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

• Decision Date: 23 September 2010
• Docket Number: No. 109156.,109156.
• Citation: 345 Ill.Dec. 32,238 Ill.2d 284,938 N.E.2d 471
• Parties: K. MILLER CONSTRUCTION COMPANY, INC., Appellee, v. Joseph J. McGINNIS et al., Appellants.
• Court: Illinois Supreme Court

938 N.E.2d 471

238 Ill.2d 284

345 Ill.Dec. 32

K. MILLER CONSTRUCTION COMPANY, INC., Appellee,

v.Joseph J. McGINNIS et al., Appellants.

No. 109156.

Supreme Court of Illinois.

Sept. 23, 2010.

Raymond J. Ostler, Nazia J. Hasan, Charles T. Little, John J. Lydon, of Gomberg, Sharfman, Gold & Ostler, P.C., of Chicago, for appellants.

Richard Lee Stavins, Edward S. Salomon, of Robbins, Salomon & Patt, Ltd., of Chicago, for appellee.

Joel J. Huotari, Scott C. Sullivan, of Williams-McCarthy, LLP, of Rockford, for amici curiae Timothy R. Fitzgerald and Tracy Fitzgerald.

[345 Ill.Dec. 35, 238 Ill.2d 286]

OPINION

Justice BURKE delivered the judgment of the court, with opinion.

The Home Repair and Remodeling Act (815 ILCS 513/15 (West 2006)) states that, "[p]rior to initiating home repair or remodeling work for over $1,000, a person engaged in the business of home repair or remodeling shall furnish to the customer for signature a written contract or work order." At issue here is whether a home remodeling contractor who violates this provision and enters into an oral contract for home remodeling work over $1,000 may enforce the oral contract or seek recovery in quantum meruit against a homeowner who has refused to pay for a completed home remodeling project. The appellate court concluded that such a contractor may not enforce the oral contract but mayseek recovery in quantum meruit. 394 Ill.App.3d 248, 332 Ill.Dec. 857, 913 N.E.2d 1147. For the reasons that follow, we hold that recovery is available under both theories.

Background

The plaintiff, K. Miller Construction Company, Inc., filed a second-amended complaint in the circuit court of Cook County against the defendants, Joseph and Frances McGinnis. The complaint alleged the following.

Plaintiff is an Illinois construction firm whose sole owner is Keith Miller. Defendant Joseph McGinnis is an Illinois real estate attorney who has been in practice since 1970 and been a division counsel for United General Title Insurance Company for 10 years. Defendant Frances McGinnis is Joseph McGinnis's wife. Plaintiff has done remodeling work for defendants in the past and, prior to the initiation of this litigation, Joseph McGinnis and Miller were friends.

In the spring of 2004, defendants purchased a three-flat apartment building in Chicago. Defendants intended to convert the building into a single-family residence by demolishing and rebuilding the interior of the building while retaining the building's exterior structure. Architectural plans were drawn up and several discussions took place among defendants, the architect and Miller about the scope and details of the work to be performed. In

[345 Ill.Dec. 36, 938 N.E.2d 475]

the fall of 2004, plaintiff entered into an oral contract with defendants to undertake the remodeling project as general contractor for the sum of $187,000.

In December 2004 and January 2005, defendants told Miller that they wanted to "vastly increase" the work to be performed on the building and that the architect would develop new plans and specifications for the expanded project. The new work included, among other things, lowering of the basement foundation and floor, installation of steel beams and framework to replace wood materials, replacement of plumbing, installation ofadditional heating, ventilation and air conditioning, and related changes. These modifications raised the total cost of the project to approximately $500,000.

Defendants instructed Miller to assist them in obtaining a new building permit for the construction changes. The permit was issued by the City of Chicago in January 2005. Plaintiff proceeded to perform the construction ordered by defendants according to the revised architectural plans and the new building permit.

Defendants paid the first $65,000 of invoices issued by plaintiff from April 2005 to June 2005. In September 2005, plaintiff submitted an invoice to defendants for $58,000. Defendants refused to pay the invoice and told Miller they did not want to make any further payments until all construction work on the project was completed. Plaintiff was unable to finance the remainder of the construction on its own and, therefore, obtained a bank line of credit for $150,000 to complete the remodeling project.

Defendants visited the construction site at least weekly in 2005 and 2006 to review and give approval to construction work plaintiff had performed. In June and July of 2006, defendants conducted final walk-throughs of the property. Defendants approved all of the construction work with the exception of certain flooring that defendants estimated would cost $300 to repair. Plaintiff's final day of construction on the project was July 10, 2006. Defendants made some additional payments to plaintiff but at the close of construction, the balance due to plaintiff for labor and materials furnished was over $300,000. Defendants refused to pay plaintiff any of this amount.

