Father & Sons Home Improvement II, Inc. v. Stuart

2016 IL App (1st) 143666, 52 N.E.3d 581

• Court: Appellate Court of Illinois
• Decided: March 31, 2016
• Docket: 1-14-3666
• Status: Unpublished

Opinion

2016 IL App (1st) 143666 No. 1-14-3666 Fifth Division March 31, 2016

______________________________________________________________________________

IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT ______________________________________________________________________________

FATHER & SONS HOME IMPROVEMENT II, INC., ) Appeal from the Circuit ) Court of Cook County. Plaintiff-Appellant, ) ) No. 11 CH 29050 v. ) ) The Honorable TRACEE M. STUART and CEDRIC D. STUART, ) Robert Quinn, Husband and Wife; MORTGAGE ELECTRONIC ) Judge Presiding. REGISTRATION SYSTEMS, INC., a Corporation; ) COUNTRYWIDE HOME LOANS, INC., a Corporation ) Duly Licensed as an Illinois Residential Mortgage ) Licensee; ) ) Defendants-Appellees ) ) (Trans-Land Financial Services, Inc., a Corporation Duly ) Licensed as an Illinois Residential Mortgage Licensee; ) RBS Citizen’s NA, a Corporation Duly Licensed as an ) Illinois Residential Mortgage Licensee; and Nonrecord ) Claimants, ) Defendants). ) _______________________________________________________________________________

JUSTICE GORDON delivered the judgment of the court, with opinion. Presiding Justice Reyes and Justice Neville concurred in the judgment and opinion.

OPINION

¶1 This appeal arises from plaintiff Father & Sons Home Improvement II, Inc.’s

mechanic’s lien action brought against defendants Tracee and Cedric Stuart (the

Stuarts); and Bank of America, N.A., and Mortgage Electronic Registration Systems, No. 1-14-3666

Inc. (together, Bank of America 1). Plaintiff raises three issues on appeal: (1) whether

the circuit court erred in finding that plaintiff had committed constructive fraud and

granting summary judgment in favor of the Stuarts and Bank of America; (2) whether

the circuit court erred in awarding the Stuarts attorney fees pursuant to the Mechanics

Lien Act (770 ILCS 60/17(c) (West 2008)); and (3) whether the circuit court erred in

awarding Bank of America attorney fees pursuant to Illinois Supreme Court Rule 137

(eff. July 1, 2013). We affirm all three of the circuit court’s orders for the reasons set

forth below.

¶2 BACKGROUND

¶3 Plaintiff’s verified complaint alleges the following undisputed facts: defendants

Tracee and Cedric Stuart, husband and wife, own a house located on Peoria Avenue

in Chicago, Illinois. On March 9, 2005, the Stuarts obtained two mortgages on this

house from Bank of America, which timely recorded these mortgages with the Cook

County Recorder of Deeds’ Office on March 29, 2005.

¶4 In April 2009, the Stuarts entered into a written construction agreement with

plaintiff. Under this agreement, the Stuarts agreed to pay plaintiff $43,500 for the

construction of a deck, garage, and basement in their house. Six months later, on

September 10, 2009, plaintiff obtained a building permit from the Department of

Buildings and soon after, plaintiff began construction on the Stuarts’ house. 2 On

1 Defendant Bank of America, N.A., appears in this litigation as successor-in-interest to Countrywide Home Loans, Inc. Defendant Mortgage Electronic Registration Systems, Inc., appears in this litigation as nominee of Countrywide Home Loans, Inc. 2 The exact date construction on the Stuarts’ house began is not provided in the record. The Stuarts claimed in their motion for summary judgment that construction began sometime in October or November of 2009.

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September 12, 2009, the Stuarts and plaintiff agreed to modify this construction

agreement to include a retail installment contract, under which plaintiff agreed to

provide the Stuarts with financing for the costs of the construction project. 3

¶5 Over the next five months, as the project progressed, plaintiff had the Stuarts

sign “certificates” titled “Final Completion Certificate for Property Improvements.”

These certificates purported to report the Stuarts’ satisfaction with the construction

work on their house at various stages of the project. The Stuarts signed such

certificates in November 2009, January 2010, February 2010, March 2010, and May

2010. Construction on the Stuarts’ house was ultimately completed sometime in June

2010.

¶6 On September 17, 2009, eight months before plaintiff completed construction

on the Stuarts’ house, plaintiff recorded an “Original Contractor’s Claim for a Lien”

(the mechanic’s lien) with the Cook County Recorder of Deeds. This mechanic’s lien

included an affidavit, signed by Nancy Martinez, president of plaintiff’s company,

which stated:

“That on the 18th day of April, 2009 the Claimant, Father and Sons

Home Imp. II, Inc., entered into a contract &/or Change Order with (1)

said owner Tracee M. Stuart & Cedric D. Stuart (J). (2) to do a Deck,

Garage and Basement for the building, (3) erected on said land for the

sum of $43,500.00 and on the 12th day of September, 2009, completed

there-under (4) All work required by said contract.” (Emphasis in the

original.)

3 The retail installment contract did not modify the construction terms provided in the original construction agreement.

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This affidavit further stated that the Stuarts owed plaintiff an additional sum of

$2,700 for “extra and additional work” completed “at the special instance and

request” of the Stuarts. In total, the balance of plaintiff’s mechanic’s lien was

$46,200, not including interest.

¶7 On August 17, 2011, plaintiff filed a four-count verified complaint with the

Cook County circuit court. Count I of this complaint sought foreclosure on the

mechanic’s lien; the other three counts, not at issue on appeal, raised claims for

breach of contract, unjust enrichment, and quantum meruit. Bank of America

responded by filing a motion to dismiss count I of plaintiff’s verified complaint under

section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2010)). In this

motion, Bank of America argued that plaintiff’s mechanic’s lien claim was not

recorded within four months of completing the construction project and was therefore

not enforceable against third-party creditors under the Mechanic’s Lien Act (770

ILCS 60/7(a) (West 2008)). On October 13, 2011, the Stuarts filed a pro se 4 motion

to dismiss arguing that plaintiff’s mechanic’s lien was invalid because it

misrepresented the amount due and the work completed as of the time of its

recording.

