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IN RE RESOURCE TECHNOLOGY CORPORATION

January 13, 2004.

In re RESOURCE TECHNOLOGY CORPORATION, Debtor. RESOURCE TECHNOLOGY CORPORATION, Plaintiff-Appellee V. MOSTARDI-PLATT ASSOCIATES, INC., Defendant-Appellan


The opinion of the court was delivered by: WAYNE ANDERSEN, District Judge

MEMORANDUM. OPINION AND ORDER

This case is before the court on defendant-appellant Mostardi-Platt Associates, Inc.'s appeal from a decision rendered by the United States Bankruptcy Court of the Northern District of Illinois. For the following reasons, the decision of the bankruptcy court is affirmed.

BACKGROUND

  Resource Technology Corporation ("RTC") is in the business of extracting methane gas from landfills. After extracting the gas from the landfills, RTC either burns off, or "flares," the gas it collects or, in some instances, uses the gas to power engines located at the landfills from which energy is generated and sold. RTC does not own the landfills. Rather, it contracts with landfill owners to extract the gas. Page 2

  RTC entered into certain contracts with Mostardi-Platt Associates, Inc. ("MPA") and engaged MPA to provide specific services with respect to a number of landfill sites in Illinois where RTC had contracts. RTC contracted with MPA: (1) to prepare applications for permits, which were required by the Illinois Environmental Protection Agency ("IEPA"), for continued operation of the landfills; (2) to prepare construction permits required by the IEPA to place or move engines at the landfills; and (3) to assist RTC in monitoring its ongoing compliance and reporting requirements for the permits it received.

  On November 15, 1999, an involuntary bankruptcy petition was filed against RTC pursuant to Chapter 7 of the Bankruptcy Code. On February 1, 2000, RTC consented to an order converting the case to one under Chapter 11 of the Bankruptcy Code. RTC is in possession of its assets and operates its business as a debtor in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code.

  MPA is a claimant in RTC's bankruptcy. MPA filed a proof of claim in RTC's bankruptcy proceeding based on certain purported mechanics liens, which were recorded against various landfill sites in Illinois. MPA's liens represent charges for work it performed for RTC relative to RTC's operations at the landfills. Although RTC is not the owner of the landfills, in order to fulfill its contracts with the landfill owners, RTC is required to cure or otherwise remedy any and all defaults, including the liens asserted by MPA.

  On May 6, 2002, RTC filed an adversary proceeding for declaratory and injunctive relief seeking, among other things, a declaration that MPA does not have a right to assert any mechanics liens for work it performed in connection with RTC's operations at the landfills. This matter was tried in a bench trial before the Honorable Eugene R. Wedoff. The bankruptcy court Page 3 determined that RTC had not paid MPA for certain services and that RTC owed MPA $172,447.87. However, the bankruptcy court further found that the services performed by MPA did not qualify for any mechanics liens under the Illinois Mechanics Lien Act (the "Act"). Thus, the bankruptcy court concluded that MPA's claim, although it is valid, was a general unsecured claim and entered judgment in favor of RTC on all counts.

  MPA filed a motion to reconsider or, in the alternative, to amend the judgment, arguing that: (1) the bankruptcy court lacked subject matter jurisdiction to determine the validity of the mechanics liens; and (2) RTC failed to join the owners of the landfills as necessary parties in its adversary proceeding. The bankruptcy court denied the motion. MPA now appeals the bankruptcy court's decision, alleging that the court erred in entering judgment in favor of RTC and in denying MPA's motion to reconsider.

  DISCUSSION

 I. Standard of Review

  This Court has jurisdiction over MPA's appeal pursuant to 28 U.S.C. § 158(a)(1), which vests a district court with jurisdiction over appeals from "final judgments, orders and decrees" of the bankruptcy court. Acting as an appellate court, we are bound to accept the bankruptcy court's findings of fact, unless they are clearly erroneous, and may only consider evidence presented before the bankruptcy court and made part of the record. In re Home Comp. Care, Inc., 221 B.R. 202, 205 (N.D. Ill. 1998) (citing In re Lefkas Gen. Partners, 112 F.3d 896, 900 (7th Cir. 1997)); In the Matter of Neis, 723 F.2d 584, 588-89 (7th Cir. 1983) (citing F.R.Bankr.P. 8013). However, we review any questions of law de novo. In the Matter of UNR Indus., Inc., 986 F.2d 207, 208 (7th Cir. 1993). Page 4

 II. The Bankruptcy Court Did Not Err in Holding that the Permitting Services Performed by MPA Did Not Qualify for a Mechanics Lien

  The Illinois Mechanics Lien Act enumerates certain contracts and services which qualify for a mechanics lien, and the bankruptcy court correctly began its analysis with the controlling provision of the Act, which provides in relevant part:
Any person who shall by any contract or contracts . . . with the owner of a lot or tract of land, or with one whom the owner has authorized or knowingly permitted to contract, to improve the lot or tract of land or to manage a structure thereon, or to furnish material, fixtures, apparatus or machinery, forms or form work used in the process of construction where cement, concrete or like material is used for the purpose of or in the building, altering, repairing or ornamenting any house or other building, walk or sidewalk, whether the walk or sidewalk is on the land or bordering thereon, driveway fence or improvement or appurtenances to the lot or tract of land or connected therewith, and upon, over or under a sidewalk, street or alley adjoining; or fill, sod or excavate such lot or tract of land, or do landscape work thereon or therefor; or raise or lower any house thereon or remove any house or structure therefrom, or perform any services or incur any expense as an architect, structural engineer, professional engineer, land surveyor or property manager in, for or on a lot or tract of land for any such purpose . . . is known under this Act as a contractor, and has a lien on the whole of such lot or tract of land. . . .
770 ILCS § 60/1. Reviewing this statutory provision, the bankruptcy court concluded that MPA's purported ...

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