K. Miller Const. Co., Inc. v. McGinnis

• Decision Date: 10 August 2009
• Docket Number: No. 1-08-2514.,1-08-2514.
• Citation: 913 N.E.2d 1147
• Parties: K. MILLER CONSTRUCTION COMPANY, INC., Plaintiff-Appellant, v. Joseph J. McGINNIS and Francis M. McGinnis, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

913 N.E.2d 1147

K. MILLER CONSTRUCTION COMPANY, INC., Plaintiff-Appellant, v. Joseph J. McGINNIS and Francis M. McGinnis, Defendants-Appellees.

No. 1-08-2514.

Appellate Court of Illinois, First District, First Division.

August 10, 2009.

Robbins, Salomon & Patt, Ltd. (Richard Lee Stavins and Vitaly Gashpar, of Counsel), Chicago, IL, for Appellant.

Gomberg, Sharfman, Gold & Ostler, P.C. (Raymond J. Ostler and Nazia J. Hasan, of Counsel), Chicago, IL, for Appellees.

Justice GARCIA delivered the opinion of the court.

In 2000, the Illinois legislature passed the Home Repair and Remodeling Act (Home Repair Act or the Act) (815 ILCS 513/1 et seq. (West 2006)), declaring it "unlawful" for a contractor to "charge for remodeling or repair work before obtaining a signed contract or work order over $1,000." 815 ILCS 513/30 (West 2006). The Act decrees that "the business of home repair and remodeling is a matter affecting the public interest." 815 ILCS 513/5 (West 2006). The stated aim of the legislation is to improve "communications and accurate representations between persons engaged in the business of making home repairs or remodeling and their consumers[, which] will increase consumer confidence, reduce the likelihood of disputes, and promote fair and honest practices in that business in this State." 815 ILCS 513/5 (West 2006). In the course of passing the legislation, elected representatives made clear that a purpose of the Act is to protect vulnerable citizens from disreputable home repair operations.

In this appeal, the only open question is whether the legislature's declaration that oral contracts falling under the Home Repair Act are "unlawful" means that the equitable remedy of quantum meruit is foreclosed in an action between a well-established contractor and a sophisticated consumer (a lawyer), where no allegation is made that the contractor engaged in anything other than a fair and honest practice, and where, based on the allegations of the complaint, the contractor took out a construction loan to complete the project, which, after a "walk-through" was approved by the consumer. In other words, did the legislature, in seeking to protect "uninformed" citizens against disreputable contractors, intend to bar all contractors, including those that would otherwise not fall within the group of home repair operations that spurred the legislature into passing the Act, from seeking any remuneration in a court of equity?

We acknowledge that the Fourth District of the Appellate Court in Smith v. Bogard, 377 Ill.App.3d 842, 316 Ill.Dec. 476, 879 N.E.2d 543 (2007), held that a quantum meruit claim is barred by the Act. Based on our own analysis of the language in the Act, we conclude that the term "unlawful" is not a clear and plain expression of legislative intent to repeal the common law remedy of quantum meruit in the context of the home repair and remodeling industry. Therefore, quantum meruit remains an equitable remedy available under the Home Repair Act and Miller may pursue its claim against the McGinnises, where the nature of the remedy itself provides ample protection against abuses the passage of the Act was meant to address.

BACKGROUND

When the McGinnises decided to remodel their Chicago property in the fall of 2004, they contacted Miller about the construction. Miller's sole owner was, at the time, a friend of the McGinnises, who had performed remodeling work for them on other property in 1997. The parties reached an oral agreement for the work, but never reduced it to writing. In its complaint, Miller alleged that the McGinnises initially agreed to pay $187,000 for the remodeling work, consistent with a written proposal from another construction company the McGinnises displayed to Miller. Much like many homeowners undergoing a remodeling project, the McGinnises decided to expand the scope of the project significantly in 2005 with a corresponding increase in the construction price, ultimately reaching slightly more than $500,000, according to Miller's second amended complaint. Because of the expanded plans, the McGinnises obtained a new building permit in January 2005, which provided for the expanded scope of the remodeling project.

The McGinnises paid Miller's initial invoices totaling $65,000. However, in September 2005, they refused to pay a $58,000 invoice-to-date, stating they would not make any further payments until the project was completed. Because Miller could not complete the project without additional capital, Miller obtained a $150,000 line of credit to pay for materials and subcontractors.

In 2006, Miller completed the project in accordance with the expanded plans. The McGinnises conducted a "walk-through" of the property and approved of all the construction work, asking only for a $300 credit to address minor floor damage. The McGinnises made some further payments to Miller, but refused to exceed payments above $177,580.33.