¶8 On December 2, 2011, the circuit court denied both motions to dismiss and the

parties went on to engage in extensive written and oral discovery. A key part of this

discovery involved plaintiff’s responses to Bank of America’s requests for

admissions, in which plaintiff admits that “it completed work at the subject property

4 The Stuarts’ pro se motion to dismiss did not specify the section of the Code of Civil Procedure under which the motion was filed. The Stuarts have subsequently acquired professional representation.

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in or about June, 2010” and not on September 12, 2009, as the sworn and signed

affidavit attached to the mechanic’s lien attests.

¶9 On June 5, 2014, the Stuarts and Bank of America each moved for summary

judgment on count I of plaintiff’s verified complaint. In these motions, both Bank of

America and the Stuarts argued that plaintiff committed constructive fraud by

misrepresenting in its mechanic’s lien and in the affidavit attached to the lien the

work performed and the amount owed at the time the lien was recorded. In addition,

Bank of America’s motion argued that plaintiff’s lien was not enforceable against

third-party creditors because plaintiff had not recorded its mechanic’s lien within four

months of completing the construction project, as required under the Mechanic’s Lien

Act (770 ILCS 60/7(a) (West 2008)).

¶ 10 On June 12, 2014, plaintiff filed a response to defendants’ motions for summary

judgment arguing that the lien was timely filed as plaintiff had already performed

architectural, permitting, and survey work before recording the lien and that the

“erroneous overcharges and overstatements” in the lien did not rise to the level of

constructive fraud as the Stuarts and Bank of America alleged.

¶ 11 On July 8, 2014, the circuit court granted the Stuarts’ and Bank of America’s

motions for summary judgment, finding that plaintiff had committed constructive

fraud in its mechanic’s lien claim. The circuit court explained that “overstatement in

and of itself is not sufficient with regard to constructive fraud. There has to be

something more. In this particular situation there is something more. There is the

affiant on behalf of Fathers and Sons stating that the work was completed some

months after, after the claim for the lien was actually filed.”

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¶ 12 The circuit court also granted both defendants leave to file petitions for attorney

fees, explaining that plaintiff’s mechanic’s lien action was nothing less than “an

egregious case of constructive fraud” and that in previous cases the court had already

warned plaintiff to stop overstating its lien claims. 5

¶ 13 The Stuarts filed their petition for attorney fees in the amount of $13,675

pursuant to section 17 of the Mechanics Lien Act (770 ILCS 60/17(c) (West 2008)).

Bank of America filed its amended petition for attorney fees in the amount of

$26,291.02 pursuant to Illinois Supreme Court Rule 137. The circuit court granted

both petitions, finding that:

“the plaintiff knew or should have known that its September 19, 2009

mechanics lien on which it based this litigation falsely stated that all

work due under the contract was complete on September 12, 2009,

when in fact the work was not complete until June 2010. Plaintiff

verified that false fact or denied its corollary in various documents filed

with the court. This false fact was the cornerstone of the litigation.”

¶ 14 The circuit court’s order granting Bank of America’s attorney fees also listed

the following five instances in which plaintiff filed pleadings in violation of Illinois

Supreme Court Rule 137: (1) in paragraph 23 of the verified complaint where

plaintiff incorporated its mechanic’s lien, which falsely stated that “[a]ll work

required by said contract” was completed by September 12, 2009; (2) in paragraph 23

of the verified complaint where plaintiff incorporated its mechanic’s lien, which

falsely stated that plaintiff “delivered extra labor and materials” and completed “extra

5 The circuit court did not name specific cases.

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and additional work” by September 12, 2009; (3) on page 2 of plaintiff’s response to

Bank of America’s motion to dismiss, where it falsely stated that “[p]laintiff’s lien

notice was filed at a proper time”; (4) in plaintiff’s answer to paragraph 5 of Bank of

America’s affirmative defenses, where plaintiff denied not having completed the

work until after September 17, 2009; and (5) in plaintiff’s answer to paragraph 6 of

Bank of America’s affirmative defenses, where plaintiff denied not having filed its

claim for the lien within four months after completion of the work.

¶ 15 Plaintiff’s remaining claims for breach of contract, unjust enrichment, and

quantum meruit remain pending in the circuit court below. On November 3, 2014,

however, the circuit court entered an order pursuant to Illinois Supreme Court Rule

304 finding that there is no just reason for delaying the enforcement of its judgments

or appeal therefrom. This appeal follows.

¶ 16 ANALYSIS

¶ 17 On appeal, we consider whether the circuit court erred in: (1) entering summary

judgment in favor of Bank of America and the Stuarts, (2) awarding the Stuarts

attorney fees pursuant to section 17 of the Mechanics Lien Act (770 ILCS 60/17(c)

(West 2008)), and (3) awarding Bank of America attorney fees pursuant to Illinois

Supreme Court Rule 137. We address each of these issues in turn.

¶ 18 I. Jurisdiction

¶ 19 As an initial matter, we must discuss our appellate jurisdiction, given the fact

that plaintiff has several claims that remain pending before the circuit court. “A

reviewing court must ascertain its jurisdiction before proceeding in a cause of action,

regardless of whether either party has raised the issue.” Secura Insurance Co. v.

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Illinois Farmers Insurance Co., 232 Ill. 2d 209, 213 (2009). “Jurisdiction of appellate

courts is limited to reviewing appeals from final judgments, subject to statutory or

supreme court rule exceptions.” In re Marriage of Verdung, 126 Ill. 2d 542, 553

(1989) (citing People ex rel. Scott v. Silverstein, 87 Ill. 2d 167, 171 (1981), and

Village of Niles v. Szczesny, 13 Ill. 2d 45, 47 (1958)). “A judgment is considered final

‘if it terminates the litigation between the parties on the merits or disposes of the

rights of the parties, either on the entire controversy or a separate part thereof.’ ” In re

Curtis B., 203 Ill. 2d 53, 59 (2002) (quoting R.W. Dunteman Co. v. C/G Enterprises,

Inc., 181 Ill. 2d 153, 159 (1998)).

