Behl v. Gingerich

Filed 12/21/09 NO. 4-08-0974
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
JOHN BEHL, d/b/a BEHL CONSTRUCTION, ) Appeal from
Plaintiff-Appellee and ) Circuit Court of
Cross-Appellant, ) Coles County
v. ) No. 07LM258
DARYL GINGERICH, )
Defendant-Appellant and ) Honorable
Cross-Appellee. ) Brien O'Brien,
) Judge Presiding.
JUSTICE APPLETON delivered the opinion of the court:
Plaintiff, John Behl, d/b/a Behl Construction, filed a complaint against
defendant, Daryl Gingerich, alleging defendant had failed to pay plaintiff $15,500 for
labor and materials plaintiff had provided under a construction contract to remodel
defendant's home. Defendant filed a motion to dismiss, claiming plaintiff was pre-
cluded from recovering any amounts from him because plaintiff had violated the Home
Repair and Remodeling Act (Act) (815 ILCS 513/1 through 999 (West 2006)). The trial
court denied defendant's motion, and the case proceeded to a bench trial.
After trial, the trial court found in plaintiff's favor and awarded him
$9,594.03 in damages. Defendant appealed, arguing that plaintiff could not enforce the
contract due to the specific requirements of the Act or, in the alternative, if the contract
was enforceable, the court erred in calculating the judgment amount. Plaintiff filed a
cross-appeal, also arguing that the court erred in its calculation of damages on different
grounds. Plaintiff also claimed the court erred in finding that his mechanic's lien was
unenforceable as untimely. We affirm in part, reverse in part, and remand for further
proceedings.
I. BACKGROUND
In August 2006, plaintiff built a room addition, added an attached garage
with a half bathroom, and performed repair work on an existing porch at defendant's
home. The "bid price" for this work was $55,395. Prior to starting the job, plaintiff
provided defendant with a written work order. Plaintiff performed the majority of the
work, and in April 2007, he left the job because he believed his relations with defendant
were deteriorating.
In August 2007, plaintiff filed a complaint for damages, seeking
$20,821.93 as the balance due. According to plaintiff, defendant had paid $39,895 of
the $55,395 total. He allowed defendant a credit in the amount of $3,296.07, leaving a
balance due of $12,203.93. Plaintiff also alleged he had performed additional work in
the amount of $8,618. Defendant filed a motion to dismiss plaintiff's complaint,
claiming plaintiff had failed to attach any written agreement between the parties. The
trial court dismissed the complaint without prejudice.
In October 2007, plaintiff filed his first amended complaint, alleging
breach of contract (count I) and foreclosure of a mechanic's lien (count II). Defendant
filed another motion to dismiss, claiming the "agreement" then attached to the amended
complaint did not satisfy the requirements of the Act (815 ILCS 513/1 through 999
(2006)) because defendant had not signed a written agreement authorizing the work.
Defendant also filed a counterclaim asking the trial court to vacate and release the
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mechanic's lien filed by plaintiff.
In January 2008, the trial court granted defendant's motion to dismiss,
finding the "allegations as they currently stand do not give rise to causes of action that
would survive an affirmative defense raising the [Act]." The court allowed plaintiff 21
days to replead.
Plaintiff timely filed a second amended complaint, alleging breach of
contract (count I), foreclosure of the mechanic's lien (count II), and promissory
estoppel (count III). Defendant filed a motion to dismiss, renewing his arguments as
they relate to the Act and claiming plaintiff was precluded from recovery under any
equitable theory when he violated Illinois law. After considering counsels' arguments,
the trial court denied defendant's motion, finding:
"It seems to me that based upon the allegations in the
pleading that there are issues of material fact that should
require this case to go forward. That doesn't mean the
[p]laintiff's going to win at trial. I'm going to have to hear all
of the evidence but I am troubled and--and I've made this
pretty clear to both of you about the issue of the periodic
payments being authorized. Perhaps it is significant that
[defendant] initiated the contact rather than [plaintiff] doing
so. Perhaps it is significant that [defendant] while the pro-
ject was in the process of going on that he ask[ed] [plaintiff]
to do even more work. These are all facts pled in this case
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that are absent from the three reported appellate court deci-
sions. And so I'm going to err on the side of caution here
and rather [than] dismiss the case on the pleadings, I'm
going to allow it to go forward to an evidentiary hearing.
Perhaps some day I'll be enlightened by the [a]ppellate
[c]ourt, as will all trial judges in the State, so we all know
whether there can ever be an exception to the application of
this Act."
