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Illinois

Mechanic's Liens

Fleissner v Fitzgerald, 403 Ill App 3d 355, 937 NE2d 1152, 344 Ill Dec 811 (2nd D, 2010).

Facts:: On May 15, 2006, Hans Fleissner, a general contractor, made an oral contract with Timothy and Tracy Fitzgerald to remodel their home. Fleissner worked on their home from May 18, 2006, to March 1, 2007. Subsequently, the Fitzgeralds paid a portion of their bill, but Fleissner alleged that they still owed him $38,447.04.

Fleissner filed a complaint seeking to foreclose on a mechanic's lien in the amount of $48,456, for the unpaid amount plus costs and attorney fees. Fleissner also alleged breach of contract, unjust enrichment, andquantum meruitagainst the Fitzgeralds in his complaint. The Fitzgeralds moved to dismiss Fleissner's complaint for failing to work under a written contract and failing to provide the Fitzgeralds with a consumer protection pamphlet, pursuant to the Home Repair and Remodeling Act (the Remodeling Act), 815 ILCS 513/1et seq. The trial court agreed and dismissed Fleissner's legal and equitable claims. Fleissner appealed.

Holding:Reversed and remanded. Fleissner appealed based on three arguments he made to the lower court which it rejected. First, he argued that failure to conform to the Remodeling Act bars only legal claims, not equitable ones. Second, he argued that the purpose of the Remodeling Act, per its legislative history, demonstrates an effort to protect consumers from predatory, unsolicited contractors. Because the Fitzgeralds sought out and engaged Fleissner to perform the work, the Remodeling Act does not apply to this case. Third, because the Fitzgeralds understood that they had entered a binding oral contract, they should be equitably estopped from subsequently claiming that they were inadequately informed and thus protected by the Remodeling Act.

As an initial matter, the court rejected Fleissner's assertion of equitable estoppel. Equitable estoppel includes an element of misrepresentation on the part of the party to be estopped. The party seeking estoppel must have relied on that misrepresentation to its detriment. Fleissner pointed to no misrepresentation or detrimental reliance in this case, so equitable estoppel does not apply.

Next, the court rejected Fleissner's assertion that the Remodeling Act only applies to predatory contractors. The plain language of the statute states that the Remodeling Act applies to any person who contracts for home repair or remodeling in excess of $1,000. Because the plain language of the statute is unambiguous, there is no need to evaluate the legislative history to interpret its application.

Finally, the court evaluated Fleissner's claim that the Remodeling Act does not bar equitable remedies. The court explained the consumer protection requirements of the Remodeling Act, generally stipulating that a contract must work from a written contract, each part of which the consumer validates. Failure to secure such a contract before starting work previously constituted an "unlawful act." However, a recent amendment to the law removes the "unlawful" language and simply indicates that a consumer has a private right of action against the contractor.

The issue here was whether a violation of the Remodeling Act automatically precludes a contractor from seeking equitable remedies stemming from the same facts. The court determined that existing case law conflicts on the issue. The court was most persuaded by K Miller Construction Co v McGinnis, 394 Ill App 3d 248, 250-51 (2009), appeal allowed, 234 Ill 2d 523 (2009), which held that a contractor could bring a claim ofquantum meruitdespite violating the Remodeling Act. A party seeking relief underquantum meruitmust show "performance of services by the party, the conferral of the benefit of those services on the party from whom recovery is sought, and the unjustness of the latter party's retention of the benefit in the absence of any compensation." Fleissner, 937 NE2d at 1159, 344 Ill Dec at 818. Although a violation of the Remodeling Act, as the statute then read, was deemed "unlawful," the term "unlawful" was itself ambiguous and did not necessarily connote that the violating party should lose its own right to equitable relief.

The court agreed with McGinnis that such an interpretation did not violate public policy by "sanitizing" the contractor's action. Under these facts, the Mechanic's Lien Act conflicts with the Remodeling Act, as the first seeks to protect contractors from consumers and the second seeks to protect consumers from contractors. The court held that allowing equitable relief protects a contractor from a dishonest consumer without infringing on the consumer's right to file a claim under the Remodeling Act.

Thus, especially in light of the recent change to the statute, the parties' oral contract and failure to comply with the Remodeling Act was not a bar to common law equitable remedies.

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