Attorney Lien Notice Illinois Cook

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Attorney Lien Notice Illinois Cook Powered By Docstoc
					Public Construction Payment Disputes
By Tobin M. Richter
Neal & Leroy, LLC
Chicago, IL

Public Construction Payment Disputes
Consideration given to the rights of:

The Owner
The General Contractor
The Subcontractor
Second Tier Subcontractors and Suppliers

   I.           Mechanics Liens
               A. Background
               B. How to File Local Projects (Notice)
               C. Filing Suit
               D. Distribution of Funds Subject to Multiple Liens
               E. Limitation to Your Line?
               F. Fees, Interest, Etc.,
               G. Lien Substitution Bonds
               H. State Projects
               I. Conclusion Liens
   II.         Bond Claims
               A. How to file a claim
               B. Other considerations
   III.        Contract claims
   IV.         Prompt Payment Act
   V.          Tactics


          A.      Just remember three things:
                  1. Liens on public jobs are totally different than on private jobs.

                  2. The answer to what is different is found in Section 23. [770 ILCS §60/23]

                  3. There is almost always also a bond to claim against. [30 ILCS §550/1]

          B.      Key Differences Between Public Jobs and Private Jobs:
                 The general contractor may not file a lien.

                 Any other subcontractor or supplier may file a lien.

                 The lien is on the public funds due to the general contractor, not on the real

                 The running of limitation periods is totally different - - and also significantly
                 different as between the public funds lien and the bond claim.

                 The time to file suit is totally different.

                 There are differences between state public projects and local public projects.

                                         Coverage of this Class

Statutory Lien Rights

The Illinois Mechanics Lien Act.

(1) The Owner is protected from liability in excess of final adjusted contract amount by case law.
Gunther v. O’Brien Bros. 369 Ill. 362 (1938).

(2) On Public Jobs the General Contractor has no lien rights. The General Contractor is limited
to its contractual remedies against the owner.
         These rights may be tightly defined and have very short time limitations.

(3) The Subcontractor, Second Tier Subcontractors and Suppliers have statutory lien rights.

Bond Claims

Illinois Law requires that there be a bond on all public construction projects with a value in
excess of $5,000.

The subcontractors may make bond claims against the surety.

The bond protects the owner from failure of the general contractor to complete the project and/or
failure of the general contractor to pay the subcontractors for the project.

Contract Claims

All parties have the right to sue on their contracts.

The Public Prompt Payment Act

                                       I.       Mechanics Liens:
        The nature of the lien is that it is on money, not real estate; it was most recently amended

effective August 17, 2007.

        Who can file one? All of the usual suspects – although the case law distinguishes

between private and public jobs. In Divane v. Smith, 332 Ill.App.3d 548, 774 N.E.2d 361 (1st

Dist. 2002), the court held that a union may file a lien for unpaid contributions.

        Only Section 23 applies to public construction.

        But, read the contract.

      C.         Steps to file a lien and lawsuit on a public job (local government):

                 1.       Notice

                          There is no required time period from completion of the work within

which the notice must be given to the Public Owner.1 However, the risk this creates for the

subcontractor is that there is no duty on the part of the Public Owner to hold funds in anticipation

of liens for any set period of time. The Public Owner may make payments to the general

contractor, upon proper request, and need only hold back funds as to which a lien notice has been

received. Hence, rather than a time limit on the subcontractor, running from completion of work,

the subcontractor is required to serve its lien before the public money has been paid or delivered

to the general contractor.

        The statute provides that the lien notice to the Public Owner may be served by

personal delivery or by certified mail, return receipt requested, but remember that mail service is

risky because the notice, under the policies of the Act (to prevent the Public Owner from paying

         Much local construction is done by “Public Building Commissions.” Be careful in your notice, Public
Building Commissions are independent municipal corporations. See 50 ILCS §20/2 et seq.
the funds to the general contractor), logically cannot be effective until received. Indeed the Act

now (after the 2007 amendment) says that the “…notice shall be effective when received or

refused by the clerk or secretary.” Physical delivery with a dated, signed receipt is preferable.

The notice must be delivered to the general contractor and to the Public Owner care of its “clerk

or secretary.” It is not a bad idea to also list and serve all contractors in the chain above your

client although this is not specifically required.

       Sending a lien notice is mandatory before you file suit. Pirola v. W.J. Turnes Co., 238 Ill.

210, 87 N.E. 354, (1909); and Aluma Systems, Inc. v. Fredrick Quinn Corp.¸203 Ill.App.3d 828,

564 N.E. 2d 1280, 1289 (1st Dist. 1990). Although you could do both the notice and the suit the

same day.

       The content of the written notice must include: a sworn statement identifying the

claimant’s contract, describing the work done by claimant, and stating the total amount due and

unpaid as of the date of the notice [(§23 (b) (1)].

       Do not send the notice regular mail. Regular mail delivery is void: Mass Transfer Inc., v.