Defendant filed his answer to the second amended complaint, raising the
following affirmative defenses: (1) plaintiff failed to complete the work and defendant
was forced to hire another contractor to finish the project and (2) plaintiff violated the
Act by failing to secure a written and signed contract before beginning construction.
On October 16 and 17, 2008, the trial court conducted a bench trial. Prior
to the presentation of evidence, upon plaintiff's request, the court took judicial notice of
the following admissions of defendant: (1) in or prior to August 2006, before construc-
tion began, plaintiff provided defendant with a written work order that contained the
scope and cost ($55,395) of the proposed construction work and (2) during the con-
struction project, plaintiff went with defendant to defendant's bank for the purpose of
receiving partial payments and signing lien waivers.
Defendant was first to testify as plaintiff's adverse witness. He testified
that during the summer of 2006, he approached plaintiff about performing construction
work on his home. Defendant, a plumbing contractor, had worked with plaintiff and
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was confident in the quality of his work. Defendant wanted plaintiff to build a garage,
remodel the interior of the home, and work on the existing porch. Defendant and his
fiancée (now his wife), Roberta Kennedy, met with plaintiff at their home to discuss the
project. Plaintiff initially submitted a written bid for $80,000. Defendant and plaintiff
discussed a different plan to reduce the cost. Plaintiff then resubmitted a written bid for
$55,395, the document attached to plaintiff's complaint and identified as exhibit A at
trial. Defendant agreed to allow plaintiff to do the specified work for this amount.
Plaintiff estimated the job would be completed in three months.
During the course of the construction, plaintiff accompanied defendant to
the bank four times for partial draws and execution of lien waivers. Defendant and
Kennedy resided in the home during construction. "At some point in time," plaintiff
provided defendant with another invoice, a document identified as exhibit B, reflecting
a balance due of $12,477.37. Defendant said he refused to pay that amount. The second
document attached to plaintiff's complaint, identified as exhibit C at trial, which
indicated an amount due for "additional work" of $8,618, was not provided to defendant
by plaintiff but by plaintiff's attorney after the lawsuit was filed. Defendant refused to
pay that amount as well.
Defendant testified that he created a three-page punch list, identified as
exhibit D, listing the items that remained unfinished and setting a deadline for comple-
tion of April 24, 2006. He gave this document to plaintiff, who completed "a few things"
on the list before the deadline.
Plaintiff was the next to testify. He said he knew defendant from working
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in the construction business and employed him in the past as his plumbing subcontrac-
tor. In the summer of 2006, defendant approached him about a remodeling project on
his home. Plaintiff said he and defendant discussed the project "[q]uite a bit." Defen-
dant agreed to pay plaintiff $55,395 for the work set forth in the document identified as
exhibit A. Plaintiff gave defendant a copy of the document before starting the project.
Plaintiff said defendant paid him four installments and did not object to
any of the work. Kennedy was "there most of the time," and if she was not satisfied with
something, she would discuss it with plaintiff. On occasion, she would give instructions
on how she wanted things done, which sometimes included items that were not within
the original scope of work. Plaintiff said he tried to please her because he considered
defendant a friend, which, he explained, was "probably one reason why [there was] no
signature." He said Kennedy seemed to be unhappy "with a lot of things." Plaintiff
realized the situation was getting difficult when he received defendant's punch list.
Many of the items on the punch list were items that were not included in exhibit A (the
written work order).
Plaintiff was tendered a document, identified as exhibit G, which was a
copy of the punch list (exhibit D) with his notations as to which items were part of the
original bid and which were not. According to plaintiff, 36 of the 67 items listed were
not contemplated in the bid. Plaintiff said he began working on the items on the punch
list that were included in the bid but stopped when he realized he was not going to get
paid. He said defendant still complained after plaintiff had completed some of the
items. According to plaintiff, the "additional work" listed on exhibit C, which consisted
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of work outside of the bid amount and totaled $8,618, were items requested by defen-
dant and completed by plaintiff. Plaintiff testified that defendant owed him $12,477.37,
as set forth in exhibit B, plus $8,618, as set forth in exhibit C. Plaintiff demanded the
amount due, but defendant refused to pay. As a result of defendant's refusal, plaintiff
filed and recorded a mechanic's lien on the property (exhibit E). Plaintiff said defen-
dant never asked him to leave the job; he left voluntarily.
On cross-examination, plaintiff admitted not providing defendant with the
consumer-rights brochure as required by the Act. In fact, he said, he did not know
anything about the Act or the brochure until consulting with an attorney about filing his
lawsuit. Plaintiff could not recall the date he began work but believed his last day was
no later than April 24, 2007. Plaintiff rested.
