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AUI Construction Group, LLC v. Vaessen

Court of Appeals of Illinois, Second District

November 9, 2016

AUI CONSTRUCTION GROUP, LLC, Plaintiff-Appellant,
v.
LOUIS J. VAESSEN, in His Capacity as Trustee of the Louis J. Vaessen Trust Dated 6/24/2003 ½ Interest; CAROL A. VAESSEN, in Her Capacity as Trustee of the Carol A. Vaessen Trust Dated 6/24/2003 ½ Interest; GSG 7, LLC; CLIPPER WINDPOWER, LLC; POSTENSA WIND STRUCTURES US, LLC; ROCK RIVER READY MIX, INC.; ILLINOIS TRUCK AND EQUIPMENT COMPANY, INC.; CUMMINGS ELECTRICAL, INC.; KR WIND, INC., d/b/a Mammoet Wind, Inc.; UNKNOWN OWNERS; and NONRECORD CLAIMANTS, Defendants Louis J. Vaessen, in His Capacity as Trustee of the Louis J. Vaessen Trust Dated 6/24/2003 ½ Interest; Carol A. Vaessen, in Her Capacity as Trustee of the Carol A. Vaessen Trust Dated 6/24/2003 ½ Interest; GSG 7, LLC; Clipper Windpower, LLC; Postensa Wind Structures, US, LLC; Rock River Ready Mix, Inc.; Illinois Truck and Equipment Company, Inc.; Cummings Electrical, Inc.; Unknown Owners; and Nonrecord Claimants, Defendants-Appellees.

         Appeal from the Circuit Court of Lee County, No. 14-CH-38 Honorable Daniel A. Fish, Judge, Presiding.

          PRESIDING JUSTICE SCHOSTOK delivered the judgment of the court, with opinion. Justices McLaren and Jorgensen concurred in the judgment and opinion.

          OPINION

          SCHOSTOK PRESIDING JUSTICE

         ¶ 1 The instant controversy arises from a wind energy system that was developed by GSG 7 and built on the property of Louis and Carol Vaessen. After the tower was completed, one of the subcontractors that worked on the tower, AUI Construction Group, LLC (AUI), filed a complaint to foreclose a mechanic's lien against the Vaessens' property and sought to recover over $3 million. The Vaessens filed a motion to dismiss the complaint, and Clipper Windpower, LLC (Clipper), a general contractor on the project, filed a motion for summary judgment. Both motions asserted that the wind energy system remained GSG 7's personal property and was a nonlienable trade fixture rather than an improvement to the property. The circuit court of Lee County agreed and granted the Vaessens' motion to dismiss and Clipper's motion for summary judgment. AUI appeals from that order. For the reasons that follow, we affirm.

         ¶ 2 BACKGROUND

         ¶ 3 On June 29, 2007, Louis and Carol Vaessen entered into a windpark easement agreement with GSG 7, a developer of wind energy. Among other things, the easement provided GSG 7 the exclusive right "to erect, install, construct, replace, maintain, repair and operate wind energy conversion systems on the Property as Developer determined in its sole discretion." The agreement provided that the Vaessens would receive annual payments of $7500 upon erection of a wind turbine.

         ¶ 4 Following its agreement with the Vaessens, GSG 7 entered into an agreement with Clipper to supply the wind turbine and the tower to support that wind turbine. Clipper manufactured wind turbines but not the towers to support those turbines. Therefore, Clipper entered into a fixed-price contract with Postensa Wind Structures US, LLC (Postensa), for the construction of a prototype tower designed to support the wind turbine.

         ¶ 5 Postensa, in turn, entered into a cost-plus agreement with AUI for the construction of the foundation and tower. The Postensa-AUI agreement is dated November 3, 2011, but it was not executed until January 16, 2012, by AUI and until February 1, 2012, by Postensa. The recital to the agreement stated that Postensa had entered into an agreement with Clipper to design and build the foundation and tower for a wind-powered electrical generator facility that was owned by GSG 7. The Postensa-AUI agreement provided that the estimated total construction costs for AUI's scope of work would be $1, 664, 791.

         ¶ 6 A memorandum of the windpark easement agreement between the Vaessens and GSG 7 was recorded on December 22, 2011.

         ¶ 7 After AUI completed its work in March or May of 2012, it claimed that the total amount due from Postensa was $5, 904, 272.69. After giving Postensa credit for various payments, AUI asserted that there remained an outstanding balance of $3, 188, 634.44. AUI filed an arbitration demand against Postensa for the approximately $3 million that it claimed it was still owed.

         ¶ 8 On June 25, 2013, the arbitrator entered a partial award. On August 20, 2013, Postensa filed for bankruptcy. On December 4, 2013, the arbitrator entered a final award in favor of AUI for $3, 527, 043 (including $655, 839 in AUI's attorney fees and costs).

         ¶ 9 On April 17, 2014, AUI filed a complaint to foreclose a mechanic's lien against the Vaessens. AUI asserted that, because the materials, fixtures, services, and labor it furnished constituted a valuable and permanent improvement to the property, the Vaessens benefitted in an amount equivalent to the arbitration award. AUI further requested that the Vaessens' property be sold at public auction to satisfy its lien.

         ¶ 10 On June 23, 2014, the Vaessens filed a motion pursuant to section 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 2014)) to dismiss AUI's complaint. On October 17, 2014, Clipper filed a motion for summary judgment. Both motions asserted that the wind energy system remained GSG 7's personal property and was a nonlienable trade fixture rather than an improvement to the property.