Vincent Const. Co., 223 Ill.App.3d 746, 585 N.E. 2d 1286 (5th Dist. 1992). However, regular

mail notice was allowed in Exterior Designing, Inc. v. Loucks Excavating, Inc., 1997 WL

534479 (N.D. Ill), in part because the Public Owner treated it as a valid lien notice.

Now, a word about empathy. This can result in strange decisions. A harsh construction of the

notice requirement may actually be prompted by a desire to save the plaintiff from the no double

notice requirement. Also, some seemingly fatal errors in creating a lien, if asserted by a public

owner or contractor who has suffered no actual prejudice, may, in some counties not meet with

judicial favor.
                                       FILING SUIT

       2.      Filing Suit

       Once notice is given to the Public Owner, the Public Owner must set aside funds in the

amount of the lien for, potentially 100 days. Within 90 days after the effective date of the lien

notice the lien claimant must file suit to enforce the lien (a suit for accounting) and then, within

10 days after filing suit notify the clerk or secretary of the Public Owner by physically delivering

a copy of the complaint filed. It is a good idea in the complaint to name not just the general

contractor and the Public Owner, but all contractors in the chain above your subcontractor to

make your client’s role clear. The suit is technically brought in the name of the Public Owner

for the use and benefit of the claiming subcontractor.

       If the suit is not filed within the 90 days the lien on the funds is released by statute. The

Act is silent on the consequence of the failure to deliver the complaint within the 10 day period.

However, the Act provides that upon the expiration of “this period” originally the 90 day period,

(now the 100 day period) the lien lapses and the money subject to the lien “shall” be released for

payment to the contractor. This makes sense, the Public Owner must have actual notice. It is

important in this regard to observe that the Section 23 language used as to serving the complaint

is the term “delivery,” to accomplish the duty to “notify,” thus expressly limiting the manner to

physical delivery.

       Delivery or mailing of either the notice or the lawsuit to an attorney is insufficient notice

to the Public Owner. A.J. Davinroy P & H, v. Finis P. Ernest, Inc., 87 Ill.App.3d 1047, 409 N.E.

2d 372 (5th Dist. 1980). Also, placing the summons to the Public Owner with the sheriff is

unnecessary and potentially ineffective (unless the Sheriff serves the Public Owner within the 10

days following filing suit). Northwest Water Com’n v. Santucci, 162 Ill.App.3d 877, 516 N.E.

2d 287 (1st Dist. 1987), appeal denied 119 Ill.2d 559.           This seems counterintuitive, but
remember that service of process is held to two standards: (1) Constitutional Due Process, and

(2) the specific statutory language involved. Here the statute requires physical delivery within 10

days. [Get a copy with a dated, “received” stamp] Constitutional Due Process is satisfied by the

earlier notice provided the Public Owner by the initial service of the lien notice. Hence, you do

not need the sheriff.

       In summary, if a lien notice is served after the funds have been paid to the general

contractor, or if the complaint is not filed within 90 days after the effective date of the lien notice

and delivered, properly within 10 days thereafter the lien is void. The validity of a lien can be

challenged by the Public Owner, or by other lien claimants. Exterior Designing, Inc. v. Loucks

Excavating, Inc., 1997 WL 534479 (ND IL).


       3.      Distribution of Funds Subject to Multiple Liens

       Note: The public body has an interpleader right:

       a. as to the liened funds only

       b. maybe as to all funds

       c. Remember you want to be sustained on appeal!

       d. The funds, pursuant to 60/23(d), are to be distributed on a pro-rata basis between

the claimants. The statute itself does not expressly limit the subcontractors’ collective recovery

to the amount of funds the Public Owner is contractually obligated to pay, but the Illinois

Supreme Court has imposed such a limit in Gunther v. O’Brien, 369 Ill. 362, 16 N.E.2d 890

(1938). The trial court may release funds prior to final judgment pursuant to the provision of the

Act authorizing payment pursuant to “other order of court.” Westcon/Dillingham v. Walsh, 319

Ill.App.3d 870, 747 N.E. 2d 410 (2nd Dist. 2001).
                          LIMITATION TO YOUR LINE?

4. Limitation to Your Line?

         Is your subcontractor’s recovery limited to his “line” in the contract or pay application?

You should be aware of three appellate decisions which suggest this result. Anderson “Safeway”

Guard Rail Corp. v. Champaign Asphalt Co., 131 Ill.App.2d 924, 266 N.E. 2d 414 (4th Dist.

1971); Tison & Hall Conc. Pro. Co. v. A.E. Asher, Inc., 86 Ill.App. 2d 34, 229 N.E. 2d 137 (5th

Dist. 1967); Koenig v, McCarthy Const. Co., 344 Ill.App. 93, 100 N.E. 2d 338 (2nd Dist., 1951).

