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Parkway Bank and Trust Company v. Haso Meseljevic

December 7, 2010

PARKWAY BANK AND TRUST COMPANY,
PLAINTIFF AND COUNTERDEFENDANT-APPELLEE,
v.
HASO MESELJEVIC, INDIVIDUALLY; SAMEL MESELJEVIC, INDIVIDUALLY; ALBIN MESELJEVIC, INDIVIDUALLY; 1633 FARWELL AVE. LLC., AN ILLINOIS LIMITED LIABILITY COMPANY; BENZ KITCHENS; THE BOARD OF MANAGERS OF 1633 FARWELL AVE. LLC CONDOMINIUM; UNKNOWN OWNERS AND RECORD CLAIMANTS, DEFENDANTS AND COUNTERDEFENDANTS (BETA ELECTRIC, INC., DEFENDANT AND COUNTERPLAINTIFF-APPELLANT). )



Appeal from the Circuit Court of Cook County Honorable Darryl B. Simko, Judge Presiding. No. 08 CH 32129

The opinion of the court was delivered by: Justice Karnezis delivered the opinion of the court.

SECOND DIVISION

JUSTICE KARNEZIS delivered the opinion of the court: Plaintiff Parkway Bank and Trust Company (Parkway) filed an action in chancery court for foreclosure of a construction mortgage and sale of the underlying real property. One of the defendants, Beta Electric, Inc. (Beta), filed a counterclaim asserting the priority of its mechanic's lien on the property over Parkway's mortgage. The court granted judgment on the pleadings to Parkway on the counterclaim and denied Beta's motion for reconsideration. Beta argues the court (1) abused its discretion by striking Beta's untimely response to Parkway's motion for judgment, denying Beta's motion for approval of the late filing and excluding Beta from oral argument for its failure to strictly comply with the court's briefing schedule; and (2) erred in granting Parkway's motion for judgment on the pleadings on the basis that Beta was a subcontractor, not a contractor, under the Mechanics Lien Act (770 ILCS 60/1 et seq. (West 2008)) and had failed to properly perfect its lien. We affirm.

Background

In 2006, Haso, Samel and Albin Meseljevic started development of a 40-unit commercial condominium project in Chicago. At some point, the Meseljevics incorporated the project as 1633 Farwell Ave. LLC. On April 11, 2006, Beta entered into a contract with Haso pursuant to which Beta would perform electrical work on the project. On May 8, 2006, Parkway entered into a construction mortgage contract with Haso and Samel, identified in the contract as "grantor[s]" and "borrower[s]." Parkway recorded the mortgage on May 11, 2006. The mortgage was modified and/or renewed several times, with 1633 Farwell Ave. LLC being added as a grantor/borrower in October 2007. On May 1, 2008, Parkway accepted a promissory note executed by all three Meseljevics and by Haso as "operating manager" of 1633 Farwell Ave. LLC. On August 5, 2008, Beta recorded a mechanic's lien against 16 of the condominium units after the Meseljevics failed to pay Beta $136,200 due for Beta's work on the project.*fn1

On August 29, 2008, Parkway filed a verified mortgage foreclosure complaint naming as defendants the Meseljevics individually; 1633 Farwell Ave. LLC.; the board of managers of 1633 Farwell Ave. LLC.; Benz Kitchens; Beta; and unknown owners and record claimants. Parkway alleged the Meseljevics had not made any payments on the mortgage since April 2008. It requested a judgment of foreclosure on its construction mortgage secured by the promissory note, an order of possession and sale and an order terminating all defendants' rights to possession of the property.

On January 26, 2009, the court entered an order of default against all defendants and granted Parkway's motion for a judgment of foreclosure and sale. In March 2009, the court vacated the default judgment against Beta in order to allow Beta to assert the priority of its mechanic's lien over Parkway's mortgage. Beta then filed a verified answer to Parkway's complaint and a counterclaim against Parkway and the Meseljevics; 1633 Farwell Ave. LLC.; the board of managers of 1633 Farwell Ave. LLC.; Benz Kitchens; Beta; and unknown owners and record claimants. The counterclaim asserted Beta's lien had priority over any other interests, including Parkway's mortgage. It asked for a judgment against Parkway for the $136,200 lien amount, plus costs, and/or a judgment extinguishing the interest of any other necessary party to the extent sufficient to satisfy that amount.

On May 7, 2009, Parkway filed a motion for judgment on the pleadings on the counterclaim pursuant to section 2-615(e) of the Illinois Code of Civil Procedure (735 ILCS 5/2-615(e) (West 2008)). It argued, in relevant part, that Beta had not properly perfected its mechanic's lien and the lien, therefore, had no priority over the mortgage. The same day, the court entered a scheduling order setting June 4, 2009, as the due date for Beta's response to the motion. The scheduling order warned that "failure to file a timely written Response or Reply will be deemed a waiver of oral argument with respect to the Response or Reply." Beta filed its response on June 5, 2009, the day after the deadline, without prior leave of court. On June 17, 2009, Parkway filed a reply to the response and an objection to Beta's participation in oral argument regarding the motion. It asserted Beta waived oral argument when it filed its response late in violation of the scheduling order. On June 24, 2009, Beta filed a motion to approve late filing. The motion was not supported by an affidavit.

