AAA Fencing Co. v. Raintree Development and Energy Co.

• Decision Date: 13 January 1986
• Docket Number: No. 19870,19870
• Citation: 714 P.2d 289
• Parties: AAA FENCING COMPANY and Ronald L. Kendell, Plaintiffs and Respondents, v. RAINTREE DEVELOPMENT AND ENERGY COMPANY and Galen J. Ross, Defendants and Appellants.
• Court: Utah Supreme Court

Page 289

714 P.2d 289

AAA FENCING COMPANY and Ronald L. Kendell, Plaintiffs and Respondents, v. RAINTREE DEVELOPMENT AND ENERGY COMPANY and Galen J. Ross Defendants and Appellants.

No. 19870.

Supreme Court of Utah.

Jan. 13, 1986.

Brant H. Wall, Salt Lake City, for defendants and appellants.

Darrell G. Renstrom, Ogden, for plaintiffs and respondents.

PER CURIAM:

This appeal arises out of a mechanics' lien foreclosure action.

Plaintiffs furnished labor and materials on premises purchased under contract by defendant Raintree Development and Energy (Raintree) and completed their work on January 10, 1982. When Raintree failed to pay, plaintiffs placed a timely lien on the premises but then sued Raintree for breach of oral contract. Plaintiffs obtained a money judgment against Raintree on January 14, 1983.

On June 29, 1982, the sellers of the property here at issue sold the property to defendant Galen J. Ross (Ross) when Raintree defaulted under its contract. Ross later brought suit to terminate the rights of Raintree to the property and to quiet title against plaintiffs and Raintree. Raintree was served with process but failed to answer or otherwise respond. On May 2, 1983, Ross obtained judgment against Raintree quieting title to the property and declaring all of Raintree's rights, title, interest and lien or estate in the land null and void.

Meanwhile, on March 7, 1983, after they discovered that Raintree was judgment-proof against their money judgment, plaintiffs instituted their mechanics' lien foreclosure action against defendants. Ross answered, but failed to plead the statutory bar as an affirmative defense. Plaintiffs' action was consolidated with Ross's quiet title action for purposes of trial. Both parties moved for summary judgment, and Ross for the first time raised the issue that plaintiffs were barred from bringing the foreclosure action as it was not filed in a timely manner. The court granted plaintiffs' motion for summary judgment and entered judgment against Ross in the amount of the lien, together with costs and attorney fees. Ross filed motions for an amendment of findings and a new trial which were denied. This appeal followed.

Ross appeals on several grounds, but his claim that plaintiffs' foreclosure action was barred for failure to institute their claim within the time prescribed by section 38-1-11 of the mechanics' lien statute is dispositive here. That section provides that actions to enforce liens must be begun within twelve months after the completion of the original contract. ¹ Plaintiffs concede that they filed their complaint late, but argue that Ross has waived his rights to the statutory bar as he failed to plead it as an affirmative defense. They also claim that filing a lawsuit is only one form of "taking action to enforce the lien," and that filing a notice of lien is another action which they took in time. Moreover, continues their response, the foreclosure of a mechanics' lien is a matter of equity, and this Court should therefore construe the statute liberally in accordance with section 68-3-2 of the Utah Code.

Properly framed, the issue before us is whether an untimely action under our mechanics' lien statute affects the rights or merely the remedies of the parties. We disagree with plaintiffs that it affects merely their remedies and is therefore subject to waiver and estoppel as are procedural statutes of limitations and hold instead that it is jurisdictional and forecloses their rights.

Mechanics' liens are statutory creatures unknown to the common law. The purpose of the Utah mechanics' lien law is to provide protection to those who enhance the value of a property by supplying labor or materials. Interiors Contracting Inc. v. Navalco, Utah, 648 P.2d 1382 (1982). Although liens and pleadings arising under the statute will be liberally construed to effect the desired object, compliance with the statute is required before a party is entitled to the benefits created by the statute. First Security Mortgage Co. v. Hansen, Utah, 631 P.2d 919 (1981); see also Schofield v. Copeland Lumber Yards, Inc., Nev., 692 P.2d 519 (1985); Lewis v. Wanamaker Baptist Church, 10 Kan.App.2d 99, 692 P.2d 397 (1984).

