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First Division
June 14, 2004

The issue on appeal is whether a construction contractor that renovated a commercialbuilding pursuant to a contract with the building's tenant stated claims of quantum meruit andunjust enrichment against the building's owner, after the tenant failed to pay all of the contractor'scharges. The contractor contends the circuit court of Cook County abused its discretion bydenying leave to file a proposed amended complaint containing sufficient factual allegations. Thecontractor is also arguing the circuit court erroneously determined that the contractor's onlyavenue of relief was statutory - the Mechanics Lien Act (770 ILCS 60/1 et seq. (West 2000)).

The record discloses the following relevant facts. On March 17, 1998, defendant TheStiffel Company (Stiffel) leased the subject real property, a 200,000-square-foot one-storywarehouse at 4307-09 South Morgan Street, Chicago, from the property owner, defendant FirstIndustrial, Inc. (First Industrial), for a term of 15 years and 6 months. Stiffel intended to relocateits corporate offices and the manufacture and warehousing of lamps and light fixtures from amultibuilding, multifloor facility on Chicago's northside to the South Morgan Street property. The parties' written lease indicated that Stiffel was accepting the premises on an "as is" basis, and,with the exception of certain "Work Items," First Industrial was not obligated to make anyrepairs, replacements, or improvements of any kind or nature in connection with the lease. Stiffel,however, was authorized to improve the warehouse at its own expense pursuant to plansapproved by First Industrial. According to an attachment to the lease entitled "TenantImprovements Work Letter," it was Stiffel's "responsibility to be certain that the work [could] beperformed in the Premises without any modifications to [First Industrial's] building." Despite thefact that First Industrial had the right to review and approve or disapprove Stiffel's plans, theparties emphasized that First Industrial "shall have no liability to *** [any party] by reason of theexistence and exercise of such approval rights." The letter also indicated that Stiffel could borrowas much as $2 million from First Industrial toward some of the renovation costs, if it gave FirstIndustrial notice within 45 days of the lease start date. Stiffel was prohibited from applying any ofthe borrowed funds to its architectural or construction plans or building permits and could borrowno more than 75% of the actual work costs. It could obtain the loan funds as needed bydepositing 25% of the work costs into an escrow account established at its own expense, and wasrequired to pay a 3% fee and 11.5% annual interest on the loan during the renovation period. Inaddition, Stiffel had to repay the entire loan at 11.5% annual interest on or before the tenthanniversary of the lease or "immediately" if it failed to complete its renovation within nine months. If Stiffel did not accept First Industrial's financing, it could still proceed with the renovation. Regardless of how the renovation was financed, Stiffel agreed to protect the property from anymechanics or materialmen's liens, to maintain insurance, cause the general contractor and any sub-contractors to maintain insurance, and to protect, defend, indemnify, and hold First Industrialharmless from all losses and claims resulting from the renovation. Stiffel was also maderesponsible for all structural and nonstructural repairs and maintenance at the leased premises. Finally, Stiffel was obligated to remove its fixtures, equipment, and furnishings at the end of thelease, and to repair any damage resulting from the installation or removal of its property. Thewritten lease was entitled "Standard Form -- Industrial Building Lease."

On or about May 4, 1998, Stiffel and plaintiff construction contractor Hayes Mechanical,Inc. (Hayes Mechanical), executed an "Agreement for Design and Construction," which obligatedthe contractor to substantially complete the office renovation and some of the factory renovationat the South Morgan Street property by August 1, 1998, and obligated the tenant to makebiweekly progress payments. Hayes Mechanical also agreed to provide insurance naming Stiffeland First Industrial as additional insureds, and to indemnify and defend Stiffel and First Industrialagainst claims arising out of its work. Paragraphs 33 and 34 of the written agreement provided:

"33. Inspection. [Stiffel's] representative and [First Industrial's]inspecting architect and representatives shall, at all times, haveaccess to the Work whenever it is in preparation or progress, and[Hayes Mechanical] shall facilitate inspection of the Work by theaforesaid persons and by any public authorities concerned with theWork.

