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Docket No. 107108.
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
WEATHER-TITE, INC. v. UNIVERSITY OF ST. FRANCIS et
al.–EXCEL ELECTRIC, INC., Appellee, v. UNIVERSITY OF ST.
FRANCIS et al. (University of St. Francis, Appellant).
Opinion filed May 21, 2009.
JUSTICE KILBRIDE delivered the judgment of the court, with
opinion.
Chief Justice Fitzgerald and Justices Freeman, Thomas, Garman,
Karmeier, and Burke concurred in the judgment and opinion.
OPINION
In this appeal, we address whether an owner has a duty to retain
funds due a subcontractor as shown on the general contractor’s sworn
statement pursuant to section 5 of the Mechanics Lien Act (770 ILCS
60/1 et seq. (West 2004)). The trial court entered judgment in favor
of the University and against Excel, holding that the University
properly paid the general contractor all funds due subcontractors as
listed on the general contractor’s sworn statement. The appellate court
reversed and remanded for entry of an order granting Excel’s motion
for summary judgment. 383 Ill. App. 3d 304. We allowed the
University’s petition for leave to appeal. 210 Ill. 2d R. 315. We now
affirm the judgment of the appellate court.
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I. BACKGROUND
This appeal involves Excel’s attempt to enforce its mechanics
lien. We review only those facts necessary to an understanding and
resolution of that issue.
According to the parties’ agreed statement of facts, the University
hired Stonitsch Construction, Inc., as the general contractor for
renovation of a residence hall. Stonitsch then entered into a written
contract with Excel, as a subcontractor, to provide electrical labor,
materials, and services for the University project.
On five occasions, Stonitsch submitted sworn statements
requesting payment from the University. Each sworn statement listed
Excel as the electrical subcontractor and showed the amount due
Excel. After receipt of each of the first four sworn statements, the
University paid Stonitsch the total amount listed on each statement,
including the amount due Excel and Stonitsch then paid Excel the
amounts due as listed on the statements. The University wire
transferred the fifth and final payment to Stonitsch’s bank account. At
that time, the recipient bank exercised its right of setoff and applied
the funds to an outstanding debt of Stonitsch. Thus, Excel was not
paid the final balance due for electrical work, totaling $130,948.48.
Thereafter, several subcontractors, including Excel, served notices
and claims for mechanics liens on the University for their work on the
project. One of those subcontractors, Weather-Tite, Inc., filed an
action to foreclose its mechanics lien. Excel was named as a
defendant in the action. Excel filed a counterclaim to foreclose its
mechanics lien.
The University filed a motion for summary judgment, arguing that
Excel did not have an enforceable mechanics lien. Excel filed a crossmotion
for summary judgment, arguing it had a valid and enforceable
mechanics lien for $130,948.48 against the University.
The trial court entered summary judgment in favor of the
University and denied Excel’s cross-motion for summary judgment.
The appellate court reversed the judgment and remanded to the trial
court for entry of an order granting Excel’s motion for summary
judgment.
II. ANALYSIS
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This case is before us on the appellate court’s reversal of the grant
of summary judgment in favor of the University on Excel’s
enforcement of a mechanics lien. Summary judgment is appropriate
only when “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 2002).
The parties agree that there are no genuine issues of material fact
raised in their cross-motions for summary judgment and that the case
may be resolved as a matter of law. Accordingly, this appeal presents
an issue appropriate for summary judgment. We review appeals from
summary judgment rulings de novo. Williams v. Manchester, 228 Ill.
2d 404, 417 (2008).
The University argues that an owner may rely on the general
contractor’s sworn statement and pay the general contractor all funds
due subcontractors. Excel counters that the general contractor’s sworn
statement provides the owner notice of subcontractor claims and
imposes a duty on the owner to retain funds sufficient to pay
subcontractor claims.
The issue raised in this appeal requires us to construe the
Mechanics Lien Act (Act) (770 ILCS 60/1 et seq. (West 2004)). We
review de novo an issue of statutory construction. Boaden v.
Department of Law Enforcement, 171 Ill. 2d 230, 237 (1996). “When
construing a statute, our primary objective *** ‘is to ascertain and
give effect to the intent of the legislature.’ ” MidAmerica Bank, FSB
v. Charter One Bank, FSB, No. 106804, slip op. at 25 (March 19,
2009), quoting DeLuna v. Burciaga, 223 Ill. 2d 49, 59 (2006). The
plain language of the statute is the most reliable indication of
legislative intent. DeLuna, 223 Ill. 2d at 59. “[W]hen the language of
the statute is clear, it must be applied as written without resort to aids
or tools of interpretation.” DeLuna, 223 Ill. 2d at 59. “The statute
should be read as a whole and construed so that no part of it is
rendered meaningless or superfluous.” People v. Jones, 214 Ill. 2d
187, 193 (2005). We will not depart from a statute’s plain language
by reading into it exceptions, limitations, or conditions that conflict
with the legislative intent. People v. Martinez, 184 Ill. 2d 547, 550
(1998).
