Appeal from the Circuit Court of Cook County; the Hon. Francis
X. Golniewicz, Judge, presiding.
JUSTICE SULLIVAN DELIVERED THE OPINION OF THE COURT:
Rehearing denied August 1, 1983.
This appeal is from judgments for plaintiffs Luczak Brothers, Inc. (Luczak), and Scarlet Glow Engineering Company (Scarlet Glow) on their counterclaims for foreclosure of mechanics' liens. Defendants Tasker and Dorothy Generes (Generes) contend that (1) the trial court erred as a matter of law in finding (a) that the counterclaims were not barred either by notice of waiver of lien provisions contained in the general contract or by the subcontracts of Luczak and Scarlet Glow and (b) that Luczak's counterclaim was not barred by its tender of a final waiver of lien; and (2) the court's finding that Luczak and Scarlet Glow substantially performed their subcontracts is against the manifest weight of the evidence. Scarlet Glow cross-appeals from those portions of the orders which limit the amount of its lien to $2,380 and find that it failed to prove its claim for conversion against Paul H. Bach, president of Structon Corporation (Structon).
On January 31, 1978, Structon and Generes entered into a general contract which provided that Structon would build a single-family residence in Northbrook, Illinois, on property owned by Generes. That document consisted of nine pages, the first three of which were recorded with the recorder of deeds of Cook County on April 3, 1978. Among the recorded provisions was a paragraph which incorporated by reference the American Institute of Architects Document A-201 General Conditions (the AIA document), which provides in pertinent part:
"5.3.1 All work performed for the Contractor by a Subcontractor shall be pursuant to an appropriate agreement between the Contractor and the Subcontractor * * * which shall contain provisions that:
1. preserve and protect the rights of the Owner and the Architect under the Contract with respect to the Work to be performed under the subcontract so that the subcontracting thereof will not prejudice such rights;
2. require that such Work be performed in accordance with the requirements of the Contract Documents;
4. obligate each Subcontractor specifically to consent to the provisions of this Paragraph 5.3.
9.3.3 The Contractor warrants and guarantees that title to all Work, materials and equipment covered by an Application for Payment, whether incorporated in the Project or not, will pass to the Owner upon the receipt of such payment by the Contractor, free and clear of all liens, claims, security interests or encumbrances, hereinafter referred to in this Article 9 as `liens'; and that no Work, materials or equipment covered by an Application for Payment will have been acquired by the Contractor; or by any other person performing the Work at the site or furnishing materials and equipment for the Project, subject to an agreement under which an interest therein or an encumbrance thereon is retained by the seller or otherwise imposed by the Contractor or such other person."
The unrecorded portion of the general contract was amended on April 16, 1978, to add the following provisions:
(d) Seller agrees that the building shall be completed free and clear of all mechanics' and materialmen's liens.
(e) The general contractor and all subcontractors and materialmen hereby waive all mechanics' liens and materialmen's liens.
(f) STRUCTON CORPORATION will hold purchaser harmless against all mechanics' liens and mechanic's lien litigation."
The entire general contract, including amendments, was recorded on March 23, 1979.
Structon entered into a subcontract with Luczak on August 23, 1978, for the installation of galvanized metal lathing and the application of Air Entraining Portland Cement stucco on the exterior walls of the residence. Luczak was to be paid $6,900 for the work, which was completed on October 7, 1978, but it has received only $3,000. A subcontract for heating, air-conditioning, and ventilating work was executed by Structon and Scarlet Glow on June 21, 1978. Scarlet Glow provided labor and materials in the value of $4,500 before it was instructed by Structon to cease work on the project because Generes refused to make any further payments. Scarlet Glow received no payment. Each of the subcontracts provided that it would "conform to" the AIA document, but no copy thereof was attached.
The general contract provided for progress payments to be made by Generes in the following amounts: $29,000 upon completion of the first floor; $23,000 upon completion of the second floor; $26,000 upon completion of the roof sheething; $28,000 upon inspection approval of the village of Northbrook; and $27,500 upon receipt of a village occupancy certificate. However, the contract further provided that no payments would be made unless Generes received Structon's sworn statement of the amounts paid and to be paid to subcontractors and waivers of lien from the contractor and subcontractors for the work completed. Generes made the first three payments upon receipt of contractor's statements dated June 23, June 28, and June 29, 1978. Although the payments were made in the amounts requested in the statements which complied with the scheduled progress payments in the contract, no waivers of lien were received from Luczak and Scarlet Glow. Generes received a fourth contractor's statement on February 7, 1979, but refused to make further payments because no lien waivers in conformity with the contractor's statements were provided. Generes terminated the general contract on April 5, 1979, before the residence was completed, and Structon brought suit to foreclose a mechanics' lien against the property in question, naming as defendants Generes and various lien creditors, among them Luczak and Scarlet Glow. Luczak then ...