         ¶ 11 On April 15, 2015, the trial court granted the Vaessens' motion to dismiss and Clipper's motion for summary judgment. The trial court explained that mechanic's lien laws are based on the theory that an owner is benefitted by improvements that become part of his premises. As such, the owner should pay for this accruing benefit when the owner induced or encouraged the erection of the improvement. Relying on Crane Erectors & Riggers, Inc. v. La Salle National Bank, 125 Ill.App.3d 658, 662 (1984), the trial court found that there were three factors to be considered in determining whether equipment has become a fixture to the realty and thus lienable. Specifically, those factors were (1) the nature of the equipment's attachment to the realty, (2) the equipment's adaptation to and necessity for the purposes to which the premises are devoted, and (3) whether it was intended that the equipment should be considered part of the real estate. After considering these factors, the trial court determined that GSG 7 retained ownership of the wind energy system according to the unambiguous terms of the easement and that AUI had notice of the terms of the easement through the recorded memorandum. The trial court expounded:

"If AUI's mechanic's lien were allowed to attach to the real estate and GSG [7] chose to terminate the easement and removed all of its property brought onto the premises as allowed by the easement agreement, [1] the lien would remain upon the real estate after removal of the benefit upon which the lien was based. Therefore, to allow AUI's filing of a mechanic's lien to attach to the real estate where removal of the fixture is allowed would produce an absurd result not intended by the lien act."

         ¶ 12 On May 14, 2015, AUI filed a motion to reconsider. On December 11, 2015, the trial court denied that motion. AUI thereafter filed a timely notice of appeal.

         ¶ 13 ANALYSIS

         ¶ 14 On appeal, AUI argues that the trial court erred in granting the Vaessens' section 2-619 motion to dismiss their complaint and Clipper's motion for summary judgment. AUI insists that a question of fact remains as to whether the tower was a lienable land improvement as opposed to a nonlienable trade fixture. AUI further argues that the trial court erred in its consideration of factors that determine whether a structure is lienable.

         ¶ 15 The purpose of a section 2-619 motion to dismiss is to dispose of issues of law and easily proved issues of fact at the outset of litigation. Van Meter v. Darien Park District, 207 Ill.2d 359, 367 (2003). A section 2-619 motion admits as true all well-pleaded facts, along with all reasonable inferences that can be gleaned from those facts. Porter v. Decatur Memorial Hospital, 227 Ill.2d 343, 352 (2008). "[W]hen ruling on a section 2-619 motion to dismiss, a court must interpret all pleadings and supporting documents in the light most favorable to the nonmoving party." Id. On appeal from a ruling on a section 2-619 motion, the reviewing court must consider whether the existence of a genuine issue of material fact should have precluded the dismissal or, absent such an issue of fact, whether dismissal is proper as a matter of law. Thurman v. Champaign Park District, 2011 IL App (4th) 101024, ¶ 18.

         ¶ 16 The purpose of a motion for summary judgment is to determine whether a genuine issue of triable fact exists (People ex rel. Barsanti v. Scarpelli, 371 Ill.App.3d 226, 231 (2007)), and such a motion should be granted only when "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law" (735 ILCS 5/2-1005(c) (West 2014)). An order granting summary judgment should be reversed if the evidence shows that a genuine issue of material fact exists or if the judgment is incorrect as a matter of law. Clausen v. Carroll, 291 Ill.App.3d 530, 536 (1997). We review de novo the trial court's grant of a motion for summary judgment. Coole v. Central Area Recycling, 384 Ill.App.3d 390, 395 (2008).

         ¶ 17 The purpose of the Mechanics Lien Act (Act) (770 ILCS 60/0.01 et seq. (West 2014)) is to protect those who, in good faith, furnish material or labor for the improvement of real property. Mostardi-Platt Associates, Inc. v. Czerniejewski, 399 Ill.App.3d 1205, 1209 (2010). The Act permits a lien upon property where a benefit has been received by the owner and where the value or condition of the property has been increased or improved by the furnishing of the labor or materials. Id. The Act is a comprehensive statute that outlines the rights, responsibilities, and remedies of parties to construction contracts, including owners, contractors, subcontractors, and third parties. Cordeck Sales, Inc. v. Construction Systems, Inc., 382 Ill.App.3d 334, 353 (2008). The burden of proving that each requirement of the Act has been satisfied is on the party seeking to enforce the lien. Czerniejewski, 399 Ill.App.3d at 1209. Because the right to a mechanic's lien is statutory, a plaintiff must strictly comply with the Act. Cordeck, 382 Ill.App.3d at 353. However, once a plaintiff has complied with the procedural requisites, the Act is liberally construed in order to accomplish its remedial purpose. Weydert Homes, Inc. v. Kammes, 395 Ill.App.3d 512, 516 (2009).

         ¶ 18 The central question in this case is whether AUI's work constituted improvement to real property, which is lienable (Czerniejewski, 399 Ill.App.3d at 1209), as opposed to improvement to a trade fixture, which is not (B. Kreisman & Co. v. First Arlington National Bank of Arlington Heights, 91 Ill.App.3d 847, 852 (1980)). The factors to be considered in determining whether equipment added to property constitutes a land improvement and is thus lienable are: (1) the nature of its attachment to the realty, (2) its adaptation to and necessity for the purposes to which the premises are devoted, and (3) whether it was intended that the item in question should be considered part of the realty. Crane Erectors, 125 Ill.App.3d at 662. Intent is the preeminent factor, the other considerations being primarily evidences of intent. Id. The fact that an item can be removed without material injury to the realty does not of itself destroy its lienability. Id. Further, that an item can be removed does not conclusively establish that it is a trade fixture where it is clear that there is an intent to permanently improve the property by its installation. See Dual Temp Installations, Inc. v. Chicago Title & Trust Co., 41 Ill.App.3d 415, 417-18 (1976). "Parties may, however, contract to evidence an intention that the title to chattels which become ...


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