¶ 20 Plaintiff claims that the trial court has jurisdiction pursuant to Illinois Supreme

Court Rules 301, 303, and 304. “Every final judgment in a civil case is appealable

pursuant to Supreme Court Rule 301 [citation], and jurisdiction is vested in the

appellate court to hear the appeal of that final judgment upon the filing of a notice of

appeal.” F.H. Prince & Co. v. Towers Financial Corp., 266 Ill. App. 3d 977, 981-82

(1994). However, “[w]hen a final judgment or order does not dispose of all matters

presented to the court, Supreme Court Rule 304(a) governs.” F.H. Prince & Co., 266

Ill. App. 3d at 982. Rule 304(a) provides that “[i]f multiple parties or multiple claims

for relief are involved in an action, an appeal may be taken from a final judgment as

to one or more but fewer than all of the parties or claims only if the trial court has

made an express written finding that there is no just reason for delaying either

enforcement or appeal or both.” Ill. S. Ct. R. 304(a) (eff. Feb. 26, 2010). In the case

at bar, the trial court included a written finding pursuant to Rule 304(a) concerning

the grant of summary judgment, the award of the Stuarts’ attorney fees, and the award

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of Bank of America’s attorney fees. However, “the mere presence of Rule 304(a)

language cannot make a nonfinal order final and appealable.” People ex rel. Block v.

Darm, 267 Ill. App. 3d 354, 356 (1994); Cinch Manufacturing Co. v. Rosewell, 255

Ill. App. 3d 37, 42-43 (1993). Thus, we must consider whether the three orders at

issue in the instant case are final orders as to those claims.

¶ 21 With respect to the grant of the Stuarts’ and Bank of America’s motions for

summary judgment, the grant of summary judgment resolved the issues concerning

the validity of the mechanic’s lien. “An order granting summary judgment is a final

order.” Schilli Leasing, Inc. v. Forum Insurance Co., 254 Ill. App. 3d 731, 739

(1993); Diggs v. Suburban Medical Center, 191 Ill. App. 3d 828, 836 (1989). As

such, the addition of Rule 304(a) language to the order renders it appealable.

¶ 22 Similarly, the grant of the Stuarts’ attorney fees under the Mechanic’s Lien Act

and Bank of America’s attorney fees under Rule 137 are final orders that are

appealable with the inclusion of Rule 304(a) language. “A request for attorney fees is

a claim within the meaning of Supreme Court Rule 304(a) [citation]. [Citation.] This

is so whether the fees are sought pursuant to statute, such as the entry of sanctions for

false pleadings, or pursuant to a contract provision.” Brown & Kerr, Inc. v. American

Stores Properties, Inc., 306 Ill. App. 3d 1023, 1028 (1999). Thus, an order resolving

those claims is appealable when Rule 304(a) language is included. See West

American Insurance Co. v. J.R. Construction Co., 334 Ill. App. 3d 75, 88 (2002)

(finding jurisdiction to review the denial of a request for sanctions under section 155

of the Insurance Code (215 ILCS 5/155 (West 1998)) with the inclusion of Rule

304(a) language). We note that the requests for attorney fees concern only the

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attorney fees that relate to the mechanic’s lien action, not the attorney fees concerning

plaintiff’s pending claims. Accordingly, we find we have jurisdiction to consider the

orders at issue in the instant appeal.

¶ 23 II. Summary Judgment

¶ 24 A trial court is permitted to grant summary judgment only “if 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 a judgment as a matter of law.” 735 ILCS 5/2–1005(c) (West 2008). The trial court

must view the pleadings, depositions, admissions, affidavits, and exhibits in the light

most favorable to the nonmoving party. North Shore Community Bank & Trust Co. v.

Sheffield Wellington LLC, 2014 IL App (1st) 123784, ¶ 60 (citing Home Insurance

Co. v. Cincinnati Insurance Co., 213 Ill. 2d 307, 315 (2004)).

¶ 25 A defendant moving for summary judgment bears the burden of proof.

Nedzvekas v. Fung, 374 Ill. App. 3d 618, 624 (2007). The defendant may meet this

burden either by affirmatively showing that some element of the case must be

resolved in its favor, or by establishing the absence of evidence supporting the

nonmoving party’s case. Nedzvekas, 374 Ill. App. 3d at 624 (citing Celotex Corp. v.

Catrett, 477 U.S. 317, 325 (1986)).

¶ 26 In short, “summary judgment is a drastic measure” only granted when the

movant’s right to judgment is clear and free from doubt. Outboard Marine Corp. v.

Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102, (1992). “Mere speculation,

conjecture, or guess is insufficient to withstand summary judgment.” Sorce v.

Naperville Jeep Eagle, Inc., 309 Ill. App. 3d 313, 328 (1999).

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¶ 27 We review a trial court's decision to grant a motion for summary judgment de

novo. Outboard Marine Corp., 154 Ill. 2d at 102. De novo consideration requires us

to perform the same analysis that a trial judge would perform. Khan v. BDO Seidman,

LLP, 408 Ill. App. 3d 564, 578 (2011). Ultimately, we may affirm the trial court’s

decision on any basis that appears in the record before us, whether or not the trial

court in fact relied on that basis, and even if the trial court's reasoning was

incorrect. Ray Dancer, Inc. v. DMC Corp., 230 Ill. App. 3d 40, 50 (1992).

¶ 28 In their motions for summary judgment both Bank of America and the Stuarts

claimed that plaintiff’s mechanic’s lien fraudulently stated that plaintiff completed all

the work required under the construction agreement by September 12, 2009, when in

fact, plaintiff did not even begin construction on the Stuarts’ house until sometime in

October or November of 2009. The Stuarts further claimed that plaintiff’s mechanic’s

lien falsely stated that they owed plaintiff $46,200 as of September 12, 2009, when

the first payment under the parties’ retail installment contract was not due until

November 1, 2009. Plaintiff does not dispute these allegations. Instead, plaintiff

maintains that the false statements in its mechanic’s lien amount to nothing more than

“erroneous overcharges and overstatements” and that the record does not support the

circuit court’s finding that it recorded the mechanic’s lien with the intent to defraud

defendants. We do not find this argument persuasive.

¶ 29 We begin our discussion by reiterating the well-established principles that guide

our analysis of the Mechanic’s Lien Act (the Act) (770 ILCS 60/1 et seq.

