse and in trailers in
the parking area. Trailers in the parking area were moved
to the warehouse loading dock and the contents of the
trailers were off loaded and staged in the warehouse."
After describing the number of containers found in the warehouse
and the number moved from the trailers to the warehouse, the
report continued as follows:
"All drums, containers, and tanks were given an
identification number, sampled and hazard characterized
(haz-cat). *** Representative samples of the identified
waste streams were sent to a laboratory for analysis.
Materials were grouped into their respective waste streams
for disposal.
All other RCRA empty drums, totes and jugs were
cut/crushed.
In addition, the floor drainage pit was pumped and
rinsed, several tanks on-site were emptied and rinsed.
5
No. 1-07-2369
Contents of the floor pit and tanks were characterized and
appropriately disposed of offsite. The floor and machinery
were cleaned. The contractor demobed from the site on
December 15, 2005."
In its response to the motion for partial summary judgment,
the plaintiff maintained that the removal of the hazardous and
toxic waste from the site constituted an improvement to the
property under the Act. The plaintiff cited the findings of the
EPA that conditions on the site posed a threat to public health
and welfare and that the removal order was necessary to protect
the public. The plaintiff maintained that the defendants
admitted that cleanup of toxic and hazardous waste was lienable
under the Act, and therefore, their motion for partial summary
judgment should be denied.
In support of its response, the plaintiff relied on Mr.
Gor's deposition testimony in which he acknowledged the hazard
the drums posed to the environment. The plaintiff also cited Mr.
Powell's deposition testimony in which he described the
protective clothing he wore while moving the drums in order to
avoid coming into contact with or breathing in any of the
substances.
As to the work performed, the plaintiff relied on Mr.
Powell's description of the activities undertaken by the
6
No. 1-07-2369
plaintiff's personnel at the site. The plaintiff's personnel had
to break through a floor to access some of the drums. They
drained tanks and the pipes along the walls. They did not wash
the tanks but did wipe down the equipment and the tanks
afterwards. They tested the floor pits and then drained them.
The drums that were leaking in the trailers were scraped and
burned out. For the substances that leaked from the drums in the
warehouse, dry oil was put around the drum and then disposed of
in another drum.
Finally, the plaintiff relied on the deposition testimony of
Robert Janota, the plaintiff's president. According to Mr.
Janota, in addition to the removal, transport and disposal of the
waste-containing drums, the plaintiff's personnel placed the
leaking drums in "'overpacked" drums, pumped out the floor pits
and disposed of their unidentified contents, repackaged smaller
containers, and removed some of the piping when the pipes were
emptied.
In its reply to the plaintiff's response, the defendants
maintained that deposition testimony of Mr. Janota and Mr. Powell
confirmed that no lienable decontamination service was provided
by the plaintiff. In addition, the defendants contended that the
plaintiff was unable to delineate between any potentially
lienable work and the nonlienable work. Finally, the defendants
7
No. 1-07-2369
pointed to the plaintiff's acknowledgment that the cleanup,
consisting of the sweeping and rinsing of the floors, took place
at only one part of the site.
At the hearing on the motion for partial summary judgment,
the parties agreed that a significant amount of the materials
removed from the site was hazardous. The circuit court then
stated as follows:
"Your real problem here, from my perspective, is
apportionment. *** There's not, in my judgment, there is no
real significant possibility of your being able to apportion
that which is lienable from that which is nonlienable, and I
concede that for the purposes of this argument that some of
the efforts your client took are lienable. *** [b]ut at the
same time, there's no question that a lot of it is
nonlienable, unless you can apportion the whole lien is
going to fail. So I am going to grant the motion with
respect to those two counts.
If you can come in here within 30 days and establish
some basis to apportion, feel free to do that."
The circuit court confirmed that it did not believe that the
disposal of sealed drums constituted lienable work.
The plaintiff chose not to replead counts I and IV. On
August 22, 2007, the court dismissed counts I and IV with
8
No. 1-07-2369
prejudice and found no just reason to delay enforcement or appeal
of its order. This appeal followed.
ANALYSIS
The plaintiff contends that the circuit court's grant of
partial summary judgment to the defendants was erroneous because
the removal and disposal of hazardous and toxic waste from the
site constituted an improvement to the property under the Act,
and therefore, such work was lienable. The defendants respond
that the plaintiff's removal of sealed drums, many of which
contained no hazardous substances, and the incidental sweeping
and rinsing were not lienable. The defendants further maintain
that, even if some of the plaintiff's work was lienable, the
plaintiff's failure to delineate between the lienable work and
the nonlienable work defeated the entire lien.
I. Standard of Review
We review an order granting a motion for summary judgment
under the de novo standard of review. Luise, Inc. v. Village of
Skokie, 335 Ill. App. 3d 672, 678, 781 N.E.2d 353 (2002).
"Summary judgment is proper if, and only if, the pleadings,
depositions, admissions, affidavits and other relevant matters on
file show that there is no genuine issue of material fact and
that the movant is entitled to judgment as a matter of law."
