Ridgeview Construction Co., Inc. v. American National Bank and Trust Co. of Chicago

American National Bank and Trust Company of Chicago (American) (defendant) purchased property in trust for Michael Wellek. Wellek contracted with WWI Corporation to build a warehouse on the property. The contract contained a no-lien clause waiving the right of WWI or its subcontractors to assert mechanic’s liens against the property. WWI then subcontracted the warehouse construction to Ridgeview Construction Company and other subcontractors (plaintiffs). These subcontracts explicitly incorporated all provisions of the general contract. Wellek subsequently mortgaged the property to Heller Financial Services, Inc. (Heller) (defendant). When WWI failed to pay its subcontractors for their work, the subcontractors sued Heller and American to foreclose on the subcontractors’ mechanic’s liens. The trial court entered summary judgment for the subcontractors. The court ruled the no-lien contracts invalid both on public-policy grounds and because the contracts evidenced fraudulent collusion between Wellek and WWI. The Illinois Appellate Court reversed, ruling that Heller and American were innocent purchasers with no knowledge or reason to know of fraudulent dealings between Wellek and WWI. On remand, the trial court rejected the subcontractors’ proffer of evidence to rebut the appellate court’s innocent-purchaser ruling. The court entered summary judgment for Heller and American. The subcontractors then appealed to the appellate court. The subcontractors also lobbied the Illinois legislature for legislation banning no-lien contracts.