The Illinois Supreme Court Extends Protection For Design Professionals Under the Mechanics Lien Act

The Illinois Supreme Court recently engineered a clearer understanding of the route for design professionals to recover under the Illinois Mechanics Lien Act (“Act”) (770 ILCS 60/1 (West 2008)). In fact, thanks to the recent decision in Christopher B. Burke Engineering, Ltd., v. Heritage Bank of Central Illinois (Docket No. 118955, November 19, 2015), the scope for potential claims to be made by architects, engineers, land surveyors, and property managers under the Act has just been clarified and, for the foreseeable future, finalized.

In April 2008, Burke Engineering (“Burke”) was hired by Glen Harkins to survey a tract of land and to draft and record a plat of subdivision for property in Peoria County, Illinois. Burke begun its work and continued to provide services, which included recording the plat, conducting a wetlands survey, and planning roads and utilities. For its work, Burke invoiced the Harkinses $109,549.69 but never received payment. As a result, Burke recorded a mechanics lien on the property and filed suit to foreclose on the lien against Harkins and Heritage Bank, the entity that provided financing for Harkins.

After discovery, Heritage Bank filed a motion for summary judgment, contending that Burke’s lien did not meet the requirements of section 1 of the Act and was, thus, invalid. The circuit court granted Heritage Bank’s motion, finding that the services provided by Burke did not constitute an improvement as defined and required in section 1 of the Act. The circuit court further reasoned that the property owner neither induced nor encouraged Burke’s work, further negating the validity of the lien. The appellate court affirmed the lower court’s judgment, and Burke petitioned for leave to appeal to the Supreme Court, which was allowed.

In reviewing the record, the Illinois Supreme Court reversed the lower court’s rulings and, in doing so, provided a clearer explanation for application of “improvement” as set forth in the Act. The Supreme Court first looked to the language of the Act in order to determine whether the services provided by Burke constituted an improvement as set forth in the Act and whether the owner knowingly allowed Harkins to enter into a contract for the property. The Illinois Supreme Court noted that the reason the appellate court concluded that the lien was invalid was because there had been no physical improvement to the property or calculable increase to the property’s value as a result of Burke’s work. 2015 IL App (3d) 140064, ¶ 18.

Disagreeing with the lower courts’ findings, the Illinois Supreme Court reasoned that if an actual physical improvement was required in order for an engineer to secure a lien, “then these professionals would be subject to the whims of the parties with whom they contract, who may decide to complete the project or not,” and that such result “is contrary to the protective purpose of the Act.” 2015 IL 118955, ¶ 13, citing Contract Development Corp. v. Beck, 255 Ill. App. 3d 660, 669 (1994). Rather, the Court found that any such requirement of physical improvement or calculable increase in property value goes against long-standing precedent. In fact, the long-standing precedent referenced by the Illinois Supreme Court was from 1900, when the Illinois Supreme Court found that when an architect draws plans and specifications for a building, even though he does not perform any actual construction, he performs services for the purpose of building it and is thus entitled to a lien. 2015 IL 118955, ¶ 14, citing Freeman v. Rinaker, 185 Ill. 172, 175 (1900).

Heritage Bank attempted—unsuccessfully—to argue that, based upon how the punctuation appeared in the language, design professionals can only obtain a lien under section 1 of the Act if their services are related to “the raising or lowering of a house on the property, the removal of a house thereto, or the removal of a house or structure therefrom.” Id. at ¶ 15. The Illinois Supreme Court quickly dismissed this notion, finding that such interpretation would be illogical, since the professionals listed in the actual clause—architects, structural engineers, professional engineers, land surveyors, and property managers—do not all partake in raising, lowering, or removing houses. Id. at ¶ 19. In applying the circumstances to the present case, the Court found that Burke’s creation of a plat of subdivision is a service performed for the purpose of building or repairing structures on the property and, to that point, Burke’s engineering services led to the construction of one house on the property. Id. at ¶ 20.

Ultimately, the Illinois Supreme Court remanded the case for determination on whether the owner at the time Burke contracted with Harkins had knowingly permitted the contract between the two parties. However, the bulk of the Court’s opinion provided affirmation for design professionals who may find themselves seeking to enforce a mechanics lien on projects where little if any actual construction has taken place. Essentially, design professionals can now seek to enforce a lien for their work so long as their services were performed for the purpose of improving property.