2 2021
BREACH OF CONTRACT
The essential elements of a breach of contract claim in Illinois are (1) the existence of a valid and
enforceable contract, (2) performance by the plaintiff, (3) breach of the contract by the
defendant, and (4) resulting injury to the plaintiff. Nielsen v. United Servs. Auto. Ass’n, 244 Ill.
App. 3d 658, 612 N.E.2d 526 (2d Dist. 1993). For breaches of construction contracts, the ‘inquiry’
must be an act or omission in a construction related activity that involve the design, planning,
supervision, and observation or management of a construction project. 735 ILCS 5/13-214(b).
A subcontractor’s liability for breach of contract is derivative, or dependent upon, the general
contractor’s liability to the owner. Therefore, a general contractor may properly pursue a third-
party complaint against a subcontractor where the general contractor (1) asserts a breach of the
terms of its agreement with a subcontractor and (2) seeks recovery for any loss incurred by the
plaintiff. Vicorp Rests. v. Corinco Insulating Co., 222 Ill. App. 3d 518, 584 N.E.2d 229 (1st Dist.
1991).
NEGLIGENCE
Tort Claims – Negligence
Since the repeal of the Illinois Structural Work Act, 740 Ill. Comp. Stat. 150/0.01 et seq., in 1995,
most construction negligence claims have been based on Restatement (Second) of Torts § 414
(1965), imposing a duty of care on contractors, or § 343, imposing a duty of care on owners or
possessors of land.
1
Bokodi v. Foster Wheeler Robbins, Inc., 312 Ill. App. 3d 1051, 728 N.E.2d 726
(1st Dist. 2000) (discussing § 414); Deibert v. Bauer Bros. Const. Co., 141 Ill. 2d. 430, 566 N.E.2d
239 (1990) (applying § 343 to the defendant general contractor, where the plaintiff subcontractor
was injured on a construction site). Restatement (Second) of Torts §§ 414 and 343 are not
mutually exclusive; rather, each offers an independent basis for recovery. Clifford v. Wharton
Bus. Grp., LLC, 353 Ill. App. 3d 34, 817 N.E.2d 1207 (1st Dist. 2004).
Restatement (Second) of Torts § 414
Illinois has adopted the Restatement (Second) of Torts § 414, which provides:
One who entrusts work to an independent contractor, but who retains the control
of any part of the work, is subject to liability for physical harm to others for whose
safety the employer owes a duty to exercise reasonable care, which is caused by
his failure to exercise his control with reasonable care.
In order to state a cause of action for common law negligence under § 414, a plaintiff must allege
(1) that the defendant owed a duty to the plaintiff, (2) that the defendant breached that duty,
and (3) that the plaintiff suffered a compensable injury proximately caused by the defendant's
breach. Bokodi v. Foster Wheeler Robbins, Inc., 312 Ill. App. 3d 1051, 728 N.E.2d 726 (1st Dist.
1
Although §§ 414 and 343 have been adopted in Illinois for some time, they were rarely pleaded prior to repeal of the
Structural Work Act because the Act provided an easier standard of proof for plaintiffs to meet and did not take into
account a plaintiff’s comparative negligence, thereby reducing the risk of a diminished judgment.
3 2021
2000).
Section 414 is an exception to the general rule that one who employs an independent contractor
is not liable for the acts or omissions of the independent contractor. Bokodi v. Foster Wheeler
Robbins, Inc., 312 Ill. App. 3d 1051, 728 N.E.2d 726 (1st Dist. 2000) (citing Gomien v. Wear-Ever
Aluminum, Inc., 50 Ill. 2d 19, 276 N.E.2d 336 (1971)). Under § 414, an employer who retains
control of any part of the work will be directly liable for injuries resulting from his failure to
exercise control with reasonable care. Carney v. Union Pac. R.R. Co., 2016 IL 118984, reh'g denied
(Jan. 23, 2017); see also Moiseyev v. Rot’s Bldg. & Dev., Inc., 369 Ill. App. 3d 338, 860 N.E.2d 1128
(1st Dist. 2006) (finding control when the defendant supervises the entire job and effects the
methods of the contractor's work, or supervises the entire safety program and fails to prevent
the contractors from doing the details of the work in a way unreasonably dangerous to others, if
he knows or by the exercise of reasonable care should know that the contractors' work is being
so done, and has the opportunity to prevent it by exercising the power of control which he has
retained in himself); see also Bokodi v. Foster Wheeler Robbins, Inc., 312 Ill. App. 3d 1051, 728
N.E.2d 726 (1st Dist. 2000) (holding that defendant-general contractor retained control over
roofing and siding work where the defendant held weekly meetings to discuss upcoming
construction hazards, defendants’ employees walked the construction site to ensure its safety
guidelines were followed, and defendant’s employees had power to stop construction at any
time if they witnessed a safety hazard); Larson v. Commonwealth Edison Co., 33 Ill. 2d 316, 211
N.E.2d 247 (1965); Claudy v. City of Sycamore, 170 Ill. App. 3d 990, 524 N.E.2d 994 (1988), rev’d
on other grounds, Claudy v. Commonwealth Edison Co., 169 Ill. 2d 39, 660 N.E.2d 895 (1995). The
question of control is one of law to be decided by a court. Aguirre v. Turner Constr. Co., 501 F.3d
825 (7th Cir. 2007).
Prior to 2016, Illinois courts approached the theory underlying the § 414 “retained control”
exception to the general rule of non-liability in a twofold manner: first, by retaining control over
the operative details of a contractor or subcontractor’s work, an owner or general contractor
may become derivatively, or vicariously, liable for the contractor or subcontractor’s negligence;
alternatively, even in the absence of control over operative details, an owner or general
contractor may be directly liable for failing to exercise actual control with reasonable care.
Cochran v. George Sollitt Constr. Co., 358 Ill. App. 3d. 865, 832 N.E.2d 355 (1st Dist. 2005). But
see Stanley v. Ameren Illinois Co., 982 F. Supp. 2d 844 (N.D. Ill. 2013) (different interpretation of
Restatement (Second) of Torts § 414). However, in Carney v. Union Pac. R.R. Co., 2016 IL 118984,
the Illinois Supreme Court held that § 414 does not apply to vicarious liability. Instead, the court
explained, agency law encompasses an employer’s vicarious liability for the torts of its
contractors and employees and § 414 “takes over where agency law ends [to encompass direct
liability].” In so holding, the court did not foreclose the theory of vicarious liability or the
requirement to show an employer retained a certain level of control, as set forth under agency
law. Id. Rather, it merely distinguished the areas of law undergirding two distinct forms of
liability. Id.
Although early cases blurred the distinction between vicarious and direct liability, see, for
example—Pasko v. Commonwealth Edison Co., 14 Ill. App. 3d 481, 302 N.E.2d 642 (1st Dist. 1974);
4 2021
Weber v. Northern Illinois Gas Co., 10 Ill. App. 3d 625, 295 N.E.2d 41 (1st Dist. 1973)—
contemporary cases have clearly delineated the level of control sufficient to impose derivative
liability. Reico v. GR-MHA Corp., 366 Ill. App 3d 48, 851 N.E.2d 106 (1st Dist. 2006) (finding that
general contractor did not exercise sufficient control over acts of subcontractor to be held liable
for wrongful death of subcontractor's employee who fell from a ladder; contractor did not retain
enough control over project to subject itself to vicarious liability, did not undertake to supervise
workers so as to subject itself to direct liability, and had no actual or constructive knowledge that
husband would carry bundle of shingles up a ladder, causing his fall); Cochran v. George Sollitt
Constr. Co., 358 Ill. App. 3d. 865, 832 N.E.2d 355 (1st Dist. 2005) (citing Shaughnessy v. Skender
Constr. Co., 342 Ill. App. 3d 730, 794 N.E.2d 937 (1st Dist. 2003)) (noting that the general
contractor's contractual undertaking required it to supervise and direct the work; be responsible
for and control the construction means, methods, techniques, sequences and procedures for
coordinating all portions of the work; be responsible for initiating, maintaining and supervising
all safety precautions and programs; and to employ a superintendent whose duties included
prevention of accidents—did not indicate control over the manner in which the employee of the
subcontractor performed his work); Kotecki v. Walsh Constr. Co., 333 Ill. App. 3d 583, 776 N.E.2d
774 (1st Dist. 2002) (finding that a general contractor’s general right to start, stop, and inspect
progress was insufficient to impose derivative liability where subcontractor controlled manner
of work by furnishing supplies, giving assignments, coordinating work, and inspecting work);
Rangel v. Brookhaven Constructors Inc., 307 Ill. App. 3d 835, 719 N.E.2d 174 (1st Dist. 1999)
(finding that the general contractor's retention of the right to inspect the work done, order
changes to the specifications and plans, and ensure that safety precautions were observed and
that the work was done in a safe manner did not show that the general contractor retained
control over the means of the independent contractor's work).
Evidence that a defendant (1) retained the right to control or supervise work, (2) had actual
knowledge of an unsafe condition, and (3) took no steps to stop the work or otherwise remedy
the situation will still subject the defendant to direct, though not derivative, liability under § 414.
Cochran v. George Sollitt Constr. Co., 358 Ill. App. 3d. 865, 832 N.E.2d 355 (1st Dist. 2005); see
also Calderon v. Residential Homes of Am., 381 Ill. App. 3d 333, 885 N.E.2d 1138 (1st Dist. 2008)
(“The general contractor's knowledge, actual or constructive, of the unsafe work methods or a
dangerous condition is a precondition to direct liability. When a general contractor has an
insufficient opportunity to observe unsafe working conditions, then knowledge will not be
inferred and direct liability will not ensue.” (citation omitted)); Pestka v. Town of Fort Sheridan
Co., 371 Ill. App. 3d 286, 862 N.E.2d 1044 (1st Dist. 2007) (explaining that the employer who does
not control the operative details of a contractor’s work may still be subject to direct liability when
it contractually assumes supervisory duties on a construction project and fails to exercise those
responsibilities with reasonable care).
In Martens v. MCL Construction Corp., 347 Ill. App. 3d 303, 807 N.E.2d 480 (1st Dist. 2004), the
First District identified three distinct types of control: operational, supervisory, and contractual.
The presence or absence of operational control turns on whether the contractor or subcontractor
was “free to perform its work in its own way.” Id. Similarly, in order to establish negligence
based on a failure to exercise supervisory control—i.e., power to direct the order in which work
5 2021
is done or to forbid its being done in a dangerous manner—a plaintiff must prove that the
defendant (1) maintained an extensive work site presence and (2) failed to exercise supervisory
control with reasonable care. Id. Finally, in order to prove contractual control, a plaintiff must
establish that the defendant contractually reserved the right to control the specific means,
methods, techniques, procedures, and coordination of work. Id. Conversely, a general
reservation of right to supervise work or require adherence to a safety manual is not per se
retained control. Id. The contractual language must indicate that a defendant will retain control
such that a plaintiff is not entirely free to do the work in its own way. Carney v. Union Pac. R.R.
Co., 2016 IL 118984, reh'g denied (Jan. 23, 2017). Nevertheless, despite the existence of a
contract, a plaintiff may indicate control by a defendant if the plaintiff can prove the defendant’s
conduct was at variance with the terms of the contract. Id.
The First District’s opinion in LePretre v. Lend Lease (US) Construction, Inc., 2017 IL App (1st)
162320, expands further upon the concept of contractual control discussed in Martens and
Carney. In LePretre, the court found that the general contractor did not owe a duty to plaintiff.
The court examined all of the relevant general and subcontracts and, although it found that the
general contractor retained control of the construction means and methods, was generally
responsible for safety, was required to provide reasonable protection to prevent damage and
injury, and was required to establish a safety program to effectuate these ends, it held that these
provisions were merely the basic rights reserved to a general contractor on a construction
project. Id. ¶¶ 34, 44, 45; see also Snow v. Power Construction Company, LLC, 2017 IL App (1st)
151226. The court also reasoned that the at-issue subcontract placed control of day to day trade
specific safety duties with the subcontractor. LePretre 2017 IL App (1st) 162320, ¶ 44.
In light of Martens and other Illinois decisions explaining the elements and factors used to prove
control under § 414, some commentators argue that Illinois Pattern Instructions for Construction
Negligence, I.P.I. (Civil) 55.00-55.04—in particular IPI (Civil) 55.03—are inconsistent with the law.
Specifically, the jury instructions do not clearly explain that under § 414, the central issue to
finding common law negligence is whether the defendant(s) controlled the means and methods
or operative details of the plaintiff or the plaintiff’s employer. Indeed, the current construction
negligence instructions refer to “control” without any mention of means, methods, or operative
details.
The most notable Illinois construction negligence cases are Fris v. Personal Products Co., 255 Ill.
App. 3d 916, 627 N.E.2d 1265 (3d Dist. 1994), Rangel v. Brookhaven Constructors, Inc., 307 Ill. App.
3d 835, 719 N.E.2d 174 (1st Dist. 1999), Bokodi v. Foster Wheeler Robbins, Inc., 312 Ill. App. 3d
1051, 728 N.E.2d 726 (1st Dist. 2000); and Carney v. Union Pac. R.R. Co., 2016 IL 118984.
Restatement (Second) § 343
Illinois has adopted § 343 of the Restatement (Second) of Torts. In addition to the retained
control exception in § 414, plaintiffs may bring a construction negligence claim under § 343,
which provides:
§ 343. Dangerous Conditions Known to or Discoverable by Possessor
6 2021
A possessor of land is subject to liability for physical harm caused to his invitees
by a condition on the land if, but only if, he
(a) knows or by the exercise of reasonable care would discover the condition,
and should realize that it involves an unreasonable risk of harm to such
invitees, and
(b) should expect that they will not discover or realize the danger, or will fail to
protect themselves against it, and
(c) fails to exercise reasonable care to protect them against the danger.
