Archicon, L.C. v. TPI Props., LLC

• Decision Date: 21 March 2013
• Docket Number: 1 CA-CV 12-0232
• Parties: ARCHICON, L.C., an Arizona limited liability company, Plaintiff/Appellee CounterDefendant, v. TPI PROPERTIES, LLC, an Arizona limited liability company, Defendant/Appellant CounterClaimant.
• Court: Arizona Court of Appeals

ARCHICON, L.C., an Arizona limited liability company, Plaintiff/Appellee CounterDefendant, v. TPI PROPERTIES, LLC, an Arizona limited liability company, Defendant/Appellant CounterClaimant.

1 CA-CV 12-0232

COURT OF APPEALS STATE OF ARIZONA DIVISION ONE DEPARTMENT B

Filed: March 21, 2013

NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY

NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.

See Ariz. R. Supreme Court 111(c); ARCAP 28(c);

Ariz. R. Crim. P. 31.24

MEMORANDUM DECISION

(Not for Publication -

Rule 28, Arizona Rules of

Civil Appellate Procedure)

Appeal from the Superior Court in Maricopa County

Cause No. CV2007-002844

The Honorable Arthur T. Anderson, Judge

AFFIRMED IN PART; REMANDED IN PART

Hoopes Adams & Alexander, PLC

By John R. Hoopes

Patricia Alexander

Attorneys for Defendant/Appellant

Chandler

GOULD, Judge

¶1 In this appeal we examine the enforceability of a mechanics' lien. For the following reasons, we find the mechanics' lien enforceable, and affirm.

Facts and Procedural Background

¶2 Technology Providers, Inc. ("Technology") desired to build a company building on a piece of vacant, unimproved property it owned in Chandler, Arizona. It formed an LLC to accomplish this purpose, TPI Properties, LLC ("TPI"), and transferred the property to the LLC. Technology contracted with Exclusive Development, Inc. ("EDI") to construct a building on the land. EDI subcontracted with Archicon, an architectural firm, to provide architectural services for the project in exchange for $69,000 plus additional costs and expenses. Archicon began work on the project. After Archicon had done substantial work toward the project, it stopped work because its invoices were not being paid.

¶3 On September 5, 2006, Archicon filed a Notice and Claim of Professional Services' Lien on the property owned by TPI in the amount of $54,687.69. It had served a preliminary 20-day lien notice on Technology and EDI on May 23, 2005.

¶4 Archicon later filed a complaint against Technology and TPI to foreclose on its lien. Technology and TPI moved for summary judgment, arguing that the lien was invalid because (1) Archicon's professional registration had expired on March 2003 and (2) Archicon's work had not enhanced the value of the land and the vacant land contained no building, structure, or improvement. The trial court denied this motion, explaining thatit interpreted Arizona case law to mean that substantial compliance with the registration requirements was sufficient and that factual issues precluded the resolution of the second issue.

¶5 Archicon moved for partial summary judgment regarding Archicon's substantial compliance with the registration, which the court granted without comment on October 25, 2010.

¶6 After a bench trial on the remaining issues, the court ruled in Archicon's favor, and entered judgment on July 20, 2011. TPI originally filed a notice of appeal on July 29, 2011, but the appeal was dismissed because the judgment did not contain a determination of finality pursuant to Arizona Rule of Civil Procedure 54(b). An amended judgment was filed on February 22, 2012. The judgment awarded $176,744.69 (consisting of the value of the mechanics' lien, $54,331.69; attorneys' fees, $120,000.00; and costs, $2,413.00) plus interest.

¶7 TPI timely appeals the amended judgment. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101(A)(1) (West 2012).¹

Discussion

¶8 We review the record "in a light most favorable to sustaining the trial court's ruling." Swichtenberg v. Brimer, 171 Ariz. 77, 82, 828 P.2d 1218, 1223 (App. 1991). When reviewing a trial court's findings of fact from a bench trial, "[w]e will not set aside the [trial] court's findings of fact unless clearly erroneous, giving due regard to the opportunity of the court to judge the credibility of witnesses." In re Estate of Zaritsky, 198 Ariz. 599, 601, ¶ 5, 12 P.3d 1203, 1205 (App. 2000). "A finding of fact is not clearly erroneous if substantial evidence supports it, even if substantial conflicting evidence exists." Kocher v. Dep't of Revenue of State of Ariz., 206 Ariz. 480, 482, ¶ 9, 80 P.3d 287, 289 (App. 2003).

