Fairfield Homes, Inc. v. Amrani

229 N.E.3d 913

2023 IL App (1st) 220973

FAIRFIELD HOMES, INC., Plaintiff-Appellant,

v.Jason AMRANI and Sarah Warren, Defendants-Appellees.

No. 1-22-0973

Appellate Court of Illinois, First District, FIFTH DIVISION.

Filed October 27, 2023

Appeal from the Circuit Court of Cook County. No. 2021 CH 00679, Honorable Anna M. Loftus, Judge Presiding.

Channing B. Hesse and Shannon Cottrell, of Grogan Hesse & Uditsky, P.C., of Oakbrook Terrace, for appellant.

David A. Eisenberg and Alexander N. Loftus, of Loftus & Eisenberg, Ltd., of Chicago, for appellees.

OPINION

JUSTICE MIKVA delivered the judgment of the court, with opinion.

¶ 1 A dispute arose between the parties, Fairfield Homes, Inc. (Fairfield), and homeowners Jason Amrani and Sarah Warren (homeowners), about construction of a single-family home. The parties submitted their dispute to arbitration. The arbitrator awarded $41,166.88 to Fairfield. The arbitration award further provided that "Fairfield shall supply the Owners appropriate releases and waivers of liens as a condition of receiving payment."

¶ 2 Without providing all waivers from its subcontractors, Fairfield filed a petition to enroll the award in the circuit court. Fairfield later filed a motion for postjudgment interest, costs, and fees, and a separate motion to vacate the portion of the award that conditioned payment on Fairfield providing the waivers. The circuit court enrolled the award, denied the motion to partially vacate, and denied postjudgment interest, costs, and fees.

¶ 3 On appeal, Fairfield argues that the circuit court erred in denying postjudgment interest, court costs, and attorney fees in its favor. For the reasons that follow, we affirm.

¶ 4 I. BACKGROUND

¶ 5 Fairfield contracted to build a single-family home for Jason Amrani and Sarah Warren. The homeowners terminated the contract with Fairfield mid-project amid disputes about defective construction. Fairfield demanded compensation for work they had completed and the homeowners demanded reimbursement for damages they had incurred.

¶ 6 The contract included an agreement to arbitrate and the following clause: "The prevailing party in any arbitration, court or other proceeding shall be entitled to reasonable attorney’s fees and costs." The parties submitted their dispute to arbitration. After considering the claims of both parties, the arbitrator awarded $41,166.88 to Fairfield. The arbitration award provided that "Fairfield shall supply the Owners appropriate releases and waivers of liens as a condition of receiving payment." The arbitrator did not award any fees or costs to either party.

¶ 7 On February 11, 2021, Fairfield filed a petition in the circuit court to enroll the arbitration award. On August 17, 2021, the homeowners moved, under section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2020)), to dismiss Fairfield’s petition. The homeowners’ motion attached a March 15, 2021 "Disposition for Application of Modification/Clarification of Award" in which the arbitrator had clarified that "[t]he phrase ‘appropriate releases and waivers of lien’ " in the original award "include[d] those from [Fairfield] as well as any [from Fairfield’s] subcontractors who have lien rights against the property in question, which [arose] out of their work as a subcontractor of [Fairfield]." The homeowners argued that Fairfield’s peti- tion should be dismissed because they had not received lien waivers from all of Fair-field’s subcontractors and were waiting on Fairfield to provide those waivers before paying the $41,166.88.

¶ 8 On January 19, 2022, Fairfield filed a motion to vacate the portion of the award requiring it to provide lien waivers from the subcontractors. Fairfield argued that the subcontractors were not parties to the arbitration and the arbitrator therefore exceeded his authority in demanding Fair-field provide the waivers. In the home-owners’ response, they argued that the arbitrator did not direct nonparties to take actions but instead mandated Fairfield provide lien waivers from its subcontractors.

¶ 9 Simultaneous with its motion to partially vacate the award, Fairfield filed a separate motion for postjudgment interest, court costs, and attorney fees arising out of the petition to enroll the award. Fair-field stated it was not paid, and interest should therefore have begun accruing starting from when the arbitrator issued the award. Fairfield claimed that it had, in place of providing the waivers, offered to indemnify the homeowners.

¶ 10 The homeowners argued in response that "it would be inequitable to reward Fairfield [with interest] for [Fair-field’s] refusal to comply with [the condition requiring it to provide lien waivers] under the award." The homeowners also argued that costs and fees would be inappropriate because "there was simply no need to seek this [enrollment as] the homeowners have never contested the enforceability of the Award and have repeatedly indicated their readiness and willingness to pay."

¶ 11 On June 1, 2022, the circuit court enrolled the award and denied the motion to partially vacate. On June 6, 2022, the circuit court denied Fairfield’s motion for postjudgment interest, costs, and fees. On June 30, 2022, Fairfield filed a notice of appeal.