It is a prerequisite to liability under § 343 that the defendant be a possessor of the land.
Restatement (Second) of Torts § 328E provides that the term “possessor” with respect to
possession of land means “a person who is in occupation of the land with intent to control it.”
See Esser v. McIntyre, 169 Ill. 2d 292, 661 N.E.2d 1138 (1996) (explaining that the defendant is
not subject to premises liability where he did not “occupy land with the intent to control it”); see
also Simpson v. Byron Dragway, Inc., 210 Ill. App. 3d 639, 569 N.E.2d 579 (2d Dist. 1991) (finding
that the defendant race car association was not subject to premises liability for race car driver’s
death when it did not own or control the race track in question); Madden v. F.H. Paschen, 395 Ill.
App. 3d 362, 916 N.E.2d 1203 (1st Dist. 2009) (reasoning that the construction manager and
design consultant are not considered “possessors” of the land where they had no contractual
power to direct events on the jobsite and no power to exclude others from that site).
In Deibert v. Bauer Brothers Construction Co., 141 Ill. 2d 430, 566 N.E.2d 239 (1990), the Illinois
Supreme Court held that a general contractor qualifies as a “possessor” within the Restatement’s
definition of the term. As such, a general contractor has a duty to keep the construction site
reasonably safe for the benefit of construction workers on the job. Id.
In addition, § 343 requires complained-of conditions to be “on the land,” rather than simply
adjacent to the land. See Carney v. Union Pac. R.R. Co., 2016 IL 118984, reh'g denied (Jan. 23,
2017) (finding a faulty steel floor plate to be part of a bridge and not a condition “on the land”).
Illinois has also adopted § 343A of the Restatement (Second) of Torts, a pro-defendant exception
to § 343. See id. Section 343A provides that an owner or possessor of land cannot be held liable
for an invitee's injury when the condition which caused the injury was known or obvious to the
invitee. Id.; see also Gregory v. Beazer E., 384 Ill. App. 3d 178, 892 N.E.2d 563 (1st Dist. 2008)
(noting that an owner or possessor of land owes its invitees a common law duty of reasonable
care to maintain its premises in a reasonably safe condition, but no legal duty arises unless the
harm is reasonably foreseeable). The term “obvious” means that a reasonable person would
recognize both the condition and the risk involved. Green v. Jewel Food Stores, Inc., 343 Ill. App.
3d 830, 799 N.E.2d 740 (1st Dist. 2003). The rationale behind the limitation in § 343A is that a
possessor of land has no reason to anticipate harm from a hazard that is self-evident. Bucheleres
v. Chi. Park Dist., 171 Ill. 2d 435, 665 N.E.2d 826 (1996). Illinois courts, however, have carved out
two exceptions to the open and obvious defense: the deliberate encounter exception and the
distraction exception.
7 2021
The deliberate encounter exception provides that a landowner has a duty to warn business
invitees of open and obvious dangers where the landowner has reason to believe that a
reasonable person in the position of the invitee will deliberately encounter the danger because
the advantages of doing so would outweigh the apparent risk. LaFever v. Kemlite Co., 185 Ill. 2d
380, 706 N.E.2d 441 (1998) (finding that owner of fiberglass plant knew that fiberglass byproducts
in its waste facility posed a hazard to driver of waste truck who had to traverse refuse-covered
ground to do his job, and, thus, owed duty to driver who slipped and fell on refuse while servicing
waste facility under “deliberate encounter” exception to open and obvious doctrine). This
exception is most often applied in cases involving some form of economic compulsion—e.g.,
where employees are compelled to encounter a dangerous condition as part of their employment
obligations. Prostran v. City of Chi., 349 Ill. App. 3d 81, 811 N.E.2d 364 (1st Dist. 2004) (citing
Sollami v. Eaton, 201 Ill. 2d 1, 772 N.E.2d 215 (2002)).
The distraction exception provides that a landowner has a duty to warn business invitees of open
and obvious dangers where the landowner can reasonably foresee that the invitee will either be
distracted from discovering the danger or, after discovering the danger, will be distracted from
avoiding it. See Bieruta v. Klein Creek Corp., 331 Ill. App. 3d 269, 770 N.E.2d 1175 (1st Dist. 2002)
(finding the distraction of a coworker calling the plaintiff’s name—causing plaintiff to fall into
trench—was not reasonably foreseeable to the owner); see also Ward v. K Mart Corp., 136 Ill. 2d
132, 554 N.E.2d 223 (1990) (explaining that it was reasonably foreseeable that customers would
become distracted while exiting store with large purchases and collide with a post); Rivas v.
Westfield Homes, 295 Ill. App. 3d 304, 692 N.E.2d 1359 (2d Dist. 1998) (citing Deibert v. Bauer
Bros. Constr. Co., Inc., 141 Ill. 2d 430, 566 N.E.2d 239 (1990)). The distraction exception only
applies if the distractions occur at the time and place of injury. Hope v. Hope, 398 Ill. App. 3d
216, 924 N.E.2d 581 (4th Dist. 2010) (finding that the common, everyday activities of eating,
studying, watching television, and sleeping, all of which were undertaken at a different location
and time than the injury, were insufficient to invoke the distraction exception). Similarly, the
distraction exception is inapplicable where a plaintiff is distracted solely by his or her own
independent acts for which the defendant has no direct responsibility. See Wilfong v. L.J. Dodd
Constr., 401 Ill. App. 3d 1044, 930 N.E.2d 511 (2d Dist. 2010) (finding that the plaintiff created
the distraction to crossing the ruts by answering his cell phone and continuing to walk across the
construction site).
The deliberate encounter and distraction exceptions have had the effect of narrowing the duty
of possessors of land created under § 343. Joyce v. Mastri, 371 Ill. App. 3d 64, 861 N.E.2d 1102
(1st Dist. 2008) (clarifying that the duty a possessors of land owes to their invitees does not
extend to risks created by open and obvious conditions); see also Sparrow v. Talman Home Fed.
Sav. & Loan Ass’n, 227 Ill. App. 3d 848, 592 N.E.2d 363 (1st Dist. 1992) (citing Ward v. K Mart Corp.,
136 Ill. 2d 132, 554 N.E.2d 223 (1990)) (holding that possessors of land are not liable for physical
injuries to invitees caused by known or obvious dangers, unless the possessor should have
anticipated the harm despite such knowledge or obviousness); Deibert v. Bauer Bros. Constr. Co.,
Inc., 141 Ill. 2d 430, 566 N.E.2d 239 (1990) (discussing open and obvious dangers).
8 2021
BREACH OF WARRANTY
There are generally two types of warranties recognized in Illinois: express and implied. An
express warranty is an assurance by one party to a contract of the existence of a fact on which
the other party may rely. Express warranties typically appear as specific clauses in the contract.
Implied warranties, by contrast, are obligations imposed by law regardless of the parties’ intent.
Illinois courts recognize several types of implied warranties, as well as certain warranties
contained in the Uniform Commercial Code (“U.C.C.”).
Express Warranty
A general contractor may be liable for damages for breach of an express warranty. Intaglio Serv.
Corp. v. J.L. Williams & Co., 95 Ill. App. 3d 708, 420 N.E.2d 634 (1st Dist. 1981) (stating that a
contractor is responsible for work he guarantees, whether the defect is due to the contractor’s
work or that of a third person—e.g., subcontractor); Wash. Ct. Condo. Ass’n.-Four v. Wash.-Golf
Corp., 267 Ill. App. 3d 790, 643 N.E.2d 199 (1st Dist. 1994).
Implied Warranty
A contract to construct a building is a contract to render services. Altevogt v. Brinkoetter, 85 Ill.
2d 44, 421 N.E.2d 182 (1981). As such, Illinois courts have recognized that such a contract may
carry an implied warranty that the various job components will be performed in a reasonably
workmanlike manner. Meyers v. Woods, 374 Ill. App. 3d 440, 871 N.E.2d 160 (3d Dist. 2008)
(holding that a proper and workmanlike job was not done when the contractor failed to use
antifreeze when installing in-floor heating systems in an “out-building”); see also Altevogt v.
Brinkoetter, 85 Ill. 2d 44, 421 N.E.2d 182 (1981); Bd. of Dirs. of Bloomfield Club Recreation Ass'n
v. Hoffman Grp., Inc., 186 Ill. 2d 419, 712 N.E.2d 330 (1999).
There has been considerable litigation when implied warranties extend to persons or entities not
in privity with the general contractor. Dean v. Rutherford, 49 Ill. App. 3d 768, 364 N.E.2d 625 (4th
Dist. 1977) (indicating that a direct relationship must exist between the injured party and a
construction contractor); see also Kramp v. Showcase Builders, 97 Ill. App. 3d 17, 422 N.E.2d 958
(2d Dist. 1981) (“[T]he warranty only exists, if at all, between builder-vendors and their vendees.
We know of no case, and none has been cited, that extends the warranty beyond the builder-
vendor to vendee relationship.” (citations omitted)); cf. Harmon v. Dawson, 175 Ill. App. 3d 846,
530 N.E.2d 564 (4th Dist. 1988) (permitting plaintiff homeowner to maintain an action for breach
of implied warranty against a third-party defendant subcontractor).
Illinois recognizes several common law implied warranties, including an implied warranty of
habitability for residential structures. Bd. of Dirs. of Bloomfield Club Recreation Ass’n v. Hoffman
Grp., Inc., 186 Ill. 2d 419, 712 N.E.2d 330 (1999) (discussing warranty of habitability). In addition,
the Seventh Circuit adopted implied warranties arising out of the U.C.C. in limited circumstances.
See, e.g., id.; see also Republic Steel Corp. v. Pa. Eng’g Corp., 785 F.2d 174 (7th Cir. 1986). Illinois
also recognizes a cause of action for breach of an implied warranty of merchantability under § 2-
314 of the U.C.C., codified in Illinois as 810 Ill. Comp. Stat. 5/2-314 (2014).
9 2021
Under Illinois law, there is no implied warranty that a general contractor or subcontractor will
construct a structure fit for its ordinary and particular purpose. Nitrin, Inc. v. Bethlehem Steel
Corp., 35 Ill. App. 3d 577, 342 N.E.2d 65 (1st Dist. 1976) (noting that no Illinois decision has
extended the U.C.C.’s implied warranty of fitness for a particular purpose with respect to goods
to construction contracts).
A party may plead implied indemnity in Illinois; however, a party has never been permitted to
recover on implied and express indemnity simultaneously. Prater v. Luhr Bros. Inc., 51 Ill. App. 3d
685, 366 N.E.2d 399 (5th Dist. 1977). Thus, where a party pleads implied indemnity and, in the
alternative, express contractual indemnity, recovery may be allowed under either theory but not
both. Id.
Warranty of Habitability
The doctrine of implied warranty of habitability has been recognized by Illinois courts to protect
residential dwellers from latent defects that interfere with the habitability of their residences.
Petersen v. Hubschman Constr. Co., 76 Ill. 2d 31, 389 N.E.2d 1154 (1979); see also Bd. of Dirs. of
Bloomfield Club Recreation Ass’n v. Hoffman Grp., Inc., 186 Ill. 2d 419, 712 N.E.2d 330 (1999)
(refusing to apply the warranty to a commonly held clubhouse that contained defects in a
residential development because it did not affect the habitability of the individual parties'
residences). However, the implied warranty of habitability has never been expanded to cover
commercial structures. Hopkins v. Hartman, 101 Ill. App. 3d 260, 427 N.E.2d 1337 (4th Dist.
1981).
The Illinois Supreme Court expanded this doctrine to include: lessees of residential units and
multi-unit dwellings, lessees of single family residences, Pole Realty Co. v. Sorrells, 84 Ill. 2d 178,
417 N.E.2d 1297 (1981), and sales by builder-vendors, Park v. Sohn, 89 Ill. 2d 453, 433 N.E.2d 651
(1982), even where the builder-vendors had lived in the homes for some time prior to selling to
the original purchases. Cotter v. Parrish, 166 Ill. App. 3d 836, 520 N.E.2d 1172 (5th Dist. 1988)
(noting that the implied warranty of habitability still applied when builder-vendor lived in the
house for four years prior to selling to the house). Further, the implied warranty of habitability
extends even to subsequent purchasers where there is a short intervening ownership by the first
purchaser. Hirsch v. Optima, Inc., 397 Ill. App. 3d 102, 920 N.E.2d 547 (1st Dist. 2009). But cf.
Redarowicz v. Ohlendorf, 92 Ill. 2d 171, 441 N.E.2d 324 (1982) (applying the doctrine to
subsequent purchasers, but limiting it to latent defects that manifest themselves within a
reasonable time after the subsequent purchaser’s purchase of the house); Fattah v. Bim, 2015 IL
App (1st) 140171, 31 N.E.3d 922 (finding that a waiver of the implied warranty of habitability
between the original purchaser and developers did not apply to a subsequent purchaser, as the
subsequent purchaser did not have requisite knowledge of the waiver), rev’d by Fattah v. Bim,
2016 IL 119365, 52 N.E.3d 332. The warranty also applies to builders who make significant
additions to previously built residences. VonHoldt v. Barba & Barba Constr., Inc., 175 Ill. 2d 426,
677 N.E. 2d 836 (1997); see also McClure v. Sennstrom, 267 Ill. App. 3d 277, 642 N.E.2d 885 (2d
Dist. 1994) (holding that the implied warranty of habitability applied to sale of house that the
vendor recently constructed on existing foundation).
