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03/20/97 NORMAN A. KOGLIN ASSOCIATES v. VALENZ ORO

March 20, 1997

NORMAN A. KOGLIN ASSOCIATES
v.
VALENZ ORO, INC., ET AL. (LA SALLE NATIONAL BANK, AS TRUSTEE UNDER TRUST NO. 113495, ET AL., APPELLANTS; H.B. BARNARD COMPANY, APPELLEE).



Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. Clifford L. Meacham, Judge, presiding.

The Honorable Justice Nickels delivered the opinion of the court:.

The opinion of the court was delivered by: Nickels

The Honorable Justice NICKELS delivered the opinion of the court:

In this appeal, we decide whether a mechanic's lien claimant may enforce its lien where it asserted its lien in an answer rather than a counterclaim.

Plaintiff, Norman A. Koglin Associates (Koglin), is an architectural firm. One of the defendants, Valenz Oro, Inc. (Valenz), was a tenant in a downtown Chicago building. Koglin alleged that it entered into a contract with Valenz to perform architectural and interior design services in connection with the construction and improvement of Valenz's jewelry store. Koglin further alleged that it performed the services but was not fully paid. Koglin filed a complaint in the circuit court of Cook County to foreclose a mechanic's lien under the Mechanics Lien Act (the Act) (770 ILCS 60/0.01 et seq. (West 1992)). Koglin named four defendants in the foreclosure action: Valenz, the tenant; La Salle National Bank (La Salle), the owner of the building where the jewelry store was located; JMB/Urban 900 Development Partners (JMB), the manager of the building; and H.B. Barnard Company (Barnard), the general contractor. Koglin alleged that Barnard also had a mechanic's lien in connection with work performed on the jewelry store. Barnard filed a pleading captioned "Answer to Complaint to Foreclose Mechanic's Lien," in which it asserted its lien.

While the suit was pending and before trial, Koglin negotiated a settlement with two of the defendants, La Salle and JMB. Barnard was not involved in the settlement. After settlement, Koglin sought voluntary dismissal of the entire action. Barnard objected, arguing that its rights under its mechanic's lien had not been adjudicated. The circuit court dismissed the entire action with prejudice. The appellate court vacated the dismissal order and remanded, thereby allowing Barnard to enforce its mechanic's lien. 277 Ill. App. 3d 142, 659 N.E.2d 971, 213 Ill. Dec. 625. Defendants La Salle and JMB filed a petition for leave to appeal to this court (155 Ill. 2d R. 315), which was granted. We affirm the appellate court.

BACKGROUND

Koglin's complaint was filed on June 16, 1992. It stated that Koglin provided architectural services in connection with Valenz's jewelry store, located in Valenz's space at 900 North Michigan Avenue. In the complaint, Koglin alleged that its work was authorized or knowingly permitted by defendants La Salle and JMB. Koglin further alleged that defendant Barnard also performed work on the jewelry store. Koglin alleged, however, that its lien rights were superior to Barnard's.

On July 20, 1992, Barnard filed a pleading designated as an answer. In the answer, Barnard alleged that it had also entered into a contract with Valenz involving work on the jewelry store. Barnard admitted the basic factual allegations of the complaint but denied that its lien rights were subordinate and inferior to Koglin's lien rights. Barnard alleged that it had a lien against the premises totalling $25,725.84 plus interest. With respect to its lien, Barnard specifically stated that "it last performed services on the premises under its contract on or after November 23, 1991, and that it perfected its mechanics lien on the premises by recording a copy of notice of such lien with the Recorder of Deeds of Cook County, Illinois, on March 20, 1992, in accordance with the Mechanics' Lien Law."

A copy of the recorded claim for mechanic's lien was attached as an exhibit to the answer. The claim for lien provided information about Barnard's work and identified La Salle and JMB, among others, as having an interest in the property. Barnard's answer also contained a prayer for relief. In the prayer for relief, Barnard asked the court: (1) to determine the amount of its mechanic's lien as $25,725.84 plus interest; (2) to determine that Barnard had a "first, prior and superior lien" against the premises under the Act; (3) to foreclose its mechanic's lien and to order the premises sold to satisfy any judgment; and (4) to award any other relief the court would deem proper.

On September 10, 1993, La Salle and JMB filed a combined answer to the Koglin complaint. In their answer, they admitted that Barnard had provided certain labor and materials in connection with the construction and improvement of the jewelry store. They denied that they knew the terms of any contract between Valenz and Barnard, and further, they denied that they authorized or permitted such a contract. La Salle and JMB did not object to the form of Barnard's answer or make a motion to strike the affirmative relief requested in Barnard's answer.

On December 21, 1993, the circuit court held a pretrial conference. Koglin moved to voluntarily dismiss its action because it had resolved its claims through a settlement with La Salle and JMB. Barnard had not been informed of Koglin's intent to seek a voluntary dismissal at the pretrial conference. Despite Barnard's objection, the circuit court dismissed the entire action with prejudice.

On January 11, 1994, Barnard filed a motion titled "Motion by H. B. Barnard Company to Modify or Vacate the Order of December 21, 1993, to Permit Filing of Amended Complaint and to Realign Parties." La Salle and JMB argued that, by this time, more than two years had passed since Barnard completed its work on the jewelry store. The Act provides that a claimant should enforce its lien within two years of completion of the work. 770 ILCS 60/9 (West 1992). The circuit court denied Barnard's motion. The effect of this ruling was to preclude Barnard from enforcing its mechanic's lien against La Salle and JMB. Barnard appealed.

The appellate court vacated the dismissal order and remanded the cause to allow Barnard to enforce its mechanic's lien. The appellate court relied on four alternative reasons. The court held that: (1) Barnard's answer complied with the Act and that a counterclaim was not required; (2) even if a counterclaim was required, the answer should have been treated as a counterclaim because it contained all the elements needed to state a claim; (3) if a counterclaim was required, Barnard should have been allowed to amend its pleading to assert a counterclaim; and (4) Koglin should have provided notice to Barnard before Koglin sought to voluntarily dismiss the entire action at the pretrial conference.

On appeal, La Salle and JMB contest each of these four reasons. We note that defendant Valenz did not file an appearance or responsive pleading in the circuit court. Neither Valenz nor Koglin are involved in this appeal. We begin our analysis with a brief discussion of the Act.

ANALYSIS

I. Overview of the Mechanics ...


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