(West 2008)). The Act is a comprehensive statutory enactment that outlines the rights,

responsibilities, and remedies of parties to construction contracts, including owners,

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contractors, subcontractors, and third parties. Lazar Brothers Trucking, Inc., v. A & B

Excavating, Inc., 365 Ill. App. 3d 559, 562 (2006); Struebing Construction Co. v.

Golub–Lake Shore Place Corp., 281 Ill. App. 3d 689, 694 (1996). The overall

purpose of the Act 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.’ ” Stafford–Smith, Inc. v. Intercontinental River East, LLC, 378 Ill. App. 3d

236, 240 (2007) (quoting Leveyfilm, Inc. v. Cosmopolitan Bank & Trust, 274 Ill. App.

3d 348, 352 (1995)).

¶ 30 The right to a mechanic's lien claim is nevertheless a statutory right in derogation

of the common law and a contractor therefore must strictly comply with the

requirements of the Act to be eligible for relief. Matanky Realty Group, Inc. v. Katris,

367 Ill. App. 3d 839, 841 (2006); Tefco Construction Co., Inc. v. Continental

Community Bank & Trust Co., 357 Ill. App. 3d 714, 719 (2005) (explaining that

“[w]hile the Act should be construed liberally as a remedial one, being in derogation

of common law, it is strictly construed with reference to the requirements upon which

the right to a lien depends”).

¶ 31 With these general principles in mind we turn to the relevant provisions of the

Act. Section 7 of the Act provides that: “[n]o such lien shall be defeated to the proper

amount thereof because of an error or overcharging on the part of any person

claiming a lien therefor under this Act, unless it shall be shown that such error or

overcharge is made with intent to defraud.” 770 ILCS 60/7 (West 2008). “ ‘Intent to

defraud may [be] inferred from documents containing overstated lien amounts

combined with additional evidence.’ ” Cordeck Sales, Inc. v. Construction Systems,

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Inc., 382 Ill. App. 3d 334, 373 (2008) (quoting Peter J. Hartmann Co. v. Capitol

Bank & Trust, Co. 353 Ill. App. 3d 700, 708 (2004)). The requirement that there be

intent to defraud is designed “to protect an honest lien claimant who makes a mistake

rather than a dishonest claimant who knowingly makes a false statement.” Peter J.

Hartmann Co., 353 Ill. App. 3d at 706. When there is evidence, however, that the lien

claimant knowingly filed a lien claim containing false statements the claim will be

defeated because “the effect of such a lien claimant’s claim is to give the appearance

of a greater encumbrance on the property than that to which he is entitled.” Peter J.

Hartmann Co., 353 Ill. App. 3d at 706.

¶ 32 Thus, not only will courts invalidate a mechanic’s lien on the basis of actual

fraud, but also on the basis of constructive fraud. Lohmann Golf Designs, Inc. v.

Keisler, 260 Ill. App. 3d 886, 891 (1994) appeal allowed, cause remanded, 157 Ill. 2d

504 (1994), and supplemented, 260 Ill. App. 3d at 894; see also LaSalle National

Trust, N.A. v. Board of Directors of the 1100 Lake Shore Drive Condominium, 287

Ill. App. 3d 449, 455 (1997) (“ ‘[fraud] is no less fraudulent, either in law or in

morals, because it is called constructive fraud’ ” (quoting Warner v. Flack, 278 Ill.

303, 313 (1917))).

¶ 33 In Lohmann, for example, we held that a contractor engaged in constructive

fraud when the contractor filed separate lien claims on three different properties

seeking in each of the claims the aggregate value of all the properties combined and

effectively tripling the amount of its lien claim. Lohmann, 260 Ill. App. 3d at 891; see

also Bank of America National Trust & Savings Ass’n v. Zedd Investments, Inc., 276

Ill. App. 3d 998, 1001 (1995) (finding that a contractor’s filing of two separate liens

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for each parcel of land in the subdivision it had worked on constituted constructive

fraud because it exaggerated the amount owed to the contractor); Fedco Electric Co.

v. Stunkel., 77 Ill. App. 3d 48, 51 (1979) (finding that a contractor’s overstatement in

a mechanic’s lien claim amounted to constructive fraud due to the size of the

overstatement and the contractor’s knowledge of the overcharges).

¶ 34 Even under the theory of constructive fraud, however, a mechanic’s lien claim

will not be defeated simply because the lien claim contains overstatements or

overcharges. Cordeck Sales, 382 Ill. App. 3d at 373. Rather, to invalidate a lien claim

on the basis of constructive fraud, there must be additional evidence demonstrating

that the contractor knowingly made the overstatement or overcharge. See Cordeck

Sales, 382 Ill. App. 3d at 371 (finding that an overstatement in a mechanic’s lien

claim did not constitute constructive fraud because aside from the lien claim itself

there was no other evidence from which fraudulent intent could be inferred); Peter J.

Hartmann Co., 353 Ill. App. 3d at 710 (finding that a contractor's filing of multiple

notices and claims did not constitute constructive fraud because the notices and

claims considered as a whole clearly indicated a single lien claim encumbering the

same property); North Shore Community Bank & Trust Co. v. Sheffield Wellington

LLC, 2014 IL App (1st) 123784, ¶ 149 (finding that an overcharge in a contractor’s

mechanic’s lien claim was not substantial enough to constitute constructive fraud).

¶ 35 The additional evidence required to establish constructive fraud may, however,

come in the form of an affidavit, signed by an agent of a contractor’s company, which

is attached to the mechanic’s lien claim, and which falsely attests to the truth of

overstatements and overcharges made by the contractor. See Lohmann, 260 Ill. App.

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3d at 892 (finding that a contractor knowingly overstated its lien claim when the

president of the contractor’s company signed affidavits attesting to the truth of the

statements made in the contractor’s mechanic’s lien claims); see also Fedco Electric

Co., 77 Ill. App. 3d at 50 (finding that a contractor knowingly overstated its lien

claim when the president of the contractor’s company admitted in his deposition that

the contractor failed to credit the defendant’s past payments).