34. [Stiffel's] Lease. [Hayes Mechanical] hereby acknowledgesthat [Stiffel] has a leasehold interest in the Project pursuant to thatcertain Standard Form Industrial Building Lease dated March 17,1998 made by [Stiffel] as Tenant, and [First Industrial], as Landlord(the 'Lease'). [Hayes Mechanical] shall cooperate with [Stiffel] anduse its reasonable efforts to help [Stiffel] comply with the terms,conditions and provisions of and the obligations imposed on[Stiffel], as Tenant, under the Tenant's [sic] Improvements WorkLetter (Exhibit E to the Lease) ***."

Stiffel moved into the renovated facility on an unspecified date in 1998. According toHayes Mechanical's calculations, the total cost of the completed renovation project, includingfinance charges through February 1, 2000, was $4,355,415.53, and Stiffel paid only $4,101,906before it ceased making payments at some point in 2000.

In February 2000, Hayes Mechanical recorded an original contractor's claim for lienagainst First Industrial at the Cook County recorder of deeds' office, indicating that HayesMechanical was owed $253,509.53 for labor and materials provided at the South Morgan Streetproperty. Hayes Mechanical also filed a two-count action in the circuit court of Cook County.

Count I of the original complaint sought recovery of the lien amount from Stiffel, based onbreach of contract. However, Stiffel never answered the allegations and within a few months assigned all of its known assets for the benefit of its creditors. A statement of the company'sliabilities and assets dated May 23, 2000, indicated Stiffel had become insolvent. It had $12.8million in liabilities but only $6.6 million in assets. On June 20, 2000, Stiffel's assignee sent aletter to all of the company's known creditors announcing his intention to sell Stiffel as a turnkeyoperation in order to maximize the value of the assets and requesting that sworn claim forms besubmitted within 30 days. The assignee conducted a public auction on August 23 and 24, 2000,which netted $887,059. On October 18, 2000, after prove-up, the trial court entered a$216,606.62 default judgment against Stiffel on the breach of contract claim. On November 30,2000, Hayes Mechanical instituted supplementary proceedings to collect the money judgment. Itstates that "[a]t that point in time" it learned the award was "likely uncollectible" due to Stiffel'sfinancial problems. There is no indication in the record or appellate briefs that Hayes Mechanicalsubmitted a sworn claim form to Stiffel's assignee, nor is there any indication of the amount offunds Hayes Mechanical would have received if it had. Stiffel is not a party to this appeal.

Count II of the original complaint also sought recovery of the lien amount, but wasdirected at First Industrial, based on the recorded contractor's claim for lien. First Industrialresponded with affirmative defenses, which were later amended, alleging that the claimed amountwas fraudulent because it was grossly overstated and included "nonlienable" amounts, such asequipment rental fees, which did not add value to the property. Hayes Mechanical did not answerthe amended affirmative defenses. First Industrial also filed a motion for summary judgment oncount II of the original complaint, reiterating the amended affirmative defenses. HayesMechanical did not meet the trial court's deadline for filing a response to the summary judgmentmotion. Instead, by its own account, Hayes Mechanical "opt[ed] to pursue a different legalcourse" and filed a satisfaction or release of its mechanic's lien claim against First Industrial withthe Cook County recorder of deeds. In a rider to the release, Hayes Mechanical stated the releasewould not "bar, release, compromise or settle any of Hayes Mechanical, Inc.'s common-lawclaims against the Stiffel Company, First Industrial, L.P., or any other entity or individual." Thenext day, Hayes Mechanical asked for leave to file an amended pleading against First Industrial, which included only the common law claims of quantum meruit and unjust enrichment. HayesMechanical contended that its release of the lien claim rendered moot First Industrial's pendingmotion for summary judgment on count II, and it asked the trial court to transfer the case out ofthe circuit court's mechanics lien section since "the lien issues [were] resolved."

