Painters Union Funds
Lien on Hotel Job
Limited to Amount Owed Sub
Since sworn statement from general
stated sub paid in full,
Funds get zero
In Doors Acquisition LLC v Rockford Structures et al, 2013 IL App (2d) 120052, District 30 of the Painters Union had a contract with a drywall supplier, D&P, which in turn was selected to install the drywall in a new hotel in Rockford. When the general, Rockford Structures, threw D&P off the job, District 30’s trust funds liened the job. The owner, Weitzel, responded that general had submitted a sworn statement under Section 5 of the Mechanics Lien Act, and that stated D&P had been paid in full for its work. A trial court found for the funds, ordering payment of $32,619.90, but the appellate court reversed.
On appeal the owner argued that D&P had been paid in full when Weitzel received notice of the lien, and therefore the Painters funds could not recover an amount beyond what was owed to its immediate contractor. The funds countered that the only limitation was the contract price between the owner and the general.
In the Weather-Tite case, 233 Ill2d 385 (2009), the owner had to honor a lien because the sworn statements submitted by the general put the owner on notice that the sub was owed money, and triggered the duty to retain sufficient funds to cover the unpaid balance due the sub. The Supreme Court stressed that Section 5 was designed to put the owner on notice of who had been paid and who was not.
Timing of this notice figured in Bricks, Inc v C&F Developers, Inc. 361 IllApp3d 157 (2005) where the court held that the subcontractor was limited to $10,000 left in the owner’s account because by the time the owner had received the Section 24 lien notice from the sub (for $64,500), it had already disbursed most of the funds for the job.
Therefore in this case the union funds recovered nothing, since by the time the hotel developer received notice of the lien, it had relied on a sworn statement that D&P had been paid in full.