Gov't Relations Corner: AGC, BA And Other IL Organizations Challenge Effort to Evade Illinois’ Mechanics Lien Law
On April 4, Builders Association joined AGC of America and three of its other Illinois chapters (Central Illinois Builders of AGC, Fox Valley AGC, and Southern Illinois Builders Association) in filing a brief amicus curiae to the Appellate Court of Illinois (Second Judicial District) in AUI Construction Group v. Vaessen, where a property owner and a developer maintain that their 50-year easement agreement trumps Illinois’ mechanics lien law.
Last year, a lower Illinois court held that the agreement did prevent the contractor from perfecting a multimillion dollar lien on a project that the contractor completed in May of 2012. In the process, the court also created a dangerous guide for any property owner or developer interested in evading Illinois’ mechanics lien law. The court also invited owners and developers across the country to test the legal waters in other states. In its brief, AGC makes it clear that the lower court’s ruling was in violation of Illinois law and public policy, and should be overturned.
At the heart of the case stands a concrete wind turbine tower that is 330 feet in height. The structure weighs more than 1,200 tons. Its foundation is over 11 feet deep, 68.5 feet wide and 59.25 feet long. Cherry picking isolated provisions of the easement agreement, where the owner and developer had recited (1) that the developer would retain title to the tower, (2) that the developer would have the right to remove the tower at any time, and (3) that the developer had an obligation to remove much of the tower when the agreement expired, the lower court maintained that the tower is merely a trade fixture and not a lienable improvement to real property.
In its brief, AGC vigorously responded that the lower court had wrongly permitted the owner and developer to devise a no-lien project, in direct violation of Illinois law and public policy. As AGC pointed out, Illinois’ Mechanics Lien Act prohibits both express and implied agreements to waive lien rights. At the relevant point in time, the law did carve out an exception for contractors that received actual notice of a waiver of its lien rights prior to contracting to perform any work, but this particular contractor did not receive any notice whatsoever and even that narrow exception is no longer on the books.
It is also true that Illinois’ Mechanics Lien Act only addresses construction contracts, and not easement, lease and similar agreements between property owners and developers, but the Illinois courts have made it clear held that the Act "is to be liberally construed" and that parties may not make an "end run" around state policy.
The court has ordered the parties to complete their briefing of the case by May 31. Thereafter, the court may or may not schedule an oral argument. There is no specific deadline for the court to render a decision.
For additional information, please feel free to contact Michael Kennedy at AGC of America at kennedym@agc.org.