Illinois Legislature Passes Modification for Private Right of Action Under The Home Repair and Remodeling Act

Amanda Bicknell - Home Repair in South DakotaSenate Bill 2540 was sent to Governor Quinn for signature on Friday.  The bill eliminates an ongoing issue prevalent in some recent judicial opinions and dissents regarding a private right of action under the Illinois Home Repair and Remodeling Act (815 ILCS 513).

The debate was sparked in recent opinions like K. Miller Constr. Co. v. McGinnis, 394 Ill. App. 3d 248, 913 N.E.2d 1147 (1^st Dist. 2009); Smith v. Bogard, 377 Ill. App. 3d 842, 879 N.E.2d 543 (4^th Dist. 2007); and Central Illinois Electrical Services, LLC v. Slepian, 358 Ill.App.3d 545, 831 N.E.2d 1169 (3^rd Dist. 2005).  The appellate courts have been reaching different conclusions about the rights and remedies asserted under the act and the Illinois Supreme Court has yet to chime in on the matter, although Artisan Design Build v. Bilstrom remains on the Leave to Appeal Docket for this term.

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Court Rules information provided from Inspection and Testing that is used for construction remains protected by Economic Loss Doctrine

Spray fireproofing on an I-beamThe GC hired Piasa to install drywall frame, spray-on fireproofing as well as acoustical and EIFS work.  The GC also hired Patriot to provide inspection and testing of the fireproofing material.  Part of Patriot’s contract required Patriot to report and deficiencies in the fireproofing to the GC and Piasa.  The project specs and manual called for this testing to occur as the fireproofing was installed and for prompt reporting of any deficiencies.

Piasa installed fireproofing and Patriot inspected it.

Piasa, was subcontractor on a project and was terminated by the GC.  Piasa filed this complaint against the GC for breach of contract and the surety for requesting monies it claimed it was owed, after a counterclaim was filed against Piasa, Piasa sued Patriot for negligent misrepresentation alleging that any defects it might be found liable for with regard to the fireproofing should be passed on to Patriot because Patriot had the responsibility for the testing.

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Court reaffirms that Receivership is the rule in commercial foreclosure actions, with few exceptions

Block 37It’s becoming apparent that apart from having financing in place to pay off the balance of a loan, no mortgagor in a commercial foreclosure action is going to be able to defeat a mortgagee’s request to appoint a receiver. 

Consider the recent case of Bank of America, N.A. v. 108 N. State Retail LLC et al. (Doc. No. 1-09-3523).  The matter involves the Block 37 project in downtown Chicago.  A consortium of lenders led by Bank of America filed suit to foreclose their interests in the retail and entertainment development when the developer defaulted on the terms of the loan.  According to the opinion, the developer signed several letters during the term of the project acknowledging the default at the request of the lenders to keep the project funded.  The events giving rise to the default were a failure by the developer to have $5 million in liquid assets and a failure to make sure the funds available under the loan equaled or exceeded the budget to complete the construction of the project as required by the loan agreement.

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The Economic Loss Doctrine Bars Suits For Negligence Where Only The Building Gets Damaged?

CASE STX480.jpgA recent Illinois Third District opinion has helped to clarify the economic loss doctrine’s application in the state and it’s a necessary read for any material suppliers and subcontractors.

The facts of Westfield Ins. Co. v. Birkey’s Farm Store, Inc. (3d Dist. Case no. 3-09-0501) are relatively easy to follow.  Plaintiff’s bought a tractor that had an added auto steer system from Birkey’s.  The tractor was made by CNH.  The tractor caught fire and was extensively damaged.  Plaintiff’s sued Birkey’s and CNH alleging counts in negligence and product liability amongst others.  Birkey’s and CNH moved to dismiss the negligence and product liability claims arguing they were barred by Illinois’ application of the economic loss doctrine.

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Can A Mortgagor Ever Show Good Cause For Not Appointing A Receiver For Non-Residential Property?

It’s an interesting question that’s finally been put to the Illinois First District Appellate Court.

Part 17 of the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1101 et seq.) is dedicated to the rules surrounding possession of the property during foreclosure.  Enacted in 1987, the Illinois statute drastically limits a trial court’s discretion regarding the appointment of a receiver and essentially turns the appointment into a mandatory condition provided a mortgagee can show it is entitled to possession of the property.  When a mortgagee is entitled to possession there is a presumption in favor of the appointment and a mortgagor wishing to retain possession has the burden of overcoming that presumption by showing “good cause” for NOT appointing a receiver.  See, 735 ILCS 5/15-1702(a) and 1701(b)(2).

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