An Idaho Ltd. Liab. Co. v. Barnson, 36246-2009.
| Decision Date | 25 June 2010 |
| Docket Number | No. 36246-2009.,36246-2009. |
| Citation | 238 P.3d 203,149 Idaho 603 |
| Parties | PARKWEST HOMES LLC, an Idaho limited liability company, Plaintiff-Appellant, v. Julie G. BARNSON, an unmarried woman; Mortgage Electronic Registration Systems, Inc., a Delaware corporation, as nominee for Homecomings Financial, LLC (f/k/a Homecomings Financial Network, Inc.,) a Delaware limited liability company; and Does 1-10, Defendants-Respondents. |
| Court | Idaho Supreme Court |
OPINION TEXT STARTS HERE
Moffatt, Thomas, Barrett, Rock & Fields, Chartered, Boise, for appellant. Robert B. Burns argued.
Hawley Troxell Ennis & Hawley LLP, Boise, for respondent Mortgage Electronic Registration Systems, Inc. Ryan T. McFarland argued.
This is an appeal from a judgment dismissing an action to foreclose a mechanic's lien because: (a) the notice of lien did not substantially comply with the requirements of Idaho Code § 45-507, and (b) the construction contract was void because the contractor had not registered under the Idaho Contractor Registration Act before it negotiated and signed the contract. We hold that the claim of lien substantially complied with Idaho Code § 45-507 and that the lien was valid for labor and materials supplied after the contractor registered. We therefore vacate the judgment of the district court and remand this case for further proceedings.
On March 27, 2006, ParkWest Homes LLC and Juli Barnson both signed a written contract dated March 15, 2006, under which ParkWest agreed to construct a home on certain real property for $422,000. At the time that the parties negotiated and executed that contract, ParkWest was not registered under the Idaho Contractor Registration Act, Idaho Code §§ 54-5201 to 54-5219 (Contractor Act). On April 7, 2006, Barnson purchased the property upon which the home was to be built.
ParkWest registered under the Contractor Act on May 2, 2006; it commenced construction of the home on May 22, 2006; and it claims to have substantially completed construction on November 1, 2006. ParkWest and Barnson later had a dispute as to whether she had paid all sums due. On November 28, 2006, ParkWest recorded a mechanic's lien against the property, claiming that the sum of $189,117.99, plus interest, was due for labor and materials it furnished in constructing the home.
On November 14, 2006, two deeds of trust were recorded against the property. Mortgage Electronic Registration Services, Inc., (MERS) is the beneficiary under both deeds of trust.
On August 7, 2007, ParkWest filed this action to foreclose its lien. On October 2, 2008, MERS filed a motion for summary judgment contending that ParkWest's asserted lien was void because: (a) the claim of lien did not substantially comply with Idaho Code § 45-507; (b) ParkWest was not registered under the Contractor Act when it entered into the construction contract; and (c) prior to contracting with Barnson ParkWest had failed to provide her with the disclosures required by Idaho Code § 45-525.
The district court held that ParkWest did not have a mechanic's lien because its claim of lien was defective and the construction contract was void. It entered judgment in favor of MERS holding that its deeds of trust were superior to ParkWest's mechanic's lien. ParkWest then timely appealed.
(1) Did the district court err in holding that ParkWest's claim of lien did not substantially comply with Idaho Code § 45-507?
(2) Did the district court err in holding that ParkWest's claimed lien was unenforceable because the construction contract was void for failure to comply with the Contractor's Act?
(3) Did the district court err in holding that ParkWest did not plead a claim for unjust enrichment?
(4) Is MERS entitled to an award of attorney fees on appeal?
During oral argument, ParkWest contended that MERS does not have standing in this case based upon a decision in an unrelated bankruptcy case holding that MERS did not have standing to assign a promissory note merely because it was the “nominal beneficiary” under the deed of trust securing that note. That decision has nothing to do with this case. ParkWest has alleged that MERS is the beneficiary under two deeds of trust and that ParkWest's mechanic's lien has priority over those deeds of trust. There is no contention that MERS attempted to assign any promissory note or to foreclose the deeds of trust.
