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Peter J. Hartmann Co. v. Capitol Bank & Trust Co.

November 10, 2004

PETER J. HARTMANN COMPANY, AN ILLINOIS CORPORATION, PLAINTIFF-APPELLANT/CROSS-APPELLEE,
v.
CAPITOL BANK & TRUST COMPANY, AS TRUSTEE UNDER TRUST AGREEMENT NO. 1975; CAPITOL BANK & TRUST COMPANY; NORTH BANK; OKLAHOMA OIL COMPANY; ALDO BOTTALLA; DANIEL PONTARELLI; R. NEIL BEAULIEU; ANTHONY MINSCALCO; PARKVIEW PLAZA ASSOCIATES, INC.; CAROLYN MOSLEY BRAUN, REGISTRAR OF TITLES; AND UNKNOWN OTHERS, DEFENDANTS-APPELLEES, AND EMIL ROSS, INC., DEFENDANT-APPELLEE/CROSS-APPELLANT.



Appeal from the Circuit Court of Cook County. Honorable Cyril J. Watson, Judge Presiding.

The opinion of the court was delivered by: Justice Hartman

PUBLISHED

Modified opinion of the court upon denial of rehearing.

Plaintiff, Peter J. Hartmann Company (Hartmann), sought compensation for its removal and disposal of contaminated soil from property located at 2800 West Irving Park Road (the property) from defendants, Capitol Bank & Trust Company, as Trustee under Trust Agreement No. 1975, Capitol Bank & Trust Company, North Bank, Oklahoma Oil Company, Aldo Bottalla, Stephen D. Korshak, James S. Bottalla, Daniel Pontarelli, R. Neil Beaulieu, Anthony Minscalco, Parkview Plaza Associates, Inc. (Parkview), Emil Ross, Inc. (Ross), Carolyn Mosely Braun, Registrar of Titles, and unknown others, under several theories, including foreclosure of mechanics lien and breach of contract. Hartmann appeals the circuit court's finding that the recording and registering of multiple notices and claims for lien constituted constructive fraud and rendered Hartmann's mechanics lien unenforceable. In its cross-appeal, Ross appeals from the jury verdict in favor of Hartmann on its breach of contract claim.

Hartmann was engaged in the business of providing, installing, testing, repairing, removing, and disposing of underground storage tanks (tanks) and cleaning up environmental contaminants. On November 24, 1989, Hartmann entered into a written contract with Ross to perform work at the property. The contract provided that Hartmann would perform certain work enumerated in seven numbered paragraphs in exchange for a fixed price of $9,700. Following a line showing the $9,700 fixed price, the contract contained a soil removal clause. Hartmann removed the tanks and the contaminated soil. Hartmann was paid $2,500.

Hartmann recorded and served a notice and claim for lien under number 90451577 dated August 29, 1990, and signed by William P. Hartmann, president of Hartmann (August 29 notice). The August 29 notice identified Hartmann as the lien claimant, "EMIL ROSS INC. - DAN PONTARELLI" as the contractor and Capital Bank, Trust #1975 and Parkway Plaza Associates as the owners. It described the property's address as 2800 West Irving Park, Chicago, Illinois. The August 29 notice stated that on December 7, 1989, the contractor made a subcontract with Hartmann to provide tank removal and EPA required clean-up on the site. It further stated that by August 20, 1990, Hartmann had "completed thereunder all that was required to be done by said contract." The August 29 notice claimed $250,000 as due and owing for the work performed.

Hartmann recorded and served a notice and claim for lien under number 90521730 dated October 18, 1990, and signed by John C. Corkhill, vice president of Hartmann (October 18 notice). The October 18 notice identified Hartmann as the claimant and Ross as the contractor. It identified the following as owners of the property: Capitol Bank, Trust #1975; Parkview Plaza Associates Inc.; Daniel Pontarelli; Anthony Miniscalco; Capitol Bank; North Bank; Stephen D. Korshak; Neil Beaulieu; and Oklahoma Oil Company. The October 18 notice gave the same property address as the August 29 notice and, like the August 29 notice, it described a December 7, 1989 subcontract for Hartmann to provide tank removal and EPA required clean-up on the site. The October 18 notice further stated that "on August 20, 1990 the claimant substantially completed thereunder all that was required to be done by said contract." It then claimed an amount due and owing to claimant of $279,824.35.

Hartmann also registered two notice and claim for lien documents with the Cook County Registrar of Titles, both dated October 18, 1990. Registered notice number 3922337 was signed by Corkhill. Registered notice number 3927531 was signed by William Hartmann, as agent of Hartmann. Both documents were identical to the October 18 notice except they both stated they were "AMENDING FILED DOCUMENT, DOCUMENT NUMBER 90451577," the August 29 notice.