-4-
We begin our review by addressing the University’s argument
that, pursuant to section 5 of the Act, an owner may rely on a general
contractor’s sworn statement and pay the general contractor all funds
due subcontractors. According to the University, the express language
of section 5 requires the owner to pay the general contractor all
monies due once the owner receives the contractor’s sworn statement
listing the subcontractors. Section 5 of the Act provides, in relevant
part:
“It shall be the duty of the contractor to give the owner,
and the duty of the owner to require of the contractor, before
the owner or his agent, architect, or superintendent shall pay
or cause to be paid to the contractor or to his order any
moneys or other consideration due or to become due to the
contractor, or make or cause to be made to the contractor any
advancement of any moneys or any other consideration, a
statement in writing, under oath or verified by affidavit, of the
names and addresses of all parties furnishing materials and
labor and of the amounts due or to become due to each.
Merchants and dealers in materials only shall not be required
to make statements required in this Section.” (Emphasis
added.) 770 ILCS 60/5 (West 2004).
Contrary to the University’s argument, section 5 does not require
an owner to pay the general contractor upon receipt of a sworn
statement listing the subcontractors. Rather, the plain language of
section 5 explicitly states the owner has a duty to require the sworn
statement “before” paying the contractor any moneys. This serves the
purpose of putting the owner on notice of any subcontractor claims.
Nonetheless, the University submits that the sworn statement
required by section 5 serves several purposes: (1) to apprise the owner
of whether the contract price will be sufficient to pay all
subcontractors; (2) to inform the owner of the dollar amount of
payments the contractor will make to subcontractors from the funds
the contractor has requested from the owner; and (3) to assure the
owner that the balance of funds remaining due will be sufficient to
cover subsequent payments to subcontractors. The University states
that the sworn statement “provides an orderly, structured system for
determining whether the owner’s payments to the contractor are being
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distributed in a way that will ensure that all subcontractors’ balances
are zero when the last payment is made.”
Not only does the University misread section 5, its interpretation
of the purpose of the sworn statement is contrary to the purpose of the
Act. The purpose of the Act is to permit a lien on premises when the
owner has received a benefit, and the furnishing of labor and
materials have increased the value or improved the condition of the
property. R.W. Dunteman Co. v. C/G Enterprises, Inc., 181 Ill. 2d
153, 164 (1998), citing First Federal Savings & Loan Ass’n of
Chicago v. Connelly, 97 Ill. 2d 242, 246 (1983), quoting Colp v. First
Baptist Church of Murphysboro, 341 Ill. 73, 76-77 (1930). In other
words, the purpose of the Act is to protect contractors and
subcontractors providing labor and materials for the benefit of an
owner’s property.
Excel points out that the University’s reading of section 5
disregards all other sections of the Act. Specifically, Excel argues, the
purpose of a contractor’s sworn statement is to give the owner notice
of subcontractor claims, and that notice imposes upon the owner the
duties set forth in section 27 of the Act. The relevant portion of
section 27 provides:
“When the owner or his agent is notified as provided in
this Act, he shall retain from any money due or to become due
the contractor, an amount sufficient to pay all demands that
are or will become due such sub-contractor, tradesman,
materialman, mechanic, or worker of whose claim he is
notified, and shall pay over the same to the parties entitled
thereto.
* * *
*** Any payment made by the owner to the contractor
after such notice, without retaining sufficient money to pay
such claims, shall be considered illegal and made in violation
of the rights of the laborers and sub-contractors and the
rights of such laborers and sub-contractors to a lien shall not
be affected thereby, but the owner shall not be held liable to
any laborer and sub-contractor or other person whose name is
omitted from the statement provided for in Sections 5 and 22
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of this Act ***.” (Emphases added.) 770 ILCS 60/27 (West
2004).
It is clear that section 27 applies to notice of a subcontractor’s claim
received as a result of a section 5 contractor’s sworn statement. Thus,
when an owner is notified of amounts due or to become due a
subcontractor, as included in a contractor’s sworn statement under
section 5, the owner is required to retain funds sufficient to pay all
claims of subcontractors.
The Act also provides for notice by the subcontractor of its claim
to the owner. See 770 ILCS 60/24 (West 2004). Section 24 does not,
however, require a subcontractor to serve notice of its claim on the
owner “when the sworn statement of the contractor or subcontractor
provided for herein shall serve to give notice of the amount due and
to whom due.” 770 ILCS 60/24 (West 2004). The legislature
obviously intended the contractor’s sworn statement to notify owners
of subcontractor claims. This construction is further supported by the
plain language of section 32:
“No payments to the contractor or to his order of any
money or other considerations due or to become due to the
contractor shall be regarded as rightfully made, as against the
sub-contractor, laborer, or party furnishing labor or materials,
if made by the owner without exercising and enforcing the
rights and powers conferred upon him in sections 5, 21 and 22
of this Act.” 770 ILCS 60/32 (West 2004).
