Elgin, Ill., November 17, 2016 -- The Appellate Court of Illinois
ruled on a matter last week which pitted wind energy developers and landowners
against the construction industry. In a landmark decision, the appellate panel
ruled that AUI Construction could not foreclose a mechanic’s lien against a
property on which it had erected a large wind tower and turbine after the
upstream contractor declared bankruptcy.
According to Jon Kreucher, an
attorney with Howard & Howard, this is the first case in the nation to
consider whether commercial-scale wind turbines should be considered personal
property or fixtures in a lien dispute. Kreucher also said that the importance
of the ruling goes beyond the legal finding.
"If the decision was different
and the court held that a farmer’s property could be foreclosed over a
construction dispute it would have sent a chill through the wind energy industry,"
said Kreucher, whose firm represented Clipper Windpower, a defendant party in
the case. "The construction industry was
also put on notice that a mechanic's lien isn’t always available just because
what’s being built is really big," Kreucher said.
The case centers on a wind farm
project being developed on the land of Louis and Carol Vaessens in Sublette,
Ill. by GSG 7 LLC, a wind energy developer. The construction of the wind tower
and turbine was completed in 2012.
As subcontractor on the project,
AUI was hired in 2011 by Postensa Wind Structures USA to build the tower on the
Vaessen property. Postensa declared bankruptcy in 2013, after AUI prevailed in
arbitration and was awarded unpaid sums amounting to nearly $3 million. To
protect its ability to collect the unpaid billings owed by insolvent Postensa,
AUI moved to enforce a mechanic’s lien and foreclose on the Vaessens property
where the wind tower was constructed.
The Illinois appeals court
affirmed a lower court decision issued by Judge Daniel A. Fish and ruled
against AUI and several construction industry associations who argued that the
tower and wind turbine were so large that they had to be considered lienable
fixtures to the real property. The turbine stands 507 feet tall and weighs nearly
In its decision the appellate
court affirmed "the parties intended that the tower was a trade fixture that
would remain the property of GSG 7 and not become a land improvement."
In addition, the appellate court
rejected AUI’s argument that it would be not unfair to AUI to prevent the
mechanic’s lien from attaching the property. The court noted that the
AUI-Postensa contract recited the relationships of the parties and that
developer GSG 7, and not the hosting landowner, owned the turbine.
Kreucher said that the ruling
should also serve as an important lesson to wind developers who should be
cautious in the way leases are drafted and contractors needing to secure
payment for work performed.
Read the full ruling at: http://bit.ly/2fW77Hi
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