The trial resumed the next day. First to testify for defendant was Lewis
Schrock, a local contractor who had completed most of the items on the punch list for
defendant. Defendant had paid him $3,285.89 on December 5, 2007, and $5,242.90 on
February 29, 2008, to correct the work or complete the things not done by plaintiff.
Schrock said he typically would get a signed written agreement before doing any work
for customers but, since he knew defendant, he did not. He was not familiar with the
brochure identified in the Act. Defendant paid Schrock in full despite the absence of a
signed written agreement and without receiving the brochure.
Roberta Gingerich, f/k/a Roberta Kennedy, recalled giving plaintiff the
punch list on April 10, 2007. Plaintiff told her he would take care of the items on the
list. Gingerich described, in detail, those items she felt plaintiff either did in an
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unworkmanlike manner or failed to do. She also described the work Schrock did to
correct the problems.
Defendant described his understanding of the scope of the work contem-
plated in his agreement with plaintiff, the quality and quantity of the work performed by
plaintiff, and the work performed by Schrock.
In rebuttal, plaintiff testified as to the quality of his work. In his opinion,
he performed each individual job in a workmanlike manner and the work completed by
Schrock was outside the scope of the original agreement.
The parties submitted written closing arguments, and on November 21,
2008, the trial court entered a detailed judgment, awarding plaintiff $9,594.03 plus
costs. The court found plaintiff had substantially complied with the Act by providing
defendant with a written bid and work order after extensive discussions and negotia-
tions regarding the construction project. Of the $55,395 contract price, defendant had
paid $39,895, leaving a balance due of $15,500. The court found plaintiff was not
entitled to recover any of the $8,618 amount billed for "additional work" as he had not
provided defendant with a written work order or invoice for this amount prior to filing
his lawsuit. The parties had not negotiated the cost or scope of this "additional work."
The trial court further found defendant was entitled to a credit in the
amount of $3,628.97 for materials, in the form of flooring, doors, and lock sets, that he
had provided plaintiff during the project. In addition, defendant was entitled to an
offset in the amount of $2,277 for the amount paid to Schrock. Defendant had re-
quested an offset in the amount of $8,528.79 as the total amount he paid Schrock to
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complete or correct plaintiff's work. However, the court found that because Schrock
had initially offered to complete the items on the punch list for $4,950, that was the
maximum amount of offset to be awarded. Because only 31 of the 67 items (or 46%) on
the punch list were part of the original agreement between plaintiff and defendant,
defendant was entitled to an offset for the costs associated with those 31 items only. The
court awarded defendant an offset in the amount of $2,277, or 46% of $4,950.
Finally, the trial court found the mechanic's lien plaintiff had filed on
August 30, 2007, was untimely and could not proceed to a foreclosure action. The court
cited section 7 of the Mechanics Lien Act (770 ILCS 60/7 (West 2006)) and found
plaintiff filed the lien more than four months after he completed the work on April 24,
2007. This appeal and cross-appeal followed.
II. ANALYSIS
In defendant's appeal, he claims the trial court erred in awarding plaintiff
monetary damages in light of plaintiff's violations of the Act. Defendant insists that
plaintiff committed "unlawful acts" by failing to (1) secure a signed contract and (2)
provide defendant with a consumer-rights brochure. These failures, defendant claims,
are fatal to plaintiff's action for recovery of any amount due for the construction work.
Defendant argues that, in effect, the court's judgment has created certain exceptions to
strict compliance with the Act and placed the burden of obtaining a signed contract and
receipt of the brochure upon the consumer.
Plaintiff cross-appeals, claiming the trial court erred in precluding his
recovery for the "additional work." He also claims the court erred in denying relief
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under the Mechanics Lien Act.
A. Recovery Under the Act
The issue in this case is whether plaintiff is precluded from recovering the
amount he claims is due from defendant when there was no signed contract and no
delivery by him of the consumer-rights brochure to defendant. The trial court denied
defendant's motion to dismiss plaintiff's complaint and allowed plaintiff to recover
despite noncompliance with all the requirements of the Act. Defendant argues the
court's decision was error. We disagree.
The Act requires that for any repair or remodeling work over $1,000, "a
person engaged in the business of home repair or remodeling shall furnish to the
customer for signature a written contract or work order." 815 ILCS 513/15 (West 2006).
This contract or work order must meet certain disclosure requirements, including cost
and the name and address of the construction company (815 ILCS 513/15 (West 2006)).