Points to consider in evaluating these cases are: (a) Only Section 23 applies to public liens. No

other sections of the Mechanic’s Lien Act apply to public jobs so there may not be the level of

detail found on the public job sworn statement as is found on private jobs. Hence, it may be hard

to do the math to tell whose “line” a subcontractor is on; (b) Secondly, there is a strong

disinclination in the First District to apply this concept; the lien is considered to attach to any

unspent money, and; (c) there is no support for this result found in the language of Section 23,

indeed, the proration requirement of Section 23 seems to contradict a limitation of each lien to its


Hypothetical: John Doe Plumbing was paid $75,000.00 of which $30,000.00 is owed to Richard

Roe Plumbing Supplies. $75,000.00 paid to John Doe then he goes BK without paying RR. RR

files lien for $30,000. The Public Owner has only $50,000 left in unexpended contract funds, and

liens of RR for $30,000 and Generic Landscaping for $50,000. If RR is “limited to its line” it

gets nothing. If the money is prorated it gets 3/8ths of its claim. (Generic gets 5/8ths).


5. Other Points
        (a) Public Jobs are essentially subject only to Section 23, not the other sections of the

Act. RW Dunteman v. C/G Enterprises, 181 Ill. 2d 153 (1998); Anderson v. Champaign, 131 Ill.

App. 2d 924 (1971);

        (b) There is no Section 23 provision for attorneys fees.

        (c) Interest – only if money is available out of remaining contract funds.



        The Act does not provide a right to bond over a Section 23 mechanics lien. However, this

is sometimes done, with court approval, and usually not if the public owner objects. The

argument for these bonds is as follows (Note this is an argument, from a brief and not settled


                        (i) Illinois Law Recognizes Common Law Bonds

        In Sharpe v. Morgan, 44 Ill.App.346 (1st Dist. 1892), an appeal bond was given by Lewis

L. Sharpe for a judgment against a James Allison. While the case was on appeal James Allison

died. The surety then contended it was not liable on the bond as the bond ran only to Mr. Allison

and not to the administrator of his estate.

        The court determined that because this was a bond authorized by statute, it was made in

view of the statutes and accordingly the statutes formed a part of the bond. The surety was thus

liable on the bond. In its reasoning the court noted:

               There is a distinction between a common law bond and one
               prescribed by statute; as to the first, the liability of the obligors is
               limited by the language of the condition; as to the second, the
               condition will be construed so as to have the effect intended by the
               statute, because the statute enters into and is a part of the
       In Abraham v. Jones, 20 Ill.App.83 (1st Dist. 1886), a bond was furnished in a replevin

suit involving fifty barrels of rye whisky and ten barrels of blackberry brandy. Following

resolution of the underlying suit action was brought on the bond. The court held:

               In the outset, it should be stated, (and the statement does not admit
               of controversy,) that the condition of the bond herein is not framed
               in conformity with, but is substantially variant from the condition
               as prescribed by §10 of our Replevin Act, and there is no United
               States statute prescribing any. It is therefore to be regarded as a
               voluntary, common law bond; so that, in construing its covenants,
               the intention of the statutes becomes wholly immaterial. In such
               case the liability of the surety will not be extended by implication
               or construction beyond the precise terms of his undertaking, which
               is to be strictly construed.

       This holding again underscores that the law recognizes common law bonds, but requires a

higher standard of care in their drafting.

       In Morton’s of Chicago v. Industrial Commission, 366 Ill.App.3d 1056, 853 N.E.2d 40

(1st Dist. 2006), the appellant filed an appeal bond using an out of date form. Since filing a

proper bond was a precondition for taking the appeal, the appellee sought to dismiss the appeal

based on the defective bond language. The court, however, ruled:

               Contrary to the claimant’s arguments, however, the absence of an
               undertaking to pay the award and costs does not render Morton’s
               bond ineffective. When a bond is required by statute, the
               statutorily mandated terms are read into the bond, regardless of
               whether the bond actually contains those terms. Rosewood Corp. v.
               Transamerica Insurance Co., 57 Il.2d 247, 254, 311 N.E.2d 673
               (1974); See also Restatement (Third) of Suretyship & Guaranty §71
               (1995). Accordingly, the provision that, upon an unsuccessful
               review, Morton’s is required to pay the award plus costs is
               incorporated into Morton’s bond, as a matter of law. We conclude,
               therefore, that Morton’s bond satisfied the requirements of section
               19(f), and the circuit court correctly denied the claimant’s motion to

       Hence there is no doubt that statutory authorization is not required to support use of a

bond. A potential obligor, such as the general contractor, in this case, may supply a bond

voluntarily. The cases do, however, require clear language in such a voluntary bond carefully
describing the obligation undertaken, the conditions which trigger liability and the parties

entitled to the benefit of the bond. It goes without saying that the bond should be of a sufficient

amount and have a surety.

