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Divane v. Smith

Case Date: 06/18/2002
Court: 1st District Appellate
Docket No: 1-01-2030 Rel

SECOND DIVISION

June 18, 2002





No. 1-01-2030

 

WILLIAM T. DIVANE, JR., MICHAEL J. )

Appeal from the

CADDIGAN, I. STEVEN DIAMOND, SAMUEL ) Circuit Court of
EVANS, MICHAEL FITZGERALD, THOMAS C. ) Cook County.
HALPERIN, DAVID A. HARDT, DANIEL )
MEYER, RICHARD SIPPLE, and MICHAEL R. )
WALSDORF, as the Electrical Insurance )
Trustees, )
)
          Plaintiffs-Appellants, )
)
               v. )
)
DALE W. SMITH, d/b/a DOVER )
DISTRIBUTING CO./DOVER )
TELECOMMUNICATIONS CO., FRIEDLER )
CONSTRUCTION CO., and BOARD OF )
EDUCATION OF THE CITY OF CHICAGO, ) Honorable
) Cyril J. Watson,
          Defendants-Appellees. ) Judge Presiding.


PRESIDING JUSTICE BURKE delivered the opinion of the court:

Plaintiffs William Divane, Jr., Michael Caddigan, I. StevenDiamond, Samuel Evans, Michael Fitzgerald, Thomas Halperin, DavidHardt, Daniel Meyer, Richard Sipple, and Michael Walsdorf, as theElectrical Insurance Trustees (Trustees), appeal from two orders ofthe circuit court granting the motions of defendants FriedlerConstruction Co. (Friedler) and Board of Education of the City ofChicago (Board) to dismiss the Trustees' complaint and firstamended complaint, which alleged a claim under section 23(b) of theMechanics Lien Act (Act) (770 ILCS 60/23(b) (West 1998)), and abreach of contract claim, pursuant to section 2-615 of the Code ofCivil Procedure (Code) (735 ILCS 5/2-615 (West 1998)).(1) On appeal,the Trustees contend that the notice submitted to the Boardpursuant to section 23(b) of the Act (770 ILCS 60/23(b) (West1998)) satisfied the requirements of that section and was notdeficient for failing to include the specific amount of their lienon Friedler's (the general contractor) project funds. In addition,the Trustees contend that the notice provided to the Board pursuantto section 23(b) of the Act satisfied the requirements for noticeunder their breach of contract claim. For the reasons set forthbelow, we affirm in part, reverse in part, and remand this causefor further proceedings.



STATEMENT OF FACTS

Plaintiffs are trustees for a certain fringe benefits fundpursuant to an agreement entered into on June 24, 1930, between theElectrical Contractors' Association of the City of Chicago(Association) and Local 134, International Brotherhood ofElectrical Workers (Local 134). The Board contracted with Friedlerto perform renovation work at Robeson High School and Harlan HighSchool. Friedler, in turn, contracted with Dale Smith to performthe electrical work. In this regard, Smith signed a "Letter ofAssent," agreeing to be bound by the terms of a collectivebargaining agreement entered into between the Association and Local134. Under this agreement, Smith was required to pay certain wagerates to his employees, to file monthly reports with the Trustees,and to make monthly contributions to the Trustees for certainfringe benefits. Although Smith submitted weekly certified payrollreports to the Board, showing the total hours worked by eachemployee and the rate of pay, Smith failed to submit the monthlyreports and contributions to the Trustees.

Because Smith failed to file monthly reports with theTrustees, they were not aware of his work until many months later. However, once the Trustees learned of Smith's work, they sought anaudit of his records. After Smith refused to have his recordsaudited, the Trustees filed a lawsuit in the federal district courtand the court ordered an audit of Smith's books. Based on thisaudit, the Trustees discovered that Smith owed them approximately$125,000 in contributions. On September 29, 2000, the Trusteesserved notice of their lien on Friedler's project funds on theBoard pursuant to section 23(b) of the Act. On October 10, theBoard acknowledged receipt of the notice and stated that it haddirected its controller to withhold project funds due Friedler inan amount sufficient to satisfy the lien. However, approximatelytwo weeks later, the Board reversed its position and stated that itwould not withhold the funds.