¶9 Moreover, "[i]n applying the clearly erroneous standard to factual findings, we will 'defer to any factual findings explicitly or implicitly made, affirming them so long as they are supported by reasonable evidence.'" Id. (quoting Twin City Fire Ins. Co. v. Burke, 204 Ariz. 251, 253-54, ¶ 10, 63 P.3d 282, 284-85 (2003)); see also Coronado Co. Inc. v. Jacome's Dep't Store, Inc., 129 Ariz. 137, 139, 629 P.2d 553, 555 (App. 1981) ("Implied in every judgment, in addition to express findings made by the court, is any additional finding that is necessary to sustain the judgment, if reasonably supported by the evidence, and not in conflict with the express findings."). Thus, we will sustainpresumptive findings if they are justified by any reasonable construction of the evidence. Able Distrib. Co., Inc. v. James Lampe, Gen. Contractor, 160 Ariz. 399, 402, 773 P.2d 504, 507 (App. 1989). However, we review the trial court's legal conclusions de novo. In re Estate of Travers, 192 Ariz. 333, 334, ¶ 11, 965 P.2d 67, 68 (App. 1998).

¶10 TPI argues that Archicon's mechanics' lien was unenforceable because (1) Archicon was not registered, (2) Archicon did not have a contract with TPI or a contractor who had a contract with TPI, (3) vacant land is not subject to a mechanics' lien, and (4) Archicon's work did not add value to TPI's property. TPI also argues that (5) the court improperly awarded compensation to Archicon when Archicon's work had never been furnished to TPI, (6) that the court abused its discretion in considering Archicon's redacted fee application, and (7) that Archicon is liable for knowingly causing to be recorded a false lien. We consider each issue in turn.

I. Registration

¶11 According to A.R.S. § 33-981(E), "[a] person who furnishes professional services but who does not hold a valid certificate of registration issued pursuant to title 32, chapter 1 shall not have the lien rights provided for in this section." TPI argues that Archicon was required to strictly comply with Arizona's registration statute (A.R.S. § 33-981(E)), and that itsfailure to maintain its registration is fatal to the enforcement of its mechanics' lien.

¶12 To determine whether any given statute requires strict or merely substantial compliance, we must first decide which rule best promotes the statute's legislative purpose. See Aesthetic Prop. Maint., Inc. v. Capitol Indem. Corp., 183 Ariz. 74, 77-78, 900 P.2d 1210, 1213-14 (1995) ("[W]hether substantial or strict compliance is required is largely a question of which test best promotes legislative purpose.") (citing A.R.S. § 1-211(B) ("Statutes should be liberally construed to effect their objects and to promote justice.")). This is an issue of law, and as such, reviewed de novo.

¶13 The general purpose of Arizona's lien statutes is to "safeguard[] materialmen and laborers who enhance the value of another's property . . . by providing them with a lien on the property for the amount of the materials or labor furnished, as well as giving them the ability to enforce these rights and pursue remedies directly against the owner of the property." United Metro Materials, Inc. v. Pena Blanca Props., LLC, 197 Ariz. 479, 484, ¶ 26, 4 P.3d 1022, 1027 (App. 2000) (citations omitted). To determine the specific purpose of the registration requirement in § 33-981(E),² we refer to § 32-101, which explainsthat "[t]he purpose of this chapter [listing the registration requirements for architects] is to provide for the safety, health and welfare of the public through the promulgation and enforcement of standards of qualification for those individuals registered or certified and seeking registration or certification pursuant to this chapter." The registration requirement thus appears to have been designed to protect the public against individuals who were unqualified to perform the services that were rendered.

¶14 We note that this purpose is very similar to the purpose of the statute that was at issue in Aesthetic, A.R.S. § 32-1153, "to protect the public from unscrupulous, unqualified, and financially irresponsible contractors." Aesthetic, 183 Ariz. at 77, 900 P.2d at 1213. Our supreme court found substantial compliance sufficient to achieve the statutory purpose of § 32-1153. Id. at 78, 900 P.2d at 1214. Given the similarity between the purposes of the two statutes, it appears that substantial compliance would likewise adequately achieve the statutory purposes of § 33-981(E). We find TPI's attempts to distinguish the statutory purposes unpersuasive; the statutory language pertaining to professional services in A.R.S. § 33-981(E) isnearly identical to the language pertaining to contractors in A.R.S. § 33-981 (C).³

¶15 Having found that substantial compliance with § 33-981(E) is sufficient to achieve its purpose, we next determine whether Archicon substantially complied with the statute. To answer this question, we consider the factors developed in Aesthetic.

¶16 First, we must consider whether suspension of the license was by operation of law or for cause and whether the Registrar's failure contributed to noncompliance. Aesthetic, 183 Ariz. at 78, 900 P.2d at 1214. In doing so, we defer to the facts implicitly found by the trial court when it concluded Archicon "was at all times properly registered with the Arizona State Board of Technical Registration . . . pursuant to A.R.S. § 32-101 et seq." See Coronado, 129 Ariz. at 139, 629 P.2d at 555 ("If the judgment can be sustained on any theory framed by the pleadings and supported by the evidence, we must affirm.")

¶17 An affidavit submitted by Archicon in support of its motion for summary judgment explained that prior to 2001, architectural firms did not have to renew or file new applications for their firm's license with the Board. Prior to2001, once the architectural firm obtained its license...