2 Ton Plumbing, L. L.C. v. Thorgaard
| Citation | 345 P.3d 675,2015 UT 29 |
| Decision Date | 30 January 2015 |
| Docket Number | No. 20120390.,20120390. |
| Parties | 2 TON PLUMBING, L.L.C., Appellee/Cross–Appellant, v. Gregory THORGAARD; Kendra Thorgaard; Washington Federal, Inc., dba Washington Federal Savings, et al., Appellants/Cross–Appellees. |
| Court | Utah Supreme Court |
David R. Nielson, Tracy A. Wilder, Salt Lake City, for appellee.
Ronald G. Russell, Royce B. Covington, Jeffery A. Balls, Salt Lake City, for appellants.
INTRODUCTION
¶ 1 This case involves interpretation of various provisions of the 2009 Mechanics' Liens statute. Specifically, we are asked to consider (1) whether attorney fees and other costs may be included in the value of a mechanics' lien, (2) when a notice of release of lien and substitution of alternate security is timely filed, and (3) whether the attorney fees award was reasonable.
¶ 2 Appellee/cross-appellant, 2 Ton Plumbing, L.L.C. (2 Ton), contracted with BNB Development LLC, Performance Construction, Inc., and Performance Construction of Utah, LLC (collectively, Developers) to provide plumbing-related materials and labor to fourteen properties in the Hailstone at Stillwater development in Heber City, Utah. From June through September 2008, 2 Ton furnished improvements to Lot 30, one of the Hailstone properties, but was not paid for its work.
¶ 3 On January 30, 2009, 2 Ton recorded a notice of mechanics' lien (original notice of lien) against Lot 30 and eight other lots in the development. The notice stated that it secured $7,470.72 for “furnishing plumbing, materials and installation,” “plus interest, costs and attorney fees.” Subsequently, BNB Development (BNB), the owner of Lot 30 at the time the lien was recorded, conveyed the property to BBRP, LLC. BBRP in turn executed a trust deed for Lot 30 in favor of Zions Bancorporation (Zions).
¶ 4 On July 27, 2009, after filing its original notice of lien, 2 Ton filed a complaint seeking to enforce its mechanics' liens against Lot 30 and the other eight properties. The complaint named BBRP and Zions as defendants in the lien foreclosure action against Lot 30 and also included various other claims against the Developers, including breach of contract and joint venture liability. The following day, 2 Ton recorded a lis pendens, providing notice of the lien foreclosure action against the nine properties. BNB and Zions were served with a summons and complaint on August 3, 2009, and August 17, 2009, respectively.
¶ 5 The Developers timely filed a joint answer to the complaint, which BBRP joined. In the joint answer, BNB asserted a counterclaim against 2 Ton alleging that 2 Ton had been overpaid for its work in the Hailstone development. BBRP also independently asserted 2 Ton's overpayment as a defense to the lien foreclosure claim against Lot 30.
¶ 6 On October 14, 2009, Appellants Gregory and Kendra Thorgaard purchased Lot 30 from BBRP. To secure their purchase loan, the Thorgaards executed a trust deed in favor of Appellant Washington Federal (Appellants, the Thorgaards and their lender Washington Federal, will be collectively referred to as “the Thorgaards”).
¶ 7 2 Ton filed an amended complaint on November 20, 2009, which did not name the Thorgaards as defendants. The same day, 2 Ton's counsel wrote to the Thorgaards advising them of the lien and warning them that there would be greater legal expense if further action was necessary. The letter invited the Thorgaards to voluntarily satisfy the lien and indicated the amount owed. The Thorgaards declined the invitation.
¶ 8 On April 30, 2010, 2 Ton filed a second amended complaint, for the first time naming the Thorgaards and Washington Federal as defendants in the lien foreclosure action. 2 Ton served the Thorgaards with the complaint on May 10, 2010 and Washington Federal on June 18, 2010. Like their predecessor in interest, BBRP, the Thorgaards also contested the validity of the lien on the basis that 2 Ton had been overpaid for its work.
¶ 9 That summer, on August 5, 2010, 2 Ton recorded an amended notice of mechanics' lien against Lot 30 in the amount of $20,983.42. The amended notice provided that “there is currently believed to be owed a total of $20,983.42 consisting of principal of $7,147.41, plus lien fees of $110, plus interest and late fees of $2,480.30, plus pro rata costs of $942.44, plus pro rata attorney fees of $10,323.27, which amount could change, should additional credits, charges, interest, costs and attorney fees be incurred.”