¶ 36 In the case at bar, we find that the record before us leaves no room for doubt

over whether plaintiff, at the very least, committed constructive fraud. The allegations

of fraud here, unlike the allegations of fraud discussed in Cordeck Sales, Peter J.

Hartmann Co., and Sheffield Wellington, are not merely based on overstatements or

overcharges, but rather on patently false statements that plaintiff used to establish its

right to a mechanic’s lien in the first place. See Cordeck Sales, 382 Ill. App. 3d at

371; Peter J. Hartmann Co., 353 Ill. App. 3d at 710; Sheffield Wellington LLC, 2014

IL App (1st) 123784, ¶ 149.

¶ 37 First, plaintiff’s mechanic’s lien, recorded on September 17, 2009, falsely stated

that all the work required under the construction agreement, including the

construction of the garage, basement, and deck, was completed by September 12,

2009. This statement was proven false by plaintiff’s own admission that “it completed

work at the subject property in or about June, 2010.” Plaintiff must have known that it

had not completed all the work required under the construction agreement as the

Department of Buildings only issued plaintiff a building permit on September 10,

2009. Likewise, the “completion certificates,” which plaintiff had the Stuarts sign as

the project progressed, clearly indicate that plaintiff knew that as of September 17,

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2009, it had not constructed any of the land improvements (the garage, deck, and

basement) required under the construction agreement.

¶ 38 Beyond providing a fabricated completion date, plaintiff’s mechanic’s lien also

stated falsely that the Stuarts owed plaintiff $46,200 as of September 12, 2009. This

statement was proven false by the clear and unambiguous terms of the parties’ retail

installment contract, under which the Stuarts were not required to make the first

installment payment until November 1, 2009.

¶ 39 Finally, here, as in Lohmann, plaintiff attached to its mechanic’s lien the signed

and sworn affidavit of Nancy Martinez, president of plaintiff’s company, falsely

attesting to the truth of the overstatements and overcharges made in its mechanic’s

lien claim. See Lohmann, 260 Ill. App. 3d at 892. The circuit court thus reasonably

inferred that plaintiff knew that its mechanic’s lien contained false statements.

Indeed, even construing the pleadings, admissions, exhibits, and affidavits strictly

against defendants and liberally in favor of plaintiff the circuit court here had no

choice but to conclude that plaintiff’s mechanic’s lien, based on patently false

statements, constituted constructive fraud.

¶ 40 Plaintiff’s assertion on appeal that the circuit court’s decision “rewrites the Act”

by making every mistaken overcharge or overstatement in a mechanic’s lien a per se

violation is simply not true. See 770 ILCS 60/7 (West 2008) (“[n]o such lien shall be

defeated *** unless it shall be shown that such error or overcharge is made with

intent to defraud”). As we explained above, even under the theory of constructive

fraud, a mechanic’s lien will not be defeated unless there is additional evidence

demonstrating that the contractor knowingly made the overcharges and

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overstatements. Cordeck Sales, 382 Ill. App. 3d at 373. The false statements in

plaintiff’s mechanic’s lien, however, cannot be characterized as mere overstatements

or overcharges, but rather as knowingly false statements that were clearly designed to

allow plaintiff to bring a fraudulent mechanic’s lien action against defendants.

¶ 41 We further find it irrelevant that plaintiff performed architectural, permit, and

survey work before recording its mechanic’s lien. See First Bank of Roscoe v.

Rinaldi, 262 Ill. App. 3d 179, 184 (1994) (“architects, structural engineers,

professional engineers, land surveyors, and property managers who perform any

service or incur any expense for any purpose are entitled to a lien under the Act”).

Even if plaintiff’s architectural, permit, and survey work was lienable, plaintiff had

no right to falsely claim that all the work required under the construction agreement

was completed by September 12, 2009. Plaintiff also fraudulently claimed $46,200,

which was the full value of the construction agreement.

¶ 42 We thus agree with the circuit court that no issue of material fact existed as to

whether plaintiff’s mechanic’s lien constituted constructive fraud, and we accordingly

find that the circuit court properly concluded that the Stuarts and Bank of America

were entitled to summary judgment.

¶ 43 Having established that the circuit court properly granted summary judgment in

favor of both defendants on the basis of constructive fraud, we find it unnecessary to

discuss Bank of America’s alternative argument that plaintiff’s mechanic’s lien was

not timely filed within four months of completing construction on the Stuarts’ house.

See 770 ILCS 60/7(a) (West 2008).

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¶ 44 III. Attorney Fees Under Section 17 of the Mechanic’s Lien Act

¶ 45 In addition to granting summary judgment to both defendants, the circuit court

awarded the Stuarts $13,675 in attorney fees pursuant to section 17 of the Mechanic’s

Lien Act (770 ILCS 60/17 (West 2008)). The circuit court based this award on the

Stuarts’ petition for attorney fees, which identified the responsible attorneys,

described their expertise and hourly rate, and detailed all the relevant work entries

involved in the case. On appeal, plaintiff argues that this award was “excessive.” In

particular, plaintiff argues that it was not objectively reasonable for the Stuarts’

attorneys to spend nearly 55 hours on a “straightforward” mechanic’s lien action.

Plaintiff also claims that it was not objectively reasonable for the Stuarts’ attorneys to

spend eight hours on researching and drafting a motion for summary judgment. We

do not find plaintiff’s argument to be persuasive, and we find no basis to disturb the

circuit court’s award of attorney fees.

¶ 46 Section 17(c) provides that “[i]f the court specifically finds that a lien claimant

has brought an action under this Act without just cause or right, the court may tax the

claimant the reasonable attorney's fees of the owner who contracted to have the

improvements made and defended the action, but not those of any other party.” 770

ILCS 60/17(c) (West 2008). The terms “without just cause or right” are defined as “a

claim asserted by a lien claimant or a defense asserted by the owner who contracted

to have the improvements made, which is not well grounded in fact and warranted by

existing law or a good faith argument for the extension, modification, or reversal of

existing law.” 770 ILCS 60/17(d) (West 2008).