Prowell v. Loretto Hospital, 339 Ill. App. 3d 817, 822, 791
9
No. 1-07-2369
N.E.2d 1261 (2003). In determining whether a genuine issue of
material fact exists, the pleadings, admissions and affidavits
are construed strictly against the movant and liberally in favor
of the nonmovant. Prowell, 339 Ill. App. 3d at 822. "A triable
issue precluding summary judgment exists where the material facts
are disputed or reasonable persons might draw different
conclusions from undisputed facts." Prowell, 339 Ill. App. 3d at
822.
II. Discussion
"The purpose of the Mechanics Lien Act [citation] 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, 881
N.E.2d 534 (2007), quoting Leveyfilm, Inc. v. Cosmopolitan Bank &
Trust, 274 Ill. App. 3d 348, 352, 653 N.E.2d 875 (1995).
Mechanic's liens were not recognized at common law or in equity
but were created by statute. Tefco Construction Co., Inc. v.
Continental Community Bank & Trust Co., 357 Ill. App. 3d 714,
718, 829 N.E.2d 860 (2005). "While the Act should be construed
liberally as a remedial one, being in derogation of the common
law, it is strictly construed with reference to the requirements
upon which the right to a lien depends." Tefco Construction Co.,
10
No. 1-07-2369
Inc., 357 Ill. App. 3d at 719. Mechanic's liens "should not be
extended to cases not provided for by the language of the [A]ct
even though they may fall within its reason." Robinette v.
Servite Fathers, 49 Ill. App. 3d 585, 587, 364 N.E.2d 679 (1977).
In order to assert a lien under the Act, a party must meet
the statutory definition of the term "contractor." Section 1 of
the Act defines a "contractor" as:
"[a]ny person who shall by any contract or contracts,
express or implied, or partly expressed or implied, with the
owner of a lot or tract of land, or with one whom the owner
has authorized or knowingly permitted to contract, to
improve the lot or tract of land or for the purpose of
improving the tract of land." 770 ILCS 60/1(a) (West 2006).
There is no dispute that the parties entered into a
contract. The question is whether the contract was for the
improvement of the site. Section 1(b) provides in pertinent part
as follows:
"As used in subsection (a) of this Section, 'improve'
means to furnish labor, services, material, fixtures,
apparatus or machinery, forms or form work in the process of
construction where cement, concrete or like material is used
for the purpose of or in the building, altering, repairing
or ornamenting any house or other building, walk or
11
No. 1-07-2369
sidewalk, *** or fill, sod or excavate such lot or tract of
land, or do landscape work thereon or therefor; or raise or
lower any house thereon or remove any house thereto, or
remove any house or other structure therefrom, or perform
any services or incur any expense as an architect,
structural engineer, professional engineer, land surveyor or
property manager in, for or on a lot or tract of land for
any such purpose; or drill any water well thereon; or
furnish or perform labor or services as superintendent, time
keeper, mechanic, laborer or otherwise, in the building,
altering, repairing or ornamenting of the same ***." 770
ILCS 60/1(b) (West 2006).
"The focus of the inquiry to determine whether a mechanic's lien
should be granted is whether the work performed has enhanced the
value of the land to be charged with the lien." Cleveland
Wrecking Co. v. Central National Bank, 216 Ill. App. 3d 279, 285,
576 N.E.2d 1055 (1991).
Illinois courts have held that services that merely maintain
rather than improve property are nonlienable activities. In
Watson v. Watson, 218 Ill App. 3d 397, 578 N.E.2d 275 (1991), the
court held that the payments and advancements for federal estate
tax installments, county real estate taxes and farm operating
loans did not enhance the value of the farmland but merely
12
No. 1-07-2369
preserved its value. Watson, 218 Ill. App. 3d at 400. In Lyons
Savings v. Gash & Associates, 279 Ill. App. 3d 742, 665 N.E.2d
326 (1996), the court found that scrubbing and sealing of the
tile and the grout on walls and floors constituted nonlienable
maintenance, where there was no evidence that the work was
necessitated by other lien claimants. Lyon Savings, 279 Ill.
App. 3d at 747-48.
The plaintiff asserts that the removal of the drums
containing hazardous waste was not mere maintenance but enhanced
the value of the land. In Cleveland Wrecking Co., the defendant
argued that the removal of debris from a demolition site was not
a lienable activity. The appellate court disagreed. The court
distinguished Robinette, inter alia, on the basis that the
plaintiff there merely removed debris from a building someone
else demolished. In contrast, the plaintiff's work in Cleveland
Wrecking Co. included both the demolition and the removal of the
debris in order to make way for new construction and therefore
was an integral part of the overall plan to improve the property.
Cleveland Wrecking Co., 216 Ill. App. 3d at 287. In the instant
case, the plaintiff was only involved in the removal of debris,
already contained.
Subsequently, in Midwest Environmental Consulting &
Remediation Services, Inc. v. Peoples Bank of Bloomington, 251
13
No. 1-07-2369
Ill. App. 3d 256, 620 N.E.2d 469 (1993), the reviewing court
rejected the defendant's argument that the charges for disposing
of the contaminated soil at a landfill were separate from the
expenses incurred as a result of the removal of storage tanks and
contaminated soil and the hauling away of the contaminated soil
from the premises. The issue was waived because it was never
raised in the trial court. However, waiver aside and citing
Cleveland Wrecking Co., the reviewing court found as follows:
"[T]he disposal of the removed contaminated soil is an
integral part of the overall plan to improve the land and is
lienable under the Act. [Citation.] The activity of
removing the soil is not separable from disposing of it.