Idaho Code § 45-501 declares that “[e]very person performing labor upon, or furnishing materials to be used in the construction ... of any ... building ... has a lien upon the same for the work or labor done.” Any person claiming a lien under that statute must file a claim of lien in the office of the county recorder for the county in which the property or some part of it is situated. I.C. § 45-507. The mechanic's lien statutes are liberally construed in favor of those to whom the lien is granted, and to create a valid lien the claimant must substantially comply with the statutory requirements. BMC West Corp. v. Horkley, 144 Idaho 890, 893-94, 174 P.3d 399, 402-03 (2007).
1. Failure to allege that the amount claimed was determined after deducting all just credits and offsets. Idaho Code § 45-507(3) includes a requirement that the claim of lien must contain “[a] statement of [claimant's] demand, after deducting all just credits and offsets.” In this case, ParkWest's claim of lien stated, “The sum of One hundred and eighty-nine thousand one hundred and seventeen dollars and ninety-nine cents ($189,117.99) together with interest calculated at the rate of Eighteen percent per year from November 1, 2006 is due claimant for the following labor and material furnished by claimant.” In its lien claim, ParkWest did not state that all just credits and offsets had been deducted in arriving at the amount claimed. The district court held, “There exists no ‘substantial compliance,’ if for no other reason, there exists no ‘statement of his demand, after deducting all just credits and offsets.’ ”
Idaho Code § 45-507(3) does not require that the claimant allege that all just credits and offsets have been deducted when calculating the amount claimed. It simply states: “The claim shall contain: (a) A statement of [claimant's] demand, after deducting all just credits and offsets.” Thus, the claimant is required to deduct all just credits and offsets when determining the amount of the claim, but is not required to allege that such deductions were made.
A lien is not invalidated simply because the claimant is not entitled to the amount claimed due in the claim of lien, Barber v. Honorof, 116 Idaho 767, 769, 780 P.2d 89, 91 (1989); Guyman v. Anderson, 75 Idaho 294, 296, 271 P.2d 1020, 1021 (1954), even when the discrepancy is substantial, Electrical Wholesale Supply Co. v. Nielson, 136 Idaho 814, 824-25, 41 P.3d 242, 252-53 (2001) (). If an error in the amount of the claim does not invalidate the lien, it would be incongruous to read into Idaho Code § 45-507(3) a provision invalidating the lien if the claimant does not state that all just credits and offsets had been deducted when calculating the amount of the demand.
2. Failing to state that the amount claimed was just. Idaho Code § 45-507(4) states that the claim of lien must be verified “to the effect that the affiant believes the same to be just.” ParkWest's claim of lien stated, “I have read said mechanic's lien and know the contents thereof; the same is true of my knowledge.” The district court held that the use of the word “true” instead of “just” rendered the lien invalid.
The purpose of this verification requirement is “a desire to frustrate the filing of frivolous claims.” Layrite Products Co. v. Lux, 86 Idaho 477, 484-85, 388 P.2d 105, 109 (1964). The word “just” is defined as “[v]alid within the law; lawful: just claims,” and the word “true” is defined as “exact; precise; accurate; correct: a true balance.” Dictionary.com. The American Heritage Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company, 2004 (accessed June 14, 2010); and Dictionary.com. Dictionary.com Unabridged. Random House, Inc. (accessed June 14, 2010) (italics in originals). The district court did not seek to explain how, in this context, the word “true” differed materially from the word “just.” ParkWest's statement that the claim of lien was “true” substantially complied with Idaho Code § 45-507(4).
3. The failure to have a certificate of verification in the form set forth in Idaho Code § 51-109(4). Idaho Code § 45-507(4) states that the claim of lien “must be verified by the oath of the claimant, his agent or attorney.” The bottom portion of ParkWest's lien claim stated as follows:
I, the undersigned, say: I am the Authorized Representative of the claimant of the foregoing mechanic's lien; I have read said mechanic's lien and know the contents thereof; the same is true of my knowledge.
I declare under penalty of perjury that the foregoing is true and correct. Executed on this 28th day of November, 2006, at Nampa, Idaho.
/s/ David M. Zawadzki
WITNESS the hands and seal of said Grantors this 28th day of November, 2006.
I [notary's name], a Notary Public in and for said County and State, hereby certify that David M. Zawadzki personally known to me (or proved to me on the basis on satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument...
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