10 2021
The courts have not expanded the doctrine to include defects in commonly held areas, such as
clubhouses, in a residential development that do not affect the habitability of individual
residences. Bd. of Dirs. of Bloomfield Club Recreation Ass’n. v. Hoffman Grp., Inc., 186 Ill. 2d 419, 712
N.E.2d 330 (1999). To bring a claim of breach of Implied Warranty of Habitability, there needs to
be a direct contractual relationship between the homeowner and contractor/subcontractor.
Sienna Court Condo. Ass’n v. Champion Aluminum Corp., 2018 IL 122022, ¶ 30, 129 N.E.3d 1112,
1121 (Ill. 2018), Goldfarb v. Bautista Concrete, Inc., 2019 IL App (1st) 172968, ¶ 14, 126 N.E.3d
516, 520 (1st Dist. 2019) . Therefore, the implied warranty of habitability does not extend to
subcontractors, even if the homeowners do not have a cause of action against general
contractor/builder. Sienna Court Condo. Ass’n v. Champion Aluminum Corp., 2018 IL 122022, ¶
30 (Ill. 2018). The implied warranty of habitability also extends to non-vendor home builders.
1324 W. Pratt Condo. Ass'n v. Platt Constr. Grp., Inc., 404 Ill. App. 3d 611 (1st Dist. 2010). The
implied warranty of habitability does not extend to subsequent purchasers of older homes with
previous owners. Minton v. Richards Grp. of Chi., 116 Ill. App. 3d 852, 452 N.E.2d 835 (1st Dist.
1983). The warranty also does not extend to architects and other design professionals. Bd. of
Managers of Park Point at Wheeling Condo. Ass’n v. Park Point at Wheeling, LLC, 2015 IL App
(1st) 123452; Bd. of Managers of Film Exch. Lofts Condo. Ass'n v. Fitzgerald Associates Architects,
P.C., 2016 IL App (1st) 113508-U, appeal denied, 60 N.E.3d 871 (Ill. 2016). Because the warranty
arises with the execution of a contract and has “roots in the execution of the contract,” courts
characterize the implied warranty of habitability as contractual. Stonebridge Dev. Co, Inc. v. Essex
Ins. Co., 382 Ill. App. 3d 731, 888 N.E.2d 633 (2d Dist. 2008).
Contractual disclaimers of the implied warranty of habitability in a sales contract are enforceable
under certain circumstances, however this contractual disclaimer does not extend to non-parties
of the sales contract. 1324 W. Pratt Condo. Ass'n v. Platt Constr. Grp., Inc., 2012 IL App (1st)
111474, 974 N.E.2d 279 appeal denied, 979 N.E.2d 890 (1st Dist. 2012).
The statute of limitations for asserting an implied warranty of habitability claim begins to run
against contractors when knowledge of the construction defect is acquired, as opposed to
knowledge of a developer’s insolvency. Bd. of Dirs. of Prairie Dist. Homes Tower Residences
Condo. Ass'n v. Leopardo Cos., 2012 IL App (1st) 111823-U (1st Dist. 2012).
Warranty of Workmanship
The Illinois Supreme Court recognized an implied warranty of workmanship in construction
contracts in Altevogt v. Brinkoetter, 85 Ill. 2d 44, 421 N.E.2d 182 (1981). See also Zielinski v. Miller,
277 Ill. App. 3d 735, 660 N.E.2d 1289 (3d Dist. 1995); Vicorp Rests. v. Corinco Insulating Co., 222
Ill. App. 3d 518, 584 N.E.2d 229 (1st Dist. 1991). Further, a claim for breach of implied warranty
of workmanship can only be brought if there is a direct contractual relationship between the
homeowner and the contractor/subcontractor. Goldfarb v. Bautista Concrete, Inc., 2019 IL App
(1st) 172968, ¶ 14, 126 N.E.3d 516, 520 (1st Dist. 2019).
11 2021
ECONOMIC LOSS
The Moorman Doctrine
In Illinois, a party cannot recover in tort for purely economic losses; rather, such losses may only
be recovered in contract. Moorman Mfg. Co. v. Nat’l Tank Co., 91 Ill. 2d 69, 435 N.E.2d 443 (1982)
(defining economic loss as “damages for inadequate value, costs of repair and replacement of
the defective product, or consequent loss of profits—without any claim of personal injury or
damage to other property,” as well as “the diminution in the value of the product because it is
inferior in quality and does not work for the general purposes for which it was manufactured and
sold” (citations omitted)). The Moorman doctrine, also known as the economic loss doctrine,
also applies in the absence of a clear contractual relationship between the parties and so there
is no alternative remedy in contract. Anderson Elec., Inc. v Ledbetter Erection Corp., 115 Ill. 2d 146,
503 N.E.2d 246 (1986) (applying the Moorman doctrine to bar plaintiff’s attempt to recover in
tort for purely economic losses, despite plaintiff’s inability to recover in contract). In affirming
Anderson Electric, Fireman’s Fund Insurance Co. v. SEC Donohue, Inc., 281 Ill.App.3d 789 (1st Dist.
1996), aff’d, 176 Ill. 2d 160 (1997), additionally provided that the economic loss rule does not bar
recovery in tort for negligence if a party breaches a duty that exists outside of contract.
A handful of decisions have criticized the Moorman doctrine because of the difficulty in
distinguishing pure economic damages from noneconomic damages. See, e.g., Trans States
Airlines v. Pratt & Whitney Can., Inc., 86 F.3d 725 (7th Cir. 1996). However, Moorman and
subsequent cases have clarified the distinction. Scott & Fetzer Co. v. Montgomery Ward & Co.,
112 Ill. 2d 378, 493 N.E.2d 1022 (1986) (“We recognized in Moorman that the dividing line
between property damage and economic loss depends on the nature of the defect and the
manner in which the damage occurred. We held in that case that ‘[w]hen the defect is of a
qualitative nature and the harm relates to the consumer's expectation that a product is of a
particular quality so that it is fit for ordinary use, contract law provides the appropriate set of
rules for recovery.’ We also stated that ‘[t]ort theory is appropriately suited for personal injury
or property damage resulting from a sudden or dangerous occurrence.’” (quoting Moorman Mfg.
Co. v. Nat’l Tank Co., 91 Ill. 2d 69, 435 N.E.2d 443 (1982))). This clarification necessarily excludes
tort recovery for damage that occurs “over time” due to deterioration or excessive use.
Hecktman v. Pac. Indem. Co., 2016 IL App (1st) 151459, 59 N.E.3d 868. Thus, a tort claim can be
brought if there is a “sudden or dangerous” event, or if the failure or defect causes a clear and
present danger for personal injury to inhabitants. Scott & Fetzer Co. v. Montgomery Ward & Co.,
112 Ill. 2d 378, 493 N.E.2d 1022 (1986); see also Elecs. Grp., Inc. v. Cent. Roofing Co., 164 Ill. App.
3d 915, 518 N.E.2d 369 (1st Dist. 1987) (allowing tort recovery for sudden water leakage in roof);
Wheeling Trust & Sav. Bank v. Tremco, Inc., 153 Ill. App. 3d 136, 505 N.E.2d 1045 (1987) (holding
claimed defects in windows, streaking and etching, did not cause “sudden and calamitous”
damage). The “sudden and dangerous” exception only applies when the plaintiff sustains
damages in either personal injury or other property damage; however, recovery is barred where
a defective product caused the type of damage one would reasonably expect as a direct
consequence of the failure of the defective product. Trans States Airlines v. Pratt & Whitney
Can., Inc., 177 Ill. 2d 21, 682 N.E.2d 45 (1997) (prohibiting tort recovery since the failed aircraft
engine and damaged airframe comprised a single product—the plaintiff had bargained for a fully
12 2021
integrated aircraft, rather than having bargained separately for an engine and an airframe). Thus,
a defective product that damages only itself cannot be the subject of a suit for damages in tort.
Mars. Inc. v. Heritage Builders of Effingham, Inc., 327 Ill. App. 3d 346, 763 N.E.2d 428 (4th Dist.
2002).
The doctrine also applies to claims against design professionals. For example, the Illinois
Supreme Court refused to allow an exception to the Moorman doctrine for claims against
architects in 2314 Lincoln Park W. Condo. Ass’n v. Mann, Gin, Ebel & Frazier, Ltd., 136 Ill. 2d 302,
555 N.E.2d 346 (1990) (disallowing a tort claim against the defendant architect, where the
plaintiff had suffered solely economic damages, reasoning that even though architects provide
information to builders, the information is transformed into the building itself).
Exceptions to the Moorman Doctrine
While the general rule is that parties cannot recover economic losses for claims sounding in tort,
Illinois courts have carved out exceptions for cases involving intentional fraud, negligent
misrepresentation, and intentional interference with contractual relationships. Moorman Mfg.
Co. v. Nat’l Tank Co., 91 Ill. 2d 69, 435 N.E.2d 443 (1982) (citing Soules v. General Motors Corp., 79
Ill. 2d 282, 402 N.E. 2d 599 (1980)) (economic loss is recoverable where one intentionally makes
false representations).
Fraud is the first exception to the Moorman doctrine. Under Soules, the elements necessary to
prove common law fraudulent misrepresentation include (at times referred to as “fraud and
deceit” or “deceit”): (1) false statement of material fact (2) known or believed to be false by the
party making it; (3) intent to induce the other party to act; (4) action by the other party in reliance
on the truth of the statement; and (5) damage to the other party resulting from such reliance.
Soules v. Gen. Motors Corp., 79 Ill. 2d 282 (1980). Fraud cases typically invoke the Consumer
Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. 505/2 (2014). In order to recover
under the Act, a plaintiff must prove (1) that the defendant committed a deceptive act or
practice, (2) that the defendant intended the plaintiff to rely on the deception, and (3) that the
deception occurred in the course of conduct that constituted or involved trade or commerce.
Siegel v. Levy Organizational Dev. Co., 153 Ill. 2d 534, 607 N.E.2d 194 (1992). The requirements
under the Act are distinguishable from common law fraud requirements because unlike common
law fraud the statute does not require proof of reliance. Id.; see also Peter J. Hartmann Co. v. Cap.
Bank & Trust Co., 296 Ill. App. 3d 593, 694 N.E.2d 1108 (1st Dist. 1998) (holding that the
legislature’s purpose in enacting the Consumer Fraud and Deceptive Business Practices Act was,
inter alia, to give consumers greater protection from business fraud than a common law fraud
action). However, proof of actual deception— either direct or indirect—is required. Shannon v.
Boise Cascade Corp., 208 Ill. 2d 517, 805 N.E.2d 213 (2004) (finding no violation under the Act
where the plaintiffs admitted that they were not personally deceived by the advertising). In
addition, for a private person to sue under the Act, the plaintiff will need proof of “actual
damage” that occurred as a result of the deceptive act or practice. 815 Ill. Comp. Stat.
505/10a(a). The Act does not apply to construction contracts between a general contractor and
subcontractor, as neither is a “consumer.” Lake Cnty. Grading Co. of Libertyville, Inc. v. Advance
Mech. Contractors, Inc., 275 Ill. App. 3d 452, 654 N.E.2d 1109 (2d Dist. 1995) (“Where a dispute
13 2021
involves two businesses that are not consumers, the proper test is whether the alleged conduct
involves trade practices addressed to the market generally or otherwise implicates consumer
protection concerns.”(citation omitted)); see also Sys. Am., Inc. v. Providential Bancorp, Ltd., No.
05 C 2161, 2006 U.S. Dist. LEXIS 6996 (N.D. Ill. 2006).
The second exception to the economic loss doctrine includes negligent misrepresentation.
Moorman Mfg. Co. v. Nat’l Tank Co., 91 Ill. 2d 69, 435 N.E.2d 443 (1982) (citing Rozny v. Marnul,
43 Ill. 2d 54, 250 N.E.2d 656 (1969)) (economic loss is recoverable where one who is in the
business of supplying information for the guidance of others in their business transactions makes
negligent representations). The courts in Knox College v. Celotex Corp., 117 Ill. App. 3d 304, 453
N.E.2d 8 (3d Dist. 1983), and Black, Jackson & Simmons Insurance Brokerage, Inc. v. IBM Corp.,
109 Ill. App. 3d 132, 440 N.E.2d 282 (1st Dist. 1982), overruled in part on other grounds by
Fireman’s Fund Insurance Co. v. SEC Donohue, Inc., 176 Ill. 2d 160, 679 N.E.2d 1197 (1997), held
that to satisfy the negligent misrepresentation exception to the economic loss doctrine, the
plaintiff must allege that (1) the defendant was in the business of supplying information to
persons such as the plaintiff, and the information was not merely ancillary to the sale; (2) the
defendant supplied the information for the guidance of the plaintiff in the plaintiff’s business
transaction; (3) the defendant had a duty to use reasonable care in supplying the information;
(4) the defendant supplied defective information; and (5) as a proximate result of the defective
information, the plaintiff sustained actual damages. When negligent misrepresentation is
contained within information which is incidental to a tangible product, this particular exception
does not apply. See First Midwest Bank v. Stewart Title Guar. Co., 218 Ill. 2d 326, 843 N.E.2d 327
(2006) (finding that the negligent misrepresentation exception did not apply since a title insurer
is not in the business of supplying information when it issues a title commitment or policy of title
insurance); see also Fireman’s Fund Ins. Co. v. SEC Donohue, Inc., 176 Ill. 2d 160, 679 N.E.2d 1197
(1997) (explaining that the exception is inapplicable when the negligent misrepresentation is
contained within plans for a water supply system as opposed to the actual tangible water supply
system).
The final exception to the Moorman doctrine is intentional interference with contractual
relationships. Waldinger Corp. v. Ashbrook-Simon-Hartley, Inc., 564 F. Supp. 970 (N.D. Ill. 1983),
aff’d sub nom. Waldinger Corp. v. CRS Grp. Eng’rs, Inc., Clark Dietz Div., 775 F.2d 781 (7th Cir. 1985).