In its proposed quantum meruit count, Hayes Mechanical alleged it furnished labor andmaterials for the renovation of the South Morgan Street property owned by First Industrial "withthe expectation that it would receive compensation for such services," and that Hayes Mechanicalhad not done so "gratuitously." Hayes Mechanical did not specify where it had expectedcompensation to come from, nor did it indicate that First Industrial had any involvement in therenovation project. Hayes Mechanical further alleged, however, that "First Industrial received thebenefit of [the] services in that the Property was improved extensively through [the] provision oflabor and materials to the Property," and "First Industrial has accepted and enjoyed the benefits of[the] provision of labor and materials to the property and it would be unjust for First Industrial toretain the benefit of these services without paying Hayes. Hayes Mechanical concluded "the valueof the benefit conferred upon First Industrial by the improvements to the Property completed by[Hayes Mechanical] is the reasonable value of the work performed," and prayed for judgment inits favor.

In its proposed unjust enrichment count, Hayes Mechanical repeated the allegations fromits quantum meruit count and added, "First Industrial has benefitted from the services rendered*** [and] First Industrial would be unjustly enriched if it was permitted to retain the benefitconferred on the Property *** without compensating [Hayes Mechanical] for the reasonable valueof its services."

First Industrial responded that the motion for leave to amend should be denied becauseFirst Industrial had no direct relationship with Hayes Mechanical and was not a party to therenovation contract, and although it had been aware that Stiffel renovated, First Industrial had nocommunication with Hayes Mechanical and had "never even heard of" Hayes Mechanical before itreceived the contractor's lien claim.

On March 27, 2001, the trial court denied leave to file the proposed amended complaint.

First Industrial then filed a second motion for summary judgment on count II of theoriginal complaint, based on Hayes Mechanical's release of the lien. After the trial court grantedthe motion and denied reconsideration, this appeal was taken from the order denying leave to filethe proposed amended complaint.

The following principles are relevant to our review of the denial of leave to file theproposed amended complaint. To begin with, plaintiffs do not have an absolute and unlimitedright to amend. Ruklick v. Julius Schmid, Inc., 169 Ill. App. 3d 1098, 1113, 523 N.E.2d 1208,1217 (1988). The Code of Civil Procedure (Code) begins with the statement, "[t]his Act shall beliberally construed, to the end that controversies may be speedily and finally determined accordingto the substantive rights of the parties." 735 ILCS 5/1-106 (West 2000). Section 2-616(a) of theCode provides that the circuit court may allow amendments to pleadings on just and reasonableterms, at any time before final judgment. 735 ILCS 5/2-616(a) (West 2000). Further, thedecision to grant leave to amend a complaint rests within the sound discretion of the circuit court. Ruklick, 169 Ill. App. 3d at 1111, 523 N.E.2d at 1216. The relevant factors considered indetermining whether the circuit court abused its discretion are: "(1) whether the proposedamendment would cure the defective pleading; (2) whether other parties would sustain prejudiceor surprise by virtue of the proposed amendment; (3) whether the proposed amendment is timely;and (4) whether previous opportunities to amend the pleading could be identified." LoyolaAcademy v. S & S Roof Maintenance, Inc., 146 Ill.2d 263, 273, 586 N.E.2d 1211, 1215-16(1992). The plaintiff must meet all four Loyola Academy factors (Loyola Academy, 146 Ill. 2d at276, 586 N.E.2d at 1216), and if the proposed amendment does not state a cognizable claim, andthus, fails the first factor, courts of review will often not proceed with further analysis. See, e.g.,Wilk v. 1951 W. Dickens, Ltd., 297 Ill. App. 3d 258, 265, 696 N.E.2d 756, 760 (1998); Myers v.Illinois Central R.R. Co., 323 Ill. App. 3d 780, 788, 753 N.E.2d 560, 567 (2001).