18 No. 1-14-3666

¶ 47 A trial court’s decision awarding attorney fees under section 17 of the

Mechanic’s Lien Act is reviewed under the abuse of discretion standard. Central

Illinois Electric Services, L.L.C. v. Slepian, 358 Ill. App. 3d 545, 550 (2005). Under

this standard, a trial court does not abuse its discretion “ ‘unless, in view of all the

circumstances, its decision so exceeded the bounds of reason that no person would

take the view adopted by the trial court.’ ” Gambino v. Boulevard Mortgage Corp.,

398 Ill. App. 3d 21, 51 (2009) (quoting In re Marriage of Demar, 385 Ill. App. 3d

837, 852 (2008)). The rationale for this standard is that a party challenging a trial

court’s decision regarding attorney fees “is actually challenging the trial court's

discretion in determining what is reasonable.” Guerrant v. Roth, 334 Ill. App. 3d 259,

263 (2002); see also Peleton, Inc. v. McGivern’s Inc., 375 Ill. App. 3d 222, 225

(2007). A trial court therefore has “broad discretionary powers in awarding attorney

fees.” Mirar Development, Inc. v. Kroner, 308 Ill. App. 3d 483, 485 (1999) (citing In

re Estate of Callahan, 144 Ill. 2d 32, 44 (1991)).

¶ 48 In the case at bar, plaintiff challenges the circuit court’s award of attorney fees

solely on the basis that the award was “excessive.” Merely characterizing an award of

attorney fees as “excessive,” however, does not amount to establishing that the trial

court abused its discretion. “The determination as to what constitutes reasonable

compensation is a matter peculiarly within the discretion of the trial court.” Chicago

Title & Trust Co., Trustee Under Trust No. 89-044884 v. Chicago Title & Trust Co.,

Trustee Under Trust No. 1092636, 248 Ill. App. 3d 1065, 1072 (1993). A trial court is

indeed permitted to use its own knowledge and experience in assessing the time

required to complete particular services or activities. Chicago Title & Trust Co., 248

19 No. 1-14-3666

Ill. App. 3d at 1073 (citing In re Estate of Healy, 137 Ill. App. 3d 406, 411 (1985)). A

court of review, in contrast, may not reverse the trial court’s award of attorney fees

merely because it may have reached a different conclusion. Chicago Title & Trust

Co., 248 Ill. App. 3d at 1073; In re Estate of Healy, 137 Ill. App. 3d at 411.

¶ 49 Furthermore, the record in the present case makes it clear that the Stuarts’

petition for attorney fees provided the circuit court with all the required detailed

information: it identified the responsible attorneys, described the expertise and hourly

rate of the attorneys, and detailed all the relevant work entries involved in this case.

See Gambino, 398 Ill. App. 3d at 66 (“the petition for fees must specify the services

performed, by whom they were performed, the time expended thereon, and the hourly

rate charged therefor”); see also Ealy v. Peddy, 138 Ill. App. 3d 397, 400 (1985).

Plaintiff, on the other hand, has failed to include in the record any transcripts from the

circuit court’s hearing awarding the Stuarts their attorney fees. See Mars v. Priester,

205 Ill. App. 3d 1060, 1066 (1990) (“[a]n appellant has the burden to present a

sufficiently complete record of the proceedings at trial to support a claim of error”).

We are accordingly required to presume that the circuit court, relying on its

experience and knowledge, carefully reviewed the Stuarts’ petition for attorney fees

and found this petition as reasonable. Mars, 205 Ill. App. 3d at 1066 (“[i]n the

absence of such a record on appeal, and upon a claim of error, it will be presumed

that the order entered by the trial court was in conformity with law and had a

sufficient factual basis *** doubts which may arise from the incompleteness of the

record will be resolved against the appellant.”); see also Chicago Title & Trust Co.,

248 Ill. App. 3d at 1075.

20 No. 1-14-3666

¶ 50 We thus decline plaintiff’s invitation to make a de novo determination as to the

reasonableness of the circuit court’s award of attorney fees and we accordingly find

that the circuit court did not abuse its discretion in awarding the Stuarts $13,675 in

attorney fees.

¶ 51 IV. Sanctions Under Supreme Court Rule 137

¶ 52 In addition to awarding attorney fees to the Stuarts, the circuit court sanctioned

plaintiff and awarded Bank of America $26,291.02 in attorney fees pursuant to

Illinois Supreme Court Rule 137. Ill. S. Ct. R. 137 (eff. July 1, 2013). Plaintiff

appeals this award of attorney fees on numerous grounds. First, plaintiff argues that

sanctions were not warranted in the present case because its mechanic’s lien claim

was based on a legal theory grounded in existing law, namely, the theory that a

contractor is not required to complete all the work required under a construction

agreement before recording a mechanic’s lien claim.

¶ 53 Second, in the alternative, plaintiff argues that even if sanctions were warranted,

the attorney fees awarded to Bank of America were “unreasonably excessive.” In

support of this argument, plaintiff claims that “it defies logic” that Bank of America

expended 105 hours defending a “non-complex” mechanic’s lien action that the

Stuarts were able to defend successfully by expending only 54 hours. Plaintiff further

claims that Bank of America’s petition for attorney fees included “double billings”

and duplicative entries. For example, according to plaintiff, Bank of America

improperly included in its petition four separate entries that were all marked for the

same task of researching applicable mechanic’s lien case law. Finally, plaintiff argues

21 No. 1-14-3666

that the circuit court erred in awarding Bank of America over $1,000 in paralegal

fees, which constitute office overhead expenses that are not recoverable.

¶ 54 We address each of plaintiff’s arguments in turn. However, here too, we find no

reason to disturb the circuit court’s award of attorney fees.

¶ 55 Illinois Supreme Court Rule 137(a) provides:

“(a) *** Every pleading, motion and other document of a party

represented by an attorney shall be signed by at least one attorney of

record ***. The signature of an attorney or party constitutes a

certificate by him that he has read the pleading, motion or other

document; that to the best of his knowledge, information, and belief

formed after reasonable inquiry it is well grounded in fact and is

warranted by existing law or a good-faith argument for the extension,

modification, or reversal of existing law, and that it is not interposed

for any improper purpose, such as to harass or to cause unnecessary

delay or needless increase in the cost of litigation.” Ill. S. Ct. R. 137(a)

(eff. July 1, 2013).