To maintain the intentional interference exception, the plaintiff must satisfy the following
requirements: (1) knowledge of the relationship or expectancy on the part of the interferer; (2)
an intentional interference inducing or causing a breach or termination of the relationship or
expectancy; and (3) resultant damage to the party whose relationship or expectancy has been
disrupted. Id. The interest protected is the reasonable expectation of economic advantage. Id.
The court continued that it is unnecessary to assert the existence of malice in the sense of ill will
because intentional conduct that brings about the breach with knowledge of the relationship is
sufficient. Id.
14 2021
STRICT LIABILITY
Generally, the doctrine of strict liability in tort does not apply to construction actions in Illinois,
because construction activities do not meet the definition of a "product" set forth in § 402A of
the Restatement (Second) of Torts. Lowrie v. City of Evanston, 50 Ill. App. 3d 376, 365 N.E.2d 923
(1st Dist. 1977); see also Immergluck v. Ridgeview House, Inc., 53 Ill. App. 3d 472, 368 N.E.2d 803 (1st
Dist. 1977) (“Professional services do not ordinarily lend themselves to the doctrine of tort
liability without fault because they lack the elements which gave rise to the doctrine. There is no
mass production of goods or a large body of distant consumers whom it would be unfair to
require to trace the article they used along the channels of trade to the original manufacturer
and there to pinpoint an act of negligence remote from their knowledge and even from their
ability to inquire.”); Heller v. Cadral Corp., 84 Ill. App. 3d 677, 406 N.E.2d 88 (1st Dist. 1980) (noting
that jurisdictions that have applied strict liability principles to a builder have done so only in the
context of mass-produced homes); Walker v. Shell Chem., Inc., 101 Ill. App. 3d 880, 428 N.E.2d 943
(1st Dist. 1981). Although a building is not a product as defined by § 402A, defective components
that make up the building can give rise to a strict liability tort action, provided that the item has
not become an indivisible component part of the building or structure. Boddie v. Litton Unit
Handling Sys., 118 Ill. App. 3d 520, 455N.E.2d 142 (1st Dist. 1983).
INDEMNITY
The Construction Contract Indemnification for Negligence Act restricts an entity’s ability to obtain
indemnification for its own negligence. The Act provides:
With respect to contracts or agreements, either public or private, for the
construction, alteration, repair or maintenance of a building, structure, highway
bridge, viaducts or other work dealing with construction, or for any moving,
demolition or excavation connected therewith, every covenant, promise or
agreement to indemnify or hold harmless another person from that person's own
negligence is void as against public policy and wholly unenforceable.
740 Ill. Comp. Stat. 35/1 (2014) et seq., (emphasis added). Also, the Act creates an insurance
exception providing that the statute “does not apply to construction bonds or insurance
contracts or agreements.” 740 Ill. Comp. Stat. 35/3 (2014). This exception pretectsprotects
construction workers by allowing an insurance policy to provide additional compensation to
injured persons. Estate of Willis v. Kiferbaum Const. Corp, 357 Ill. App. 3d 1002, 1010, 294 Dec.
224, 830 N.E.2d 636, 645 (1st Dist. 2005). However, “indemnification contracts will not be
construed as indemnifying against a party's own negligence unless such construction is required
by clear and explicit language of the contract, or such an intention is expressed in unequivocal
terms.” McNiff v. Millard Maint. Serv. Co., 303 Ill. App. 3d 1074, 715 N.E.2d 247 (1st Dist. 1999);
see also Buenz v. Frontline Transp. Co., 227 Ill. 2d 302, 882 N.E.2d 525 (2008) (“It is not simply the
use of the phrase ‘any and all’ that determines whether a particular contract provides
indemnification for an indemnitee’s own negligence. The phrase must be read in the context of
the entire contract.”); Blackshare v. Banfield, 367 Ill. App. 3d 1077, 857 N.E.2d 743 (5th Dist.
2006) (“[B]ecause an agreement to indemnify a party for its own negligence is so unusual and
extraordinary, the intent to indemnify to that extent must be beyond doubt by express
15 2021
stipulation.”). Courts do not automatically apply the Act to void all indemnity agreements in
construction-related contracts; rather, courts examine whether applying the Act will serve its
ends. Ill. Power Co. v. Duke Eng’g Servs., No. 99 C 5384, 2002 U.S. Dist. LEXIS 5497 (N.D. Ill. 2002)
(citing Lovellette v. S. Ry. Co., 898 F.2d 1286 (7th Cir. 1990)).
Much of the litigation involving the Act has focused on the question, “what is a construction
contract”. Whether a particular agreement is a “construction” contract within the meaning of
the Act is a question of contract interpretation; as such, it is a question of law to be decided by a
court. Modern Steel Treating Co. v. Liquid Carbonic Indus./Med. Corp., 298 Ill. App. 3d. 349, 698
N.E.2d 710 (1st Dist. 1998) (holding that a contract to install, repair and maintain an electrical
control panel for an industrial furnace was a construction contract within the meaning of the Act;
thus, it was a provision); see also Chi. Steel Rule & Die Fabricators Co. v. ADT Sec. Sys., Inc., 327
Ill. App. 3d 642, 763 N.E.2d 839 (1st Dist. 2002); cf. N. River Ins. Co. v. Jones, 275 Ill. App. 3d 175,
655 N.E.2d 987 (1st Dist. 1995) (holding that the Act did not bar enforcement of a contractual
provision limiting damages, where the damages occurred after the fire alarm system had been
installed).
Further, the contract must be for “construction, alteration, repair, or maintenance”; merely
having “some connection” with construction is not sufficient. Winston Network Inc. v. Ind. Harbor
Belt R. Co., 944 F.2d 1351 (7th Cir. 1991) (agreement providing that a party could issue a license
to a third party who, in turn, might decide to paint an advertisement on a bridge was too
attenuated from construction to fall within the Act’s anti-indemnity provision). Therefore, a
contract to provide janitorial services (“general cleaning work”) is not “maintenance of a
building,” thus, the Act does not apply. McNiff v. Millard Maint. Serv. Co., 303 Ill. App. 3d 1074,
715 N.E.2d 247 (1st Dist. 1999). If the indemnitee is not responsible for construction activities or
is not in a position to prevent accidents from occurring, the contract is not subject to the the Act.
Lovellette v. S. Ry. Co., 898 F.2d 1286 (7th Cir. 1990) (holding that a contract granting a right-of-way
for the installation of a sewer system fell outside the Act).
“Improvement to Real Property”
There has been substantial litigation over what activities constitute design, planning, supervision
and improvements to real property. Whether an item constitutes an “improvement to real
property” is a question of law; its answer, however, is grounded in fact. St. Louis v. Rockwell
Graphics Sys., 153 Ill. 2d 1, 605 N.E.2d 555 (1992). For example, In St. Louis v. Rockwell Graphic
Systems, , the Illinois Supreme Court held that the terms “fixture” and “improvement to real
property” are not synonymous. Id. A fixture is typically a form of chattel that, while retaining its
separate existence, is so connected with the real property that an observer would consider it a
part of such real property. Id. Alternatively, an improvement may not have a separate identity
after being installed in the system or building in which it is located. Id. Relevant factors for
determining what constitutes an “improvement to real property” include the following: whether
the addition was meant to be permanent or temporary; whether it became an integral
component of the overall system; whether the value of the property was increased; and whether
the use of the property was enhanced. Id.; see also Bailey v. Allstate Dev., 316 Ill. App. 3d 949, 738
N.E.2d 189 (1st Dist. 2000) (finding that window washing services did not qualify as “construction
16 2021
of an improvement to real property” under § 214(a)); Merrit v. Randall Painting Co., 314 Ill. App.
3d 556, 732 N.E.2d 116 (1st Dist. 2000) (reasoning that scraping, plastering, cleaning, and
painting while installing a window were ordinary maintenance activities that did not constitute
an improvement to real property); Adcock v. Montgomery Elevator Co., 274 Ill. App. 3d 519, 654
N.E.2d 631 (1995) (explaining that installation of an escalator constituted improvement to real
property that fell under § 214, as opposed to the product liability statute of limitations and
repose); Morietta v. Reese Constr. Co., 347 Ill. App. 3d 1077, 808 N.E.2d 1046 (5th Dist. 2004)
(stating that removing and replacing an existing road where it did not improve the value of the
road or enhance the use of the property was not an improvement to real property under §
214(a)); Fireman’s Fund Ins. Co. v. Rockford Heating & Air Conditioning, Inc., 2014 IL App (2d)
130566, 9 N.E.3d 1154 (finding that a ventilation system installed solely to allow the operation
of temporary hanging furnaces during the construction of a building fit under § 214(a) because it
was “an essential step in the installation of an improvement to the property”).
STATUTES OF LIMITATION AND REPOSE
The Illinois Code of Civil Procedure porivdesprovides both a statute of limitations and a statute
of repose for construction claims. 735 Ill. Comp. Stat. 5/13-214 (2014). Under subsection (a) of
5/13-214, actions based on tort, contract, or agasintagainst any person involved in the
construction of a project, are subject to a four-year statue of limitations (the period of time a
party is allowed to file an action). 735 ILCS 5/13-214(b). This period begins when the injured party
knew or should have reasonably known of the injury. Id. In regards to repose, subsection (b)
provides that the state of repose (date upon which the action no longer exists) for all tort,
contract, and other construction based actions is ten years. Id 5/13-214(b). Essentially, the statue
of repose begins to run after the work was completed; therefore, if a person discovers the injury
or defect within ten years of the conclusion of the work, the person then has four years to file
the action upon discovery of the injury or defect. Id.
This statute contains a four-year statute of limitations and a ten-year statute of repose. The
statute applies to almost all construction defect claims, as well as injury claims that arise from
one of the statute’s enumerated construction-related activities. Hernon v. E.W Corrigan Constr.
Co., 149 Ill. 2d 190, 595 N.E.2d 561 (1992) (holding that the four-year statute of limitations of §
13-214(a) applied to a lawsuit by a construction worker injured on the job site, and the plaintiff
worker’s suit was not barred by the general two-year statute of limitations for personal injury
suits); Lombard Co. v. Chi. Hous. Auth., 221 Ill. App. 3d 730, 587 N.E.2d 485 (1st Dist. 1991)
(applying § 13-214(a) to a landowner’s nonpayment for extra work due to its failure to timely
approve or reject shop drawings); Blinderman Constr. Co. v. Metro. Water Reclamation Dist. of
Greater Chi., 325 Ill. App. 3d 362, 757 N.E.2d 931 (1st Dist. 2001) (applying § 13-214(a) to a water
reclamation district’s failure to pay for work generated by the district in its capacity as a
construction supervisor).
Third-party express indemnity claims for construction defects, however, are subject to the 10-
year statute of limitations for breach of written contract claims. 15th Place Condo. Ass’n v. S.
Campus Dev. Team LLC, 2014 IL App (1st) 122292, 14 N.E.3d 592. Where two statutes of
limitations might apply, Illinois courts apply the one which bears the closest relationship to the
17 2021
nature of the liability. Hernon v. E.W Corrigan Constr. Co., 149 Ill. 2d 190, 595 N.E.2d 561 (1992)
("Section 13-214(a) . . . applies specifically to construction-related activities. Thus, we find that
it takes precedence over the general statute of limitations for personal injuries set out in section
13-202."); see also Fed. Ins. Co. v. Konstant Architecture Planning, Inc., 388 Ill. App. 3d 122, 902
N.E.2d 1213 (1st Dist. 2009) (applying § 13-214(a) over § 13-206 since the complaint was based
upon a contract that dealt with the design and construction of a home); Traveler’s Cas. & Sur. Co.
v. Bowman, 229 Ill. 2d 461, 893 N.E.2d 585 (2008) (applying § 13-206 over § 13-214 since the
liability at issue stems from the breach of a contractual obligation to indemnify and not from any
construction-related activity). Parties to a contract may agree upon a shortened contractual
limitations period to replace a statute of limitations as long as it is reasonable. Medrano v. Prod.
Eng’g Co., 332 Ill. App. 3d 562, 774 N.E.2d 371 (1st Dist. 2002).
Additionally, the language of 735 ILCS 5/13-214 contains a discovery rule relating to the statute
of limitations; the effect of this discovery rule is to postpone the commencement of the period
of limitations until the injured party knows or should have known of their injury. Knox Coll. v.
Celotex Corp., 88 Ill. 2d 407, 430 N.E.2d 976 (1981) see also Penn v. Gerig, 334 Ill. App. 3d 345,
778 N.E.2d 325 (4th Dist. 2002); LaSalle Nat’l Bank v. Skidmore, Owings & Merrill, 262 Ill. App. 3d
899, 635 N.E.2d 564 (1st Dist. 1994).
"Knew or reasonably should have known”
All actions against any person alleging liability from the construction or an improvement to real
property “shall be commenced within 4 years from the time the person bringing the action . . .
knew or should reasonably have known of such act or omission.” 735 Ill. Comp. Stat. 5/12-214(a)
(2014); DuPage Cnty. v. Graham, Anderson, Probst & White, Inc., 109 Ill. 2d 143, 485 N.E.2d 1076
(1985). A party knows or should know of a wrongfully caused injury when he or she has
information that would alert a reasonable person to inquire as to whether the cause of injury
was actionable. LaSalle Nat'l Bank v. Skidmore, Owings & Merrill, 262 Ill. App. 3d 899, 635 N.E.2d
564 (1st Dist. 1994) see also Soc’y of Mt. Carmel v. Fox, 90 Ill. App. 3d 537, 413 N.E.2d 480 (2d Dist.
