Bachman Mech. v. Wal-Mart Trust

• Decision Date: 08 April 2009
• Docket Number: No. 24931.,No. 24941.,24931.,24941.
• Citation: 764 N.W.2d 722,2009 SD 25
• Parties: W.J. BACHMAN MECHANICAL SHEETMETAL COMPANY, INC., Plaintiff, Par Golf Construction, Plaintiff and Appellee, v. WAL-MART REAL ESTATE BUSINESS TRUST; Bodell Construction Company, Inc. (Intervenor), Defendants, Third Party, Plaintiffs and Appellants, and Frontier Mechanical, Inc.; Dalsin, Inc. d/b/a M.J. Dalsin; and Spearfish Excavating, Inc., Defendants and Third Party Plaintiffs, v. Wal-Mart Stores, Inc., Third-Party Defendant, and Appellants, Travelers Casualty and Surety Company of America and Bodell Construction Company, Inc., Defendants and Appellants.
• Court: South Dakota Supreme Court

764 N.W.2d 722

2009 SD 25

W.J. BACHMAN MECHANICAL SHEETMETAL COMPANY, INC., Plaintiff, Par Golf Construction, Plaintiff and Appellee, v. WAL-MART REAL ESTATE BUSINESS TRUST; Bodell Construction Company, Inc. (Intervenor), Defendants, Third Party, Plaintiffs and Appellants, and Frontier Mechanical, Inc.; Dalsin, Inc. d/b/a M.J. Dalsin; and Spearfish Excavating, Inc., Defendants and Third Party Plaintiffs, v. Wal-Mart Stores, Inc., Third-Party Defendant, and Appellants, Travelers Casualty and Surety Company of America and Bodell Construction Company, Inc., Defendants and Appellants.

No. 24931.

No. 24941.

Supreme Court of South Dakota.

Argued February 18, 2009.

Decided April 8, 2009.

Timothy R. Johns, Johns & Kosel, Prof. LLC, Lead, South Dakota, Attorneys for appellee.

Scott Sumner, Barton R. Banks, Banks, Johnson, Colbath, Sumner & Kappelman, PLLC, Rapid City, South Dakota, Attorneys for appellants.

ZINTER, Justice.

[¶ 1.] A subcontractor sued a property owner seeking enforcement of a mechanic's lien, or in the alternative, a claim under the theory of unjust enrichment. The circuit court awarded the subcontractor a judgment enforcing the portion of the mechanic's lien that was properly itemized and a judgment for the remainder of the claim on the theory of unjust enrichment. The property owner, general contractor, and its bonding company appeal from those judgments and the award of attorney fees. We affirm in part, reverse in part, and remand.

Facts and Procedural History

[¶ 2.] Bodell Construction Company, Inc., entered into contract with Wal-Mart Stores, Inc. (Wal-Mart Stores) to build a Wal-Mart Supercenter in Spearfish, South Dakota. Wal-Mart Real Estate Business Trust (Wal-Mart Trust), a separate entity from Wal-Mart Stores, owned the property.

[¶ 3.] Bodell subsequently entered into a $291,245.87 subcontract with Par Golf, a landscaping contractor, for the purpose of installing plantings and an irrigation system on the project. The subcontract contained an arbitration clause, which provided:

In the event of any dispute between [Bodell] and [Par Golf] covering the scope of work, the dispute shall be settled in the manner provided by the contract documents. If none be provided, or if there arises any dispute concerning matters in connection with this Agreement, and without the scope of the work, then such disputes shall be settled by a ruling of a board of arbitration[.]

[¶ 4.] Par Golf began work on the project in September 2004. Before Par Golf finished its work, Bodell authorized change orders for: the installation of an 18-inch strip of sod in the curb/gutter areas; an additional island planter; and a temporary irrigation system. The change order regarding sod made no mention of watering.¹ Further, Bodell requested Par Golf to provide labor, materials, and equipment for watering new seed on another portion of the project. This included the use of Par Golf's water truck and laborers. In a letter dated June 24, 2005, Par Golf informed Bodell that Par Golf did not have watering in its bid, and Par Golf, therefore, inquired of Bodell whether Par Golf would be paid extra for the watering. Bodell's project manager wrote "OK" behind the request and added his initials. Par Golf subsequently provided all of these items.

[¶ 5.] Pursuant to the subcontract, Par Golf had seeded the west end of a detention pond in the spring of 2005. A subsequent rain flooded the area and washed out most of the topsoil. The flooding occurred because a spillway had been improperly constructed by another contractor. At Bodell's instructions, Par Golf reseeded the area in June 2005, but Bodell would not authorize additional topsoil. Bodell later contended that Par Golf's seeding did not result in the uniform stand of grass required by the contract specifications. Bodell therefore spent $17,814.90² to satisfy the grass requirement, which involved hiring another contractor to sod the area.

[¶ 6.] Following Par Golf's completion of the project in August 2005, Bodell requested Par Golf to return to repair some damage to the irrigation system caused by vandalism. Par Golf performed this work on September 23 and 24, 2005.

[¶ 7.] Bodell subsequently paid Par Golf $279,220, which was the subcontract amount, less a retainage. Par Golf, however, contended that $64,560.30 remained due and owing for its work. This amount included compensation for labor and materials for sodding, watering, temporary irrigation, the additional planter, sprinkler repair, and the retainage. Bodell refused to pay.