The law is clear in this jurisdiction that a mechanics' lien foreclosure action must be brought within twelve months after the original contract between the lienor and the lienee is completed, or relief will not lie. Motivated Management International v. Finney, 604 P.2d 467 (1979) (dictum); Roberts v. Hansen, 25 Utah 2d 190, 479 P.2d 345 (1971); Totorica v. Thomas, 16 Utah 2d 175, 397 P.2d 984 (1965). That failure to enforce a mechanics' lien within the statutory period is a jurisdictional question has not heretofore been decided by this Court. We therefore look to our sister jurisdictions with similar mechanics' lien statutes.

The definitive statement of the law on this issue was first rendered in Fleshman v. Whiteside, 148 Or. 73, 34 P.2d 648 (1934), 93 A.L.R. 1456. The court in that case rejected the plaintiffs' identical argument that defendants had waived the defense of the statutory bar by failing to raise it by demurrer or answer and stated in pertinent part:

While the contrary is held in California, ² it is the rule in most jurisdictions that [the time limit provided for actions to enforce mechanics' liens] is not a statute of limitations, which is waived if not pleaded, but a statute limiting the duration of the lien. The remedy forms a part of the right and must be pursued within the time prescribed, or else both are lost. If an action is not brought within the time limited, the court is without jurisdiction to decree a foreclosure....

34 P.2d at 650, 93 A.L.R. at 1459.

That rule is still good law today. It was echoed in Diamond National Corp. v. Dwelle, 164 Conn. 540, 325 A.2d 259 (1973), where the court addressed the same issue and citing Fleshman v. Whiteside pronounced the statutory bar substantive or jurisdictional rather than procedural or personal. As the mechanics' lien is a creature of statute and fixes the time within which the right must be enforced, the court reasoned that "it is a limitation of the liability itself as created, and not of the remedy alone." Similar results were reached in Well Done Heating & Sheet Metal Co. v. Ralph Schwartz & Associates, 112 Ill.App.3d 438, 68 Ill.Dec. 3, 445 N.E.2d 451 (1983), accord Garbe Iron Works, Inc. v. Priester, 99 Ill.2d 84, 75 Ill.Dec. 428, 457 N.E.2d 422 (1983) (dictum); Regal Wood Products, Inc. v. First Wisconsin National Bank of Milwaukee, Fla.App., 347 So.2d 643 (1977); Federal National Bank and Trust Co. of Shawnee v. Calsim, Inc., La.App., 340 So.2d 611 (1976); Bellegarde Custom Kitchens v. Leavitt, Me., 295 A.2d 909 (1972).

In Cox v. Bankers Trust Co., 39 Colo.App. 303, 570 P.2d 6 (1977) (dealing with untimely joinder under the Colorado statute), the court held that the trial court was not vested with jurisdiction after the statutory period. Both in that case and in King v. W.R. Hall Transportation and Storage Co., Colo., 641 P.2d 916 (1982) (also barring joinder after the statutory period), the court stated that the strict application of the statutory limit was based on the principle that extending the lifetime of a perfected lien would vest a lien creditor with greater rights than were granted by the statutory provision creating the rights. In addition, strictly limiting the time during which property is encumbered renders titles to real property and to interests and estates therein more safe, secure, and marketable. Id. at 920. See also Wood Panel Structures, Inc. v. Grangaard, 55 Or.App. 294, 637 P.2d 1320 (1981). In distinguishing mechanics' lien statutory periods from procedural statutes of limitations, the court in Bellegarde Custom Kitchens, supra, held that the trial court had no jurisdiction where a lienor filed one day late because the last statutory day for enforcing the lien fell on a Sunday. "The Legislature saw...