¶ 12 On December 19, 2022, in response to Fairfield’s motion to file a bystander’s report, the court restated its previous ruling and reasoning with a court reporter present. As the court explained on the record: "due to the condition precedent established by the arbitrator, the ball remained in Fairfield Home’s court." It would therefore "be inequitable to reward Fairfield *** with interest."

¶ 13 The court also explained its denial of costs and fees to Fairfield. It noted that Fairfield’s claim under the Mechanics Lien Act (770 ILCS 60/0.01 et seq. (West 2020)) was misplaced, since this was not a mechanic’s lien case. The court declined to award fees under the Uniform Arbitration Act (Arbitration Act) (710 ILCS 5/1 et seq. (West 2020)), noting that, "while the costs and attorney’s fees have been awarded in *** arbitration cases where a party refused [to comply with an award] without justification, [here], there [was] no basis to conclude that the [homeowners] failed to abide by the arbitration award." Additionally, the court did not find an authority allowing the court to "reach back to the provision in the [underlying] contract" to award attorney fees when the arbitrator had denied fees.

¶ 14 II. JURISDICTION

¶ 15 The circuit court issued a judgment order resolving all claims on June 6, 2022. Fairfield timely filed its notice of appeal on June 30, 2022. This court has jurisdiction over this appeal, pursuant to Illinois Supreme Court Rules 301 (eff. Feb. 1, 1994) and 303 (eff. Jul. 1, 2017), governing appeals from final judgments entered by the circuit court in civil cases.

¶ 16 III. ANALYSIS

¶ 17 On appeal, Fairfield argues that (1) postjudgment interest should accrue beginning on the date that the arbitrator issued the award, (2) the Mechanics Lien Act applies and provides for cost shifting, and (3) the provision in the underlying contract between the parties providing for fee shifting should apply to Fairfield’s petition to enroll the arbitration award and this appeal.

¶ 18 The homeowners respond that no interest was due because payment was conditioned on Fairfield providing lien waivers, which were not provided. They further argue that Fairfield is not entitled to fees or costs as the action was unnecessary. The homeowners also contend that they are entitled to sanctions under Illinois Supreme Court Rule 375(b) (eff. Feb. 1, 1994). We address each issue in turn.

¶ 19 A. Postjudgment Interest

¶ 20 Section 2-1303 of the Code of Civil Procedure (735 ILCS 5/2-1303 (West 2020)), which speaks directly to civil judgments, also governs interest on arbitration awards. Ryan v. Kontrick, 304 Ill. App. 3d 852, 860-61, 237 Ill.Dec. 588, 710 N.E.2d 11 (1999). The statute provides that "judgments recovered in any court draw interest at the rate of 9% per annum from the date of the judgment until satisfied" and "[w]hen judgment is entered upon any award, report or verdict, interest shall be computed at the above rate, from the time when made or rendered to the time of entering judgment upon the same, and included in the judgment." 735 ILCS 5/2-1303(a) (West 2020).

[1] ¶ 21 We generally defer to a circuit court’s decision on a request for interest on a judgment. Milligan v. Gorman, 348 Ill. App. 3d 411, 415, 284 Ill.Dec. 747, 810 N.E.2d 537 (2004). However, where, as here, "the facts show that there is no dispute as to the existence of a fixed debt based on a written instrument, reviewing courts will not defer to a trial court’s denial of interest but will, instead, employ de novo review since only issues of law are involved." Chandra v. Chandra, 2016 IL App (1st) 143858, ¶ 46, 403 Ill.Dec. 132, 53 N.E.3d 186.

[2–4] ¶ 22 To the extent that Fairfield suggests portions of the arbitrator’s award are illegitimate, our "review of an arbitrator’s award is extremely limited." (Internal quotation marks omitted.) Western Illinois University v. Illinois Educational Labor Relations Board, 2021 IL 126082, ¶ 56, 451 Ill.Dec. 662, 184 N.E.3d 249. "[T]he award must be construed, if possible, as valid." City of Chicago v. Fraternal Order of Police, Chicago Lodge No. 7, 2020 IL 124831, ¶ 25, 450 Ill.Dec. 18, 181 N.E.3d 18. "Furthermore, there is a presumption that the arbitrator did not exceed his authority." Herricane Graphics, Inc. v. Blinderman Construction Co., 354 Ill. App. 3d 151, 155, 289 Ill.Dec. 843, 820 N.E.2d 619 (2004).

[5] ¶ 23 Fairfield argues that "the arbitrator did not have the authority to order Fairfield to provide final lien waivers from subcontractors who were not a party to the arbitration" and, as a result, interest should accrue from the moment the arbitrator issued the award because the prerequisite conditioning the accrual’s timing was invalid.

¶ 24 Ho...