¶ 56 “ ‘The purpose of [Rule 137] is to prevent abuse of the judicial process by

penalizing claimants who bring vexatious and harassing actions based upon

unsupported allegations of fact or law.’ ” Lake Environmental, Inc. v. Arnold, 2015 IL

118110, ¶¶ 13, 39 (quoting Fremarek v. John Hancock Mutual Life Insurance Co.,

272 Ill. App. 3d 1067, 1074 (1995)); see also Espevik v. Kaye, 277 Ill. App. 3d 689,

697 (1996) (explaining the same). Rule 137 is thus penal in nature and must be

22 No. 1-14-3666

strictly construed. Citi Mortgage, Inc. v. Johnson, 2013 IL App (2d) 120719, ¶ 41

(citing Sadler v. Creekmur, 354 Ill. App. 3d 1029, 1045 (2004)).

¶ 57 Rule 137 is not, however, intended to punish litigants for making losing

arguments. Indeed, a trial court considering whether sanctions are warranted in a

particular case should not engage in hindsight, but rather determine what was

reasonable at the time the attorney or party signed the document or made its motion.

Arnold, 2015 IL 118110, ¶ 39 (citing Fremarek, 272 Ill. App. 3d at 1074). Courts

should also not impose sanctions solely because the facts ultimately determined in a

particular case are adverse to the facts set forth originally in the pleadings.

Commonwealth Edison Co. v. Munizzo, 2013 IL App (3d) 120153, ¶ 35 (citing

Rubino v. Circuit City Stores, Inc., 324 Ill. App. 3d 931, 946 (2001)).

¶ 58 The determination of whether to impose sanctions under Rule 137 ultimately

rests with the sound discretion of the trial court. In re Marriage of Schneider, 298 Ill.

App. 3d 103, 109 (1998) (citing Senese v. Climatemp, Inc., 289 Ill. App. 3d 570, 581-

82 (1997)). The trial court’s decision to impose or deny sanctions is thus entitled to

great weight on appeal, and its decision will not be disturbed absent an abuse of

discretion. Bennett & Kahnweiler, Inc. v. American National Bank & Trust Co. of

Chicago, 256 Ill. App. 3d 1002, 1007 (1993) (citing In re Estate of Wernick, 127 Ill.

2d 61, 78 (1989)). Under this standard, a trial court is only said to have abused its

discretion where no reasonable person would take the view adopted by the trial court.

Arnold, 2015 IL 118110, ¶ 16. We thus limit our review to “whether the trial court's

decision was informed, based on valid reasoning, and follows logically from the

facts.” Munizzo, 2013 IL App (3d) 120153, ¶ 33.

23 No. 1-14-3666

¶ 59 We first address plaintiff’s argument that sanctions were not warranted in the

present case. Plaintiff argues that its mechanic’s lien claim was well grounded in the

theory that a contractor does not need to complete all the work required under a

construction agreement before recording a mechanic’s lien claim. Plaintiff is correct;

a contractor does not need to complete all the work required under a construction

agreement before recording a mechanic’s lien claim. Cordeck Sales, Inc. v.

Construction Systems, Inc., 382 Ill. App. 3d 334, 389 (2008) (explaining that the term

“completion” as used in the Mechanic’s Lien Act does not refer to completion of the

contract, but rather to completion of the work for which the contractor seeks to

enforce its lien).

¶ 60 The circuit court here, however, did not sanction plaintiff for recording its

mechanic’s lien claim prematurely, but rather for repeatedly submitting documents to

the court containing false statements about plaintiff’s right to enforce its mechanic’s

lien claim. See Lohmann, 260 Ill. App. 3d at 886 (affirming a circuit court’s decision

imposing sanctions on a contractor who filed an excessive mechanic’s lien claim that

wrongly encumbered the subject property and clouded the property owner’s title).

¶ 61 In particular, the circuit court here listed five instances where plaintiff violated

Rule 137: (1) in paragraph 23 of the verified complaint where plaintiff incorporated

its mechanic’s lien falsely stating that “[a]ll work required by said contract” was

completed by September 12, 2009; (2) in paragraph 23 of the verified complaint

where plaintiff incorporated its mechanic’s lien falsely stating that plaintiff “delivered

extra labor and materials” and completed “extra and additional work” by September

12, 2009; (3) on page 2 of plaintiff’s response to Bank of America’s motion to

24 No. 1-14-3666

dismiss, where plaintiff falsely stated that “[p]laintiff’s lien notice was filed at a

proper time”; (4) in plaintiff’s answer to paragraph 5 of Bank of America’s

affirmative defenses, where plaintiff denied not having completed the work until after

September 17, 2009; and (5) in plaintiff’s answer to paragraph 6 of Bank of

America’s affirmative defenses, where plaintiff denied not having filed its claim for

the lien within four months after completion of the work.

¶ 62 In conclusion, there was no theory grounded in existing law that permitted

plaintiff to falsely state in its mechanic’s lien claim that all the work required under

the construction agreement was completed, when in fact the work had not been

completed. There was also no theory grounded in existing law that allowed plaintiff

to misrepresent the amount owed by the Stuarts at the time the lien claim was

recorded. Any such a theory would indeed defeat the vary purpose of the Mechanic’s

Lien Act, which is to ensure that persons with an interest in real property pay for the

actual improvements and benefits that they have induced. Stafford–Smith, Inc. v.

Intercontinental River East, LLC, 378 Ill. App. 3d 236, 240 (2007) (citing Leveyfilm,

Inc. v. Cosmopolitan Bank & Trust, 274 Ill. App. 3d 348, 352 (1995)).

¶ 63 There can thus be little argument over whether the circuit court’s decision to

impose sanctions against the plaintiff was informed, based on valid reasoning, and

followed logically from the facts of this case. We accordingly find that the circuit

court did not abuse its discretion in imposing sanctions on the plaintiff.

¶ 64 Plaintiff’s second and alternative argument that the attorney fees awarded to

Bank of America were unreasonably “excessive” is equally unpersuasive. According

to the plaintiff, it was not “objectively reasonable” for Bank of America to expend

25 No. 1-14-3666

105 hours defending a “non-complex” mechanic’s lien action that the Stuarts were

able to defend successfully by expending only 54 hours. Plaintiff further argues that

Bank of America improperly included in its petition four duplicative entries that were

all marked for the same task of researching mechanic’s lien case law. We disagree.