                       (ii) Illinois Case Law On Lien Substitution Bonds

       The Illinois Mechanic’s Lien Act, Section 23, does not provide for a lien release (or

substitution) bond, but it also does not prohibit them. At least two Illinois Appellate opinions

have, at the least, acknowledged the existence of such bonds. In Luis v. Village of Skokie, 335

Ill.App.3d 672, 781 N.E. 2d 353 (1st Dist. 2003), the court stated:

               Neither Luise nor Berkeley was paid for its performance of its
               respective contracts with Szabo. On February 18, 1998, Luise sent
               out a verified notice of lien for the amount of $126,771.79, via
               certified mail to the Village. On May 4, 1998, Berkeley sent out a
               verified notice of lien for the amount of $254,107.28, via certified
               mail to the Village. At the time of service of the lien notices, the
               Village retained sufficient funds to pay the claims of Luise and
               Berkeley, having not yet paid Szabo. After November 8, 1998, the
               Village released funds in the amount of $571,668.29 to Szabo after
               obtaining a “Release of Lien Bond” from Fidelity & Deposit
               Company of Maryland (Fidelity).

       A second appellate opinion, L.J.Keefe Co. v. Szabo Contracting, Inc., 324 Ill.App.3d

1125, 805 N.E. 2d 7500 (Table) (1st Dist. 2001), appeal denied 198 Ill.2d 593 (2002), an

unreported Rule 23 opinion, also acknowledged the existence of such bonds.

       In light of the inherent common law right to supply a bond to permit release of a lien the

appellate reference to such bonds, while not phrased as holdings expressly authorizing such

bonds, are an implicit approval of the bonds in the sense that it would really be incumbent on an

appellate court to pronounce the bonds improper if the court knew they had been used and so


       The substitution of a bond with surety for a lien is a fundamental feature of our

commercial legal system.      Provisions for such bonds is a recognition that the commercial
requirements of many situations urgently need substitution of the security of a bond for the

security of a lien on particular funds or goods, such as the blackberry brandy, supra. Looked at

another way, if the rights of the several contending parties could be instantly resolved, there

would be no commercial need for the substitution of a bond in any situation.     However, where

significant factual and/or legal disputes exist the substitution of a bond is critical to avoid

collateral damage. That collateral damage is likely to include failure to complete the project on

time and delay damages sustained by other subcontractors. And it must be noted, this is not a

matter of minor inconvenience, it can be a major commercial problem with all remaining trades

experiencing schedule disruptions, as well as a project not brought on line at a time required by

the public.

       The Illinois Mechanics Lien Act grants an uncompensated subcontractor a right to freeze

public moneys in the amount of its unpaid claim. This policy is fine where no significant factual

dispute exists as to the amount of the claim and/or set offs to the claim. However, where a

significant factual dispute exists as to the compensation due to the subcontractor a series of

material collateral problems are created by the lien claim.

Hypothetical        Consider an extreme example; subcontractor “Jones Masonry” performs

$50,000 worth of work, but uses defective or improper material. Instead of red clay brick, the

subcontractor faces the building with gray cinderblock. It all must be torn out, is of no value to

the project, and must be redone by another contractor at an additional cost of say $60,000. The

general contractor, deprived of access to the $50,000 (subject to the lien) must advance the

$60,000 or face a work stoppage or a second lien in the amount of $60,000, resulting in liens in

the amount of $110,000, for what was supposed to be $50,000 worth of work. If the cash flow

on the job is thus cut off and work slows or halts on the project it is, in a very real sense,
immaterial whether the primary fault lies with the subcontractor or with the general contractor,

the adverse consequence is visited on the public owner and the public itself, who are deprived of

the timely completion and use of the new public building.

          The general contractor, given a material factual dispute has an interest in maintaining a

cash flow which will enable it to complete the project and draw all contract funds it has earned.

It should be noted here that the general contractor must pay the premium to the surety on the

bond and must make satisfactory arrangements with the surety to pay that amount ultimately due

to the subcontractor. Hence, the bond in no way lets the general contractor off the hook.

          The third interest here is that of the public. While, in theory the public owner can default

and replace a general contractor who falls behind the construction schedule, in reality all that is

certain to be achieved is significant additional delay and expense. Hence, the use of a properly

worded bond, at the sole expense of the general contractor, to protect the subcontractor and keep

the job on schedule is the best, and fastest and fairest solution where a significant factual dispute


          The burden on the public owner is significant in the absence of a bond. It is the

obligation of the general contractor to bring the project to completion at the contract amount.

Once the lien freezes monies due to the general contractor and where adjudication of the rights

involved will take time, there is a likelihood of delay, maybe even a complete stoppage of work.

In other words, a significant burden on the public owner. The public policy is to be certain the

subcontractor is paid upon adjudication of liability by the court. The public policy is not to

punish anyone, nor to freeze the construction nor to delay opening of a public project.

                                     STATE PROJECTS

          Steps to file a Lien, (State Projects)
       1.      Send notice to “Director or Other Official whose duty is to let such contract” and

to the general contractor.

               a.      It must be a sworn statement.

               b.      Must state the amount of the claim.

       2.      As with a local job the lien is good only against funds, (not real estate).

       3.      Suit must be filed within 90 days and the complaint delivered within 10 days

thereafter - - or - -not less than 15 days before the appropriation lapses. (Archaic language – state

appropriations apparently no longer lapse)

                                     CONCLUSION LIENS

       Provisions applicable to both State and Local projects:

       1.      No second notice for the same claim – the sole reason for this is to prevent

improper extension of the 90 days. Note that a shorter time to file suit may prevail on state jobs
as suit must be filed not less than 15 days before the state appropriation for the project lapses.