Reading the Act as a whole, the purpose of the contractor’s sworn
statement is to put the owner on notice of subcontractor claims and
to create a duty upon the owner to protect the claims of the
subcontractors named in the contractor’s sworn statement. The
purpose of the contractor’s sworn statement is not, as advanced by the
University, to provide an orderly method of making payments to
subcontractors through the general contractor. What is clear from our
reading of the Act is that the legislature intended the following
orderly method of conducting construction transactions to protect
subcontractor claims: (1) the owner and general contractor enter into
a contract for the construction work; (2) as the work is completed, the
general contractor submits a section 5 sworn affidavit that must list
all subcontractors and the amount due, to become due, or advanced;
(3) when the section 5 sworn affidavit lists an amount due or to
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become due a subcontractor, section 24 requires the owner retain
sufficient funds to pay the subcontractor; and (4) section 27 requires
the owner to make subcontractor payments upon receiving notice of
a subcontractor claim pursuant to a section 5 sworn statement.
Additionally, a lien waiver can be provided to the contractor when the
subcontractor is paid, and the owner can require a lien waiver by
every subcontractor when paying the contractor. Funds subject to a
lien waiver are required to be held by the owner in trust for the
subcontractor. See 770 ILCS 60/21.02 (West 2004).
This court has recognized that when an owner receives notice of
a subcontractor claim from a contractor’s sworn statement under
section 5, the owner must retain sufficient funds to pay the
subcontractor. In Kiefer v. Reis, 331 Ill. 38 (1928), the contractor
furnished the owners with a list of claims due subcontractors pursuant
to section 5 of the Act. However, the statement was not under oath,
but provided the owners notice of the amounts due subcontractors.
This court held that under section 27, upon receiving notice, the
owners rightly retained an amount sufficient to pay subcontractor
claims from any amount due the contractor, and that the owners had
a duty to pay the subcontractors. Kiefer, 331 Ill. at 47. See also Keeley
Brewing Co. v. Neubauer Decorating Co., 194 Ill. 580, 592 (1902)
(“a notice by the sub-contractor is not necessary where the sworn
statement of the contractor, made under section 5, gives to the owner
true notice of the amount due, and to whom due”).
The University submits that Knickerbocker Ice Co. v. Halsey
Bros. Co., 262 Ill. 241 (1914), and Luczak Brothers, Inc. v. Generes,
116 Ill. App. 3d 286 (1983), support its argument that the owner is
entitled to rely on the contractor’s sworn statement and is required to
make full payment to the contractor of all amounts due subcontractors
under section 5 of the Act. The University misreads these cases.
In Knickerbocker, the contractor issued a false sworn statement
to the owner indicating the subcontractor was owed $900, when the
subcontractor was actually owed $1,426.33. The owner made
payment to the contractor, but retained sufficient funds from the
contract price to pay the subcontractor. This court held that the
subcontractor only had a lien for $911, the remaining unpaid balance
on the contract between the owner and the contractor. We explained
that the owner had the right to rely on the contractor’s sworn
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statement because the owner had no knowledge of the falsity of the
statement, and that “the sub-contractor must look to the contractor for
any balance due on its claim over and above the amount withheld by
the owner pursuant to the sworn statements made.” Knickerbocker,
262 Ill. at 246.
In Luczak, the owner relied on the contractor’s statement that
$4,500 was paid to the subcontractor, leaving a balance due of
$2,380. The trial court imposed a lien in the amount of $2,380 for the
balance due because the owners relied on the contractor’s sworn
statement that it had already paid $4,500. The appellate court held
that the owners were entitled to rely on the contractor’s affidavit and
that the subcontractors were only entitled to a lien in the amount
shown to be due on the contractor’s last sworn statement. Luczak, 116
Ill. App. 3d at 304.
Knickerbocker and Luczak do not support the University’s
position. The University does not argue that it relied on any
representation that the contractor had already paid Excel. Rather, the
University admits that it knew Excel had not yet been paid, but states
that it was relying on the contractor to distribute its payment among
the subcontractors. Applying Knickerbocker and Luczak to the facts
of this case, Excel is entitled to a lien in the amount of $130,948.48,
the amount due Excel on the contractor’s final sworn statement.
Summary judgment is appropriate when “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 2002). In
this case there are no issues of material fact and, as a matter of law,
Excel is entitled to enforce its mechanics lien under the Act. Excel is,
therefore, entitled to entry of summary judgment. We therefore affirm
the judgment of the appellate court reversing the trial court judgment
and remanding the cause to the trial court for entry of summary
judgment in favor of Excel.
III. CONCLUSION
For the foregoing reasons, we affirm the judgment of the appellate
court.
Affirmed.
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