Archive for July 2013

Subcontractors’ Recovery Limited to Their Pro Rata Share of Funds Due on the Date Lien Notices Were Served

July 23, 2013

In Gerdau Ameristeel US, Inc. v. Broeren Russo Const., Inc.,  2013 IL App (4th) 120547, Campus Investors 309, LLC (“Campus”) entered into a contract with general contractor Broeren Russo (“Russo”) to perform the construction of a high-rise apartment building, known as the Green Street Tower project, in Champaign, Illinois.  Russo entered into a contract with subcontractor Jacobsmeyer-Mauldin Construction Company (“JMC”), who then contracted with second tier subcontractors Ahal Contracting Co. (“Ahal”) and Blager Concrete Company (“Blager”).

In October 2008, JMC submitted its waiver of lien to date/subcontractor’s affidavit to Russo indicating JMC owed more to its subcontractors and suppliers than it had shown on previous requests.  Russo froze all payments pending a resolution.  Ahal and Blager timely filed claims for liens for their outstanding balances.  Campus and Russo settled with JMC and argued that Ahal and Blager were limited to their pro rata share of any settlement by the owner with JMC.  The trial court denied Campus and Owner summary judgment motions and granted the summary judgment motions of Ahal and Blager.  The court entered into judgments for Ahal and Blager to the full amounts owed in their contracts.

On appeal, Campus and Russo argued the trial court erred by not limiting Ahal and Blager’s recovery to only their pro rata shares of the amount of unpaid contract funds remaining at the time they served their notices of lien.  The appellate court agreed with Campus and Russo.  The appellate court analyzed different sections of the Mechanics Lien Act (Act) and relied on caselaw from a First District case,  Bricks, Inc. v. C & F Developers, Inc., 361 Ill. App. 3d 157 (2005) in particular.  The analysis focused on the purpose of the Act and how it seeks to balance the rights and duties of subcontractors, materialmen, and owners alike.  The owner should not be required to pay more than he contracted for, absent notice of subcontractors’ claims.  As in Bricks, since Campus could rely on Russo’s sworn statements, Ahal and Blager’s recovery was limited to the unpaid amount due to their immediate contractor as of the date they served notice of their liens.  As such, Ahal and Blager were entitled to recovery of their pro rata shares of the funds remaining due to JMC on the subcontract between Russo and JMC.

This Blog is made available by Laurie & Brennan, LLP for general educational purposes only. The purpose of the Blog is not to provide specific legal advice on any particular matter. By using this Blog site you understand that there is no attorney client relationship between you and this firm and the authors or members of the firm. This Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Under rules applicable to the professional conduct of attorneys in various jurisdictions, the material on this Blog may be considered advertising material.

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Suit Against Architect Barred by Statute of Limitations

July 9, 2013

In J.S. Riemer, Inc. v. Village of Orland Hills, 2013 IL App (1st) 1120106, the Village of Orland Hills brought suit against the architect for actions concerning the design, management, or supervision of the construction of its new community center. The community center was substantially completed in 2001.  In 2002, the concrete floor of the community center began sinking into the ground because it was built over peat, which was being compressed by the weight of the building. The Village claimed the architect gave its approval for the pouring of the concrete floor before all the excavation work required was complete.  The Village filed suit against the architect in 2006.

The architect contended the suit was filed after the statute of limitations had run and was time-barred under section 13-214 of the Code of Civil Procedure, which provides a four-year statute of limitations for actions “against any person for an act or omission of such person in the design, planning, supervision, observation or management of construction, or construction of an improvement to real property.”  The contract between the parties had a provision, typically found  in certain standard AIA forms, which automatically triggered the running of the statute of limitations upon the date of substantial completion.  In response, the Village asserted that it relied on statements by the architect that the excavator was at fault, not the architect, so it did not file a lawsuit against the architect until 2006.

The circuit court ruled in favor of the architect, and the appellate court agreed and affirmed the circuit court’s decision, finding that the Village was aware of the defects within the four-year statute of limitations period.  The court also found the architect was not estopped from raising the statute of limitations claim because it did not agree the architect lulled the Village into complacency by undertaking responsibility for remedial measures until the statute of limitations ended.  Finally, the court did not find the architect fraudulently concealed the cause of action by misrepresenting to the Village that the excavator was to blame for the defects.

This Blog is made available by Laurie & Brennan, LLP for general educational purposes only. The purpose of the Blog is not to provide specific legal advice on any particular matter. By using this Blog site you understand that there is no attorney client relationship between you and this firm and the authors or members of the firm. This Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Under rules applicable to the professional conduct of attorneys in various jurisdictions, the material on this Blog may be considered advertising material.


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