       2.      The general contractor may serve a 30 day demand for liens on all subcontractors.

If no lien is filed within 30 days then the lien rights of that subcontractor are cut off. This is

useful for closing out a public project.


                                           II. BOND

II.    Bond Claims/Surety Liability: 30 ILCS § 550/1 “Public Construction Bond Act”

[NOTE: there is a committee considering amendments to this Act. Check for
amendments before using this statute.]
       A.      Steps to file a bond claim and a lawsuit on a public job:

       A verified notice of claim must be filed with the officer, board, bureau or department

awarding the contract within 180 days after the date of the last item of work or the furnishing of

the last item of materials. A copy of the notice must be furnished by the claimant to the general

contractor within 10 days of the filing of the notice with the agency awarding the contract. The

contents of the claim are specified in the Act:

               The claim shall be verified and shall contain (1) the name and
               address of the claimant; the business address of the claimant within
               this State and if the claimant shall be a foreign corporation having
               no place of business of said corporation and in the case of a
               partnership, the notice shall state the names and residences of each
               of the partners; (2) the name of the contractor for the government;
               (3) the name of the person, firm or corporation by whom the
               claimant was employed or to whom he or it furnished materials; (4)
               the amount of the claim; (5) a brief description of the public
               improvement sufficient for identification.

       No lawsuit may be brought until at least 120 days after the date of the last item of

work or material was furnished. An exception exists if “final settlement” between the agency

and contractor shall have been made prior to the expiration of the 120 day period, in which case

action may be taken immediately following the final settlement. Another restriction is that an

action may not be brought later than 6 months after the acceptance by the political subdivision of

the work.


B. Other Points

       (1) A political subdivision must require every contractor in contracts for any work

costing over $5,000.00 to furnish a bond.

       (2) A bond is foremost, simply a contract. However, as used in connection with public

projects the following Black’s Law Dictionary definitions are more to the point:
               “An instrument with a clause, with a sum fixed as a penalty,
               binding the parties to pay the same, conditioned, however that the
               payment of the penalty may be avoided by the performance by
               some one or more of the parties of certain acts.”

               “Bonds are either single (simple) or double, (conditional.) A single
               bond is one in which the obligor binds himself, his heirs, etc., to
               pay a certain sum of money to another person at a specified day. A
               double (or conditional) bond is one to which a condition is added
               that if the obligor does or forbears from doing some act the
               obligations shall be void. Formerly such a condition was
               sometimes contained in a separate instrument, and was then called a

       The latter quote suggests the origin of the typical difficult wording of construction bonds:

I promise to do A, B and C, however, if X and Y happen then my obligation to do A, B & C is

void. Logically, there is no reason why a “bond” could not be written in simple contract

language, however, insurance companies like to cling to familiar wording to pick up venerable

case law interpreting the wording.

       The bond shall be conditioned for the completion of the contract and for the payment for

all material and all labor performed in the work. There are two requirements expressed here: (1)

that the construction covered by the contract be completed.        (2) That the bond covers all

materials and all work on the project. While this would seem to require the surety to pay

everyone who has not been paid, this open-ended requirement is potentially modified by the

requirement that any claimant give the notice required by § 550/2. However, at least as to the

Public Owner, even full payment of contractors is not a defense as to a claim for defective work

against the surety. People ex rel Skinner v. FGM, Inc, 166 Ill.App.3d 802 520 N.E.2d 1024 (5th

Dist. 1988), in which the court sustained a complaint against a surety for a leaking roof seven

years after completion of the building.

       (3) Bond wording is similar but not always exactly the same. There are AIA forms and

custom drafted form by certain public owners.
       (4) Some bonds provide for payment of attorneys fees, if incurred by the public owner.

       (5) If the surety pays a bond claim, it is then subrogated to that subs lien rights.

        (6) The bond language pretty clearly provides that everyone must be paid. However,
sureties like to point to the notice requirements of the Act as a limiting condition on the right to
be paid. If a subcontractor did not comply with the Act they don’t have a claim. However, the
Public Owner has some leverage in demanding that the condition of the bond be implemented –
every subcontractor must be paid.

       (7) Take over, or completion agreement:
       This is often negotiated between a public owner and a surety. It can be very important
where the project is incomplete at the time of the general contractor default. An issue between
the owner and the bond surety is the cash flow-funding of the project completion.

                                 CONTRACT CLAIMS

Claim at law, if filed alone must be in Law, not Chancery.

                              PROMPT PAYMENT ACT
       The Local Government Prompt Payment Act is found at 50 ILCS §505/1 et seq. The Act

imposes time limits on approval and payment of bills by both the Public Owner and the general

contractor. This Act is not necessarily the cornucopia it appears to be. It has the potential to

produce significant fact issue disputes.

