In Re T. Brady Mechanical Services Inc.

133 B.R. 441, 1991 Bankr. LEXIS 1677, 1991 WL 240101
CourtUnited States Bankruptcy Court, N.D. Illinois
DecidedNovember 18, 1991
Docket19-02547
StatusPublished
Cited by8 cases

This text of 133 B.R. 441 (In Re T. Brady Mechanical Services Inc.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re T. Brady Mechanical Services Inc., 133 B.R. 441, 1991 Bankr. LEXIS 1677, 1991 WL 240101 (Ill. 1991).

Opinion

MEMORANDUM OPINION

RONALD S. BARLIANT, Bankruptcy Judge.

The Debtor was a mechanical sub-contractor. The Debtor wants the Court to determine the status of creditors who claim to have liens as a result of their work on various projects as the Debtor’s sub-contractors. The Debtor's assets include accounts receivable from the prime contractors on these projects. American National Bank holds a perfected security interest in all of the Debtor’s assets, including these accounts receivable. The creditors here claim to have prior liens on the basis of Illinois mechanics’ lien laws and equitable theories.

The Illinois Mechanics Lien Act (MLA), Ill.Rev.Stat. ch. 82, II1 et seq., gives a subcontractor a lien for the value of its work on the realty of the owner and on the monies due from the owner to the contractor. The lien claim must be recorded within 4 months after completion under the contract. Section 7. Notice of the lien must be given to the owner “within 90 days after the completion thereof, or, if extra or additional work or material is delivered thereafter, within 90 days after the date of completion of such extra or additional work or final delivery of such extra or additional material.” Section 24. Alternatively, if the sub-contractor is listed on the contractor’s Sworn Statement, the § 24 notice requirement is satisfied. Sections 5, 22.

Maram Corp.

Maram was involved on two projects. Both projects present the same issue: Did Maram perform work covered by the MLA within the period set by MLA §§ 7 and 24?

For the Riverway project, Maram served its § 24 notice on October 15, 1990, and recorded its Sub-contractor’s Lien on October 31, 1990. The Debtor asserts that the last date on which Maram performed liena-ble work was March 28, 1990, and therefore their filing and notice were not timely. Maram asserts that its last lienable work was performed on October 4, 1990, making both notice and filing timely. The October 4th work consisted of shipping water treatment chemicals.

On the Downers Grove Project, Maram served its § 24 notice on August 28, 1990, and recorded its lien on September 28, 1990. The Debtor claims that Maram’s last lienable performance occurred on May 25, 1990. Maram asserts that its last lienable performance was on June 14, 1990. This work included training the owner’s operator in the water treatment system and, according to the Debtor, chemical testing.

Although the parties themselves focus on contract/warranty distinctions and the significance of the work performed, the real question is whether Maram performed work that added to the value of the property within the required period. “As a general rule, only that which is actually used, or incorporated into the building is lienable.” Verplank Concrete & Supply v. Marsh, 40 Ill.App.3d 742, 353 N.E.2d 27, 29 (1976). Shipping chemicals and personnel training are not, in any obvious sense, incorporated into a building. There is little room to expand the concept of “incorporated into a building.” “Illinois courts have held that while the [Illinois Mechanics Lien Act] should be construed liberally as a remedial one, it, being in derogation of the common law, is strictly construed with reference to the requirements upon which the right to a lien depends.” Robinette v. Servite Fathers, 49 Ill.App.3d 585, 586, 7 Ill.Dec. 518, 364 N.E.2d 679 (1977).

*445 In D.M. Foley Co., v. Northwest Federal Savings & Loan, 122 Ill.App.3d 411, 77 Ill.Dec. 877, 461 N.E.2d 500 (1984), the issue was the extent to which landscaping services were lienable. The Court distinguished initial placement of vegetation, which enhanced the value of the property, and consequently could support a lien, from subsequent measures required to maintain the vegetation, which did not enhance the value of the property, and hence could not support a lien. “The ‘maintenance’ services were not intended to aid in the initial settlement of materials in the ground, but were designed instead as subsequent measures necessary to maintain the vitality of the living materials. Mere replacement of once-viable material does not enhance the property, as is required by statute.” In Bull v. Mitchell, 114 Ill.App.3d 177, 184, 70 Ill.Dec. 138, 448 N.E.2d 1016 (1983) the court considered maintenance on and storage of a boat. 1 “We are aware of no cases in which material, labor and services rendered on behalf of a vessel for the purposes of merely maintaining and storing it have been held sufficient to entitle the person or entity furnishing such material, labor and services to a mechanics lien under this statute.” The work at issue here is analogous to the work in Foley and Bull. Both the shipment of chemicals and the personnel training were designed to maintain a system already installed. As such it does not add to the value of the property and therefore is not lienable.

Maram emphasizes the importance of the work that was done. Importance, however, is not determinative of lienability. Few mechanical systems continue to perform properly without systematic maintenance, but maintaining value is not adding value. “Where the work completed is merely a repair to, or maintenance of, work already performed, the time for filing a claim for a mechanics lien is not extended.” In re California Steel, 21 B.R. 383, 387 (Bkrtcy.N.D.Ill.1982). “It would be inconsistent with the rules of strict construction that must be used in relation to the Mechanics’ Lien Act to find that the time to file a lien could be extended by maintenance or correction of completed work.” Miller Bros. v. LaSalle National Bank, 119 Ill.App.2d 23, 30, 255 N.E.2d 755 (1970).

Maram also points out that the work in question was required under its contracts with the Debtor. This too is beside the point. It is not what is actually mentioned in the contract, but the nature of the work and its completion that matters. In DuPage Bank v. DuPage Bank, 122 Ill.App.3d 1015, 1017, 78 Ill.Dec. 309, 462 N.E.2d 25 (1984), the Court explained that the test is whether the contract could be considered complete prior to the performance of the additional work. The Miller court relied heavily on the timing of the invoice to determine completion. When the bill for final payment was submitted, the contract was complete even though the contractor did maintenance work after that date. In our case, the contracts were billed as complete prior to the work in question.

The Foley court considered the same problem but used another analysis. Rather than explaining that a contract could be complete with some work still outstanding, it divided contract work into lienable/non-lienable. In deciding that maintenance work was not lienable, the Foley

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Cite This Page — Counsel Stack

Bluebook (online)
133 B.R. 441, 1991 Bankr. LEXIS 1677, 1991 WL 240101, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-t-brady-mechanical-services-inc-ilnb-1991.