Bates v. Chi. Lumber Co. of Omaha

• Decision Date: 09 June 2016
• Docket Number: S–15–0206, S–15–0207
• Citation: 2016 WY 58,375 P.3d 732
• Parties: Shad Alan Bates and Trisha Diane Bates, husband and wife, Appellants (Defendants), v. The Chicago Lumber Company of Omaha, doing business as Century Lumber Center, Appellee (Plaintiff). The Chicago Lumber Company of Omaha, doing business as Century Lumber Center, Appellant (Plaintiff), v. Shad Alan Bates and Trisha Diane Bates, husband and wife, Appellees (Defendants).
• Court: Wyoming Supreme Court

375 P.3d 732

2016 WY 58

Shad Alan Bates and Trisha Diane Bates, husband and wife, Appellants (Defendants)

v.The Chicago Lumber Company of Omaha, doing business as Century Lumber Center, Appellee (Plaintiff).

The Chicago Lumber Company of Omaha, doing business as Century Lumber Center, Appellant (Plaintiff)

v.Shad Alan Bates and Trisha Diane Bates, husband and wife, Appellees (Defendants).

S–15–0206, S–15–0207

Supreme Court of Wyoming.

June 9, 2016

Representing Shad Alan Bates and Trisha Diane Bates: James A. Eddington, Jones & Eddington Law Offices, Torrington, Wyoming.

Representing Chicago Lumber Company of Omaha: John J. Maier, John J. Maier Law Offices, Torrington, Wyoming.

Before BURKE, C.J., and HILL, DAVIS, and FOX, JJ., and ROGERS, D.J.

DAVIS

, Justice.

[¶1] Appellee Chicago Lumber Company of Omaha, doing business as Century Lumber Center (Century), supplied materials to a contractor, Anderson Carpentry and Construction (Anderson), which built a home for the Appellants Shad and Trisha Bates (the Bates). Although the Bates paid Anderson for the materials used in the home, those funds were applied to various other accounts, which caused the account with Century on the Bates job to become delinquent. Century ultimately filed a material lien against the Bates property and instituted proceedings to enforce it. The district court enforced the lien as requested. We reverse.

ISSUES

[¶2] The parties collectively raise four issues:

1. Did the district court err as a matter of law when it granted Century Lumber's Motion for Partial Summary Judgment concerning the validity of the lien?

2. Did the district court abuse its discretion by finding that Century Lumber timely filed its lien and that the work or materials were furnished under the same contract?

3. Did the district court err in concluding that the inclusion of materials and nonlienable charges in the recorded lien did not cause the lien in this matter to be a false and frivolous lien?

4. Did the district court err in determining that prejudgment interest cannot be included in a materialman's lien?

[¶3] We find the answer to the second issue as to the timeliness of Century's lien to be dispositive, and thus address only that issue.

FACTS

[¶4] For reasons that are explained in connection with our discussion of the standard of review, we look to a decision letter and order granting a partial summary judgment and an order after a bench trial on the remaining issues for the facts of this case. The Bates purchased real property in Goshen County, Wyoming in June of 2010. Sometime before October 15, 2010, they contracted with Anderson to serve as the general contractor in the construction of a home and other improvements to the property. The Bates ultimately paid Anderson $249,800.00, a portion of which was to be used to purchase building materials.

[¶5] Anderson contracted with Century to purchase the necessary supplies and raw materials to build the Bates home. The two companies had a long-standing business relationship, and Anderson kept an open master account with Century to make charges as needed. The Bates construction project was opened as a subaccount of Anderson's master account, which, as we will see, initially allowed Anderson to charge materials for that job and pay for them later. Century first provided materials to Anderson for the Bates project on or about October 15, 2010.

[¶6] Century had two different methods for applying payments it received from contractors. If Century received a “generic” payment, meaning one not specified as applying to a particular account, it first applied the funds to the contractor's oldest outstanding charges and then to later charges. “Specific” payments were applied to particular subaccounts identified by the contractor. Anderson periodically made “generic” payments to his master account using money the Bates paid him. These payments were therefore not credited to the Bates subaccount in their entirety. Between October 15, 2010 and July 1, 2011, Century provided Anderson with approximately $57,161.37 in materials for the Bates project but because the payments Anderson made were “generic,” Century applied only $14,966.81 to the Bates subaccount. Anderson was basically reducing his oldest balances on other jobs with the Bates' money. Therefore, the Bates account became delinquent, with a balance of $42,194.56 by July 1, 2011.

