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Pyramid Dev., LLC v. Dukane Precast, Inc.

Court of Appeals of Illinois, Second District

December 22, 2014

PYRAMID DEVELOPMENT, LLC, Plaintiff and Counterdefendant-Appellant,
v.
DUKANE PRECAST, INC., and M.B. FINANCIAL BANK, INC., Defendants and Counterplaintiffs-Appellees

Page 1186

[Copyrighted Material Omitted]

Page 1187

Appeal from the Circuit Court of Du Page County. No. 09-L-113. Honorable Terence M. Sheen, Judge, Presiding.

SYLLABUS

In a mechanic's lien action arising from a contract under which plaintiff construction manager was to build townhomes for the owner and plaintiff contracted with defendant to provide prefabricated concrete slabs to form the walls and floors but the slabs failed and the trial court then held a single trial on plaintiff's claim to foreclose its mechanic's lien, plaintiff's breach of contract claims against defendant, and the bank's claim for a setoff for attempted repairs, the appellate court determined that trial court properly denied plaintiff's claim against defendant and found that plaintiff was entitled to a mechanic's lien but that, in view of the trial court's decision to grant the bank a setoff for repairs in an amount exceeding plaintiff's lien, the lien was extinguished.

Kevin K. McQuillan, of McQuillan Law Office, LLC, of Naperville, for appellant.

Christopher W. Carmichael and Maureen Browne Schoaf, both of Holland & Knight LLP, of Chicago, for appellee M.B. Financial Bank, Inc.

Ryan J. Harrington, of Kuhn Mitchell Moss, LLC, of Naperville, for appellee Dukane Precast, Inc.

JUSTICE ZENOFF delivered the judgment of the court, with opinion. Justices Burke and Spence concurred in the judgment and opinion.

OPINION

ZENOFF, JUSTICE.

Page 1188

[¶1] This appeal arises out of mechanic's lien litigation stemming from construction of the Bluff Townhomes in Hinsdale, Illinois. For the reasons that follow, we affirm the trial court's judgment.

[¶2] I. BACKGROUND

[¶3] In March 2007, Dr. Husam Aldairi and plaintiff, Pyramid Development, LLC, entered into a written contract for plaintiff to construct eight townhome units, which became known as the Bluff Townhomes, in unincorporated Hinsdale. The contract price was $3,030,000. Plaintiff was a construction manager, owned no equipment, had no employees, and hired subcontractors to do all of the work. Plaintiff's principal was Ramy Saif. When plaintiff and Aldairi contracted to build the Bluff Townhomes, they already had a working relationship. Plaintiff was working, or had worked, on approximately seven different projects for Aldairi. Regarding the Bluff Townhomes, Aldairi required plaintiff to submit sworn affidavits with each draw. Broadway Bank was Aldairi's lender. Defendant, M.B. Financial Bank, Inc. (Bank), is Broadway Bank's successor.

[¶4] Plaintiff contracted with defendant, Dukane Precast, Inc. (Dukane), to furnish prefabricated concrete slabs, which were to form the walls and floors of the townhomes. The contract price with Dukane was $1,040,000. Dukane delivered the materials, and they were incorporated into the townhomes. However, Saif noticed problems. The slabs were uneven; there were gaps between the walls and the floors; the electrical boxes in the walls were not even and straight; and the conduit between some of the walls was plugged with concrete.

[¶5] Completion of the townhome development required the erection of retaining walls, which held up dirt, on the property. The west wall was completed while plaintiff was still the general contractor, but due to burgeoning difficulties between plaintiff and Aldairi, Aldairi had someone else finish the contiguous north and east wall. Eventually that wall failed at the northeast corner. In January 2009, Aldairi terminated plaintiff.

[¶6] During lengthy litigation, Aldairi filed for bankruptcy protection. Aldairi entered into a consent judgment with the Bank, and the Bank eventually sold the property to a party not associated with the litigation. The Bank assumed the duty to pay plaintiff's mechanic's lien claim, and the Bank claimed that it had paid to repair the failed retaining wall. In June 2012, the trial court heard, in a single trial, plaintiff's claim to foreclose its mechanic's lien, Dukane's claim against plaintiff for breach of contract, plaintiff's claim against Dukane for breach of contract, and the Bank's claim for a setoff against plaintiff for the repair of the retaining wall. To aid in understanding the evidence, we treat the issues involving the mechanic's lien and the Bank separately from the issues involving plaintiff's and Dukane's breach-of-contract claims.

[¶7] The Mechanic's Lien Foreclosure

[¶8] This phase of the trial presented two issues: plaintiff's right to a mechanic's lien and the Bank's right to a setoff against any award to plaintiff. Plaintiff filed a claim for a lien on May 6, 2009. The lien claim states that plaintiff's last day of work was January 15, 2009, and that $235,000 was owed for improvements on the premises.

[¶9] Pursuant to Aldairi's request as the owner of the property, plaintiff furnished a contractor's sworn statement with each draw. In all, ...


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