[¶ 8.] Following failed negotiations, Par Golf filed a mechanic's lien on January 17, 2006, against Wal-Mart Trust in the amount of $64,560.30. This filing was more than 120 days after Par Golf had completed the project in August 2005, but was within 120 days of Par Golf's September 23-24, 2005, return to repair the vandalism damage to the irrigation system.

[¶ 9.] Following commencement of this suit against Wal-Mart Trust to enforce the mechanic's lien, Bodell moved to intervene. It also moved to dismiss based upon the arbitration clause. The circuit court heard the motions, allowed intervention, and denied Bodell's motion to dismiss. Par Golf subsequently amended its complaint, adding Bodell and Travelers³ as defendants. Par Golf also added an alternative unjust enrichment claim against Wal-Mart Trust for any portions of Par Golf's mechanic's lien claim that might be determined to be invalid. Wal-Mart Trust, Bodell, and Travelers (Defendants) answered and again moved to dismiss based upon the arbitration clause. The circuit court denied Defendants' motion.

[¶ 10.] Following trial, the circuit court found that Par Golf had filed its lien within 120 days of when it last performed work on the property (the September 23-24 vandalism repair work). The court further found that although almost seventy percent of Par Golf's mechanic's lien was concededly not itemized, $20,252.52 was itemized. Accordingly, the court entered a mechanic's lien judgment against Travelers for $20,252.52. With respect to the action for unjust enrichment, the circuit court found that although Wal-Mart Stores had paid Bodell on their contract, Wal-Mart Trust would be "unjustly enriched if allowed to retain the benefits of [Par Golf's] extra work [and retainages] without payment to Par Golf." The court, therefore, entered judgment against Wal-Mart Trust for the balance of Par Golf's claim ($44,370.78). Finally, the circuit court denied Wal-Mart Trust's request for attorney fees in defending the mechanic's lien claim and awarded Par Golf $12,500 in attorney fees for its prosecution of the mechanic's lien.⁴

[¶ 11.] Defendants appeal, raising the following issues: (1) whether the action should have been dismissed for failure to arbitrate; (2) whether Par Golf's lien was timely; (3) whether Par Golf's lien was sufficiently itemized; and, to the extent that it was, whether a partially itemized mechanic's lien may be enforced; (4) whether Par Golf may recover from Wal-Mart Trust on the theory of unjust enrichment; (5) whether Bodell was entitled to offsets against Par Golf's claims; and (6) whether the circuit court abused its discretion in awarding Par Golf attorney fees. By notice of review, Par Golf raises one protective issue: if this Court disallows any portion of the mechanic's lien, whether Par Golf should be permitted to recover the disallowed portion under the theory of unjust enrichment. Par Golf has also moved this Court for appellate attorney fees.

Decision

Issue I: Arbitration

[¶ 12.] "[T]he construction and legal effect of a written [arbitration] contract are to be determined by the court as a question of law except where the meaning of the language depends upon disputed extrinsic evidence." Flandreau Public Sch. Dist. No. 50-3 v. G.A. Johnson Const., Inc., 2005 SD 87, ¶ 7, 701 N.W.2d 430, 434. "We review legal questions concerning arbitration agreements de novo." Id. (citing First Options of Chicago, Inc. v Kaplan, 514 U.S. 938, 947-48, 115 S.Ct. 1920, 1926, 131 L.Ed.2d 985, 996 (1995)). "A circuit court's factual findings supporting its [arbitration] decision, however, are reviewed under the clearly erroneous standard of review." Masteller v. Champion Home Builders Co., 2006 SD 90, ¶ 9, 723 N.W.2d 561, 563-64.

[¶ 13.] The circuit court concluded that the arbitration clause in the Par Golf-Bodell subcontract did not require Par Golf to arbitrate with Wal-Mart Trust before suing that property owner to enforce the mechanic's lien. The circuit court also concluded that Bodell, the only defendant with a contractual arbitration clause, waived its right to assert that clause in this litigation. The circuit court stated:

The arbitration provision in the subcontract does not preclude Par Golf from proceeding against the landowner. [Further,] Bodell agreed to diligently seek from Wal-Mart all sums owing to Par Golf. There is no evidence of any efforts. On the contrary Bodell, Wal-Mart and Travelers are united in their efforts to defeat Par Golf's claim for payment. Bodell waived its right to compel Par Golf to arbitrate the claims.

[¶ 14.] Before addressing Defendants' appeal of these rulings, we address Par Golf's assertion that Defendants waived the right to challenge the circuit court's arbitration decision. Par Golf points out that although Bodell sought to enforce the arbitration clause in two related lawsuits,⁵ those cases have not been appealed. Par Golf further contends that Bodell failed to sufficiently raise the failure to arbitrate issue in this case. Defendants respond that they did not waive the arbitration issue because they attempted to enforce the arbitration provision in this litigation on two occasions. We agree with the Defendants.

[¶ 15.] Bodell formally moved to dismiss in October 2006, arguing that the subcontract required arbitration. The court heard the motion and decided the issue at a November 2, 2006 motions hearing. Furthermore, when...