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Casenotes

Illinois

Mechanic's Liens

Inter-Rail Systems, Inc v Ravi Corp, 387 Ill App 3d 510, 900 NE2d 407, 326 Ill Dec 771 (1st D 2008)

Facts:In July 2005, responding to a request from the City of Chicago Department of Environment, the United States Environmental Protection Agency emergency response branch inspected a parking lot and warehouse containing more than 500 drums and totes containing unknown chemicals. The substances appeared to be perfume agents used in the manufacture of industrial cleaners. The containers were in poor condition and the contents were leaking onto the floor of the warehouse.

Defendant Ravi Corporation contracted with plaintiff Inter-Rail Systems for the removal and disposal of the containers. In the meantime, Ravi entered into a consent decree requiring Ravi to clean up the site by testing and removing the containers. Inter-Rail completed the clean up on December 1, 2005. When Ravi failed to pay the balance due on the contract, Inter-Rail recorded mechanic's liens against the site and filed a complaint.

The circuit court granted partial summary judgment to Ravi regarding the mechanic's liens portions of the complaint, stating that there was a problem with Inter-Rail's complaint because not all of the work that was performed was lienable. The circuit court confirmed that the disposal of sealed drums was not lienable, and unless Inter-Rail could apportion the lienable from the non lienable work, then entire lien failed. The circuit court gave Inter-Rail the opportunity to file an amended complaint, which it did not do. Inter-Rail appealed.

Holding:Affirmed. The appellate court noted that the purpose of the Mechanics Lien Act (770 ILCS 60/1 et seq.) is to "require a person with an interest in real property to pay for improvements or benefits which have been induced or encouraged by his or her own conduct." As such, the court addressed whether Inter-Rail's activities included actual improvements to the Site. The court held that Inter-Rail did not perform the work that resulted in the filling of the drums with the hazardous waste, meaning Inter-Rail's work did not qualify for a mechanic's lien. Inter-Rail merely removed and disposed of the drums and performed incidental cleaning activities. None of these activities were shown to be part of an overall plan to improve rather than simply maintain the property.

The court further agreed with the lower court that where a lump sum contract includes both lienable and nonlienable work, and such items cannot be separated, the entire lien must fail. Inter-Rail waived its opportunity to file an amended complaint, and accordingly waived its opportunity to argue that its work could be apportioned.

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