The Act also requires that "any person engaging in the business of home repair and
remodeling shall provide to its customers a copy of the 'Home Repair: Know Your
Consumer Rights' pamphlet prior to the execution of any home repair and remodeling
contract"; the text of this brochure appears in the statute itself. 815 ILCS 513/20 (West
2006). The Act specifies that it is "unlawful for any person engaged in the business of
home repairs and remodeling to remodel or make repairs *** before obtaining a signed
contract or work order [when the amount of the work is] over $1,000." 815 ILCS 513/30
(West 2006).
The parties do not dispute that the Act applies to the facts of this case.
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Nor do they dispute that (1) defendant did not sign the work order and (2) plaintiff did
not provide defendant with the brochure. Given these facts, the issue is whether
plaintiff substantially complied with the Act so as to allow him recovery from defendant.
Whether there is substantial compliance with a statutory provision is a question of law,
and our standard of review is de novo. Mashni Corp. v. Board of Election Commission-
ers, 362 Ill. App. 3d 730, 739, 841 N.E.2d 60, 68 (2005).
The two statutory sections pertinent in this case use the word "shall" when
describing the contractor's duties. First, in section 15, the statute states that the
contractor "shall furnish to the customer for signature a written contract or work order."
815 ILCS 513/15 (West 2006). Then, in section 20, the legislature proscribed that the
contractor "shall provide to its customers a copy of" the brochure. 815 ILCS 513/20
(West 2006). Typically, use of the word "shall" in a statutory provision indicates that
the legislature intended a mandatory, rather than a directory, provision. However, a
mandatory provision does not always require strict compliance. "Substantial compli-
ance can satisfy even a mandatory provision." Jakstas v. Koske, 352 Ill. App. 3d 861,
864, 817 N.E.2d 200, 203 (2004).
Therefore, the question before us is whether substantial, rather than strict,
compliance with a mandatory statutory requirement in this case is permissible and, if
so, whether plaintiff demonstrated such compliance. To answer this question, we
conduct a twofold analysis. First, we look to the purpose of the Act to determine
whether the purpose was achieved without strict compliance. Next, we decide whether
defendant suffered any prejudice from plaintiff's failure to strictly comply with the Act.
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See Jones v. Industrial Comm'n, 188 Ill. 2d 314, 324-26, 721 N.E.2d 563, 568-69 (1999)
(the court found the petitioner had substantially complied with the requirements of the
Workers' Compensation Act to adequately fulfill the purpose of the statute and the
respondent was not prejudiced by the petitioner's actions).
To ascertain the purpose of the Act, we look to the statutory language used
therein and give the words their plain and ordinary meaning. MD Electrical Contrac-
tors, Inc. v. Abrams, 228 Ill. 2d 281, 287, 888 N.E.2d 54, 58 (2008). "[I]t is not suffi-
cient to read a portion of the statute in isolation. We must, instead, read the statute in
its entirety, keeping in mind the subject it addresses and the legislature's apparent
objective in enacting it." MD Electrical Contractors, 228 Ill. 2d at 287, 888 N.E.2d at 58.
The Act went into effect on January 1, 2000. Its purpose was to improve
communication between consumers and persons engaged in the business of home
repairs or remodeling in order to "increase consumer confidence, reduce the likelihood
of disputes, and promote fair and honest practices in [the repair and remodeling]
business in this State." 815 ILCS 513/5 (West 2006). As a means of achieving this goal,
the legislature enacted section 15, the section referenced above requiring that the
contractor, prior to initiating repair or remodeling work over $1,000, "shall furnish to
the customer for signature a written contract or work order that states the total cost,
including parts and materials listed with reasonable particularity and any charge for an
estimate. In addition, the contract shall state the business name and address of the
person engaged in the business of home repair or remodeling." 815 ILCS 513/15 (West
2006). The contractor must also provide the customer with a copy of the pamphlet:
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"Home Repair: Know Your Consumer Rights" prior to the execution of any contract.
815 ILCS 513/20 (West 2006). Further, the Act provides that it is "unlawful for any
person engaged in the business of home repairs and remodeling to remodel or make
repairs *** before obtaining a signed contract or work order [for] over $1,000." 815
ILCS 513/30 (West 2006).