       Make an early assessment. (The dispute may be between the owner and the general –

could be a perfect situation for a speedy summary judgment motion) (in the absence of an

obvious factual issue).

       Control of legal fees is hard but important. I have frequently seen subs in multiple cases,

always with a new lawyer! The fees were too high..

Bankruptcy of either the general contractor, or of a sub or supplier may be disruptive. Remember

to go to Bankruptcy Court to lift the automatic stay before proceeding adversely to the debtor.

Usually, everyone involved in the construction project, other than the debtor, wants to keep the

remaining contract balance out of the hands of the general creditors.

                                        VI. FORMS

FORM - Lien Notice combined with Bond Claim

                     UNDER 770 ILCS 60/23 AND BOND CLAIM
                         UNDER 30 ILCS 550/1 AND 550/2

TO:    See Attached Service List

       You are hereby notified as follows:

        The undersigned, THE LITTLE GUY, INC., (“claimant”) whose address is 12 Poverty
Street, No Trees Park, Illinois 60600, entered into a contract with General Contractor Inc., whose
address is 24 Plush Drive, Chicago, Illinois 60000 (“General Contractor”), to [DESCRIBE THE
WORK DONE] furnish, deliver and erect structural steel for the project sometimes known as the
Don Imus Juvenile Detention Center, Chicago, Illinois [IDENTIFY THE PROJECT AS FULLY

      The General Contractor is General Contractor, Inc., whose address is 24 Plush Drive,
Chicago, Illinois 60000.

     Claimant was employed by the General Contractor [OR SUBCONTRACTOR “X” IF

        The amount of the original contract was One Hundred Thousand and 00/100 Dollars
($100,000.00), plus extras to the contract in the amount of Seven Thousand and 00/100 Dollars
($7,000.00), less payments in the amount of Six Thousand and 00/100 Dollars ($6,000.00)
leaving an unpaid balance due Claimant, for the work completed and materials provided by
Claimant, of One Hundred One Thousand and 00/10 Dollars ($101,000.00). There are no other
credits due on this account. Although demand has been made therefore, said amount due
remains unpaid and, therefore, Claimant claims a lien in said amount.

       The Public Improvement is the Don Imus Juvenile Detention Center, Chicago, Illinois.
      The Bonding Company is Never Pay Insurance Company and the bond number is
555555, which bond is attached hereto as Exhibit “I.” [THE BOND IS PART OF THE

      Claimant does, therefore, claim a lien upon all moneys, bonds, or warrants due or to
become due the General Contractor and you are herby notified to withhold payment to the
General Contractor in an amount sufficient to pay the amount for which a lien is claimed and
Claimant further makes claim against the bond furnished by the General Contractor to the public

               PUBLIC IMPROVEMENTS, AND 30 ILCS 550/1 AND 550/2,
               PUBLIC BODY.

                                                    The Little Guy, Inc.

                                                    By: ________________________________
                                                           Name: John Small
                                                           Its: President

STATE OF ILLINOIS             )
                              ) SS.
COUNTY OF COOK                )

       John Small being first duly sworn on oath, deposes and states that he is the President of
Claimant, and as such is familiar with the contents of the foregoing Notice; that the information
contained in the Notice is true and correct; and that there is due and owing to Claimant a balance
for [DESCRIBE] materials rendered on the construction project above described the sum of One
Hundred One Thousand and 00/100 Dollars ($101,000.00).

                                                    By: _______________________________
                                                           Name: John Small
                                                           Its: President

To before me this _____ day of
_____________, 200-.

Notary Public
STATE OF ILLINOIS              )
                               ) SS.
COUNTY OF COOK                 )

                                       Certificate of Service

_____________________, being first duly sworn on oath, deposes and states he/she served a
ILCS 60/23 and BOND CLAIM UNDER 30 ILCS 550/1 AND 550/2 upon the persons and
entities listed on the attached Service List, by depositing a true and correct copy thereof in the
United States Post Office, Chicago, Illinois, by Certified Mail, Return Receipt Requested,
Restricted Delivery with proper postage thereon prepaid, this ________ day of ______________,

                                                       By: _______________________________

To before me this _____ day of
_____________, 200-.

Notary Public

This Document Prepared By:

Barks Loud Law Office
48 Main Street
Bucksville, Illinois 60000
(555) 555-5555

[This block is not necessary- as this lien notice will not be recorded, but it is not a bad idea to
show counsel’s name and contact information.]
                          SERVICE LIST