Miller filed a three-count complaint against the McGinnises in October 2006. Miller alleged it provided labor, materials, and services with an unpaid balance due from the McGinnises. In count I of the complaint, Miller alleged that it was entitled to a lien on the property in the amount of the unpaid balance based on the parties' oral contract. In count II, Miller sought recovery of the unpaid balance based upon the McGinnises' breach of the oral contract. In count III, Miller sought compensation for its labor, materials, and services on a quantum meruit theory. The McGinnises did not file an answer to the complaint. Rather, the McGinnises filed a motion to dismiss the complaint arguing that the three counts were legally insufficient under section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2006)) because Miller failed to obtain a written contract before it began work as required in section 30 of the Act (815 ILCS 513/30 (West 2006)) and, independently, count III failed to sufficiently allege the elements of quantum meruit. Judge Bartkowicz dismissed the original complaint, but granted Miller leave to file an amended count III. Miller filed a second amended complaint, with an amended count III and pled anew counts I and II, to preserve them for review. The McGinnises filed a nearly identical section 2-615 motion to dismiss, which no longer challenged the legal sufficiency of the quantum meruit allegations. Judge Bartkowicz granted the motion to dismiss all counts as barred by the Act. This timely appeal followed.

ANALYSIS

I. Standard of Review

Judge Bartkowicz granted the McGinnises' motion to dismiss all counts of Miller's second amended complaint as barred by the Act, pursuant to section 2-615.¹ Springfield Heating & Air Conditioning, Inc. v. 3947-55 King Drive at Oakwood, LLC, 387 Ill.App.3d 906, 909, 327 Ill.Dec. 245, 901 N.E.2d 978 (2009). A section 2-615 motion to dismiss challenges the legal sufficiency of a complaint. Springfield Heating, 387 Ill.App.3d at 908, 327 Ill.Dec. 245, 901 N.E.2d 978. On review, "`all well-pleaded facts are taken as being true and all reasonable inferences from those facts are drawn in favor of the plaintiff.'" Springfield Heating, 387 Ill.App.3d at 908-09, 327 Ill.Dec. 245, 901 N.E.2d 978, quoting Luise, Inc. v. Village of Skokie, 335 Ill.App.3d 672, 685, 269 Ill.Dec. 556, 781 N.E.2d 353 (2002). Dismissal is proper if the complaint's allegations, viewed in the light most favorable to the plaintiff, are insufficient to state a cause of action upon which relief can be granted. Springfield Heating, 387 Ill.App.3d at 909, 327 Ill.Dec. 245, 901 N.E.2d 978. Our standard of review is de novo.

Section 15 of the Act requires persons "engaged in the business of home repair or remodeling" to provide customers with "a written contract or work order" prior to beginning work on a project with a cost over $1,000. 815 ILCS 513/15 (West 2006). This is reiterated in section 30:

"It is unlawful for any person engaged in the business of home repairs and remodeling to remodel or make repairs or charge for remodeling or repair work before obtaining a signed contract or work order over $1,000 and before notifying and securing the signed acceptance or rejection, by the consumer, of the binding arbitration clause and the jury trial waiver clause as required in Section 15 and Section 15.1 of this Act." 815 ILCS 513/30 (West 2006).

Our primary objective in interpreting this statute is to "ascertain and give effect to the intent of the legislature." People ex rel. Madigan v. Kinzer, 232 Ill.2d 179, 184, 327 Ill.Dec. 546, 902 N.E.2d 667 (2009). "The best indication of legislative intent is the statutory language given its plain and ordinary meaning." Kinzer, 232 Ill.2d at 184, 327 Ill.Dec. 546, 902 N.E.2d 667.

II. Contentions on Appeal

Miller raises two substantive contentions: (1) Miller was entitled to recover on the lien foreclosure and breach of contract claims; and (2) Miller was entitled to recover on the quantum meruit claim.

A. Oral Contract

We find no merit to Miller's contention that his lien foreclosure claim in count I and his breach of contract claim in count II can stand in the face of the plain language of the Act that bars recovery for work that exceeds $1,000 on a residence without a written contract or work order. 815 ILCS 513/30 (West 2006). Counts I and II in Miller's second amended complaint are based on proof of the parties' oral contract. Miller cites no authority for its contention that the Act does not apply to "time and materials" oral contracts. Miller argues that time and materials contracts are exempt from the Act because "it is impossible for parties to prepare `a written contract or work order that states the total costs.'" We find the argument untenable. "Nothing in the Act precludes a contractor from providing an updated estimate or work order as the circumstances may warrant." Central Illinois Electrical Services, L.L.C. v. Slepian, 358 Ill.App.3d 545, 549, 294 Ill.Dec. 844, 831 N.E.2d 1169 (2005...