Chicago Business Litigation Lawyer Blog
Where a construction manager overstated amount in mechanic’s lien by more than 100%, and overstatement consisted of work performed by other contractors that manager did not have a contractual relationship with, the circuit court did not err in granting summary judgment to restaurant owner alleging constructive fraud on part of the construction manager.
In August 2017, MEP Construction filed suit against Truco MP and Randhurst Improvements seeking to foreclose upon a mechanic’s lien and other relief. The complaint alleged that Truco and MEP entered into a verbal contract in April 2014 in which MEP would provide construction management and related services to Truco for the purpose of building out Truco’s restaurant in Mount Prospect, Illinois. MEP alleged that it fully performed the work it was required to perform as of May 2015 and that Truco paid only $612,447.15 of $791,781.16. MEP recorded a mechanic’s lien in September 2015 with the Cook County Recorder of Deeds.
Truco filed for partial summary judgment on the mechanic’s lien count arguing that the lien was constructively fraudulent because MEP only performed $123,134.45 of work and that the remaining amount was performed by various subcontractors at the property with which MEP had no contract and was not responsible for paying. MEP argued that, though it did not have a contractual relationship with the subcontractors, it had “brought in” the various subcontractors to the project and was therefore entitled to collect on their behalf. The circuit court agreed with Truco and granted the motion for summary judgment, dismissing the mechanic’s lien with prejudice. MEP then appealed.
The appellate panel began by finding that the circuit court properly granted summary judgment in favor of Truco. The panel stated that the evidence established that, though MEP’s mechanic’s lien indicated that it and no other entity was owed over $250,000, MEP’s president admitted in his sworn statement that MEP only performed about $124,000 in work and that the remaining amount was owed to other contractors who had no contractual relationship with MEP. Citing Lohmann Golf Designs, Inc. v. Keisler, the panel noted that the Illinois Appellate court had previously held that substantially lower overstatements in a mechanic’s lien constituted constructive fraud.
Finally, the panel rejected MEP’s argument that the circuit court reached its conclusion because there was an insufficient amount of discovery at the time of summary judgment. The panel noted that MEP failed to comply with Illinois civil procedure requirements requesting more time or more discovery. The panel determined therefore that the circuit court did not err, and it affirmed the decision of the circuit court.
You can read the full decision here.Super Lawyers named DuPage County breach of contract and business dispute trial attorney Peter Lubin a Super Lawyer and Illinois breach of contract and employment termination attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating franchise and dealer termination, breach of contract, complex class action, copyright, partnership, and shareholder oppression suits, noncompete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes. Our St. Charles and Batavia 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, Geneva , and Oak Brook area businesses and business owners who are victims of fraud. You can contact us by calling at 630-333-0333. You can also contact us online here.