Practice Areas

    Employment Law

    Labor Law

    Employee Benefits Law

    Commercial Litigation

    Construction Law

    Dispute Resolution

    Harassment Claims

    Wage and Hour Law

    Mediation and Arbitration

    Other Employment Litigation



Contact Us


HR Solutions

Sub loses lien rights based on waivers from contractor; circumstantial evidence of notice insufficient


Schmidt and Associates Construction undertook a development of land it owned in Northbrook, and acted as its own GC.  In August 2002 it contracted with A&B Excavating to dig the hole, for a contract price of $25,000.  In September A&B's president gave a waiver for a payment of $20,000, and in February A&B gave a second waiver for the remaining $5,000.  In each waiver A&B swore that it used no subs for the excavation.


As GC Schmidt in January 2003 provided a sworn statement listing all contractors on the project and balances due them totaling $80,000.  This statement listed A&B as excavator and showed payment of $25,000.  A second sworn statement in March 2003 showed a balance of $53,000 owed contractors for landscaping, paving, curb work, and gutter work.  This second statement noted an additional  payment to A&B for retention pond grading;  A&B provided a final waiver for the amount due on this work.


Meanwhile, Lazar liened this property on April 14, 2003, and served notice of the lien on Schmidt two days later.  Lazar eventually foreclosed, and alleged that A&B owed Lazar $28,730 for hauling debris from the site in mid January 2003.  Schmidt filed a motion to dismiss based on the waivers, and won.  Lazar appealed and Schmidt won again.  Lazar Brothers Trucking v. A&B Excavating, Inc., et al.


Lazar's president gave an affidavit declaring that removing and hauling debris is the most expensive part of any excavation contract, and that this removal is generally performed as the excavation proceeds.  The affidavit also claimed that Schmidt must have known Lazar was on the job inasmuch as Lazar provided forty trucks with its name conspicuously posted on the trucks' doors.


The trial court threw out Lazar's lien claim and the appeals court in Cook County agreed.  Even if A&B falsely omitted Lazar from its sworn statement, "the lien waivers from A&B established a prima facie defense to Lazar's claim for a mechanic's lien," the court found, and it was Lazar's burden to raise a genuine issue showing that Schmidt acted in bad faith by unreasonably relying on the waivers.


Lazar's affidavit in court aimed to show that Schmidt had to have known the industry practice of allocating much of the price of an excavation contract to removal and hauling. Lazar didn't perform this work until after the $20,000 payment. But the court rejected the argument that advance payment of $20,000, paid to A&B before Lazar did its hauling and removal, raised an inference that Schmidt knew, under industry practice, that A&B must have been submitting a false statement.


The court also rejected the inference that since Lazar had observed Schmidt personnel on the job when Lazar's trucks were there, Schmidt saw the trucks. 


Noting that Schmidt paid itself as GC, Lazar also wanted some of that money. But the court ruled that even though the law in Illinois went both ways, it could not be disputed that in this case Schmidt had paid itself as a GC prior to the date Lazar filed its lien.