Once removed, it must be disposed of in some fashion. If
there is a cost which is incurred as a result, that cost is
part of the removal of the soil." Midwest Environmental
Consulting & Remediation Services, Inc., 251 Ill. App. 3d at
262.
The plaintiff's reliance on Midwest Environmental Consulting
& Remediation Services, Inc. is misplaced. In that case, there
was no dispute that the removal of the underground storage tanks
and the contaminated soil was done to improve the property. The
removal of the storage tanks and excavation of the contaminated
soil necessitated the removal and disposal of the contaminated
14
No. 1-07-2369
soil from the premises. In the present case, the plaintiff did
not perform the work that resulted in the filling of the drums
with the hazardous waste. It made no changes to the structure of
the building or its land either by repair or demolition other
than to facilitate waste removal. It merely removed and disposed
of the drums, already filled with the waste, and performed
incidental cleaning activities. None of these activities were
shown to be part of an overall plan to improve rather than simply
maintain the property.
We find the decision in TPST Soil Recyclers of Washington,
Inc. v. W.F. Anderson Construction, Inc., 91 Wash. App. 297, 957
P.2d 265 (1998), to be instructive. In that case, the property
owners contracted with Anderson to remove and replace fuel
storage tanks on the property. After discovering contaminated
soil, Anderson contracted with the plaintiff to haul away and
dispose of the contaminated soil. The plaintiff removed the soil
and recorded a mechanic's lien against the property for the
unpaid contract. The trial court granted summary judgment to the
defendant. The plaintiff appealed.
Relying in part on Cleveland Wrecking, the reviewing court
held that the plaintiff's role in merely removing the debris did
not involve it in the overall scheme to improve the property.
Therefore, the plaintiff's work did not entitle it to a
15
No. 1-07-2369
mechanic's lien on the property. TPST Soil Recyclers of
Washington, Inc., 91 Wash. App. at 301-02, 957 P.2d at 267.1
Likewise, in the present case, the plaintiff's activities were
limited to removing and disposing of the hazardous waste.
The plaintiff relies on Midwest Asbestos Removal Service,
Inc. v. Crown Cork & Seal Co., No. 90 C 7010 (N.D. Ill. January
25, 1993). In that case, the district court held that the
removal and hauling away of asbestos from a building fell within
the meaning of the Act. According to the testimony at trial, the
plaintiff removed asbestos ceiling tiles and drain wrappings to
comply with OSHA2 and environmental laws. There was expert
testimony that the value of the property was significantly less
with the asbestos tile and pipe wrapping present and that the
value of the building would improve with the removal of the
asbestos. Describing the asbestos removal as both a repair and
an improvement, the court found that the removal improved the
premises, and therefore, the work performed was within the
meaning of the Act. Midwest Asbestos Removal Service, Inc., slip
op. at ___.
1
While federal decisions and those of our sister states are
not binding on this court, we find them instructive in this case.
2
Occupational Safety and Health Act (29 U.S.C. §651 (____).
.
16
No. 1-07-2369
Midwest Asbestos Removal Service, Inc. is distinguishable.
The decision in that case was reached after a trial on the
merits, not at the summary judgment stage. Moreover, in the
present case, the plaintiff failed to offer evidence that its
work improved the property, such as evidence of the value of the
site prior to and after the work it performed.
We conclude that the activity of removing and disposing of
drums containing hazardous waste, in and of itself, does not
constitute an improvement to real property so as to be a lienable
activity under the Act. As there was no evidence that the
plaintiff's work was part of an overall plan to improve the
property, its work was not a lienable activity under the Act.
Finally, even if we were to determine that some of the
activities performed by the plaintiff were lienable, Illinois
case law supports the proposition that "where a lump sum contract
includes both lienable and nonlienable work, and such items
cannot be separated, the entire lien must fail." Cleveland
Wrecking Co., 216 Ill. App. 3d at 287. In the present case, the
circuit court granted the plaintiff the opportunity to file an
amended complaint apportioning the work. However, the plaintiff
did not do so. Now, on appeal, the plaintiff maintains that its
work can be apportioned. By failing to amend its complaint in
the circuit court, the plaintiff has waived this argument. See
17
No. 1-07-2369
Purmal v. Robert N. Wadington & Associates, 354 Ill. App. 3d 715,
730, 820 N.E.2d 86 (2004) (the plaintiff waived right on appeal
to seek leave to amend her complaint where she chose to stand on
her complaint and did not seek leave to amend in the circuit
court).
We conclude that the circuit court did not err in granting
summary judgment to the defendants on the mechanic's lien counts
of the complaint. The circuit court's order granting partial
summary judgment to the defendants is affirmed.
Affirmed.
R.E. GORDON, P.J., and GARCIA, J., concur.
18
No. 1-07-2369
19