It is clear from these statutory sections that the legislature intended to
protect unsuspecting homeowners from employing deceptive contractors or dishonest
individuals posing as contractors. However, the Act, as written, not only protects those
homeowners considered "prey" but also promotes good business practices by requiring
that the scope of the project be reduced to writing. As Justice Wolfson said: "[T]here is
something to be said for predictability of cost and consumer expectation." K. Miller
Construction Co. v. McGinnis, 394 Ill. App. 3d 248, 268, 913 N.E.2d 1147, 1163 (2009)
(Wolfson, J., dissenting). That is, not only has the legislature sought to protect the
unwary consumer, it has codified a sound business practice for the protection of both
the honest contractor and the informed consumer. "[T]he Act appears designed to help
define some reasonable boundaries for a home[-]improvement project." Central Illinois
Electrical Services, L.L.C. v. Slepian, 358 Ill. App. 3d 545, 549, 831 N.E.2d 1169, 1173
(2005).
For further guidance in interpreting the Act, we look to our common law.
Six Illinois published appellate opinions apply, interpret, analyze, and discuss the
provisions of the Act. See MD Electrical Contractors, 228 Ill. 2d at 286-96, 888 N.E.2d
at 58-63; Slepian, 358 Ill. App. 3d at 548-51, 831 N.E.2d at 1172-74 (Third District);
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Smith v. Bogard, 377 Ill. App. 3d 842, 844-48, 879 N.E.2d 543, 545-48 (2007) (Fourth
District); Kunkel v. P.K. Dependable Construction, LLC, 387 Ill. App. 3d 1153, 1157-61,
902 N.E.2d 769, 774-77 (2009) (Fifth District); K. Miller Construction, 394 Ill. App. 3d
at 255-65, 913 N.E.2d at 1152-61 (First District); Artisan Design Build, Inc. v. Bilstrom,
No. 2-08-0855, slip op. at 5-18 (September 22, 2009), ___ Ill. App. 3d ___, ___, ___
N.E.2d ___, ___ (Second District). Not one of these published opinions addresses the
issue currently before this court: whether a written, unsigned work order substantially
satisfies the requirements of the Act. We will discuss those reported decisions in
chronological order to establish the framework thus far of the courts' application of the
Act.
First, in Slepian, the Third District held that the Act applied to a successor
electrical contractor despite the contractor's urging that it did not "initiate" the con-
struction project for the homeowners as required by section 15 of the Act (815 ILCS
513/15 (West 2006)). The court reversed the trial court's decision that the Act did not
apply and remanded for further proceedings, noting that the contractor had failed to
provide the homeowners with "a written work order of reasonable particularity" as
required by section 15. Slepian, 358 Ill. App. 3d at 549, 831 N.E.2d at 1172-73.
Next, in Smith, this court held that the contractor's failure to provide a
written contract or work order and the consumer-rights brochure prior to beginning
construction defeated his legal and equitable claims for recovery. Smith, 377 Ill. App. 3d
at 848, 879 N.E.2d at 548. The contractor had proceeded with construction after
providing the homeowners only with an oral estimate of "$20,000 or less" as the cost
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for labor and materials. Smith, 377 Ill. App. 3d at 843, 879 N.E.2d at 545. We held that
the contractor's failure to comply with several provisions of the Act precluded his
breach-of-contract and quantum-meruit claims. Smith, 377 Ill. App. 3d at 848, 879
N.E.2d at 548.
In MD Electrical Contractors, the supreme court affirmed the Second
District's decision and held that "it is clear that the statute unambiguously applies only
to those who directly contract with a homeowner," which, in that case did not include
the plaintiff subcontractor. MD Electrical Contractors, 228 Ill. 2d at 291, 888 N.E.2d at
60. The court did not reach the issue of whether the subcontractor was able to recover
under the equitable theory of quantum meruit, as the court deemed that issue forfeited.
MD Electrical Contractors, 228 Ill. 2d at 299-300, 888 N.E.2d at 65.
Next, the Fifth District held that the consumer could have a cause of
action under the Consumer Fraud and Deceptive Business Practices Act (815 ILCS
505/1 through 12 (West 2002)) when the contractor failed to provide the consumer-
rights brochure, as required by section 20 of the Act (815 ILCS 513/20 (West 2002)), if
the consumer could prove that the failure to provide the brochure was a proximate
cause of his or her damages. Kunkel, 387 Ill. App. 3d at 1160, 902 N.E.2d at 776.
The First District rejected this court's decision in Smith and held that the
contractor's violations of the Act did not preclude his recovery in quantum meruit. K.
Miller Construction, 394 Ill. App. 3d at 254-55, 913 N.E.2d at 1150. The court consid-
ered the parties' oral agreement for remodeling work on the consumers' home and
found that such an agreement was not enforceable under the Act due to the Act's writing
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requirement. K. Miller Construction, 394 Ill. App. 3d at 252, 913 N.E.2d at 1152.
