Attorney Fees in Lien Cases: Only paid by the Owners

In a recent case the appellate court of Kane county upheld section 17(b) of the Illinois Mechanics Lien Act, which prohibits attorneys’ fees awards against subsequent purchasers. The plaintiff Action Plumbing Company (Action Plumbing) filed claims for liens on property developed by Neumann Homes (Neumann) when it did not receive payment for work it did for Neumann’s residential complexes. Before Action Plumbing filed the claims though, Neumann sold its units to new occupants and when Action Plumbing decided to foreclose on the claims, it filed 16 separate complaints to foreclose, naming Neumann and the new owners of the units (subsequent purchasers) as defendants. In addition to seeking payment for services rendered with interest, Action Plumbing demanded its attorneys’ fees be paid in accordance with section 17(b) of the Illinois Mechanics Lien Act (Lien Act).

As soon as the trial court began, the defendants jointly submitted a motion to dismiss the lien claims, arguing that the liens did not meet standards specified by the Lien Act. Shortly after that motion was submitted, Neumann filed for bankruptcy, putting a stay on the proceedings. After the trial resumed the court denied the motion to dismiss and ordered the defendants to answer Action Plumbing’s complaint. Neumann did not answer and was defaulted but the subsequent purchasers did answer and asked for a partial summary judgment that exonerated them from paying any of Action Plumbing’s attorneys’ fees. The trial court agreed that only Neumann, the owner of the property who contracted Action Plumbing, could be assessed Action Plumbing’s attorneys’ fees. The trial judge is even quoted as saying, “when I’m taxing attorneys’ fees, I’m taxing them on Neumann Homes.”

The court ordered decrees of foreclosure on all 16 claims, and in each claim the amount included Action Plumbing’s attorneys’ fees. Even though the language of the decree stated that the attorneys’ fees are, “taxed costs against Neumann” Neumann had defaulted on all its cases and no longer had any interest in the property, leaving the subsequent purchasers in a predicament; either pay Action Plumbing’s attorneys’ fees or lose their property in a judicial auction.

The subsequent purchasers quickly filed an appeal, asserting that the trial court erred in putting the attorneys’ fees in their foreclosure decrees. The Appellate court understood section 17(b) and how it states, “the court may tax that owner, but not any other party, the reasonable attorney’s fees,” of the lien claimant. It also recognized the trial court’s intent to only fine Neumann Action Plumbing’s attorneys’ fees. However, Neumann no longer had any interest in the properties and had defaulted in each case, putting itself in a position where it did not have to pay the claim or lose any interest. Therefore, the foreclosure decrees placed the subsequent purchasers in a situation where they had to pay Action Plumbing’s attorneys’ fees or lose their rights to the property entirely. The appellate court determined that by including Action Plumbing’s attorneys’ fees in each decree, the trial court improperly levied the attorneys’ fees on the subsequent purchasers, in clear violation of section 17(b). It ruled that the trial court erred in inserting Action Plumbing’s attorneys’ fees in each decree and partially reversed the decision of the trial court, remanding the case for additional proceedings pursuant to their opinion. The court did allow Action Plumbing to seek awards for its attorneys’ fees in all proceedings relevant to the claims’ case, but only from Neumann.

Section 17(b) of the Lien act is not an ambiguous statute, its language is clear; only the owner can be taxed the attorney fees of the lien claimant. The appellate court interpreted the law correctly and ensured that the subsequent purchasers would not have to pay Action Plumbing’s attorneys’ fees. These two rulings protect the subsequent purchasers from being unlawfully taxed and upholding section 17(b) of the Illinois Mechanics Lien Act.

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