[¶7] Ken Owens (Owens), Century's manager, had a number of conversations with Anderson about the delinquent status of the Bates account, and he informed Anderson that Century might assert a lien against the Bates property to ensure payment. On July 1, 2011, Century prohibited Anderson from making future charges for materials for the Bates home because of the delinquency. Of course, Century was willing to sell materials to Anderson for cash, and did so after that point in time.

[¶8] On July 22, 2011, approximately 280 days after Century first supplied materials to Anderson in connection with the Bates project, Century mailed a Notice of Lien Liability to the Bates.¹ This was the first time they were notified that their contractor was in arrears, and that they could be responsible for the outstanding debt to Century. Shortly after receiving this notice, the Bates contacted Owens, who confirmed that the subaccount Anderson established with Century in connection with the Bates project was delinquent. Owens also notified the Bates that Century might file a lien against their property if the subaccount remained unpaid. Century then allowed Anderson to charge some materials for the Bates home in September and October of 2011.²

[¶9] On October 21, 2011, Century sent a Wyoming Notice to Owner to the Bates by certified mail. That same day, Century mailed a more extensive Notice of Lien Liability to all parties involved in the dispute.³ One month later, on November 29, 2011, Century mailed a Notice of Intent to File Lien to the Bates and to Anderson. Owens also drove to the Bates residence where he hand-delivered the Notice of Intent to File Lien to Shad Bates. On December 23, 2011, Century recorded its Statement of Lien against the Bates property, and on December 27, 2011, Century delivered a Notice of Filing Lien to the Bates and other interested parties. Finally, on June 18, 2012, Century filed a complaint seeking, among other things, to foreclose the lien against the Bates property.

[¶10] After reviewing the invoices attached to the Statement of Lien , the Bates contested certain charges. In an effort to accommodate their concerns, Century deducted the entire contested amount except one charge totaling $1,348.50 for 150 sheets of drywall. At trial, Century sought judgment in its favor for $37,438.53 in principal, $20,949.61 in contract-based interest, and costs of $659.00. The interest was calculated at the rate of 1.33% per month (16% annually) based on the provisional language included on each Century invoice to Anderson.

[¶11] The parties filed cross-motions for summary judgment or partial summary judgment prior to trial. In a November 12, 2014 decision letter, the district court determined that Century's lien statement was perfected and that Century timely filed its action to foreclose its materialman's lien within 180 days of perfection. The district court also found that the materialman's lien was valid and enforceable against the Bates property. This ruling was evidently not quite as broad as it might seem, because the court later addressed some aspects of whether the lien was timely filed in its findings after trial.

[¶12] The district court held a bench trial on the issues remaining after partial summary judgment on April 8, 2015. In an April 20, 2015 order, the district court first addressed whether the inclusion in its Statement of Lien of items not specifically used in the construction of the Bates home caused the lien to be a false or frivolous lien under Wyo. Stat. Ann. § 29–1–311(b)

. It found that Century had amended its lien to include only the materials furnished for the Bates project, and that there was no evidence to suggest that the lien was false or frivolous. It thus declined to strike and release the lien on that basis.

[¶13] Next, the district court addressed the lien's timeliness and the Bates' contention that the lien was not filed within ninety days of substantial completion of the project. The Bates contended that the project was substantially completed in July 2011. The district court, however, found that the Statement of Lien was timely filed because Century continuously provided materials for the Bates project under “one overarching contract” from October 2010 to October 2011.

[¶14] Finally, the district court analyzed whether Century was entitled to include accrued interest in the lien amount. Although Century initially sought statutory prejudgment interest, it clarified at trial that it sought only contract-based monthly interest of 1.33% based on the language of its invoices to Anderson. The district court concluded that the lien statutes do not explicitly allow materialmen to recover contract-based interest. Rather, it reasoned, the statutes allow materialmen to claim only an amount “for material furnished,” citing Wyo. Stat. Ann. § 29–2–101

. As a result, the court deducted accrued interest from the lien amount and awarded Century $37,438.53, plus costs of $659.00, for a total judgment of $38,097.53. The parties' respective appeals followed.

STANDARD OF REVIEW

[¶15] We resolve this appeal based upon the timeliness of Century's lien under Wyo. Stat. Ann. § 29–2–106(a)

. The district court made findings of undisputed material fact on partial summary judgment in its decision letter, which was referred to in its order granting partial summary judgment. It also made additional findings after a bench trial on the remaining issues. We must review both.

[¶16] Under Wyoming Rule of Civil Procedure 56(d)

, the court was entitled to determine what material facts exist without substantial controversy:

(d) Case

...