Portage Park v. A.L.L. Masonry: Lien Validity Dispute Sent to Arbitration

Portage Park Capital, LLC entered into a contract with A.L.L. Masonry Construction Company, Inc., doing business as All Construction Group, for the construction of a self-storage building in Chicago, Illinois. The agreement was a standard form AIA contract that contained an arbitration clause requiring that any claim unresolved by mediation be submitted to arbitration in Chicago before a mutually selected arbitrator. Claims were defined to include demands or assertions for adjustments of contract terms, payment of money, extensions of time, or other relief, as well as other disputes between the parties arising out of or relating to the contract.

Disputes arose regarding the amount Portage Park Capital owed under the contract. A.L.L. Masonry filed a mechanic’s lien for the amount it alleged was still due. Portage Park Capital initiated arbitration over payment issues and the amount owed, and also filed a separate action in the Circuit Court of Cook County seeking a declaratory judgment that the lien was fraudulent or false and void. A.L.L. Masonry moved to compel arbitration and to dismiss the court action under section 2-619. The circuit court granted the motion, finding that the claims were subject to arbitration, and dismissed the case. Portage Park Capital appealed.

Appellate Court Analysis

The court reviewed the order compelling arbitration de novo. It noted that under section 9 of the Mechanics Lien Act, the circuit court has jurisdiction to enforce a mechanic’s lien, but validity and enforcement are distinct issues. Establishing lien validity is a prerequisite to enforcement, and courts have treated it as an antecedent issue.

Past Illinois Supreme Court cases cited by Portage Park Capital—O’Brien v. Gooding and Sorg v. Crandall—did not address whether lien validity could be arbitrated. Courts in other states have reached differing conclusions; some held arbitrators may determine lien validity, while others limited arbitration in certain statutory lien contexts. The appellate court found no statutory provision barring arbitration of lien validity questions.

The opinion emphasized contract law principles and Illinois’s policy favoring arbitration. Parties are generally free to agree to arbitrate claims unless expressly prohibited by statute. Arbitration agreements are interpreted under ordinary contract principles, giving effect to the parties’ intent as expressed in the contract’s language.

The arbitration clause in this case covered two categories: claims involving contract term adjustments and “other disputes and matters in question” arising out of or relating to the contract. Illinois courts have construed similar “generic” arbitration clauses broadly, requiring arbitration of any dispute arguably arising from the contract.

The appellate court agreed with the circuit court’s determination that the mechanic’s lien dispute arose out of or related to the contract. The complaint’s allegations referenced the contract, the payment applications, subcontractor agreements, and contractual provisions concerning specific work items, such as storage partitions and doors. Resolving the claims would require reference to the contract.

The court also rejected Portage Park Capital’s procedural argument that the circuit court was bound by the face of the complaint in ruling on the section 2-619 motion. Allegations in a complaint that contradict affirmative matter in such a motion are not deemed admitted, and the nonmovant cannot rely on bare allegations to avoid arbitration.

Court’s Decision

The appellate court affirmed the judgment of the Circuit Court of Cook County, holding that the validity of the mechanic’s lien was subject to arbitration under the contract, and that the circuit court properly granted the motion to compel arbitration and dismiss the case.

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