On December 28, the Trustees filed a two-count complaint. Count I sought an accounting and an order directing the Board toremit the funds due the Trustees. Count II alleged a breach ofcontract claim based on a "Multi-Project Labor Agreement" (LaborAgreement), which was executed by the Board with Local 134, interalia, and required the Board to withhold any disputed funds. TheTrustees alleged that the Board failed to comply with therequirements of the Labor Agreement by failing to withhold thedisputed funds from Friedler.

On January 29, 2001, the Board filed a motion to dismiss theTrustees' complaint. With respect to count I, the Board contendedthat the Trustees lacked standing to bring a claim under the Actand, additionally, that the notice served upon it was deficientpursuant to section 23(b) of the Act because it failed to state theamount of the lien. With respect to count II, the Board contendedthat the Trustees failed to provide any notice of a lien onFriedler's project funds as required by the Labor Agreement. Alternatively, the Board maintained that if the notice pursuant tosection 23(b) could be construed to be notice under the LaborAgreement, the notice was nonetheless insufficient because itfailed to set forth the amount of the lien. Friedler later joinedand adopted the Board's motion to dismiss.

On May 8, the trial court granted the motions to dismiss. While the court concluded that the Trustees had standing, pursuantto section 9(a) of the Labor Agreement, it found, however, that theTrustees' section 23(b) notice to the Board was deficient, stating:

"[T]he clear and obvious requirement--if notthe specific language--of Section 23(b)directs the claimant to state a specificamount due. In the absence of such a specificamount, the clerk does not know how much moneyto withhold."

With respect to count II, the court concluded that the notice wasdefective for the same reason; it failed to set forth an amountthat would satisfy the claim. On May 21, the Trustees moved tomodify the May 8 order and sought leave to file an amendedcomplaint. On May 30, the trial court entered a second order inwhich it granted the Trustees leave to file an amended complaint,stated that the Board and Friedler had adopted their previousmotions to dismiss, reaffirmed its May 8 order, and dismissed theTrustees' amended complaint. The order further provided that therewas no just reason to delay enforcement or appeal. This appealfollowed.



ANALYSIS

A motion to dismiss pursuant to section 2-615 of the Codetests the legal sufficiency of the plaintiff's complaint. Lykowskiv. Bergman, 299 Ill. App. 3d 157, 162, 700 N.E.2d 1064 (1998). "Indetermining the legal sufficiency of a complaint, all well-pleadedfacts are taken as being true and all reasonable inferences fromthose facts are drawn in favor of the plaintiff." Lykowski, 299Ill. App. 3d at 162. "The question on appeal from the granting ofa section 2-615 motion is whether the allegations in the complaint,when viewed in a light most favorable to the plaintiff, aresufficient to state a cause of action upon which relief can begranted." Lykowski, 299 Ill. App. 3d at 162-63. We review thetrial court's decision de novo. Lykowski, 299 Ill. App. 3d at 162.

This case requires us to construe a statute, which involves aquestion of law subject to de novo review. In re Estate ofAndernovics, 197 Ill. 2d 500, 507, 759 N.E.2d 501 (2001). "Thecardinal rule of statutory construction is to ascertain and giveeffect to the intent of the legislature." People ex rel. Ryan v.McFalls, 313 Ill. App. 3d 223, 226, 728 N.E.2d 1152 (2000). Thefirst step in doing so requires an examination of the language ofthe statute in which we give the words their plain meaning andconstrue them in context. In re Tax Deed, 311 Ill. App. 3d 440,443, 723 N.E.2d 1186 (2000). We "must construe the statute aswritten and may not, under the guise of construction, supplyomissions, remedy defects, annex new provisions, add exceptions,limitations, or conditions, or otherwise change the law so as todepart from the plain meaning of the language employed in thestatute." In re Tax Deed, 311 Ill. App. 3d at 444; see also In reCounty Treasurer and Ex-Officio Collector of Cook County, 323 Ill.App. 3d 1044, 1049, 753 N.E.2d 363 (2001). Additionally, "[i]fpossible, courts must give effect to every word, clause, andsentence and may not read a statute so as to render any partinoperative, superfluous, or insignificant." Newland v. BudgetRent-A-Car Systems, Inc., 319 Ill. App. 3d 453, 456, 744 N.E.2d 902(2001). "Legislative intent as to the meaning of words can beascertained from the history of the legislation or from the use ofthe term in other sections of the same or other Illinois statutes." In re Tax Deed, 311 Ill. App. 3d at 444. See also In re CountyTreasurer and Ex-Officio Collector of Cook County, 323 Ill. App. 3dat 1048. "One may presume that the legislature, when drafting thelanguage of the section, was aware of the construction and use of[a] term in another section." In re Tax Deed, 311 Ill. App. 3d at444. Accordingly, where the legislature uses certain words in oneinstance and different words in another, it intends differentresults. Ryan, 313 Ill. App. 3d at 227. The same generalprinciples apply in interpreting contract provisions.