¶ 10 On September 16, 2010, Washington Federal recorded its notice of release of lien and substitution of alternate security and made a cash deposit of $14,942.00. This document purported to release 2 Ton's original January 30, 2009 notice of lien with its claim of $7,147.41. Washington Federal did not address the amended notice of lien that 2 Ton had recorded the month before in the amount of $20,983.42.
¶ 11 On January 12, 2011, 2 Ton filed a third amended complaint which, among other things, sought to invalidate Washington Federal's lien release on the grounds that it attached insufficient alternate security. 2 Ton argued that the alternate security should have been 175 percent of the amount claimed in its amended notice of lien-$20,983.42. 2 Ton also asserted a claim against the alternate security, as required by Utah Code section 38–1–28(4)(b) (2009).1
¶ 12 On January 28, 2011, the Thorgaards moved to dismiss two counts of 2 Ton's third amended complaint-the lien foreclosure claim, and the claim that the lien release and substitution of alternate security was invalid. The Thorgaards contended that their lien release was valid because they properly submitted a cash deposit in the amount of 200 percent of 2 Ton's original lien claim and thus fully complied with the pertinent section of the Mechanics' Liens statute, Utah Code section 38–1–28. They argued that a mechanics' lien claim is limited to the “value of the services rendered, labor performed, or materials or equipment furnished or rented” and attorney fees and costs are not included in this amount. The Thorgaards also argued that the amended notice of lien was invalid and “unenforceable” because it was untimely filed and “moreover ... [could] not be used to trigger a requirement for more security than what is required under section 38–1–28.” After briefing and oral argument on the matter, the district court denied the Thorgaards' motion to dismiss. The Thorgaards appeal in part from that denial.
¶ 13 Ten days after the hearing on the motion to dismiss, on June 13, 2011, 2 Ton recorded a second amended notice of mechanics' lien against Lot 30 in the amount of $38,714.98. The second amended notice of lien alleged, again, that $7,147.41 of this amount was for improvements to the property while the remaining sum consisted of lien fees, interest, late fees, costs, and attorney fees.
¶ 14 As the litigation continued, the Thorgaards and Developers continued to dispute the validity of the lien on the basis that 2 Ton had been overpaid for its work. Ultimately, on December 5, 2011, the Thorgaards stipulated to a finding of fact that the value of the services rendered, labor performed, or materials or equipment furnished or rented by 2 Ton that had not been paid on Lot 30 was $7,147.41.
¶ 15 Following the Thorgaards' stipulation, 2 Ton submitted affidavit testimony and exhibits to support its claim for attorney fees. 2 Ton alleged that it had incurred $37,019.53 in attorney fees and $1,543.56 in costs prosecuting its lien against Lot 30. The Thorgaards contested 2 Ton's claim for attorney fees on the basis that the amount was unreasonable, that attorney fees should be allocated to those defendants who caused 2 Ton to incur the majority of those fees, and that attorney fees should be awarded on a per capita basis against all fourteen lots in the development.
¶ 16 On March 19, 2012, the district court entered a ruling and order on the award of attorney fees, and on April 16, 2012, it entered a judgment against Lot 30 in the amount of $57,972.42. The judgment included $7,147.41 in principal, $1,287.50 in costs, $110 for a lien filing fee, $4,569.81 in interest, and $44,857.70 in attorney fees. The Thorgaards also appeal from this judgment.
¶ 17 The Thorgaards and Washington Federal raise three issues on appeal. First, they contend that the district court erred by ruling that attorney fees and costs are properly included in a mechanics' lien and therefore erroneously found their notice of release of lien and substitution of alternate security was invalid. A district court's interpretation of relevant statutory provisions is reviewed for correctness, giving “no deference to the district court's decision.”2
¶ 18 Second, the Thorgaards argue that the district court erroneously held that 2 Ton's amended notices of lien were timely filed. Because we hold that the amended notices of lien were invalid, we do not address this issue.
¶ 19 Finally, the Thorgaards challenge the district court's award of $44,957.70 in attorney fees. A district court's calculation of attorney fees will not be overturned absent a showing that the district court abused its discretion.3
¶ 20 2 Ton raises one issue on cross-appeal. It argues that the district court erred by allowing Washington Federal to record its notice of release of lien and substitution of alternate security more than ninety days after the original owner of Lot 30 was served with a summons and complaint in the lien foreclosure action. We review questions of statutory interpretation for correctness, granting no deference to the district court's decision.4
¶ 21 “Mechanics' liens are statutory creatures unknown to the common law.”5 The Utah Mechanics' Liens statute is to be “liberally construed” to effect its purpose, which is “to provide...
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