However, the court concluded that the writing requirement of the Act did not foreclose
an equitable theory of recovery between, in that particular case, an honest contractor
and a "sophisticated" consumer. K. Miller Construction, 394 Ill. App. 3d at 250, 913
N.E.2d at 1149-50.
Finally, the Second District considered whether a contractor's failure to
provide the homeowners with the consumer-rights brochure in violation of section 20
of the Act (815 ILCS 513/20 (West 2006)) forfeited his legal and equitable causes of
action. Artisan Design, slip op. at 13, ___ Ill. App. 3d at ___, ___ N.E.2d at ___. The
parties had entered into a written and signed contract for the remodeling of the defen-
dants' home. Artisan Design, slip op. at 2, ___ Ill. App. 3d at ___, ___ N.E.2d at ___.
The defendants locked the plaintiff out of the project and hired another contractor to
finish the work when a portion of the contract price remained unpaid. Artisan Design,
slip op. at 2, ___ Ill. App. 3d at ___, ___ N.E.2d at ___. The homeowners moved to
dismiss the contractor's lawsuit against them, claiming he was precluded from recovery
due to his failure to provide them with the consumer-rights brochure. Artisan Design,
slip op. at 2, ___ Ill. App. 3d at ___, ___ N.E.2d at ___. The court concluded that a
contractor's failure to provide the brochure may provide a homeowner with a cause of
action under the Consumer Fraud and Deceptive Business Practices Act (815 ILCS
505/1 through 12 (West 2006)) but does not "vitiate the contractor's right to recover
either in equity or in law." Artisan Design, slip op. at 15, ___ Ill. App. 3d at ___, ___
N.E.2d at ___.
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The question presented in the case sub judice has not been answered by
the appellate or supreme court: whether a written but unsigned work order, tendered
by the contractor to the homeowner, substantially complied with the intent of the Act so
as to allow the contractor to pursue recovery of any outstanding amount he claims due.
We find that, in this case, plaintiff substantially complied with the Act and the trial
court did not err in denying defendant's motion to dismiss.
The testimony at trial revealed that defendant contacted plaintiff about
remodeling his home. The two had worked together on construction jobs in the past.
They met to discuss the scope of the project, and after their discussion, plaintiff
submitted to defendant a written bid for $80,000. Defendant rejected that bid, and the
two parties reworked the scope of the project. Prior to initiating the work, plaintiff
submitted to defendant a written work order in the amount of $55,395. This work order
contained (1) plaintiff's name, address, and telephone number; (2) defendant's name,
address, and telephone number; (3) a somewhat detailed description of the project,
including a list of specifications and materials; (4) the cost of each individual job as well
as the total cost; and (5) a note that defendant would provide the electrical, plumbing,
heating, and concrete materials and labor.
Our decision that plaintiff substantially complied with the Act rests
primarily on the fact that there existed a writing between the parties and evidence that
each party had accepted the writing as their contract. Each side knew the cost and
scope of the entire project based on that written work order. Unlike the parties in K.
Miller Construction, Smith, and Slepian, the contractor and homeowner in this case had
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negotiated the scope and cost of the project and reduced it to writing. In each of the
previous decisions, the respective court has held that the Act unambiguously bars
enforcement of an oral contract. See K. Miller Construction, 394 Ill. App. 3d at 254, 913
N.E.2d at 1152; Smith, 377 Ill. App. 3d at 845, 879 N.E.2d at 546; Slepian, 358 Ill. App.
3d at 549, 831 N.E.2d at 1172. As the supreme court stated in MD Electrical Contractors,
the Act "was designed to regulate the communications between contractors and the
consumer/homeowner." MD Electrical Contractors, 228 Ill. 2d at 289, 888 N.E.2d at
59. The best evidence of those "communications" is a written document, rather than
each person's interpretation of verbal communications.
Defendant approached plaintiff about performing the work. This is
significant in terms of the purpose of the Act because the legislature intended to protect
homeowners from being approached by dishonest individuals who hoped to deceive the
unwary.
"According to the floor debates, the Act was designed to deal
with contractors that 'prey on seniors [and] homeowners
after disasters' (91st Ill. Gen. Assem., House Proceedings,
May 20, 1999, at 17 (statements of Representative Fritchey)),
and those who 'simply go up and down the street looking for
the elderly, [and] looking for the unprotected, looking for the
uninformed' (91st Ill. Gen. Assem., House Proceedings, May
20, 1999, at 20 (statements of Representative Winters))." K.
Miller Construction, 394 Ill. App. 3d at 263, 913 N.E.2d at
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1159.
