Discovery Responses Doom Mechanic’s Lien Claim Appellate Court Rules

The First District Appellate Court of Illinois recently affirmed the entry of summary judgment against the plaintiff in a commercial breach of contract and mechanic’s lien dispute. In upholding the grant of summary judgment, the Court found that the plaintiff’s discovery responses doomed its mechanic’s lien claim, providing yet another example of why it is crucial for a party to carefully review its discovery responses – something the best commercial litigation attorneys make painstaking efforts to do.

The case stems from a dispute arising over an alleged verbal contract between the plaintiff, MEP Construction, LLC, and defendant, Truco MP, LLC, to build out the defendant’s restaurant. According to the plaintiff’s complaint, under the oral contract, it agreed to provide “construction management and other related services” to the defendant for a cost of $791,781.16 (though the parties later agreed to have the plaintiff do an additional $80,000.00 of work). The plaintiff further alleged that it “fully performed” its contractual obligations, but the defendant only made partial payment of $612,447.15 and refused to pay anything further. The plaintiff later recorded a mechanic’s lien naming the defendant and others and claiming an amount of $251,870.45 was owed to it.

In August 2017, the plaintiff filed a three-count complaint against the defendant alleging breach of contract and seeking to foreclose on the mechanic’s lien. In the course of discovery, the defendant issued a document request to the plaintiff asking for all documents showing all payments that the plaintiff had made for work performed either “by MEP or at the direction of MEP.” The plaintiff’s response to the document request stated that all “contractors, subcontractors and material were paid directly by Truco.” The defendant also sought production of all contracts between the plaintiff and “any and all contractors, sub-contractors or other persons with whom MEP contracted for purposes of performing work” at the property. The plaintiff responded to this request by stating that all contractors and subcontractors “contracted directly with Truco” and were paid directly by Truco.

The defendant ultimately filed a motion for partial summary judgment on the mechanic’s lien count pursuant to section 2-1005(a) of the Illinois Code of Civil Procedure, 735 ILCS 5/2-1005 . The defendant argued that the plaintiff’s mechanic’s lien of $251,870.45 was constructively fraudulent because the plaintiff had only performed $123,134.45 of work, and that the remaining amount was performed by various subcontractors “with which MEP had no contract and for which MEP was not responsible for paying.” At oral argument on defendant’s summary judgment motion, the plaintiff attempted to elaborate on its discovery responses by explaining that although the contractors and subcontractors contracted directly with and were paid by the defendant, the plaintiff had undertaken to seek payment from the defendant on their behalf. The trial court granted summary judgment in the defendant’s favor on the plaintiff mechanic’s lien claim.

On appeal, the Court contrasted the statements in the mechanic’s lien—that the entire $241,870.45 was owed to the plaintiff—to those of the plaintiff’s discovery responses which stated that much of the money was owed directly to various contractors and subcontractors. As the Court explained, summary judgment was to be based on “the pleadings, depositions, and admissions on file, together with the affidavits, if any.” Based on this, the Court explained, summary judgment was proper as the plaintiff’s “president (Morales) admitted . . . in his sworn answers to Truco’s interrogatories that MEP only performed about $124,000 in work. The remaining amount, according to Morales, was owed to other contractors[.]”

You can read the Court’s full opinion here.

In business litigation, a party’s responses to discovery requests are crucial. A party’s responses must be complete, accurate, and include all relevant explanatory information. If additional information is discovered, it is incumbent upon a party to update its discovery responses. Many cases are won or lost based on a party’s discovery responses. Lubin Austermuehle’s Oak Brook and Elmhurst business dispute lawyers have over thirty years of experience in litigating, intellectual property cases including copyright infringement and trade secret cases, insurance coverage disputes, franchise and dealer termination, breach of contract, complex class action, copyright, partnership, and shareholder oppression suits, non-compete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes.

Super Lawyers named Chicago breach of contract lawyer Peter Lubin a Super Lawyer and Chicago business dispute attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Our Westmont and Clarendon Hills franchise and dealer termination lawyers, civil litigation lawyers, and copyright attorneys handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely-held businesses and employee breaches of fiduciary duty. We also assist Chicago, Evanston and Oakbrook Terrace area businesses and business owners who are victims of fraud. You can contact us by calling at 630-333-0333.  You can also contact one of our business dispute lawyers near Elmhurst and Chicago online here.

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