[Name] Executive Director           CERTIFIED MAIL, RETURN RECEIPT
Public Owner                        REQUESTED, RESTRICTED DELIVERY
Government Center
Room 999
Chicago, Illinois 60000
[Name] Secretary                    CERTIFIED MAIL, RETURN RECEIPT
Public Owner                        REQUESTED, RESTRICTED DELIVERY
Government Center
Room 999
Chicago, Illinois
[Name] Clerk                        CERTIFIED MAIL, RETURN RECEIPT
Public Owner                        REQUESTED, RESTRICTED DELIVERY
Government Center
Room 999
Chicago, Illinois 60000
[Name] Chief Financial Officer      CERTIFIED MAIL, RETURN RECEIPT
Public Owner                        REQUESTED, RESTRICTED DELIVERY
Government Center
Room 999
Chicago, Illinois 60000
[Name] Registered Agent             CERTIFIED MAIL, RETURN RECEIPT
General Contractor, Inc.            REQUESTED, RESTRICTED DELIVERY
24 Plush Drive
Chicago, Illinois 60000
[Name] President                    CERTIFIED MAIL, RETURN RECEIPT
General Contractor, Inc.            REQUESTED, RESTRICTED DELIVERY
24 Plush Drive
Chicago, Illinois 60000
Never Pay Insurance Company         CERTIFIED MAIL, RETURN RECEIPT
Attn: Bond Claims                   REQUESTED, RESTRICTED DELIVERY
77 Distant Boulevard
New York, NY 00000
FORM - Complaint with lien and bond and breach of contract counts.


CHICAGO, for the use of THE LITTLE GUY, )                                  NO.      2007 CH 0000
INC.                                     )
                      Use Plaintiff,     )
     vs.                                 )
                      Use Defendants.    )
                          COMPLAINT FOR MECHANIC’S LIEN

       Now comes the Public Building Commission of Chicago (“the Commission”), for the use
and benefit of the Little Guy, Inc., and complains of defendants as follows:

                                           COUNT I
                                  MECHANIC’S LIEN ACCOUNTING

         II. That Plaintiff, THE LITTLE GUY, INC. (hereinafter referred to as “TLG”), is an
Illinois corporation engaged in furnishing and installing structural steel and services in Illinois
and having its principal place of business located at 12 Poverty Street, No Trees Park, Illinois

         III. That Defendant, General Contractor, Inc. (hereinafter referred to “General”), is an
Illinois corporation engaged in providing general contracting services, with its principal office at
24 Plush Drive, Chicago, Illinois 60000.

        IV. That the PUBLIC BUILDING COMMISSION OF CHICAGO, is a body politic and
corporate which owns and controls the Don Imus Juvenile Detention Facility located at 88 North
South Road, Chicago, Illinois 60000, and which contracted with Defendant, General, for
construction and improvement of said project. Plaintiff is informed and believes and so charges
the fact to be that said contract was in writing, but Plaintiff does not have a copy thereof in its

           Whether you name the Public Owner or not, if the lien notice and complaint are served on it, it becomes a
party - - but why be mysterious – just name it as a defendant?
possession so that said document cannot be incorporated herein.3 Plaintiff, TLG, is further
informed and believes that said contract was entered into in the year 2007 and provided that said
general contractor would furnish all labor and materials required under the contract with the

        V. On or about January 1, 2007, General thereafter entered into a written subcontract
with the Plaintiff whereby the Plaintiff was to furnish all necessary material, labor, and for steel
structural work for said improvement/construction required in said project under General
contract with the PUBLIC BUILDING COMMISSION OF CHICAGO for a contract amount of
$100,000.00 and copy of said subcontract is attached hereto as Exhibit “A”.

       VI. At the insistence and request of General, Plaintiff also furnished extra and additional
materials and additional labor pursuant to change orders confirmed by General, in an amount in
excess of $101,000.00. Copies of extras in the amount of $7,000.00 are attached hereto. (See
Exhibit “B”)

       VII.    On information and belief, the extras performed by Plaintiff, listed in paragraph 5

               a.       outside the scope of the Plaintiffs contract;
               b.       ordered by or on behalf of the Owner;
               c.       accepted by the Owner;
               d.       not furnished by Plaintiff as its voluntary act;
               e.       not rendered necessary by any fault of Plaintiff.

       VIII. On or about April 1, 2007, Plaintiff completed all that was required under said
subcontract and extras and all labor and materials furnished by Plaintiff were accepted for the
said improvement were incorporated therein and constitute a permanent and valuable
improvement of the said premises.

       IX. That the total value of due for Plaintiff’s work and materials on and for the benefit of
the premises pursuant to its Contract with GENERAL CONTRACTOR is in excess of

        X. That partial payments were made by Defendant, General, in the amount of $6,000.00,
thereby leaving a balance due and owing of at least $101,000.00 since April 1, 2007, together
with interest thereon.

       XI. Pursuant to and in accordance with the statutes in such cases made and provided
under 770 ILCS 60/23, Plaintiff notified the PUBLIC BUILDING COMMISSION OF
CHICAGO of the said sum due Plaintiff and of its claim for lien on the monies, bonds or
warrants due or to become due from said work provided. That said notification was by written
and personal notice, a copy of which NOTICE is attached hereto and marked as Exhibit “C.”

