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04/03/97 VERNON HILLS III LIMITED PARTNERSHIP v.

April 3, 1997

VERNON HILLS III LIMITED PARTNERSHIP, PLAINTIFF AND COUNTER-DEFENDANT-APPELLEE,
v.
ST. PAUL FIRE AND MARINE INSURANCE COMPANY, DEFENDANT (BUCON, INC., D/B/A BUTLER CONSTRUCTION COMPANY, DEFENDANT AND COUNTERPLAINTIFF-APPELLANT).



Appeal from the Circuit Court of Lake County. Nos. 95--CH--587, 95--CH--628, 95--CH--903. Honorable Peter M. Trobe, Judge, Presiding.

Released for Publication May 2, 1997.

Presiding Justice Geiger delivered the opinion of the court. Inglis and Hutchinson, JJ., concur.

The opinion of the court was delivered by: Geiger

PRESIDING JUSTICE GEIGER delivered the opinion of the court:

The defendant and counterplaintiff, Bucon, Inc. (Bucon), appeals from the April 23, 1996, order of the circuit court of Lake County granting summary judgment in favor of the plaintiff and counterdefendant, Vernon Hills III Limited Partnership (VHLP), on its claim for declaratory judgment. The trial court ruled that Bucon forfeited its mechanic's lien by failing to commence an action to foreclose the lien within 30 days after receipt of VHLP's written demand to sue, as required by section 34 of the Mechanics Lien Act (the Act) (770 ILCS 60/34 (West 1994)). On appeal, Bucon argues that the trial court erred in finding that VHLP's letter of July 29, 1994, constituted a written demand to sue pursuant to section 34 of the Act. We affirm and remand.

The facts necessary for the disposition of this appeal are as follows. On February 18, 1993, VHLP contracted with Bucon to design and build a shopping center in Vernon Hills. Bucon was to design and construct all of the buildings, as well as numerous site improvements, including the parking lot and utility connections. The contract provided that Bucon would be paid approximately $15 million for the project. Bucon commenced construction in the spring of 1993, and a certificate of substantial completion was issued on August 22, 1994.

On July 21, 1994, Bucon filed a mechanic's lien against the shopping center in the Lake County recorder's office. The lien was in the amount of $1,315,249. On August 1, 1994, Bucon received, via certified mail, a letter from VHLP dated July 29, 1994. The letter provides, in pertinent part:

"Pursuant to Article 11.4 of that certain Design Build Contract dated as of February 18, 1993, *** between and [Bucon] for the design and construction of a retail shopping center *** located in Vernon Hills, Illinois, this letter shall serve as notice of your breach on the Contract pursuant to Article 11.5.2 of the Contract.

Article 11.5.2 of the Contract provides that 'in no event may Design/Builder file, or permit those whom it controls or for whom it has legal responsibility under the Contract to file, a mechanics' *** lien or claim for lien for work performed under the Contract ***.' However, on July 21, 1994, a claim for lien in the amount of $1,315,249.00 was filed in the Lake County Recorder's Office ***. This course of action is clearly in violation of the Contract.

We hereby demand that you either immediately release your lien or bring suit to enforce it so that this matter can be expeditiously resolved. We fully intend to look to your organization in order to recapture any additional costs we may incur in connection with your actions. In addition, in the event this lien is not released of record immediately, we will pursue all other rights and remedies available in the Contract, at law or in equity in response to your breach and your failure to fulfill the requirements of this letter."

On August 3, 1994, Bucon received a follow-up letter from VHLP's attorney dated July 28, 1994. The letter provided as follows:

"You should be receiving, if you have not received already, a copy of ownership's letter in connection with the mechanic's lien you recently filed under Illinois' Mechanic's Lien Statute (770 ILCS 60/1, et seq.). It is not the purpose of this letter to alter the contents of ownership's letter, but I did want to initiate with you a discussion as to why you have filed the lien and what purpose you think it will serve and further to suggest a dialogue to accomplishing the mutual objectives of your company and ownership. If you are so inclined, please give me a call."

Thereafter, VHLP's attorney and Bucon's attorney had several conversations in which they discussed the lien. During these conversations, Bucon's attorney explained that, although Bucon intended to preserve its rights under the Act, it would nonetheless assist VHLP in closing out the project. VHLP's attorney reiterated VHLP's position that Bucon had breached the contract by filing the lien.

On August 4 and 17, 1994, VHLP's attorneys wrote Bucon regarding certain paperwork that had to be completed in order to close out the project and to get the property ready for sale. After August 1994, Bucon and VHLP continued to correspond through their attorneys with respect to completing the steps necessary to close ...


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