Tuesday, February 16, 2010

The Illinois Home Repair and Remodeling Act - The 1st District


This is part six in a series of posts on the Illinois Home Repair and Remodeling Act (HRRA), and the third post in the series looking at the rulings of each of the appellate district courts.  After starting with the fifth and fourth districts, I'm now going to jump to the First District and then proceed to the second and third districts in the next few days.  Why?  Because of the importance of the First District's August 2009 ruling in K. Miller Construction Company, Inc. v. McGinnis.1  McGinnis is the only HRRA case to come out of the First District Appellate Court (specifically, the First Division), and the McGinnis court disagreed with the Fourth District's decision in Smith v. Bogard.2

Again, here's a map of the Illinois Appellate Districts.  The First District is the smallest district geographically, but for good reason -- it "only" covers Cook County.  In 2008 the First District reported a total pending caseload of 5,738.  That's more than the other four districts reported combined (total of 4,073 cases).  For that reason, the First District Appellate Court is actually divided into six divisions.

In McGinnis, the contractor had previously done work for the homeowners on another property.  The parties initially reached an oral agreement for remodeling work amounting to $187,000.  After paying an initial $65,000, the homeowners refused to pay a $58,000 progress payment and indicated that they would not make further payments until the work was complete.  The contractor then obtained a $150,000 line of credit to pay for materials and subcontractor to complete the work.  Meanwhile, due to changes in the scope of work, the ultimate cost of the project allegedly exceeded $500,000.  After allegedly approving all the work but for a $300 credit for some minor floor damage, the homeowners refused to pay more than $177,580.33.  The contractor filed a mechanics lien claim and then sued to foreclose on its lien, as well as for damages in law for breach of contract and quantum meruit.  The homeowners sought to dismiss the suit due to the contractor's failure to comply with the HRRA.  The trial court granted the motion and the contractor appealed.

Regarding the breach of contract and mechanics lien foreclosure claims, the First District Appellate Court affirmed the trial court, holding that without a written contract or work order a contractor's "time and materials" contract was unenforceable under the HRRA.  The court then analyzed the quantum meruit claim in the context of the HRRA, and found that the language of Section 30 of the HRRA (specifically the use of the word "unlawful") did not clearly express an intention by the state legislature to bar the common law equitable remedy of quantum meruit, a holding which the court noted to be at odds with the Fourth District's ruling in Bogard.

The Illinois Supreme Court has granted a petition for leave to appeal in the McGinnis case, and will hopefully issue an opinion in the case later this year.

1  K. Miller Constr. Co, Inc. v. McGinnis, 913 N.E.2d 1147 (1st Dist. 2009), appeal allowed by __ N.E.2d __ (Ill. Nov. 25, 2009) (Table, No. 109156).
2  Smith v. Bogard, 879 N.E.2d 543 (4th Dist. 2007).

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