     XII. On or about April 5, 2007, at the time of service of said notices on the PUBLIC

        Public Building Commission of Chicago contracts are accessible at the Commission’s Web Site.
CHICAGO was in possession and control of, and had not as yet paid over to the Defendant,
General Contractor, more than a sufficient amount of monies, bonds or warrants due or to
become due to said Defendant, General, and therefore retained sufficient funds to pay the claim
of Plaintiff; and it thereupon became the duty of said the PUBLIC BUILDING COMMISSION
OF CHICAGO, to withhold sufficient monies, bonds or warrants to pay the amount due Plaintiff
until such time as the instant suit can be finally adjudicated.

        XIII. Plaintiff caused a true copy of said notice, which is attached hereto as Exhibit “C”
to be served by certified mail and personal service upon General in accordance with the
provisions of 770 ILCS 60/23.

        WHEREFORE, The Little Guy, Inc. prays that this court render its accounting on its
Section 23 mechanics lien and award judgment to it in the amount proven at trial and for such
other and further relief as may be appropriate.

                           COUNT II

      Now comes The Little Guy, Inc., and complains of defendants pursuant to the Public
Bond Act, as follows:

        VI. That the PUBLIC BUILDING COMMISSION OF CHICAGO is a body corporate
and public, exercising public and governmental functions, and by such name and style may sue
or be sued, contract or be contracted with, and exercises control and supervision of the
construction and operation of the Don Imus Juvenile Detention Facility located at 88 North
South Road, Chicago, Illinois 60000.

      VII. That Use Plaintiff, TLG, is an Illinois corporation qualified and doing business in
Chicago, Illinois.

       VIII. Use Plaintiff states on information and belief, that the PUBLIC BUILDING
COMMISSION OF CHICAGO entered into a contract with General whereby General as general
contractor, agreed to furnish work, labor and materials for said public work, the date and terms
of which are unknown to Use Plaintiff, but Use Plaintiff is informed and believes said contract
was entered into in the year 2007.

        IX. General entered into a subcontract with TLG whereby Use Plaintiff was to provide
labor and material for structural steel for construction of said project and did furnish said labor
and materials and that all of said materials were used in said construction and having a
reasonable value of in excess of $107,000.00.

        X. Pursuant to 30 ILCS 550/1 and 550/2, General was required to furnish a bond with
satisfactory surety conditioned for the payment of labor and materials used in the performance of
said contract; that among other things the statute provides as follows:

Each said bond shall be deemed to contain the following provisions whether such
provisions are inserted in such bond or not:
The principal sureties on this bond agree to pay all persons, firms and
corporations having contracts with the principal or with subcontractors all just
claims due them under the provisions of such contract for labor performed or
materials furnished; in the performance of the contract on account of which this
bond is given when such claims are not satisfied out of the contract price of the
contract on account of which bond is given after final settlement between the
officer, commission or agent of the state or any public political subdivision
thereof and the principal has been made.

       XI. In connection with the said contract, Defendant General, as principal, and Defendant
Never Pay Insurance Company, as surety, made, executed and delivered a certain contractor’s
bond. A copy of said bond is attached hereto as Exhibit “D”.

       XII. After the execution and delivery of said contract and bond as hereinafter set forth,
TLG entered into the performance of said contract; that Use Plaintiff thereafter furnished the
materials required of it and performed all on its part required to be done under its contract with

        8.     The materials furnished by Use Plaintiff were accepted for the said project and
used in the construction thereof.

       9.     There is now due and owing to Use Plaintiff the sum of at least $101,000.00,
which has been due and owing since April 1, 2007, together with interest thereon.

        10.     That on April 1, 2007, said date being within 180 days of the completion of Use
Plaintiff’s contract with General, Use Plaintiff filed a verified notice of its claim with the general
contractor and the surety company, a copy of which is hereto attached as said Exhibit “C”, and
Use Plaintiff did also serve an executed copy on each of the Defendants herein.

         11.    That demand has been made for payment from the Defendants, but said persons
have failed to pay the same; and such failure to pay constitutes and is a breach of the conditions
of said bond; by reason of said breach of conditions of the bond and the statutes of the State of
Illinois, the PUBLIC BUILDING COMMISSION OF CHICAGO for the use and benefit of TLG
has a claim against General as principal and Never Pay Insurance Company as surety on said
bond for the sum of at least $101,000.00, together with interest and costs as provided pursuant to

         12.   This claim is a proceeding under the provisions of 30 ILCS 550/1-550/3; that the
contract herein was entered into and was to be performed in the County of COOK, State of

       XIV. Use Plaintiff claims it has complied with all of the conditions precedent to
recovery under said bond and of its contract.

        WHEREFORE, the TLG prays that this court shall enter judgment in its favor and
against defendants General Contractor, Inc., and Never Pay Insurance Company, in the amount
proven at trial together with such other and further relief as this court may seem fit to grant.
                                    COUNT III

                        [INSERT BREACH OF CONTRACT COUNT]

                                     The Little Guy, Inc.

                                           One of Its Attorneys

Barks Loud Law Office
48 Main Street
Bucksville, Illinois 60000
(555) 555-5555

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Description: Attorney Lien Notice Illinois Cook document sample