## Facts

- American National Bank and Trust Company of Chicago (American) took title to real property as land trustee for the benefit of Michael Wellek.
- Wellek entered a construction contract with WWI Corporation (WWI) to build a warehouse on the property.
- The owner–WWI contract contained a “no-lien” clause waiving WWI’s and its subcontractors’ rights to assert mechanics’ liens against the property.
- WWI subcontracted portions of the work to Ridgeview Construction Co., Inc., and other subcontractors (the plaintiffs).
- The subcontracts expressly incorporated the terms of the owner–WWI contract, including the no-lien provision.
- After construction began, Wellek mortgaged the property to Heller Financial Services, Inc. (Heller).
- WWI failed to pay the subcontractors for labor and materials; the subcontractors recorded mechanics’ liens and sued to foreclose those liens against the property, naming American and Heller.
- The trial court initially granted summary judgment for the subcontractors, finding the no-lien arrangement unenforceable on public-policy grounds and due to alleged collusion between Wellek and WWI.
- In an earlier appeal, the Illinois Appellate Court reversed, holding American and Heller were innocent parties with no knowledge or reason to know of fraud between Wellek and WWI, and remanded.
- On remand, the subcontractors sought to introduce additional evidence aimed at disputing American’s and Heller’s innocent-party status; the trial court rejected that proffer as outside the scope of remand and entered summary judgment for American and Heller.
- The subcontractors appealed again from the post-remand summary judgment.

## Issues

1. After the earlier appellate decision found the trustee and mortgagee lacked notice of any fraud, could the subcontractors reopen that “innocent purchaser/mortgagee” determination on remand with additional evidence?
2. Was the no-lien clause—incorporated into the subcontractors’ agreements—enforceable against the subcontractors’ mechanics’ lien claims as to American and Heller?
3. Did the trial court properly grant summary judgment for American and Heller based on the appellate mandate and the no-lien provision?

## Decision

- The appellate court affirmed the post-remand summary judgment in favor of American and Heller.
- The court held that the subcontractors could not relitigate or expand the prior appellate determination that American and Heller were innocent parties without notice of fraud; the trial court was bound by the earlier mandate.
- Because the no-lien clause was incorporated into the subcontracts and American and Heller were treated as innocent parties, the subcontractors’ mechanics’ liens could not be enforced to defeat or impair American’s and Heller’s interests.

## Legal Principles

- Parties may contractually waive mechanics’ lien rights, and a subcontract that incorporates the general contract’s terms can bind the subcontractor to a no-lien provision contained in that general contract.
- A lender or titleholder who takes its interest without notice of fraud between other parties may rely on contractual and record-based arrangements affecting lien rights; alleged wrongdoing between owner and general contractor does not automatically defeat the protections afforded to an innocent mortgagee/trustee.
- Under the law-of-the-case doctrine and the mandate rule, a trial court on remand must follow the appellate court’s prior determinations and may not permit a party to retry issues already decided in the same case.

## Conclusion

The Illinois Appellate Court affirmed summary judgment for American and Heller because the earlier appeal conclusively treated them as innocent parties without notice of fraud, the trial court was required to follow that ruling on remand, and the subcontractors’ mechanics’ lien claims were barred by the no-lien provision incorporated into their subcontracts.


Ridgeview Construction Co., Inc. v. American National Bank and Trust Co. of Chicago, 628 N.E.2d 1060 (1993)