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Petroline Co. v. Advanced Environmental Contractors Inc.

April 27, 1999

PETROLINE COMPANY, AN ILLINOIS CORPORATION, PLAINTIFF-APPELLANT,
v.
ADVANCED ENVIRONMENTAL CONTRACTORS, INC., AN ILLINOIS CORPORATION; YONG CHOI AND KIL JEE CHOI, HUSBAND AND WIFE; SHUI L. CHOW; CRUSH-AL INC.; HIGHLAND TANK AND MANUFACTURING CO., A PENNSYLVANIA CORPORATION; H.J. MOHR AND SONS, AN ILLINOIS CORPORATION; UNKNOWN OWNERS AND NON-RECORD CLAIMANTS, DEFENDANTS-APPELLEES



No. 96 CH 12551

The opinion of the court was delivered by: Justice Cousins

Appeal from the Circuit Court of Cook County The Honorable Robert J. Quinn, Judge Presiding

The plaintiff subcontractor was hired to provide equipment that was to be installed on a piece of property owned by defendants in this case. The subcontractor was not fully paid, so it filed a mechanic's lien against the property. It provided 90 day's notice to the owners under section 24 of the Mechanics Lien Act (770 ILCS 60/24 (West 1996)), but did not provide such notice to the mortgagee (whose interest was recorded).

The subcontractor filed suit against the owners to foreclose the lien within the statutory limitations period. The trial court dismissed the action, however, on the basis that the subcontractor's failure to give the mortgagee 90 day's notice prevented the formation of an enforceable lien.

The subcontractor appealed, arguing that the lack of notice to the lender only made the lien unenforceable against the lender, not unenforceable against the owners.

We reverse and remand.

BACKGROUND

In 1993, defendants Yong Choi and Kil Jee Choi (owners) bought a piece of property on North Cicero Avenue. They financed the purchase by mortgaging the property to defendant Shui Chow (lender). The purchase and the mortgage were promptly recorded.The owners hired defendant Advanced Environmental Contractors, Inc. (contractor), to install underground petroleum storage tanks and other equipment on the property. The contractor bought equipment from the plaintiff, Petroline Co. (subcontractor). The subcontractor completed delivery on November 17, 1994. At this time, $14,107.25 of the $63,499.00 bill remains unpaid.

The subcontractor served a 90 day's notice on the owner that it was filing a mechanic's lien, as required by section 24 of the Mechanics Lien Act (the Act), which provides in pertinent part:

"Sub-contractors, or party furnishing labor or materials may at any time after making his or her contract with the contractor, and shall within 90 days after the completion thereof *** cause a written notice of his or her claim and the amount due or to become due thereunder, to be sent by registered or certified mail, with return receipt requested, and delivery limited to addressee only, to or personally served on the owner of record or his agent or architect, or the superintendent having charge of the building or improvements and to the lending agency if known[.]" 770 ILCS 60/24 (West 1996).

The subcontractor did not, however, give notice to the lender.

The subcontractor recorded its lien within four months of delivery of the equipment and then filed suit to foreclose the lien (along with other relief) within two years of delivery as required by section 7 of the Act. 770 ILCS 60/7 (West 1996). Both the contractor, who had filed in bankruptcy, and the lender were joined as defendants.

The subcontractor's initial complaint had three counts: mechanic's lien foreclosure, an action at law under section 28 of the Act, and quantum meruit. The trial court struck the second count with leave to replead and dismissed the third count without prejudice. The subcontractor then filed a first amended complaint for mechanic's lien foreclosure. The court dismissed this complaint on the motion of the owners because the subcontractor had not provided section 24 notice to the lender. The court denied a motion to reconsider, explaining that "[p]laintiffs were unable to plead notice on owner and lender or allege facts to obviate the need to serve such notice." The court then certified the issue for interlocutory review pursuant to Supreme Court Rule 304(a) (134 Ill. 2d R. 304(a)).

The subcontractor now appeals, arguing that its failure to give the lender section 24 notice only means that its lien cannot have priority over the mortgage, not that the ...


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