1980) (holding plaintiffs had sufficient knowledge of design defects for purposes of the statute
when they received a contractor’s report that identified such defects); Schleyhahn v. Cole, 178 Ill.
App. 3d 111, 532 N.E.2d 1136 (4th Dist. 1989) (holding that when the act or omission is
discovered prior to the ten-year period, plaintiff has four years from the date of discovery to
bring an action); Freeport Mem’l Hosp. v. Lankton, Ziegele, Terry & Assocs., Inc., 170 Ill. App. 3d 531,
525 N.E.2d 194 (2d Dist. 1988) (holding that the plaintiff had sufficient information when the
project architect issued a letter outlining his findings). Subsection (e) provides a fraud exception
to section 13-214: “The limitations of this Section shall not apply to causes of action arising out
of fraudulent misrepresentations or to fraudulent concealment of causes of action.” 735 Ill.
Comp. Stat. 5/12-214(e)(2014). If the exception applies, fraudulent concealment stops the
limitations period until the cause of action is discovered. Henderson Square Condo. Ass’n v. LAB
Townhomes, LLC, 2014 IL App (1st) 130764, ¶¶ 94-95, 16 N.E.3d 197.
Equitable estoppel
Equitable estoppel is based upon the notion that when a person’s conduct induces a party to take
or forebear filing an action, that person will not be allowed to deny the words or acts made they
18 2021
made that resulted in the detriment of the other party. 18 Ill. Law and Pract. § 22. In construction
cases, equitable estoppel applies when a plaintiff reasonably relies on the defendant’s
representations—through words or conduct—in delaying legal action, and thereafter suffers an
injury (e.g., the running of the statute of limitations) based upon that reliance. Swann & Weiskopf,
Ltd. v. Meed Assocs., Inc., 304 Ill. App. 3d 970, 711 N.E.2d 395 (1st Dist. 1999) (“Although there is
ordinarily no duty to apprise an adversary of his rights, one cannot justly or equitably lull his
adversary into a false sense of security, causing him to subject his claim to the bar of the statute,
and then plead the very delay caused by his course of conduct.”); see also Senior Housing, Inc. v.
Nakwatase, Rutkowski, Wyns & Yi, Inc., 192 Ill. App. 3d 766, 549 N.E.2d 604 (1st Dist. 1990) (“[T]o
invoke the doctrine of equitable estoppel, it is not necessary to establish that the defendant
intentionally misled or deceived the plaintiff, or even that the defendant intended to induce
delay. The only requirements are that plaintiff reasonably relied on the defendant's conduct in
forbearing suit and that plaintiff suffered a detriment as a result of his reliance upon the words
or conduct of the defendant.” (citing AXIA, Inc. v. I.C. Harbour Constr. Co., 150 Ill. App. 3d 645, 501
N.E.2d 1339 (2d Dist. 1986))). In Axia, Inc., a breach-of-contract action against the builder and
architect, the court held that defendant-builder was equitably estopped from asserting the
statute of limitations, where its ongoing efforts to repair the building had the predictable effect
of delaying legal action; however, defendant-architect was not estopped from raising the
defense, where he had no contact with plaintiffs prior to the expiration of the statute of
limitations. AXIA, Inc. v. I.C. Harbour Constr. Co., 150 Ill. App. 3d, 501 N.E.2d 1339 (2d Dist. 1986).
Contribution and Indemnity Actions
Notwithstanding the four-year statute of limitations for filing construction-related actions,
whether sounding in tort or contract provided by 735 Ill. Comp. Stat. 5/13-214(a) (2014), or the
ten-year statute of limitations for third-party express indemnity claims for construction defects
under15th Place Condominium Ass’n v. South Campus Development Team LLC, 2014 IL App (1st)
122292, third-party actions for contribution and indemnity must be filed within two years of the
filing of the underlying complaint. Guzman v. C.R. Epperson Constr., Inc., 196 Ill. 2d 391, 256 N.E.2d
1069 (2001) (holding that a defendant-general contractor’s third-party action against a
subcontractor was not time-barred when the third-party action was filed within one year of the
underlying complaint, even though the general contractor knew for several years prior that the
homeowners were unhappy with the home and might sue the general contractor); see also
Medrano v. Prod. Eng’g Co., 332 Ill. App. 3d 562, 774 N.E.2d 371 (1st Dist. 2002).
Prior to Guzman, some Illinois courts held that (1) the four-year statute of limitations in § 214
applied to construction claims as well as third-party claims arising out of construction claims; and
(2) the time for filing third-party claims began to run when the third-party plaintiff knew or
reasonably should have known of the injury. Guzman v. C.R. Epperson Constr., Inc., 196 Ill. 2d
391, 256 N.E.2d 1069 (2001). The Illinois Supreme Court reasoned, however, that the General
Assembly’s amendment to 735 Ill. Comp. Stat. 5/13-204, specifically including indemnity claims,
strongly suggested that the legislature intended the two-year statute of limitations in § 204 to
apply to all indemnity claims, including those arising out of construction accidents. Id. Moreover,
the court rejected the “knew or reasonably should have known . . . of the construction defect”
standard, holding that such a rule would in some cases require third-party indemnity claims to
19 2021
be filed before they had accrued. Id.
There has also been litigation over whether the ten-year repose period in the statute or an
equitable standard of “reasonableness” applies to causes of action based on the implied warranty
of habitability. Redarowicz v. Ohlendorf, 92 Ill. 2d 171, 441 N.E.2d 324 (1982) (holding that the
implied warranty of habitability extends to subsequent purchasers, provided the latent defects
manifest themselves to the subsequent purchaser within a reasonable time of the purchase); see
also VonHoldt v. Barba & Barba Constr., Inc., 175 Ill. 2d 426, 677 N.E.2d 836 (1997) (holding that
an eleven-year delay between completion of a home addition and filing of a lawsuit was untimely
under either statutory or equitable standards and concluding that "the reasonable time for
bringing a cause of action under the 'reasonable time' standard of Redarowicz begins with the
act or omission causing the defect rather than the date on which the subsequent purchaser takes
title to the property"); Andreoli v. John Henry Homes, Inc., 297 Ill. App. 3d 151, 696 N.E.2d 1193
(2d Dist. 1998) (holding that the ten-year statutory repose period of § 214(b) applies to actions
based on the implied warranty of habitability and, in the case of a home, begins to run on the
date the property is conveyed to the plaintiff-buyer).
MECHANICS LIEN ACT
The Illinois Mechanics Lien Act is a statute adopted by the Illinois legislature to provide security
for materialmen, subcontractors, and contractors who furnish their labor and/or materials to a
construction project, which in turn increases the value or improves the condition of the property.
Weather-Tite, Inc. v. Univ. of St. Francis, 233 Ill. 2d 385, 909 N.E.2d 830 (2009) (citing R.W.
Dunteman Co. v. C/G Enters., Inc., 181 Ill. 2d 153, 692 N.E.2d 306 (1998)). The Mechanics Lien
Act can be found at 770 Ill. Comp. Stat. 60/0.01 (2014), et seq.
In order for a general contractor to secure a lien, four prerequisites must be satisfied. 770 Ill.
Comp. Stat. 60/1. First, there must be a valid contract. Candice Co. v. Ricketts, 281 Ill. App. 3d
359, 666 N.E.2d 722 (1st Dist. 1996); see also S.N. Nielsen Co. v. Nat’l Heat & Power Co., 32 Ill.
App. 3d 941, 337 N.E.2d 387 (1st Dist. 1975). Second, the contract must be made with the owner,
the owner’s authorized agent, or one “knowingly permitted” by the owner to improve the
property. 770 Ill. Comp. Stat. 60/1; see also Delaney Elec. Co., Inc. v. Schiessle, 235 Ill. App. 3d
258, 601 N.E.2d 978 (1st Dist. 1992). Third, the contract must involve the improvement of
property and the provision of lienable services or material. See L.J. Keefe Co. v. Chi. & Nw. Transp.
Co., 287 Ill. App. 3d 119, 678 N.E.2d 41 (1st Dist. 1997) (finding that a lien disallowed as work
benefited the licensee and not the property); Mostardi-Platt Assocs., Inc. v. Czerniejewski, 399 Ill.
App. 3d 1205, 929 N.E.2d 94 (5th Dist. 2010) (explaining that consulting services were not the
kind of improvements to land that were subject to mechanics lien since the services did not
enhance the land’s value). Under the Mechanics Lien Act, lienable services include “labor,
services, material, fixtures, apparatus or machinery, forms or form work.” Fourth, the contractor
must perform the contracted work or have a valid excuse for nonperformance. Folk v. Cent. Nat’l
Bank & Trust Co. of Rockford, 210 Ill. App. 3d 43, 567 N.E.2d 1 (2d Dist. 1991); see also Wilmette
Partners v. Hamel, 230 Ill. App. 3d 248, 594 N.E.2d 1177 (1st Dist. 1992) (finding that the
contractor’s performance was excused due to the developer ejecting the contractor from the
property); J.E. Milligan Steel Erectors, Inc. v. Garbe Iron Works, Inc., 139 Ill. App. 3d 303, 486
20 2021
N.E.2d 945 (3d Dist. 1985) (clarifying that the subcontractor’s performance was excused after the
general contractor refused to pay despite the subcontractor’s good-faith effort to cooperate).
Even with all four requirements satisfied, the Mechanics Lien Act contains additional
requirements that the general contractor must comply with to enforce the mechanics lien. 770
Ill. Comp. Stat. 60/7. First, the claim must be filed in the office of the recorder for the county in
which the improvement is located. Id. Second, the claim must be a recordable verified affidavit
claiming a lien on the property and setting forth the name of the owner or its agent or employee,
a description of the contract, the balance due after credits, a description of the property, and the
date of completion of the work. Id. Third, and most importantly, are the timing requirements.
The lien must be filed with the county recorder within four calendar months after completion of
the work as to the owner and third parties and within two years after completion as to the
original owner holding title to the property on the date of contract. M. Ecker & Co. v. LaSalle
Nat’l Bank, 268 Ill. App. 3d 874, 645 N.E.2d 335 (1st Dist. 1994). Thus, determining the date of
completion becomes very important. “Work that is trivial and insubstantial, and not ‘essential to
the completion of the contract’ does not extend the time to file a lien under the Mechanics Lien
Act.” Braun-Skiba, Ltd. v. LaSalle Nat’l Bank, 279 Ill. App. 3d 912, 665 N.E.2d 485 (1st Dist. 1996).
Finally, there are four ways to institute the lien: (1) filing a petition to intervene and filing a
counterclaim in the mechanics lien suit of another claimant; (2) filing an answer and a
counterclaim in the mechanics lien suit of another claimant who has made the plaintiff a party;
(3) filing an answer and counterclaim in a mortgage foreclosure suit; or (4) filing an original
complaint to foreclose the lien in the circuit court of the county where the improvement is
located. 770 Ill. Comp. Stat. 60/9.
Even if § 7 is satisfied, the contractor must comply with § 5 of the Mechanics Lien Act to ensure
enforceability of the lien. It should be noted, however, that courts are split on whether the failure
to comply with § 5 prevents the contractor from prevailing on a mechanics lien. See Ambrose v.
Biggs, 156 Ill. App. 3d 515, 509 N.E.2d 614 (2d Dist. 1987) (finding that failure to comply with § 5
barred contractor’s lien); but see Nat’l Wrecking Co. v. Midwest Terminal Corp., 234 Ill. App. 3d
750, 601 N.E.2d 999 (1st Dist. 1992) (finding that failure to comply with § 5 did not bar mechanics
lien). Section 5 requires that the contractor must provide the owner with a statement in writing,
under oath or verified by affidavit, for the names and addresses of all parties furnishing labor,
services, material, fixtures, apparatus or machinery, forms or form work, and of the amount due
or to become due to each. Such a writing must be furnished before the owner or his agent,
architect, or superintendent shall pay or cause to be paid to the contractor any moneys or other
consideration due or to become due to the contractor, or make or cause to be made to the
contractor any advancement of any moneys or any other consideration. 770 Ill. Comp. Stat. 60/5.
The Mechanics Lien Act is not only for general contractors, but also for subcontractors. 770 Ill.
Comp. Stat. 60/21. The subcontractor’s lien, unlike the general contractor’s, is not only on the
land but also on the money that is due or that will become due to the general contractor, as well
as the fixtures incorporated into the real estate by the subcontractor. Brady Brick & Supply Co.
v. Lotito, 43 Ill. App. 3d 69, 356 N.E.2d 1126 (2d Dist. 1976); see GX Chi., LLC v. Galaxy Envtl., Inc.,
2015 IL App (1st) 133624, 38 N.E.3d 60 (finding that “the amount due from the owner to the
21 2021
contractor” under the Act must be read to refer to the amount owed to the lien claimant’s
immediate contractor—for example, the subcontractor if the claimant is a sub-subcontractor).
The prerequisites to the subcontractor’s mechanics lien are similar to that of the general
contractor and include: (1) a valid contract between the owner and general contractor; (2) a valid
contract between the general contractor and the subcontractor; (3) provision of lienable services
or materials; and (4) performance of the contract or a valid excuse for nonperformance.
Enforcement of the subcontractor’s lien is governed by §§ 21 and 24 of the Mechanics Lien Act.
There are four important points under §§ 21 and 24. First, a subcontractor who performs services
or delivers material to a single-family, owner-occupied residence must notify the occupant,
personally or by certified mail, return receipt requested, that it is supplying labor or materials
within sixty days from the first furnishing of labor or material. 770 Ill. Comp. Stat. 60/21(c).