Plaintiff thereafter filed a three-count, second-amended complaint against defendants. Count I sought to foreclose a mechanic's lien. Count II alleged a breach of contract. Count III, which was pled in the alternative,sought recovery in quantum meruit for the reasonable value of plaintiff's work.

Defendants filed a motion to dismiss pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2006)). With respect to count II of plaintiff's complaint, defendants maintained that the oral contract plaintiff entered into with defendants "violates Illinois law and is therefore not enforceable." In support, defendants pointed to section 15 of the Home Repair and Remodeling Act (Act) (815 ILCS 513/15 (West 2006)), which states that persons "engaged in the business of home repair or remodeling" shall provide customers with "a written contract or work order" prior to beginning work on a project costing more than $1,000, and section 30 of the Act (815 ILCS 513/30 (West 2006)), which at the time plaintiff filed its complaint, stated that it is "unlawful" to engage in home remodeling "before obtaining a signed contract or work order over $1,000." Defendants noted that plaintiff's complaint alleged that the remodeling contract was not in writing and that it was for work totaling more than $1,000. Based on these facts, defendants maintained that the contract violated the

[345 Ill.Dec. 37, 938 N.E.2d 476]

Act and was unenforceable and, therefore, that count II of plaintiff's complaint should be stricken. Further, because a mechanic's lien may be enforced only if there is a valid underlying contract, defendants contended that count I of plaintiff's complaint should also be stricken.

With respect to count III of plaintiff's complaint, defendants cited to Smith v. Bogard, 377 Ill.App.3d 842, 848, 316 Ill.Dec. 476, 879 N.E.2d 543 (2007), wherein the appellate court held that allowing a contractor to recover in quantum meruit when he has breached the writing requirement of the Act "would run afoul of the legislature's intent of protecting consumers, would reward deceptive practices, and would be violative of public policy." Relying on Bogard, defendants contended that count III of plaintiff'scomplaint should be stricken and plaintiff's action dismissed.

The circuit court granted defendants' motion and dismissed plaintiff's cause of action with prejudice.

The appellate court affirmed in part and reversed in part. 394 Ill.App.3d 248, 332 Ill.Dec. 857, 913 N.E.2d 1147. The appellate court unanimously agreed that plaintiff's claims for breach of contract and foreclosure of mechanic's lien could not go forward. The appellate court reasoned that because the Act imposes a writing requirement for remodeling work costing over $1,000, the Act necessarily "bars the enforcement of an oral contract." 394 Ill.App.3d at 254, 332 Ill.Dec. 857, 913 N.E.2d 1147.

However, on the question of whether plaintiff could recover in quantum meruit, the appellate court was divided. Justice Garcia, writing the lead opinion for the court, concluded that plaintiff could proceed with its quantum meruit claim because there was "no clear and plain intent in the Act to do away with quantum meruit, an equitable remedy that is a part of our common law going back to the times when Abraham Lincoln practiced in our courts." 394 Ill.App.3d at 258, 332 Ill.Dec. 857, 913 N.E.2d 1147. In reaching this conclusion, Justice Garcia expressly disagreed with the appellate court's decision in Bogard. 394 Ill.App.3d at 258-61, 332 Ill.Dec. 857, 913 N.E.2d 1147.

Justice Robert Gordon agreed with the result reached by Justice Garcia, but not his reasoning. Justice Gordon pointed to the last sentence of section 30 of the Act, which, at the time plaintiff's complaint was filed, stated that the failure to obtain a written contract is "unlawful but is not exclusive nor meant to limit other kinds of methods, acts, or practices that may be unfair or deceptive" (815 ILCS 513/30 (West 2006)). Justice Gordon concluded that this sentence "leaves the door open to equitable remedies, such as the quantum meruit claim in this case." 394 Ill.App.3d at 266, 332 Ill.Dec. 857, 913 N.E.2d 1147 (Gordon, J., specially concurring).

Justice Wolfson dissented. Justice Wolfson concluded that quantum meruit was unavailable to plaintiff, as there was no authority "supporting the proposition that an act declared unlawful by the legislature can be sanitized by filtering it through a court of equity." 394 Ill.App.3d at 267, 332 Ill.Dec. 857, 913 N.E.2d 1147 (Wolfson, J., dissenting).

We allowed defendants' petition for leave to appeal. 210 Ill.2d R. 315.

Analysis

The circuit court granted defendants' motion to dismiss brought pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2006)). A section 2-615 motion to dismiss challenges the legal sufficiency of a complaint based on defects apparent on its face.

[345 Ill.Dec. 38, 938 N.E.2d 477]

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