¶ 65 First, contrary to plaintiff’s argument, a cursory comparison of the hours

expended by one defendant to the hours expended by another defendant is not

determinative in reviewing the reasonableness of an award of attorney fees. The mere

fact that Bank of America expended more time than the Stuarts defending this lawsuit

does not establish that the circuit court’s award of attorney fees was unreasonably

excessive. As the record reflects, Bank of America was directly involved in this

litigation for over three years. During this period, the attorneys representing Bank of

America participated in extensive oral and written discovery and motion practice.

¶ 66 Bank of America was also involved in this litigation in a different manner than

the Stuarts. It was Bank of America’s attorneys that introduced the argument that

plaintiff’s mechanic’s lien claim was untimely filed and was not enforceable against

third party creditors. See 770 ILCS 60/7(a) (West 2008). It was also Bank of

America’s attorneys that researched and drafted the motion to dismiss, which Bank of

America brought at the onset of this litigation. There is, therefore, no reason to

assume that the amount of time expended by Bank of America in this action should

mirror the amount of time expended by the Stuarts.

¶ 67 There is also nothing in the record that suggests that Bank of America’s entries

were “duplicative” as plaintiff suggests. On the contrary, it is clear from the record

that during the hearing on the reasonableness of Bank of America’s petition the

26 No. 1-14-3666

circuit court carefully scrutinized each of the entries made by Bank of America in its

petition for attorney fees. Indeed, the hearing transcripts establish that plaintiff was

given the opportunity to object to the entries included in Bank of America’s petition,

that plaintiff objected to some of these entries, and that the circuit court struck down

and adjusted the entries that it deemed to be unreasonable. We thus find nothing in

the record that supports plaintiff’s claim that the circuit court abused its discretion by

awarding Bank of America duplicative and unreasonably excessive attorney fees.

¶ 68 Moreover, we must reiterate that because Rule 137 sanctions are penal in nature,

we are not required to review each and every reimbursable component of an award of

attorney fees that was imposed as a sanction against a party filing a frivolous lawsuit.

Riverdale Bank v. Papastratakos, 266 Ill. App. 3d 31, 43 (1994) (“[t]he isolated focus

on each reimbursable component part of preparation and trial is not necessary where

false allegations made without reasonable cause are determined to be the cornerstone

of the entire baseless lawsuit”); Robertson v. Calcagno, 333 Ill. App. 3d 1022, 1028

(2002) (“[f]ees are recoverable under Rule 137 even where they are ‘lumped,’ and

even for unaccounted-for time entries”). The circuit court here explicitly noted that it

considered the false statements made by plaintiff in its mechanic’s lien claim to be

“the cornerstone of the litigation.” We accordingly decline to review isolated entries

made in Bank of America’s petition for attorney fees.

¶ 69 Finally, plaintiff incorrectly assumes that paralegal work may never be

recovered as part of an award of attorney fees. Under Rule 137, a party may recover

attorney fees incurred as a result of the sanctionable paper or pleading. Robertson,

333 Ill. App. 3d at 1028. This limitation generally precludes the recovery of office

27 No. 1-14-3666

overhead expenses, which an attorney incurs regardless of specific litigation. See

Harris Trust & Savings Bank v. American National Bank & Trust Co. of Chicago,

230 Ill. App. 3d 591, 599 (1992) (citing Kaiser v. MEPC American Properties, Inc.,

164 Ill. App. 3d 978, 989 (1987)). Such office overhead expenses typically include

“telephone charges, in-house delivery charges, in-house photocopying, check

processing, newspaper subscriptions, and in-house paralegal and secretarial

assistance.” Johnson v. Thomas, 342 Ill. App. 3d 382, 401 (2003). When paralegals or

other non-attorneys, however, perform special legal tasks, which would otherwise

have to be performed by an attorney, the fees incurred from those tasks are

recoverable because they cannot be regarded as overhead office expenses that are

already included in the attorney’s hourly rate. See Merchandise National Bank of

Chicago v. Scanlon, 86 Ill. App. 3d 719, 728 (1980) (distinguishing services

performed by a law student, which would otherwise have been performed by an

attorney, from general administrative tasks “which would be more properly included

in the attorneys’ hourly rates as part of their general overhead costs”); see also Todd

W. Musburger, Ltd. v. Meier, 394 Ill. App. 3d 781 (2009) (finding that work done by

a law firm’s non-attorney in-house consultant was recoverable).

¶ 70 In the present case, the circuit court carefully reviewed all the entries pertaining

to paralegal work that were included in Bank of America’s petition for attorney fees.

In considering those entries, the circuit court explained that Bank of America was

only entitled to recover for the paralegal work involving legal tasks that would

otherwise have to be performed by an attorney.

28 No. 1-14-3666

¶ 71 After reviewing those entries, the circuit court found that some of the paralegal

work described in Bank of America’s petition involved work of the kind that would

otherwise have to be completed by an attorney. For example, the circuit court found

that Bank of America’s paralegals performed “legal tasks” when they researched the

title history of the property subjected to plaintiff’s mechanic’s lien claim and when

they drafted a memorandum to the supervising attorneys summarizing the results of

this title search. Conversely, the circuit court did not allow Bank of America to

recover for the entries involving the paralegals performing general administrative

tasks, such as updating the case status reports and organizing the case file.

¶ 72 The record thus makes it clear that the circuit court did not simply rubber-stamp

Bank of America’s petition for attorney fees. Rather, the circuit court applied its

discretion and reviewed each of the entries involving work performed by paralegals.

We thus find no basis in the record supporting plaintiff’s argument that the circuit

court abused its discretion by erroneously reimbursing Bank of America for office

overhead expenses.

¶ 73 Having addressed each of plaintiff’s objections to the circuit court’s award, we

find that the circuit court appropriately awarded $26,291.02 in attorney fees to Bank

of America as a sanction under Rule 137.

¶ 74 CONCLUSION

¶ 75 For the foregoing reasons, we affirm the judgment of the circuit court of Cook

County.

¶ 76 Affirmed.