Second, within ninety days after the date of completion of the work, the subcontractor must
serve a written notice of its claim and the amount thereof on the owner, the owner’s agent,
architect, or superintendent, and the mortgagee, if known. 770 Ill. Comp. Stat. 60/24(a); see also
Caruso v. Kafka, 265 Ill. App. 3d 310, 638 N.E.2d 663 (1st Dist. 1994); Hill Behan Lumber Co. v.
Irving Fed. Sav. & Loan Ass’n, 121 Ill. App. 3d 511, 459 N.E.2d 1066 (1st Dist. 1984). Under §
24(a), the written notice must be served personally or by certified or registered mail, return
receipt requested and may be displayed as follows:
To (name of owner):
You are hereby notified that I have been employed by (the name of
contractor) to (state here what was the contract or what was done, or to
be done, or what the claim is for) under his or her contract with you, on
your property at (here give substantial description of the property) and
that there was due to me, or it to become due (as the case may be),
therefore the sum of $……
Dated at .......... this .......... day of .........., .....
(Signature)..........
With one exception, a subcontractor loses their rights under the Mechanics Lien Act by failing to
properly serve a ninety-day notice. If the general contractor included the subcontractor on their
§ 5 sworn statement, the subcontractor’s lien is enforceable to the extent of the amount listed
on the sworn statement as being due to the subcontractor. Hill Behan Lumber Co. v. Irving Fed.
Sav. & Loan Ass’n, 121 Ill. App. 3d 511, 459 N.E.2d 1066 (1st Dist. 1984). Third, the
subcontractor’s lien must be filed with the county recorder within four months after completion
of the work in the same manner as the general contractor’s lien. Finally, a lawsuit to foreclose
the subcontractor’s lien must be brought within two years after the date of completion of the
work and may be instituted by: (1) an action at law against the general contractor; (2) an action
at law against the general contractor and the owner jointly; (3) an action at law on the general
contractor’s completion bond; (4) an action in equity to enforce the mechanics lien; (5) a petition
to intervene and counterclaim in a pending action by the general contractor against the owner;
or (6) a petition to intervene in a pending action by the mortgagee foreclosing its mortgage lien.
22 2021
Under § 17, parties can recover reasonable attorney’s fees provided § 17(b) and § 17(c) are met.
Section 17(b) states:
If the court specifically finds that the owner who contracted to have the
improvements made failed to pay any lien claimant the full contract price,
including extras, without just cause or right, the court may tax that owner,
but not any other party, the reasonable attorney's fees of the lien claimant
who had perfected and proven his or her claim. 770 Ill. Comp. Stat.
60/17(b).
Section 17(c) provides:
If the court specifically finds that a lien claimant has brought an action
under this Act without just cause or right, the court may tax the claimant
the reasonable attorney's fees of the owner who contracted to have the
improvements made and defended the action, but not those of any other
party. 770 Ill. Comp. Stat. 60/17(c).
Additionally, parties may be entitled to recover extra work performed if the party can prove that
the work was outside the scope of the contract; the extra work was ordered by the owner; the
owner agreed to pay, either expressly or by his or her conduct; the extras were not furnished by
the contractor as his or her voluntary act; and the extra items were not rendered necessary by
any fault of the contractor. Kern v. Rafferty, 131 Ill. App. 3d 728, 476 N.E.2d 52 (5th Dist. 1985).
There are a number of defenses available to a mechanics lien. Some defenses include: failure of
the subcontractor to serve § 24 notice within ninety days of completion, improper service, or
service on wrong parties; failure of general contractor and subcontractor to record a claim for
the lien within four months after completion; failure of general contractor and subcontractor to
file a lawsuit to foreclose a claim within two years from date of completion; failure to maintain
adequate records to determine date of completion or allocate a lien amount on multi-parcel or
multiunit development; failure to accurately state the nature of the contract in the claim for the
lien; incorrect names of contractors or owners; inaccurate or incorrect legal descriptions; failure
to file lis pendens notices upon filing suit and failure to name each party defendant on the lis
pendens notices; filing a claim for work completed more than three years after commencement
when contract fails to state completion date; failure to serve § 21 notice within sixty days after
the date of commencement of work by a subcontractor on a owner-occupied residence; and
claiming a lien for non-lienable services or materials.
Finally, § 35 of the Mechanics Lien Act levies significant penalties for a lien claimant’s failure to
provide a release when one is warranted. Failure of a lien claimant to provide a written release
within ten days of a demand subjects the lien claimant to liability of $2500 plus costs and
reasonable attorney’s fees in bringing the action to enforce § 35. 770 Ill. Comp. Stat. 60/35(a).
23 2021
DAMAGES
RECOVERY OF INVESTIGATIVE COSTS
There is no published Illinois decision on the recovery of investigative costs as an element of
recoverable damages.
EMOTIONAL DISTRESS
Negligent Infliction of Emotional Distress
A plaintiff alleging negligent infliction of emotional distress must plead and prove the basic
elements of negligence—that the defendant owed the plaintiff a duty of care; the defendant
breached that duty; and the defendant caused an injury to the plaintiff which was proximately
caused by the breach. Schweihs v. Chase Home Fin., LLC, 2016 IL 120041, ¶ 44, 77 N.E.3d 50, 62.
For direct victims, the plaintiff must also plead and prove contemporaneous physical impact or
injury directly resulting from the defendant’s conduct in order to prevail. Schweihs v. Chase Home
Fin., 2016 IL 120041, ¶ 44, 77 N.E.3d 50, 62 (noting that Illinois still follows the “impact rule” for
direct victims of negligent infliction of emotional distress). Though expert testimony may assist a
victim in proving his or her case, it is not required to support a claim of negligent infliction of
emotional distress. Thornton v. Garcini, 237 Ill. 2d 100, 928 N.E.2d 804 (2009).
More recent cases have extended recovery to bystanders within the “zone of danger.” Corgan v.
Muehling, 143 Ill. 2d 296, 574 N.E.2d 602 (1991) (explaining that a plaintiff is within the “zone of
danger”—and thus able to seek recovery—“when he is sufficiently close to that accident such
that he is subjected to a high risk of physical impact emanating from the accident itself”) (citations
omitted); Campbell v. A.C. Equip. Servs. Corp., Inc., 242 Ill. App. 3d 707, 610 N.E.2d 745 (4th Dist.
1993). In practice, this allows a bystander who is in close enough proximity to the person injured
to fear for his own safety, to recover for any resulting emotional distress from the defendant's
negligence. Both Corgan and Campbell made clear, however, that the zone-of-danger test only
applies to bystanders.
Intentional Infliction of Emotional Distress
The intentional form of this tort requires the plaintiff to establish that (1) the defendant's conduct
was extreme and outrageous; (2) the defendant either intended that his conduct should inflict
severe emotional distress or knew that there was a high probability that his conduct would cause
severe emotional distress; and (3) the defendant's conduct in fact caused severe emotional
distress. Rekosh v. Parks, 316 Ill. App. 3d 58, 735 N.E.2d 765 (2d Dist. 2000).
The key distinctions between intentional infliction of emotional distress and negligent infliction
of emotional distress are (1) the level of conduct required: extreme and outrageous, as opposed
to a breach of duty; and (2) an intent to inflict the harm, as opposed to mere negligence resulting
in severe emotional distress.
To date, Illinois courts have not ruled on the propriety of pleading these causes of action in the
classic construction lawsuit setting. In a personal injury claim, it is certainly conceivable that the
24 2021
elements of either negligent or intentional infliction of emotional distress could be met, but no
opinion has either authorized or disallowed this form of recovery. However, consistent with the
seminal Illinois Supreme Court decision, Moorman Manufacturing Co. v. National Tank Co., 91 Ill.
2d 69, 435 N.E.2d 443 (1982), prohibiting recovery in tort for economic losses, appellate courts
have not awarded damages without a separate claim of personal injury or damage to other
property. Anderson Elec., Inc., v. Ledbetter Erection Corp., 115 Ill. 2d 146, 503 N.E.2d 246 (1986).
STIGMA DAMAGES
Illinois has not recognized separate recovery for stigma damages, but has allowed stigma to be
considered in terms of diminution of property value in the context of environmental cases.
Hawthorne Partners v. AT&T Techs., Inc., 831 F. Supp. 1398 (N.D. Ill. 1993) (denying a motion to
exclude expert’s opinion on diminution of property value based on the stigma of environmental
contamination).
ECONOMIC WASTE
Where there has been less than full performance, the usual measure of damages is the cost of
repairing the defects and/or completing the project. Castricone v. Michaud, 223 Ill. App. 3d 138,
583 N.E.2d 1184 (3d Dist. 1991). However, where the repairs would entail substantial destruction
of the contractor’s work, or the costs are disproportionate to the contract price, the measure of
damages is determined by the diminution in the value of the property resulting from the defects.
Id.; see also Witty v. C. Casey Homes, Inc., 102 Ill. App. 3d 619, 430 N.E.2d 191 (1st Dist. 1981).
LIQUIDATED DAMAGES
In Illinois, an agreement to set the amount of liquidated damages prior to a breach is
unenforceable unless: (1) the amount is a reasonable forecast of just compensation for the harm
caused by the breach; and (2) the amount of harm is difficult or even impossible to determine or
estimate. People ex rel. Dep’t of Pub. Health v. Wiley, 218 Ill. 2d 207, 843 N.E.2d 259 (2006); Hidden
Grove Condo. Ass’n v. Crooks, 318 Ill. App. 3d 945, 744 N.E.2d 305 (3d Dist. 2001). Whether a
contractual provision for damages is a valid liquidated-damages provision or a penalty clause is a
question of law. Penske Truck Leasing Co., L.P. v. Chemetco, Inc., 311 Ill. App. 3d 447, 725 N.E.2d
13 (5th Dist. 2000). However, there is no fixed rule applicable to all liquidated-damages
agreements, and each one must be evaluated on its own facts and circumstances. Id. In order
to validate such a clause, three elements must be met:
(1) the parties intended to agree in advance to the settlement of damages that
might arise from the breach; (2) the amount of liquidated damages was
reasonable at the time of contracting, bearing some relation to the damages which
might be sustained; and (3) actual damages would be uncertain in amount and
difficult to prove.
Jameson Realty Grp. v. Kostiner, 351 Ill. App. 3d 416, 813 N.E.2d 1124 (1st Dist. 2004) (emphasis
added) (citations omitted). “A term fixing unreasonably large liquidated damages is
unenforceable on grounds of public policy as a penalty.” Penske Truck Leasing Co., L.P. v.
Chemetco. Inc.. 311 Ill. App. 3d 447, 725 N.E.2d 13 (2000) (quoting Restatement (Second) of
25 2021
Contracts § 356 at 157 (1981)). Illinois courts, however, have upheld liquidated damage clauses
over a fairly wide range of values. Inland Bank & Trust v. Knight, 399 Ill. App. 3d 378, 927 N.E.2d
777 (1st Dist. 2010) (holding that a default interest rate of eleven percent in a promissory note,
which was negotiated to and agreed upon by both parties, was not unreasonable in light of the
loss that plaintiff suffered by defendant’s default); see also Casaccio v. Habel, 14 Ill. App. 3d 822,
303 N.E.2d 548 (1st Dist. 1973) (holding that a promissory note’s default interest rate of twenty-
four percent was reasonable).
ABANDONMENT AND TERMINATION
Abandonment occurs when a contractor ceases to perform on the contract. However,
abandonment alone does not terminate the contract; rather, termination occurs only when one
of the parties to the contract decides to end the contractual relationship. The distinction turns
on the contractor’s intent: If the contractor intends to resume performance, he is deemed to
have abandoned the contract; if the contractor has no intention of resuming performance, he is
deemed to have terminated the contract.
Abandonment
Among the few cases decided in Illinois on the issue of abandonment, the courts have taken a
decidedly pro-owner stance in their rulings. See, e.g., City of East Peoria v. Colianni & Dire Co.,
334 Ill. App. 108, 78 N.E.2d 806 (3d Dist. 1948) (holding for the plaintiff city against the defendant
contractor, where the defendant stopped work on its contract with the plaintiff due to alleged
insufficiency in plans and specifications provided by the plaintiff). While the courts do not take
the extreme position that a contractor's abandonment is “in all circumstances per se bad faith,”
more often than not, they side with the non-abandoning party. Brink v. Hayes Branch Drainage
Dist. of Douglas Cnty., 59 Ill. App. 3d 828, 376 N.E.2d 78 (4th Dist. 1978). Note, however, that
even an abandoning contractor is entitled to payment for work already performed, generally on
a quantum meruit theory. Watson Lumber Co. v. Mouser, 30 Ill. App. 3d 100, 333 N.E.2d 19 (5th
Dist. 1975). Moreover, an owner or contractor who receives substantially what he bargained for
must pay the contract price, but the owner or contractor may deduct from the contract price the
difference between what he actually received and what strict performance would have given
him. Brink v. Hayes Branch Drainage Dist. of Douglas Cnty., 59 Ill. App. 3d 828, 376 N.E.2d 78 (4th
Dist. 1978) (citing Watson Lumber Co. v. Mouser, 30 Ill. App. 3d 100, 333 N.E.2d 19 (5th Dist.
1975)).
Termination
Termination, rather than abandonment, is the more commonly litigated course of action taken
by disgruntled parties to a contract. Termination clauses typically are included in construction
contracts, and the damages for termination will be governed by these clauses. If the court
determines termination was improper, it will not award damages to the terminating party; but if
termination was proper, the court will award what is stipulated to in the contract. Robinhorne
Constr. Corp. v. Snyder, 113 Ill. App. 2d 288, 251 N.E.2d 641 (4th Dist. 1969). This amount is usually
the difference between the unpaid balance of the contract price and the expenses of completing
the construction. J.F. Edwards Constr. Co. v. Ill. St. Toll Highway Auth., 34 Ill. App. 3d 929, 340 N.E.2d
572 (3d Dist. 1975). A party who materially breaches a contract cannot take advantage of the
26 2021
terms of the contract that benefit that party. McBride v. Pennant Supply Corp., 253 Ill. App. 3d
363, 623 N.E.2d 1047 (5th Dist. 1993) (citing Robinhorne Constr. Corp. v. Snyder, 113 Ill. App. 2d
288, 251 N.E.2d 641 (4th Dist. 1969)).
