Illinois Supreme Court to Evaluate Mechanic’s Lien in Connection With Cancelled Project

In the closing days of its May term, the Illinois Supreme Court agreed to decide an important issue for the construction industry: can a mechanic’s lien be enforced in connection with a project which is cancelled before completion?

Christopher B. Burke Engineering, Ltd. v. Heritage Bank of Central Illinois arises from a contract between plaintiff and certain defendants to perform engineering work on a tract of land which the defendants intended to buy and develop as a residential subdivision. The case was initially dismissed on the grounds that the mechanic’s lien contained an inadequate legal description of the property. After that order was reversed, the plaintiff settled with one group of defendants, and another filed for bankruptcy.

The original owner of the property was deposed after remand, and testified that before she agreed to sell the property, the prospective buyers had told her that they were planning to employ the plaintiff to do engineering work on the property. One of the buyers was deposed and testified that he had engaged the plaintiff to prepare both a preliminary and final plat of the property. The plaintiff had also performed the “lot work” on one lot, and had performed engineering work regarding the planning of sewers and roads on the property. Ultimately, due to the state of the economy, the new owners decided to call off the project, and told the plaintiff to stop all work. Sometime later, the plaintiff filed a civil complaint seeking to foreclose on his mechanic’s lien. The trial court granted defendant’s motion for summary judgment on the grounds that the plaintiff had not improved the land.

The Third District affirmed the judgment of dismissal. The court held that plaintiff had only prepared a preliminary and final plat of the property. While the plaintiff’s work might have been required in order for the defendants to get financing and final approval to develop the land, the court held that the preparation of a final plat was not an improvement of the land sufficient to support a mechanic’s lien.

Justice Lytton dissented, arguing that the measure of a valid mechanic’s lien wasn’t whether the professional’s work had actually improved the property, but rather whether his or her services were provided for the purpose of improving the property – meaning that a professional has a lien in connection with services rendered on a cancelled project. Justice Lytton concluded that engineers and architects are entitled to a mechanic’s lien after preparing preliminary plats even if construction never begins on the property.

We expect Christopher B. Burke Engineering to be decided in eight to ten months.

Image courtesy of Flickr by Elliott Brown (no changes).