I. Section 23(b) Notice

The Trustees first contend that the trial court erred inconcluding that notice under section 23(b) of the Act required theTrustees to set forth the specific amount of their lien. Accordingto the Trustees, unlike other provisions of the Act, in particularsection 7 and 23(c), section 23(b) does not require that the noticeset forth the claimed amount. The Trustees maintain that the trialcourt, contrary to its authority, added requirements to the statutethat were not present. Additionally, the Trustees rely on otherIllinois statutes to support their contention that section 23(b)does not require the notice to state the amount of their claimbecause, in these other statutes, the legislature specificallystated that the lien notice shall set forth the amount of theclaim. The Trustees also argue that the Board would be able tocalculate the amount to be withheld because it had Smith'scertified payroll records. The Trustees further maintain that theydid not possess the necessary information to set forth the exactamount of their claim because Smith failed to comply with thecollective bargaining agreement by failing to submit monthlyreports to the Trustees. Lastly, and alternatively, the Trusteesargue that only substantial compliance with the requirements of theAct are required.

The Board and Friedler contend that the Trustees were requiredto strictly comply with the notice provision of section 23(b) ofthe Act. According to the Board and Friedler, the only fairreading of the statute requires that the notice state the claimedamount. In addition, the Board and Friedler maintain that commonsense dictates that if the Board is not notified of the amount ofa claim, it has no basis upon which to determine the amount of thelien. In response to the Trustees' argument that the Board wouldbe able to ascertain the amount, the Board and Friedler maintainthat this argument is not supported by the statutory language ofsection 23(b), nor case law. In addition, they argue that becausethe purpose of the statute is to protect public entities, it is theclaimant's obligation, here the Trustees, to comply with thestatute and, therefore, the Trustees' argument has no merit. TheBoard and Friedler further argue that to impose a duty upon theBoard to ascertain the amount of the claimed lien would be absurd. Lastly, the Board and Friedler maintain that a comparison of thelanguage in section 23(b) with the language in other Illinoisstatutes regarding different types of liens is irrelevant andcontrary to the principles of statutory construction.(2)

Initially, we must address the issue of the Trustees'standing. The Trustees rely on United States for Benefit and onBehalf of Sherman, et al., Trustees v. Carter, 353 U.S. 210, 1 L.Ed. 2d 776, 77 S. Ct. 793 (1957), in support of their argument thatthey had standing to bring an action under the Act. In Sherman,the trustees of a benefit fund sued the surety on a contractor'spayment bond when the contractor failed to make requiredcontributions to the fund. Sherman, 353 U.S. at 212-13, 1 L. Ed.2d at 780, 77 S. Ct. at 795. The contractor had contracted withthe United States government to construct buildings and employedlaborers, under certain labor agreements/collective bargainingagreements, which required the contractor to pay certain specifiedwages to the laborers and to contribute to the benefit fund. Sherman, 353 U.S. at 213, 1 L. Ed. 2d at 780, 77 S. Ct. at 795. When the contractor failed to make the necessary contributions, thetrustees sued the contractor and its surety under section 2(b) ofthe Miller Act (40 U.S.C.