LOST PROFITS
Illinois courts allow for recovery of lost profits when information is available by which the
probable lost profits can be reasonably estimated. See, e.g., TRI-G, Inc. v. Burke, Bosselman &
Weaver, 222 Ill. 2d 218, 856 N.E.2d 389 (2006) (holding that a plaintiff may satisfy the reasonable
certainty requirement by presenting evidence of past profits in an established business). The
amount of loss need not be proven with absolute certainty; indeed, prospective profits will
always be somewhat uncertain. The law merely requires that the plaintiff approximate the
claimed lost profits with competent evidence—i.e., evidence that, with a fair degree of
probability, establishes a basis for the assessment of damages. Id. However, recovery of lost
profits cannot be based on sheer speculation or conjecture; the evidence must afford some
reasonable basis for the computation of damages. Id.; see also Apa v. Nat’l Bank of Commerce,
374 Ill. App. 3d 1082, 872 N.E.2d 490 (1st Dist. 2007). Prospective profits recoverable are limited
to those which might have been made pursuant to the performance of the particular contract
sued on and during the period for which it was to run. Rivenbark v. Finis P. Ernest, Inc., 37 Ill. App.
3d 536, 346 N.E.2d 494 (5th Dist. 1976). The “net profits” recoverable in a breach of contract
action are calculated by deducting from the contract price the costs of full compliance on the
part of the plaintiff. Wilmette Partners v. Hamel, 230 Ill. App. 3d 248, 594 N.E.2d 1177 (1st Dist.
1992). Indirect costs may also be deducted from a contract price to determine “net profits.” The
determination will largely depend upon whether they constitute variable or fixed indirect costs.
The issue of indirect costs was addressed by the Illinois Appellate Court in Rivenbark v. Finis P.
Ernest, Inc., 37 Ill. App. 3d 536, 346 N.E.2d 494 (5th Dist. 1976). See also F.E. Holmes & Son Constr.
Co., Inc. v. Gualdoni Elec. Serv., Inc., 105 Ill. App. 3d 1135, 435 N.E.2d 724 (5th Dist. 1982).
FAILURE TO COMPLY WITH PLANS AND SPECIFICATIONS
In Illinois, a contractor is not liable for damages if he (1) performs his work in accordance with
the plans and specifications furnished by the owner, and (2) does so in a workmanlike manner.
Bednar v. Venture Stores, Inc., 106 Ill. App. 3d 454, 436 N.E.2d 46 (1st Dist. 1982) (citing
Georgetown Twp. High Sch. Dist. No. 218 v. Hardy, 38 Ill. App. 3d 722, 349 N.E.2d 88 (4th Dist.
1976)); see also Regan Co. v. Fiocchi, 44 Ill. App. 2d 336, 194 N.E.2d 665 (2d Dist. 1963); R.F. Conway
Co. v. City of Chi., 274 Ill. 369, 113 N.E. 703 (1916).
“No Damages for Delay” Clauses
Where there is no agreement otherwise, the general rule is that a contractor may recover
damages for acts or omissions of the owner or general contractor that burden performance of
the contractor’s work and increase the costs of completion. Bates & Rogers Constr. Corp. v.
Greeley & Hansen, 109 Ill. 2d 225, 486 N.E.2d 902 (1985). As a result, sophisticated owners and
general contractors will frequently insist on a “no damages for delay” clause in the construction
contract. These provisions generally provide that a contractor waives any claim for
compensation or damages arising out of any delay caused by the owner or its agents. The
damages covered by the contracts typically include lost income or profit; rental expenses for tools
27 2021
and equipment; loss of use of tools, equipment, and personnel; loss of business reputation; and
loss of management or employee productivity.
“No damages for delay” clauses are generally enforceable, though they are strictly construed
against the parties seeking to invoke them, and they are subject to several specific exceptions.
J&B Steel Contractors, Inc. v. C. Iber & Sons, Inc., 162 Ill. 2d 265, 642 N.E.2d 1215 (1994). Where
the owner is not acting in good faith, the delay is unreasonable in duration, the cause of the delay
was not within the contemplation of the parties, or the delay is attributable to inexcusable
ignorance or incompetence on the part of the owner or general contractor, such clauses have
been held unenforceable. Bates & Rogers Constr. Corp. v. Greeley & Hansen, 109 Ill. 2d 225, 486
N.E.2d 902 (1985); see also Gust K. Newberg, Inc. v. Ill. St. Toll Highway Auth., 153 Ill. App. 3d
918, 506 N.E.2d 658 (2d Dist. 1987) (holding that the only recognized exceptions to the
enforceability of no damages for delay clauses are bad faith and gross negligence).
PREJUDGMENT INTEREST
Illinois law provides that prejudgment interest can be awarded to the contractor if the owner is
late in making payment under the contract. Gen. Dynamics Corp. v. Zion St. Bank & Trust Co., 86
Ill. 2d 135, 427 N.E.2d 131 (1981). Pursuant to § 2 of the Illinois Interest Act, the owner is entitled
to a five percent prejudgment interest award for the balance of the account outstanding. 815 Ill.
Comp. Stat. 205/2 (2014); see also Gen. Dynamics Corp. v. Zion St. Bank & Trust Co., 86 Ill. 2d 135,
427 N.E.2d 131 (1981) (holding that interest shall not be awarded where the person withholding
payment did so in good faith, because of a genuine and reasonable dispute, but that interest was
proper where an owner in bad faith unreasonably withholds money due to a contractor).
Prejudgment interest will not be issued where the person withholding payment did so in good
faith, because of a genuine and reasonable dispute. Veath v. Specialty Grains, Inc., 190 Ill. App.
3d 787, 546 N.E.2d 1005 (5th Dist. 1989). However, interest is in fact proper where an owner in
bad faith unreasonably withholds money. Id.
CONSEQUENTIAL DAMAGES
An owner may recover consequential damages from a contractor who breaches the contract.
Such damages may include lost profits, compensation for hardships resulting from the breach,
costs of repair and damage to reputation in the industry. See DP Serv., Inc. v. AM Int’l, 508 F.
Supp. 162 (N.D. Ill. 1981) (“Consequential damages are such as are not produced without the
concurrence of some other event attributable to some origin or cause; such damage, loss, or
injury as does not flow directly and immediately from the act of the party, but only from the
consequence or results of such act.”). Stated more broadly:
[A] person breaching a contract can be held liable for such damages as may fairly
and reasonably be considered as naturally arising from the breach thereof, in light
of the facts known or which should have been known, or such as may reasonably
be supposed to have been within the contemplation of the parties as a probable
result of a breach thereof. Speculative damages or damages not the proximate
result of a breach of contract will not be allowed.
28 2021
Jones v. Melrose Park Nat'l Bank, 228 Ill. App. 3d 249, 592 N.E.2d 562 (1st Dist. 1992) (citations
omitted); see also Edward E. Gillen Co. v. City of Lake Forest, 221 Ill. App. 3d 5, 581 N.E.2d 739 (2d
Dist. 1991) (“Where a contract has been breached, recoverable damages are those which (1)
naturally result from the breach, or (2) are the consequence of special or unusual circumstances
which were within the reasonable contemplation of the parties when making the contract.”).
DUTY TO MITIGATE
A party to a construction contract has a duty to mitigate damages arising from the other party's
breach. A plaintiff may not “stand idly by and allow his property to be destroyed,” thereby
increasing the damages owed to him by the defendant. Montefusco v. Cecon Constr. Co., 74 Ill.
App. 3d 319, 392 N.E.2d 1103 (3d Dist. 1979); Cedar Rapids & Iowa City Ry. & Light Co. v. Sprague
Elec. Co., 280 Ill. 386, 117 N.E. 461 (1917) (“[I]t is the duty of a party injured by a breach of contract
to do all that is reasonably in his power to prevent the damage or reduce it to the smallest
amount.”).
Damages that a plaintiff is required to avoid include those that may have been “avoided with
reasonable effort without undue risk, expense, or humiliation.” Pioneer Bank & Trust Co. v. Seiko
Sporting Goods, U.S.A. Co., 184 Ill. App. 3d 783, 540 N.E.2d 808 (1st Dist. 1989) (“The burden of
proof that the injured party has failed to mitigate damages is on the party who has breached the
contract. However, the duty to mitigate may not be invoked by one who has breached a contract
as grounds for a hypercritical examination of the injured party's conduct, or as evidence that the
injured party might have taken steps which seemed wiser or would have been more
advantageous to the breaching party.”).
INSURANCE COVERAGE
Failure to Procure Insurance
A common dispute among contractors is the failure to name the contractor as an additional
insured on another contractor's insurance policy. This can flow from the general contractor or
property owner to the subcontractor or sub-subcontractor, or vice versa. This is a common risk-
shifting analysis undertaken in almost all construction projects. These disputes are often litigated
as third-party claims or counterclaims ancillary to the underlying injury suit. Commonly, the party
that seeks relief brings a breach of contract action for failure to provide insurance pursuant to
the underlying construction contract. There are several issues that Illinois courts have examined
pertaining to this issue.
A promise by a contractor to obtain insurance for itself and/or an owner or general contractor is
enforceable and does not violate public policy. Jokich v. Union Oil Co. of Cal, 214 Ill. App. 3d 906,
574 N.E.2d 214 (1st Dist. 1991); see also Zettel v. Paschen Contractors, Inc., 100 Ill. App. 3d 614,
427 N.E.2d 189 (1st Dist. 1981). Indeed, one who breaches an agreement to obtain liability
insurance is liable for all resulting damages, including the amount of any judgments against the
promisee and the costs of the promisee’s defense. Id. However, an agreement to obtain
insurance is not the same as a promise to indemnify: an indemnity agreement is an agreement
to assume all liability for injuries or damages; an insurance agreement, by contrast, is merely an
29 2021
agreement to procure insurance and pay the premiums on it. Id.
A subcontractor may argue that the general contractor waived the contractual provision
requiring the subcontractor to procure insurance where the general contractor allowed
performance under the contract (and paid for performance), notwithstanding the
subcontractor’s failure to provide proof of insurance, as required by the contract. Whalen v. K-
Mart Corp., 166 Ill. App. 3d 339, 519 N.E.2d 991 (1st Dist. 1988); see also Lehman v. IBP, Inc., 265
Ill. App. 3d 117, 639 N.E.2d 152 (3d Dist. 1994) (holding that an owner who repeatedly requested
proof of insurance from contractor had not waived its contractual right).
RELEVANT STATUTES AND FORMS
Building and Construction Contract Act
815 Ill. Comp. Stat. 665/1 (2014) et seq.
The Building and Construction Contract Act voids construction contract provisions that require
that building contracts be interpreted under the laws of another state. The Act broadly defines
“building and construction contract” to include any contract for “design, construction, alteration,
improvement, repair or maintenance of the real property, highways, roads or bridges.” 815 Ill.
Comp. Stat. 665/5. The Act provides that any provisions that require a construction contract to
be litigated, arbitrated, or resolved using another form of dispute resolution outside of Illinois
are void and unenforceable as against public policy 815 Ill. Comp. Stat. 665/10. There are two
key exceptions. The first exception states that the Act does not apply to contracts awarded by
the United States or by any other state. 815 Ill. Comp. Stat. 665/15. The second states that the
Act does not apply to any person primarily engaged in the business of selling tangible personal
property. 815 Ill. Comp. Stat. 665/20.
Construction – Design Management and Supervision
735 Ill. Comp. Stat. 5/13-214 (2014). Construction--Design management and supervision
Section 13-214. Construction – Design management and supervision. As used in
this Section "person" means any individual, any business or legal entity, or any
body politic.
(a) Actions based upon tort, contract or otherwise against any person for an act or
omission of such person in the design, planning, supervision, observation or
management of construction, or construction of an improvement to real property
shall be commenced within 4 years from the time the person bringing an action,
or his or her privity, knew or should reasonably have known of such act or
omission. Notwithstanding any other provision of law, contract actions against a
surety on a payment or performance bond shall be commenced, if at all, within
the same time limitation applicable to the bond principal.
30 2021
(b) No action based upon tort, contract or otherwise may be brought against any
person for an act or omission of such person in the design, planning, supervision,
observation or management of construction, or construction of an improvement
to real property after 10 years have elapsed from the time of such act or omission.
However, any person who discovers such act or omission prior to expiration of 10
years from the time of such act or omission shall in no event have less than 4 years
to bring an action as provided in subsection (a) of this Section. Notwithstanding
any other provision of law, contract actions against a surety on a payment or
performance bond shall be commenced, if at all, within the same time limitation
applicable to the bond principal.
(c) If a person otherwise entitled to bring an action could not have brought such
action within the limitation periods herein solely because such person was under
the age of 18 years, or a person with a developmental disability or a person with
mental illness, then the limitation periods herein shall not begin to run until the
person attains the age of 18 years, or the disability is removed.
(d) Subsection (b) shall not prohibit any action against a defendant who has expressly
warranted or promised the improvement to real property for a longer period from
being brought within that period.
(e) The limitations of this Section shall not apply to causes of action arising out of
fraudulent misrepresentations or to fraudulent concealment of causes of action.