On October 17, 1990, Hartmann filed a two count complaint to foreclose mechanics lien (count I) and for breach of contract against Ross (count II). Hartmann alleged that it had entered into the contract on or about November 24, 1989; by August 20, 1990, it had removed and disposed of all the tanks and the contaminated soil; and it demanded payment of $279,824.35 as a result of this work, but had not been paid. Hartmann filed a lis pendens notice of its lawsuit on October 25, 1990. On December 5, 1990, Korshak, Beaulieu, Pontarelli, Minscalco, Parkview, and Ross filed a counterclaim alleging that Hartmann had committed fraud in advising defendants with respect to the amount of contaminated soil that would need to be removed and the cost thereof. The counterclaim was the subject of a previous appeal to this court (Peter J. Hartmann Co. v. Capitol Bank and Trust Co., 296 Ill. App. 3d 593, 694 N.E.2d 1108 (1998) (Hartmann I)).*fn1

On May 7, 1999, defendants filed a "motion for declaratory judgment," arguing that the soil removal clause of the contract did not create any contractual obligation for them to pay for the removal of contaminated soil. On June 22, 1999, the circuit court declared as a matter of law that the written contract "did not contain any obligation by the parties regarding the removal of contaminated soil and payment therefore on a cost plus basis or otherwise." The court found that the contract was limited to Hartmann's promise to perform the items enumerated in paragraphs one through seven of the contract in exchange for $9,700.

On July 23, 1999, Hartmann filed a seven count verified fourth amended complaint. In count I (mechanics lien foreclosure as a subcontractor), Hartmann alleged that the written contract included the removal of contaminated soil. Hartmann also alleged that during the removal of the tanks, Ross requested that Hartmann remove the contaminated soil as an addition to the contract and that it agreed to do so at the rate of cost plus 20%. In count II (mechanics lien foreclosure as an original contractor), Hartmann alleged the written contract, but also that on March 23, 1990, the owners requested that Hartmann remove the contaminated soil and that it agreed to do so at a rate of cost plus 20%. Counts I and II were directed against all defendants. Count III alleged breach of contract against Ross based on the same facts alleged in count I. Count IV alleged breach of contract against Korshak, Pontarelli, Beaulieu, Miniscalco and Parkview based on the same facts alleged in count II. Count V alleged joint and several liability against all defendants under the Mechanics Lien Act (the Act) (770 ILCS 60/0.01 et seq. (West 2000)). Count VI alleged unjust enrichment and count VII alleged breach of contract third party beneficiary against Capitol Bank & Trust, as Trustee under Trust Agreement No. 1975, Korshak, Pontarelli, Beaulieu, Miniscalco and Parkview. Defendants moved to dismiss portions of the fourth amended complaint under sections 2-615 and 2-619 of the Code of Civil Procedure (735 ILCS 5/2-615; 5/2-619 (West 2000)). On October 28, 1999, the circuit court denied the motion as to counts I, III, and V, but limited Hartmann's recovery to $9,700; denied it as to counts II, IV, and VI; and granted it with prejudice as to count VII. On May 10, 2000, the court dismissed counts II, IV, and VI as time-barred, holding that the oral contract and unjust enrichment claims did not relate back to Hartmann's initial written contract claim. Following trial on counts I, III, and V, with Hartmann's claims limited to $9,700, the circuit court filed a memorandum opinion and entered judgment on March 23, 2001, in favor of defendants on counts I and V, and in favor of Hartmann on count III in the amount of $7,200 ($9,700 offset by $2,500 previously paid by Ross). The court also found that because Hartmann's notice and claim for lien was in the amount of $279,824.35 and the contract work was only in the amount of $9,700, the notice and claim for lien was fraudulent as a matter of law and Hartmann was entitled to no mechanics lien.

Hartmann appealed asking that the circuit court's June 22, 1999 order be reversed or, alternatively, that the orders dated October 28, 1999, and/or May 10, 1999, be reversed and the cause remanded for further proceedings. On appeal, this court found that the soil removal clause was part of the written contract and that the circuit court erred in dismissing counts II, IV, and VI of the fourth amended complaint as time barred. The circuit court's judgment was reversed and the cause was remanded for further proceedings. Peter J. Hartmann Co. v. Capitol Bank & Trust Co., No. 1-01-1547 (2002) (unpublished order under Supreme Court Rule 23) (Hartmann II). Plaintiff did not raise the issue of constructive fraud in that appeal. This court noted the constructive fraud finding in a footnote in the order which stated: "The court also found that Hartmann had recorded two liens which significantly overstated its valid lien claims, amounting to constructive fraud. Consequently, the claims for lien by Hartmann recorded with the Cook County Recorder of Deeds were 'declared void, held for naught, and expunged from the title' of the property."

Upon remand, the case was bi-furcated with plaintiff's contract claim against Ross (Count III) and Parkview's counterclaims being transferred to the law division for a jury trial and the mechanics lien claims remaining in the chancery division. During the jury trial, the jury was instructed:

"If you decide for [Hartmann] on its claim for breach of contract, you must fix the amount of money which will reasonably compensate [Hartmann] for all loss naturally arising from the breach. In calculating [Hartmann's] damages, you should determine that sum of money that will put [Hartmann] in as good a position as it would have been in if both [Hartmann] and Emil Ross, Inc. had performed all of their promises under the contract. [Hartmann] claims ...


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