In this case, plaintiff and defendant, both engaged in the construction
trades, negotiated the scope and cost of the project until they finally reached an
agreement as to what the project would entail. Before beginning construction, plaintiff
tendered to defendant a written work order that represented their final agreement.
Defendant did not dispute the contents of that work order, and plaintiff began construc-
tion. Throughout the course of the project, defendant paid plaintiff several draws. The
fact that their relationship soured had nothing to do with plaintiff's failure to secure
defendant's signature on a construction contract.
Nor can defendant argue that he suffered any prejudice by plaintiff's
failure to strictly comply with the provisions of the Act, including plaintiff's failure to
provide him with the consumer-rights brochure. As the court held in Artisan, the
brochure merely instructs the homeowner to contact the State's Attorney or the
Attorney General if he feels he has been defrauded by a contractor. Artisan, slip op. at
14, ___ Ill. App. 3d at ___, ___ N.E.2d at ___. Because defendant (1) negotiated the
scope and cost of the project, (2) accepted the written work order provided by plaintiff
before plaintiff began the construction project, and (3) paid plaintiff in several install-
ments during the course of the project, he cannot reasonably argue that he suffered
prejudice or that he had been defrauded by plaintiff. Defendant may have been
dissatisfied with plaintiff's quality of work and found it necessary to hire Schrock to
remedy some of his complaints. However, defendant did not contend that he hired
Schrock because plaintiff had engaged in deceptive practices. Under these facts,
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defendant cannot demonstrate that plaintiff's failure to secure his signature on the work
order or plaintiff's failure to provide him with the consumer-rights brochure proxi-
mately caused him damages. See Artisan, slip op. at 12, ___ Ill. App. 3d at ___, ___
N.E.2d at ___; Kunkel, 387 Ill. App. 3d at 1160, 902 N.E.2d at 776.
In sum, based on the record before us, we find plaintiff substantially
complied with the provisions and purpose of the Act by negotiating with defendant
regarding the scope of the work and cost and by presenting defendant with a written
work order, which contained the details of the project with "reasonable particularity"
and included plaintiff's business name and address as required by section 15 of the Act
(815 ILCS 513/15 (West 2006)). We further find defendant was not prejudiced by
plaintiff's failure to strictly comply with every provision of the Act. Thus, we hold the
trial court did not err in denying defendant's motion to dismiss.
B. Calculation of Damages
Defendant next contends that the trial court erred in calculating plaintiff's
damages. Specifically, he argues that he was entitled to an amount greater than the
$2,277 awarded as credit for the amounts he paid to Schrock. On the other hand,
plaintiff contends the court's calculation of the offset amount was proper; however, in
his cross-appeal, he contends he is entitled to damages for the "additional work" that he
completed. Because we find the court erred in its calculation of the offset amount, we
reverse the award of damages and remand for the court to recalculate the proper
amount to be credited to defendant. We affirm the award of damages in all other
respects.
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"Under the doctrine of substantial performance, the general rule regarding
building contracts is that a builder is not required to perform perfectly but, rather, is
only held to a duty of substantial performance in a workmanlike manner." Howard v.
Jay, 203 Ill. App. 3d 539, 544, 561 N.E.2d 274, 278 (1990). The homeowner, who
receives substantial performance of the building contract, must pay the price bargained
for, less any offset for defects in what he received as compared to what strict perfor-
mance would have given him. Howard, 203 Ill. App. 3d at 544, 561 N.E.2d at 278. See
also Restatement (Second) of Contracts §347, at 112 (1981) (the injured party has a right
to damages as measured by the loss in the value to him caused by the other party's
breach, plus any incidental or consequential loss, less any cost that he has avoided by
not having to perform).
The evidence presented at trial revealed that defendant owed the balance
of $15,500 from the original contract price. The trial court found that plaintiff had
substantially performed the contract and was due that balance, less the costs of flooring
and other items that defendant had paid for in the amount of $2,209.29, leaving a
balance due of $13,290.71. Because defendant had hired Schrock to complete items on
the punch list that were not completed by plaintiff, defendant was entitled to an offset
for those items. Defendant had paid Schrock $8,528.79. However, the court found that
much of the work that Schrock performed was not contemplated in the original agree-
ment between plaintiff and defendant. According to plaintiff's testimony, 31 of the 67
items on the punch list (or 46%) were included in the scope of the original agreement.
Schrock had initially offered to perform all of the 67 items on the punch list for $4,950.