Construction Contract Indemnification for Negligence Act
740 Ill. Comp. Stat. 35/1 (2018). Indemnification of person from person's own negligence; effect;
enforcement
Section 1. With respect to contracts or agreements, either public or private, for
the construction, alteration, repair or maintenance of a building, structure,
highway bridge, viaducts or other work dealing with construction, or for any
moving, demolition or excavation connected therewith, every covenant, promise
or agreement to indemnify or hold harmless another person from that person's
own negligence is void as against public policy and wholly unenforceable.
Adjacent Landowner Excavation Protection Act
765 Ill. Comp. Stat. 140/1 (2009). Evacuation; notice; liability; sustention adjoining land;
standard depth, defined
Section 1. Each adjacent owner is entitled to the continuous lateral and subjacent
support which his land receives from the adjoining land, subject to the right of the
31 2021
owner of the adjoining land to make proper and usual excavations on the same
for purposes of construction or improvements, under the following conditions:
1. Any owner or possessor of land intending to make or to permit an excavation to
be made on his land shall give due and reasonable notice in writing to the owner
or owners of adjoining lands and of adjoining buildings and other structures
stating the depth to which the excavation is intended to be made and when the
excavation will begin. If the excavation is to be of a depth of not more than the
standard depth of foundations, as herein defined, and if it appears that the
excavation is to be of a greater depth than the walls or foundations of any
adjoining building or other structure and is to be so close as to endanger the
building or other structure in any way, then the owner of the building or other
structure on the adjoining land shall be allowed a reasonable time, but in no event
less than thirty (30) days, in which to take measures to protect the same from any
damage or in which to extend the foundations thereof, and he must be given, for
the said purpose, a license to enter on the land on which the excavation is to be
or is being made.
2. Any owner or possessor of land upon which an excavation is made, who does not
comply with the provisions of subparagraph 1, when so required, is liable to the
owner of adjacent property for any damage to the land or to any buildings or other
structure thereon arising from such excavation, and is also liable to occupants and
tenants of the adjoining land or structures for any damage to their property or
business, proximately resulting from injury to such land or structures, caused by
the failure of such owner or possessor to so comply.
3. In making any excavation, reasonable care and precautions shall be taken to
sustain the adjoining land as such, without regard to any building or other
structure which may be thereon, and there is no liability for damage done to any
building or other structure by reason of the excavation except as herein provided
or otherwise provided or allowed by law.
4. Standard depth of foundations, as used herein, is a depth of eight (8) feet below
the established grade of a street, highway or other public way upon which such
land abuts, or if there is no established grade, below the surface of the adjoining
land.
5. If the excavation is intended to be or is deeper than the standard depth of
foundations as herein defined, then the owner of the land on which the excavation
is being made, if given the necessary license to enter on adjoining land, and not
otherwise, shall protect the said adjoining land and any building or other structure
thereon, without cost to the owner thereof, by furnishing lateral and subjacent
support to said adjoining land and all buildings and structures thereon, in such a
manner as to protect the same from any damage by reason of the excavation and
32 2021
shall be liable to the owner of such property for any damage to the land or to any
buildings or other structures thereon.
6. The owner or possessor of the land upon which the excavation is being made shall
also be liable to occupants and tenants of such adjoining lands or structures
thereon for any damage to their property or business, proximately resulting from
injury to such land or structures, caused by the failure of such owners or
possessor, making such excavation, to fulfill the duty set forth in subparagraph 5.
Mechanics Lien Act
770 Ill. Comp. Stat. 60/1 (2018). Contractor defined; amount of lien; waiver of lien; attachment
of lien; agreement to waive; when not enforceable
Section 1. Contractor defined; amount of lien; waiver of lien; attachment of lien;
agreement to waive; when not enforceable.
(a) Any person who shall by any contract or contracts, express or implied, or partly
expressed or implied, with the owner of a lot or tract of land, or with one whom
the owner has authorized or knowingly permitted to contract, to improve the lot
or tract of land or for the purpose of improving the tract of land, or to manage a
structure under construction thereon, is known under this Act as a contractor and
has a lien upon the whole of such lot or tract of land and upon adjoining or
adjacent lots or tracts of land of such owner constituting the same premises and
occupied or used in connection with such lot or tract of land as a place of residence
or business; and in case the contract relates to 2 or more buildings, on 2 or more
lots or tracts of land, upon all such lots and tracts of land and improvements
thereon for the amount due to him or her for the material, fixtures, apparatus,
machinery, services or labor, and interest at the rate of 10% per annum from the
date the same is due. This lien extends to an estate in fee, for life, for years, or
any other estate or any right of redemption or other interest that the owner may
have in the lot or tract of land at the time of making such contract or may
subsequently acquire and this lien attaches as of the date of the contract.
(b) As used in subsection (a) of this Section, "improve" means to furnish labor,
services, material, fixtures, apparatus or machinery, forms or form work in the
process of construction where cement, concrete or like material is used for the
purpose of or in the building, altering, repairing or ornamenting any house or
other building, walk or sidewalk, whether the walk or sidewalk is on the land or
bordering thereon, driveway, fence or improvement or appurtenances to the lot
or tract of land or connected therewith, and upon, over or under a sidewalk, street
or alley adjoining; or fill, sod or excavate such lot or tract of land, or do landscape
work thereon or therefore; or raise or lower any house thereon or remove any
33 2021
house thereto, or remove any house or other structure therefrom, or perform any
services or incur any expense as an architect, structural engineer, professional
engineer, land surveyor or property manager in, for or on a lot or tract of land for
any such purpose; or drill any water well thereon; or furnish or perform labor or
services as superintendent, time keeper, mechanic, laborer or otherwise, in the
building, altering, repairing or ornamenting of the same; or furnish material,
fixtures, apparatus, machinery, labor or services, forms or form work used in the
process of construction where concrete, cement or like material is used, or drill
any water well on the order of his agent, architect, structural engineer or
superintendent having charge of the improvements, building, altering, repairing
or ornamenting the same.
(c) The taking of additional security by the contractor or sub-contractor is not a
waiver of any right of lien which he may have by virtue of this Act, unless made a
waiver by express agreement of the parties and the waiver is not prohibited by
this Act.
(d) An agreement to waive any right to enforce or claim any lien under this Act where
the agreement is in anticipation of and in consideration for the awarding of a
contract or subcontract, either express or implied, to perform work or supply
materials for an improvement upon real property is against public policy and
unenforceable. This Section does not prohibit release of lien under subsection (b)
of Section 35 of this Act, nor does it prohibit an agreement to subordinate a
mechanics lien to a mortgage lien that secures a construction loan if that
agreement is made after more than 50% of the loan has been disbursed to fund
improvements to the property.
Consumer Fraud and Deceptive Business Practices Act
815 Ill. Comp. Stat. 505/2 (2014). Unlawful practices; construction with Federal Trade
Commission Act
Section 2. Unfair methods of competition and unfair or deceptive acts or
practices, including but not limited to the use or employment of any deception
fraud, false pretense, false promise, misrepresentation or the concealment,
suppression or omission of any material fact, with intent that others rely upon the
concealment, suppression or omission of such material fact, or the use or
employment of any practice described in Section 2 of the "Uniform Deceptive
Trade Practices Act", approved August 5, 1965 [815 Ill. Comp. Stat. 510/2], in the
conduct of any trade or commerce are hereby declared unlawful whether any
person has in fact been misled, deceived or damaged thereby. In construing this
section consideration shall be given to the interpretations of the Federal Trade
Commission and the federal courts relating to Section 5 (a) of the Federal Trade
Commission Act [15 U.S.C. § 45].
34 2021
Home Repair Fraud Act
815 Ill. Comp. Stat. 515/2 (2014). Definitions
Section 2. Definitions. As used in this Act, unless the context otherwise requires:
(a) "Home Repair" means the fixing, replacing, altering, converting, modernizing,
improving of or the making of an addition to any real property primarily designed
or used as a residence.
(1) Home repair shall include the construction, installation, replacement or
improvement of driveways, swimming pools, porches, kitchens, chimneys,
chimney liners, garages, fences, fallout shelters, central air conditioning, central
heating, boilers, furnaces, hot water heaters, electrical wiring, sewers, plumbing
fixtures, storm doors, storm windows, awnings and other improvements to
structures within the residence or upon the land adjacent thereto.
(2) Home repair shall not include the sale, installation, cleaning or repair of carpets;
the sale of goods or materials by a merchant who does not directly or through a
subsidiary perform any work or labor in connection with the installation or
application of the goods or materials; the repair, installation, replacement or
connection of any home appliance including but not limited to disposals,
refrigerators, ranges, garage door openers, television antennas, washing
machines, telephones or other home appliances when the person replacing,
installing, repairing or connecting such home appliance are employees or agents
of the merchant that sold the home appliance; or landscaping.
(b) "Person" means any individual, partnership, corporation, business, trust or other
legal entity.
(c) "Residence" means a single or multiple family dwelling, including but not limited
to a single family home, apartment building, condominium, duplex or townhouse
which is used or intended to be used by its occupants as their dwelling place.
Nothing in this Act shall be construed to apply to original construction of single or
multiple family residence.
Illinois Pattern Jury Instructions (Civil) 55.01-55.04
55.01 Construction Negligence—Work Entrusted to Another
A[n] [owner] [contractor] [other] who entrusts work to a [subcontractor] [contractor]
[other] is liable for injuries resulting from the work if the [owner] [contractor] [other]
retained some control over any part of the work and the injuries were proximately caused
35 2021
by the [owner's] [contractor's] [other's] failure to exercise that control with ordinary care.
55.02 Construction Negligence—Requisite Control
A party is deemed to retain some control over the work if there is any part of the work
that a [subcontractor] [contractor] [other] is not entirely free to do in [his] [her] [its] own
way.
55.03 Construction Negligence—Issues Made by the Pleadings/Burden of Proof
Plaintiff ____ seeks to recover damages from defendant[s] ____. In order to recover
damages, the plaintiff has the burden of proving:
1. The [defendant ____] [defendants __, __, and __] retained some control over any part
of the work;
2. Defendant[s] [acted] [or] [failed to act] in one or more of the following ways:
a. ____; or
b. ____; or
c. ____;
and in so [acting] [or] [failing to act], was [were] negligent in the manner in which it [they]
[exercised] [or] [failed to exercise] its [their] control.
3. Plaintiff ____ was injured; and 4. The [defendant's] [defendants' ____, ____, or ____]
negligence was a proximate cause of plaintiff's injuries. [You are to consider these
propositions as to each defendant separately.] If you find that any of these propositions
has not been proven as to [the defendant] [any one] [or more] [or all] [of the defendants],
then your verdict should be for [the] [that] [those] defendant[s]. On the other hand, if
you find that all of these propositions have been proven as to [the defendant] [any one]
[or more] [or all] [of the defendants], then you must consider defendant['s] [s'] claim[s]
that the plaintiff was contributorily negligent.
As to [that] [those] claim[s], defendant[s] has [have] the burden of proving:
A. Plaintiff [name] acted or failed to act in one or more of the following ways:
1. ____; or
2. ____; or
3. ____;
and in so [acting] [or] [failing to act] was negligent, and
B. Plaintiff's negligence was a proximate cause of [his injury] [and] [damage to his
property].
If you find that plaintiff has proven all the propositions required of [him] [her], and the
36 2021
defendant[s] ha[s][ve] not proven all of the propositions required of the defendant[s],
then your verdict should be for the plaintiff as to [that] [those] defendant[s] and you will
not reduce plaintiff's damages. If you find that defendant[s] [has] [have] proven all of the
propositions required of [the] [those] defendant[s], and if you find that the plaintiff's
contributory negligence was greater than 50% of the total proximate cause of the injury
or damage for which recovery is sought, then your verdict should be for [that] [those]
defendant[s].
If you find that defendant[s] [has] [have] proven all of the propositions required of [the] [those]
defendant[s], and if you find that the plaintiff's contributory negligence was less than 50% of the
total proximate cause of the injury or damage for which recovery is sought, then your verdict
should be for the plaintiff as to [that] [those] defendant[s] and
55.04 Construction Negligence—More Than One Person Having Control
One or more persons may have some control over the safety of the work. Which
person or persons had some control over the safety of the work under the
particular facts of this case is for you to decide.
37 2021
About the Authors
Dennis J. Cotter is a founding partner of SmithAmundsen, serves as Chairperson of the firm’s
Construction Practice Group, and is also a member of the firm’s Executive Committee. Dennis is
an experienced trial attorney and represents steel erectors, HVAC contractors, roofing
contractors, general contractors, owners, architects, masons, excavators, and others, all in
pending lawsuits involving catastrophic injuries, commercial disputes, and construction defects,
frequently with potential values in excess of one million dollars. He consults to general and
subcontractors including litigation management, contract review, insurance and safety issues.
Special thanks to Michael F. Cocciemiglio, associate attorney, Megan Williams, current law clerk
at SmithAmundsen LLC and third-year law student at Chicago-Kent College of Law, and Brooke
Cieplik, current law clerk at SmithAmundsen LLC and second-year law student at DePaul
University College of Law.
This Compendium outline contains a brief overview of certain laws concerning various
litigation and legal topics. The compendium provides a simple synopsis of current law and is
not intended to explore lengthy analysis of legal issues. This compendium is provided for
general information and educational purposes only. It does not solicit, establish, or continue
an attorney-client relationship with any attorney or law firm identified as an author, editor or
contributor. The contents should not be construed as legal advice or opinion. While every
effort has been made to be accurate, the contents should not be relied upon in any specific
factual situation. These materials are not intended to provide legal advice or to cover all laws
or regulations that may be applicable to a specific factual situation. If you have matters or
questions to be resolved for which legal advice may be indicated, you are encouraged to
contact a lawyer authorized to practice law in the state for which you are investigating and/or
seeking legal advice.