The primary consideration is whether amendment would further the ends of justice. Ruklick, 169 Ill. App. 3d at 1113, 523 N.E.2d at 1217. Where it is apparent even afteramendment that no cause of action can be stated, leave to amend should be denied. Ruklick, 169Ill. App. 3d at 1111, 523 N.E.2d at 1216. It is not necessary for the parties to go through theprocess of filing an amended pleading and then testing its sufficiency by a motion to dismiss -when ruling on a motion to amend, the court may consider the ultimate efficacy of a claim asstated in a proposed amended pleading. Village of Gulfport, Henderson County v. Buettner, 114Ill. App. 2d 1, 6, 251 N.E.2d 905, 907 (1969). See also Fleisch v. First American Bank, 305 Ill.App. 3d 105, 110, 710 N.E.2d 1281, 1285 (1999) (allowing leave to amend when plaintiff fails todemonstrate he can plead and prove a viable cause of action does not further the ends of justice).

In addition, before a trial judge can be found to have abused his or her discretion indenying leave to amend, it must be clear from the record that reasons or facts were presented as abasis for requesting the favorable exercise of the court's discretion. Bernstein v. Lind-Waldock &Co., 153 Ill. App. 3d 108, 112-13, 505 N.E.2d 1114, 1117 (1987); Tishman MidwestManagement Corp. v. Wayne Jarvis, Ltd., 146 Ill. App. 3d 684, 692, 500 N.E.2d 431, 436(1986). Illinois is a fact-pleading jurisdiction, and plaintiffs cannot rely on mere conclusions oflaw or fact unsupported by specific factual allegations but must allege facts sufficient to bringtheir claims within the scope of the cause of action asserted. Hirsch v. Feuer, 299 Ill. App.3d1076, 1081, 702 N.E.2d 265, 269 (1998).

Hayes Mechanical acknowledges these legal principles, but contends that in this instancewe should employ the nondeferential de novo standard of review applicable to the dismissal of acomplaint for failure to state a claim pursuant to section 2-615 of the Code of Civil Procedure,because First Industrial's opposition to the motion for leave to amend was an attack on the factualsufficiency of the proposed amended complaint. See 735 ILCS 5/2-615 (West 2000)); Goldbergv. Michael, 328 Ill. App. 3d 593, 597, 766 N.E.2d 246, 250 (2002) (appellate court applies denovo standard of review to dismissal of complaint pursuant to section 2-615). Hayes Mechanicalargues that First Industrial's attack on the factual sufficiency of the proposed quasi-contract claimswas "markedly different" from other defendants' arguments in opposition to leave to amend,warranting our application of a different standard of review. We do not find this argumentpersuasive. This appeal is similar to many others (see, e.g., Wilk, 297 Ill. App. 3d at 265, 696N.E.2d at 760, Myers, 323 Ill. App. 3d at 788, 753 N.E.2d at 567), and Hayes Mechanical hasfailed to cite any opinion in which the court departed from the well-established standard ofreview.

Hayes Mechanical also contends that it factually stated the elements of claims for quantummeruit and unjust enrichment against First Industrial. Hayes Mechanical argues that the recordreflects the close relationship of "the three parties directly involved" in the property renovation,specifically the renovation contract and property lease which were "contemporaneously" executedand the lease which gave the landlord the right to approve plans and "the right to inspect the workin progress." We note that the two "contemporaneous" contracts were actually executed twomonths apart. In any event, Hayes Mechanical concludes that although the landlord was not aparty to the renovation contract, it "clearly retained a degree of control" over the renovationproject, and thus should pay for the balance owing on the renovation. Further, any doubt aboutthe sufficiency of the proposed pleading should have been resolved in favor of allowing theamendment. First Industrial responds that the lack of a relationship between the landlord andcontractor prevents the contractor from ever stating viable quasi-contract claims against thelandlord.

A quasi-contract, or contract implied in law, is one in which no actual agreement betweenthe parties occurred, but a duty is imposed to prevent injustice. 66 Am. Jur. 2d. Restitution andImplied Contracts