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Beginning with that sum as the maximum amount of offset to which defendant was
entitled, the court reduced the amount by 46%. The court ruled defendant was entitled
to an offset in the amount of $2,277 for the punch-list items paid to Schrock. We find
this calculation to be in error.
The evidence does not support the trial court's apparent assumption that
every one of the 31 items on the punch list cost the same to complete in terms of
materials and labor. A more accurate offset amount should be calculated. The court
should consider additional evidence, if necessary, in order to calculate the amount
defendant paid to Schrock for each of the 31 items that Schrock completed, items that
plaintiff should have completed as part of the original work order.
With the exception of the trial court's percentage-based calculation, we do
not disturb the court's findings. Every other calculation referenced above was sup-
ported by the evidence, including the court's finding that plaintiff is precluded from
recovering any further amount from defendant for "additional work." No evidence in
the record suggests defendant was notified or aware that the original work order had
been amended or modified, and therefore, plaintiff is not entitled to any additional
amount.
As stated above, the Act prohibits the enforcement of any oral construc-
tion or remodeling contract. See 815 ILCS 513/1 through 999 (West 2006). "Nothing in
the Act precludes a contractor from providing an updated estimate or work order as the
circumstances may warrant." Slepian, 358 Ill. App. 3d at 549, 831 N.E.2d at 1173.
Plaintiff did not provide defendant with any written update until the lawsuit was filed,
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and therefore, plaintiff is precluded from recovering any amount for "additional work"
not contemplated in the original work order.
C. Mechanic's Lien
In his cross-appeal, plaintiff also contends that the trial court erred in
holding that his mechanic's lien was unenforceable because it was not timely filed. He
contends that section 7 of the Mechanics Lien Act (770 ILCS 60/7 (West 2006)) refers
only to a limitation period relating to the contractor's lien as it relates to other creditors,
not relating to the time within which a lawsuit against the homeowner may be filed. We
agree with plaintiff, reverse the trial court's judgment, and remand for further proceed-
ings related to the Mechanics Lien Act.
Section 7 provides, in relevant part, as follows:
"No contractor shall be allowed to enforce such lien
against or to the prejudice of any other creditor or incum-
brancer or purchaser, unless within [four] months after
completion, *** he or she shall either bring an action to
enforce his or her lien therefor or shall file in the office of the
recorder of the county *** a claim for lien." 770 ILCS 60/7
(West 2006).
Whereas, section 9 provides, in part:
"If payment shall not be made to the contractor hav-
ing a lien by virtue of this act ***, then such contractor may
bring suit to enforce his lien ***. Such suit shall be com-
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menced *** within two years after the completion of the
contract ***." 770 ILCS 60/9 (West 2006).
Section 7 requires a contractor to file a suit, or to record a lien claim,
within four months after completion of the work so as to give third parties dealing with
the property notice of the existence, nature, and character of the lien. The contractor's
failure to comply with the four-month limitation period will preclude him from enforc-
ing his lien against any other creditor. In the event the contractor fails to comply with
section 7 of the Act, the lien may not be enforceable against such third parties, but may
nonetheless be enforced against the original owner pursuant to section 9. The contrac-
tor has two years from the completion of the contract to file a lawsuit to enforce his lien.
See Apollo Heating & Air Conditioning Corp. v. American National Bank & Trust Co.,
135 Ill. App. 3d 976, 979-80, 482 N.E.2d 690, 693 (1985).
We reverse that portion of the trial court's judgment that releases plain-
tiff's claim for lien and remand for further proceedings pursuant to the Mechanics Lien
Act (770 ILCS 60/0.01 through 39 (West 2006)) and count II of plaintiff's second
amended complaint.
III. CONCLUSION
For the foregoing reasons, we affirm in part and reverse in part the trial
court's judgment and remand for further proceedings consistent with our opinion.
Specifically, we hold that plaintiff substantially complied with the statutory require-
ments of the Act and was entitled to enforce his contract with defendant for the remod-
eling of defendant's home. We further hold that the court erred in its calculation
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regarding the amount of credit to which defendant was entitled. In all other respects,
the court's calculations and factual findings are affirmed. We reverse the court's finding
that defendant was entitled to an offset in the amount of $2,277 for the amounts paid to
a third-party contractor and remand for a redetermination of the proper amount
consistent with our opinion above. We further hold that the court erred in finding that
plaintiff's lien filed pursuant to the Mechanics Lien Act was untimely. We therefore
reverse the court's order releasing plaintiff's lien as unenforceable and remand for
further proceedings.
Affirmed in part and reversed in part; cause remanded with directions.
KNECHT and POPE, JJ., concur.
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