Rich Guerard's Blog

Contractor Losses Claim for Mechanics’ Lien and Breach of Contract Claim by Failing to Deliver Invoices Required by the Contract.

The case of Kasinecz v. Duffy is an instructive reminder of the issues of contractor performance, invoicing and how it can impact negatively mechanics’ lien and breach of contract claims (2013 IL App (2d) 121329-U appeal denied, 2 N.E.3d 1046 (Ill. 2013).   This was the second time the Appellate Court reviewed the proceedings in this case.  This case grew out of a dispute that arose when Kasinecz, a general contractor, performed work on a home owned by Duffy during 2004 and early 2005. A dispute arose between them regarding payment, and on March 9, 2005, Kasinecz removed his tools and workmen from the site. The planned home was not completed and Duffy did not pay Kasinecz the remainder of the contract price. Kasinecz then sued, asserting claims for mechanic’s lien and breach of contract claims.

Kasinecz argued that the trial court erred in finding that he had breached the written contract by failing to provide Duffy with written invoices prior to seeking progress payments In raising these arguments, the Court stated Kasinecz, “is confusing two separate things: the sworn contractor’s statement which must be supplied by a contractor if a homeowner asks for it, pursuant to section 5 of the Mechanic’s Lien Act (770 ILCS 60/5 (West 2006)), and written invoices, which were a requirement imposed by the written contract Kasinecz signed.”  The Courts previous decision found that Duffy had not expressly asked for a sworn contractor’s statement and was not prejudiced by the lack of one, and so Kasinecz’s contract and mechanic’s lien claims could not be dismissed solely on the basis that Kasinecz had failed to supply Duffy with such a statement in March 2005. However, in his written contract with Duffy, Kasinecz agreed that progress payments were to be made “upon invoicing.” The Court found, this contractual obligation presented a different issue than the statutory obligation which was the subject of its earlier decision.

Kasinecz protested that there was no evidence that Duffy asked for such written invoices. He also pointed to Duffy’s testimony that Kasinecz provided him with the copies of checks and receipts he requested. However, the court continued, unlike the duty to provide a sworn contractor’s statement, which (pursuant to section 5 of the Mechanic’s Lien Act) is triggered by a homeowner’s request, Kasinecz’s duty to provide written invoices in order to receive payment was a term of the contract. The contract did not state that the duty to provide a written invoice arose only if the homeowner requested such an invoice. Nor did the contract state that the invoice requirement could be met if Kasinecz supplied Duffy with a “voluminous” (according to Kasinecz) pile of copied checks and receipts for him to go through. Rather, the Court pointed out the contract provided that “payment shall be made upon invoicing.”  “Whether or not Duffy requested a written invoice is simply irrelevant to the question of whether Duffy was required to pay Kasinecz without such an invoice”, stated the Court. Pursuant to the contract, no payment was due without an invoice. Kasinecz pulled off the job in response to Duffy’s refusal to pay him, but that nonpayment was justified under the contract. Therefore, the trial court did not err in finding that Kasinecz breached the contract first and entering judgment in favor of Duffy on the breach of contract claim.

The trial court further found that at the time Kasinecz pulled off the job site, the work had not been substantially completed.  After it determined that Kasinecz had breached the contract by not substantially completing the work, the trial court examined the effect of this breach on Kasinecz’s mechanic’s lien claim. The court noted that, generally, a contractor may not recover on a lien where he has not fully performed the contract, e.g., where he has breached the contract. Fieldcrest Builders, Inc. v. Antonucci, 311 Ill.App.3d 597, 609 (1999). However, under the doctrine of substantial completion, the contractor may still recover if he can show that he substantially performed the contract in a workmanlike manner. Id. at 610. If the contractor can show this, he can enforce a lien for the value of the work completed under the contract, minus any deductions for the cost of completing the work. Id. If the contractor cannot make this showing, he may not enforce a lien for the work.   For the reasons stated, the Court affirmed the judgment of the circuit court of Du Page County.