The Illinois appellate court recently held that if a mechanics lien claimant misses the deadline for providing to a public entity a copy of a mechanics lien complaint, the lien is terminated, even if the complaint was filed with the court on time. In Speedy Gonzalez Landscaping, Inc. v. O.C.A. Construction, et al., 896 N.E.2d 494 (1st Dist. 2008), the court upheld the trial court’s dismissal of a subcontractor’s claim for mechanics lien on public funds arising from a construction project for a high school.
Speedy Gonzalez Landscaping performed gravel work as a subcontractor on the project. The work was being done for a general contractor that contracted with the Public Building Commission of Chicago, a municipal corporation. Claimant, on December 20, 2006, served on PBC notice of its mechanics lien claim, as required by the Mechanics Lien Act, 770 ILCS 60/23(b). Because the PBC is a public entity, the Act does not allow liens against the property itself, but does allow liens on public funds that have been set aside for the project but not yet paid out.
Section 23(b) of the Act then in effect required that, within 90 days of serving that notice on the public entity, the claimant shall file a complaint for an accounting of the public funds held in connection with the subject project. Section 23(b) then in effect also required the claimant to provide a copy of the complaint to the public entity within that same 90-day deadline. (Section 23(b) has since been amended to require a Claimant to serve the complaint on a public entity within 10 days of filing the complaint with the court.)
Claimant here filed its complaint with the court on March 20, 2007, within the 90 days provided by the Act. However, claimant did not provide a copy of the complaint to the PBC until April 20, 2007. The trial court granted a motion to dismiss Count I of the complaint, seeking a mechanics lien and an accounting of the public funds, because the Claimant had missed the deadline for giving a copy to the public entity. Claimant appealed, arguing that because it filed the complaint with the court on time, the case should proceed, even though the public entity did not receive a copy of the complaint on time.
The appellate court affirmed the lower court’s dismissal of the relevant count of the complaint. Section 23(b)’s deadline for the public entity to receive a copy of the complaint is not a minor formality, the court held. When the public entity receives notice of a mechanics lien claim, it must withhold a sufficient amount of money to pay the claim for the 90-day period allowed for the filing of suit. When the 90-day period expires, the Act provides that money shall be released to the contractor unless the claimant has initiated proceedings and delivered a copy of the complaint to the public entity. Because the Act required the public entity to release the funds when the 90-day period expired, a claimant could not be allowed to deliver the complaint to the public entity after that 90-day period and still claim a lien on the funds.
The current version of the Act provides that the public entity shall release the funds when the 90-day period for filing the complaint and 10-day period for serving notice have expired. As a result, lien claimants must strictly comply with these deadlines in order to keep their lien rights.