On June 26, 2009, after argument on Parkway's objection and Beta's motion to approve late filing, the court denied Beta's motion to approve late filing, struck Beta's response as untimely and barred Beta from participating in oral argument during the hearing on the motion for judgment on the pleadings. The court then heard argument by Parkway on its motion for judgment on the pleadings on the counterclaim and granted the motion. It found Beta's lien showed Beta was a subcontractor; Beta failed to perfect its lien because it did not give statutory notice of the lien to Parkway; and Parkway's mortgage was, therefore, prior to and superior to Beta's lien. The court reinstated the January 2009 default judgment entered against Beta.

On August 14, 2009, the court denied Beta's motion to reconsider. The court granted Parkway's motion to confirm the sale and distribution of the unsold condominium units, those not released from the mortgage. The condominiums having sold at auction for less than the amount due Parkway under the mortgage, the court entered a deficiency judgment against the Meseljevics and 1633 West Farwell Ave. LLC. On November 6, 2009, it granted Parkway's emergency motion to modify the judgment in order to change the description of one of the condominium units listed in the previous order. On December 7, 2009, Beta filed its notice of appeal from the June 26, 2009; August 14, 2009; October 21, 2009; and November 6, 2009, orders.

Analysis

1. Untimely Response

Beta argues that the court abused its discretion in denying Beta's motion for approval of its late-filed response to Parkway's motion for judgment on the pleadings, striking the response and barring Beta from participating in oral argument on the motion for judgment on the pleadings. The court's scheduling order required Beta to file its response to Parkway's motion for judgment on the pleadings on or before June 4, 2009. Beta filed its response on June 5, 2009, one day late, without first requesting an extension of time or leave of court to file the untimely response. Beta's procedural failure to obtain leave of court prior to filing its untimely response did not render the response a nullity. Cedzid Co. v. Marriott International Inc., No. 1-09-1924, slip op. at 4 (September 20, 2010). Instead, although it was within the court's discretion to strike the untimely filing, it was also within the court's discretion to allow it. Once Parkway objected to the untimely response, the court was required to exercise its discretion to determine whether it should grant Beta leave to file the untimely response. Cedzid, slip op. at 4.

Beta filed a "motion to approve late filing" of the response. Pursuant to Supreme Court Rule183:

"[The] court, for good cause shown on motion after notice to the opposite party, may extend the time for filing any pleading or the doing of any act which is required by the rules to be done within a limited period, either before or after the expiration of the time." 134 Ill. 2d R. 183.

Rule 183 vests the circuit court with discretion to extend the time a party has to comply with a court-ordered or rule-imposed deadline, both before and after expiration of the filing deadline. Vision Point of Sale, Inc. v. Haas, 226 Ill. 2d 334, 345-46 (2007), citing Bright v. Dicke, 166 Ill. 2d 204 (1995). However, the court's discretion to allow a late response pursuant to a Rule 183 motion " 'does not come into play under the rule unless the responding party can first show good cause for the extension.' " Vision Point of Sale, Inc., 226 Ill. 2d at 344, quoting Bright, 166 Ill. 2d at 209. Accordingly, the court had the discretion to allow Beta's response to stand if Beta could show good cause for its noncompliance with the deadline. We will not reverse a court's decision to deny a motion for extension of time absent an abuse of the court's discretion. Vision Point of Sale, Inc., 226 Ill. 2d at 353-54.

In order to demonstrate good cause under Rule 183, Beta had the burden to demonstrate to the court "clear, objective reasons why it was unable to meet the deadline and why an extension of time should be granted." Vision Point of Sale, Inc., 226 Ill. 2d at 348. In its motion for approval of late filing, Beta provided no reason for why it filed the response late. Instead, it merely stated, without explanation, that its counsel's "office was unable to file [the] response until" the day following the deadline. It also stated that its counsel called Parkway's counsel and told him the response would be late and, if Parkway's counsel intended to object, Beta would seek leave of court to approve the late filing. Beta asserted Parkway's counsel told him he would not object but the court might not allow Beta to participate in oral argument.*fn2

Putting aside the fact that Beta's motion was unsupported by affidavit, it is clear that the court had no basis on which to approve the late response. Beta's motion presented no cause for its late filing, let alone a good cause. "[I]n determining whether good cause exists under Rule 183 for the grant of an extension of time to remedy an unintentional noncompliance with a [timing] requirement, the circuit court may not take into consideration facts and circumstances of record that go beyond the reason for noncompliance." Vision Point of Sale, Inc., 226 Ill. 2d at 353. Beta's alleged discussion with Parkway's counsel is irrelevant to the issue of whether Beta had good cause to miss the deadline. It might explain why Beta did not file a motion for extension of time sooner, but that is not relevant to why Beta missed the deadline in the first place. Because Beta offered no explanation of ...


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