Blue Tee Corp. v. CDI Contractors, Inc.

• Decision Date: 10 February 1995
• Docket Number: No. S-93-411,S-93-411
• Citation: 247 Neb. 397,529 N.W.2d 16
• Parties: BLUE TEE CORPORATION, a Maine Corporation, doing business as Brown Strauss Steel, Appellant, v. CDI CONTRACTORS, INC., et al., Appellees.
• Court: Nebraska Supreme Court

Page 16

529 N.W.2d 16

247 Neb. 397

BLUE TEE CORPORATION, a Maine Corporation, doing business as Brown Strauss Steel, Appellant, v. CDI CONTRACTORS, INC., et al., Appellees.

No. S-93-411.

Supreme Court of Nebraska.

Feb. 10, 1995.

Syllabus by the Court

1. Equity: Mechanics' Liens: Foreclosure. An action to foreclose a mechanic's or construction lien is one grounded in equity.

2. Equity: Appeal and Error. In an appeal of an equitable action, an appellate court tries factual questions de novo on the record and reaches a conclusion independent of the findings of the trial court, provided, where credible evidence is in conflict on a material issue of fact, the appellate court considers and may give weight to the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another.

3. Mechanics' Liens. The Nebraska Construction Lien Act allows a supplier to a subcontractor to file a construction lien. The act does not afford protection to the supplier of a supplier or materialman.

4. Mechanics' Liens: Proof. A claimant of a construction lien has the burden of proving that the statute providing for such procedure to perfect the same is intended to protect the claimant.

5. Construction Contracts: Words and Phrases. The essential feature which constitutes one a subcontractor rather than a materialman is that in the course of performance of the prime contract he constructs a definite, substantial part of the work of improvement in accord with the plans and specifications of such contract, not that he enters upon the jobsite and does the construction there.

6. Mechanics' Liens: Words and Phrases. One who furnishes materials without performing any work or labor in installing them or putting them in place is a materialman and is given a lien under the provisions of the Nebraska Construction Lien Act because the materials furnished were used in the construction of a building or other structure.

7. Mechanics' Liens: Claims. The object of a mechanic's lien being to secure the claims of those who have contributed to the erection of a building, it should receive the most liberal construction to give full effect to its provisions.

8. Prejudgment Interest: Mechanics' Liens: Foreclosure. Prejudgment interest is recoverable upon the foreclosure of a mechanic's lien.

9. Prejudgment Interest: Claims. Prejudgment interest is available only when a claim is liquidated, that is, when there is no reasonable controversy either as to the plaintiff's Walter R. Metz, Jr., of Schmid, Mooney & Frederick, P.C., Omaha, for appellant.

right to recover or as to the amount of such recovery. There must be no dispute either as to the amount or as to the plaintiff's right to recover.

Dwight E. Steiner, of Fraser, Stryker, Vaughn, Meusey, Olson, Boyer & Bloch, P.C., Omaha, for appellee CDI Contractors.

HASTINGS, C.J., and WHITE, CAPORALE, FAHRNBRUCH, LANPHIER, WRIGHT, and CONNOLLY, JJ.

CONNOLLY, Justice.

Blue Tee Corporation (Blue Tee) seeks $108,070.09 plus interest as consideration for structural steel supplied to Northwestern Steel & Supply Co. (Northwestern). Northwestern fabricated the steel for CDI Contractors, Inc. (CDI), the general contractor in the construction of a department store. Blue Tee sought foreclosure upon a bond issued by CDI in lieu of collateral to secure a construction lien filed by Blue Tee. CDI claimed that Blue Tee was not entitled to protection under the Nebraska Construction Lien Act, Neb.Rev.Stat. § 52-125 et seq. (Reissue 1993). The district court for Douglas County agreed and dismissed Blue Tee's petition with prejudice. Blue Tee appealed. For the reasons stated below, we reverse the judgment of the district court.

FACTUAL BACKGROUND

The issue in this case is whether Northwestern was a subcontractor or a materialman for the purposes of the Nebraska Construction Lien Act. If Northwestern was a subcontractor for CDI, Blue Tee is entitled to protection under the Nebraska Construction Lien Act as a supplier to a subcontractor; if Northwestern was a materialman to CDI, Blue Tee is not entitled to a lien.

CDI was the general contractor for the construction of a department store--Dillard's at Oakview Mall in Omaha. CDI accepted Northwestern's bid to provide structural steel for the project. Northwestern ordered raw steel from Blue Tee. Blue Tee delivered the steel and billed Northwestern $108,070.09 for the material. The date of the last delivery was on or about November 1, 1990. The steel was fabricated by Northwestern off the construction site and was installed by Davis Erection Company.

According to Blue Tee's expert witness, John Rupprecht, steel fabrication is the process of cutting, drilling, plating, and otherwise altering raw steel sections to exact specifications such that the sections may be assembled into the framework of a building. Rupprecht also stated that, as in this case, fabrication must be done in a steel fabrication facility and cannot be done at a jobsite. He testified that, after steel has been fabricated for a particular project, it has only scrap value if it is not incorporated into that project or an identical project. Rupprecht also stated that the work completed by Northwestern constituted a definite and substantial portion of the project. Upon cross-examination, Rupprecht admitted that fabrication of steel could be as simple as cutting a piece of steel to a certain length.

At trial, CDI introduced documents, such as Northwestern's contract bid proposal and joint checking authorizations, which stated that Northwestern was a materialman, not a subcontractor. CDI employees testified that CDI treated Northwestern as a materialman rather than as a subcontractor. As examples of this treatment, CDI cited the lack of not only insurance but also payment retainage agreements and workplace safety standards normally associated with subcontractor contracts. CDI also adduced evidence that CDI was not contacted by Blue Tee until more than 3 months after the last major delivery of steel from Blue Tee to Northwestern. By that time, CDI had paid to Northwestern all but $18,517 for the steel.

Northwestern failed to pay Blue Tee and filed for bankruptcy protection. Blue Tee filed a construction lien on the real estate. The district court found that Northwestern was a materialman and dismissed Blue Tee's petition for foreclosure with prejudice.

ASSIGNMENTS OF ERROR

In appealing, Blue Tee assigns as error, in sum, the following acts of the district court: the dismissal of the petition, the finding that Northwestern was a materialman, and the failure to grant the requested relief including prejudgment interest.

STANDARD OF REVIEW

An action to foreclose a mechanic's or construction lien is one grounded in equity. In an appeal of an equitable action, the appellate court tries factual questions de novo on the record and reaches a conclusion independent of the findings of the trial court, provided, where credible evidence is in conflict on a material issue of fact, the appellate court considers and may give weight to the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another. Evans v. Engelhardt, 246 Neb. 323, 518 N.W.2d 648 (1994); Hulinsky v. Parriott, 232 Neb. 670, 441 N.W.2d 883 (1989).

ANALYSIS

The Nebraska Construction Lien Act allows the supplier to a subcontractor to file a construction lien. The act does not afford protection to the supplier of a supplier or materialman. A claimant of such a lien has the burden of proving that the statute providing for such procedure to perfect the same is intended to protect the claimant. Id.

This court has previously attempted to define the differences between a subcontractor and a materialman. We have stated:

"[T]he essential feature which constitutes one a subcontractor rather than a materialman is that in the course of performance of the prime contract he constructs a definite, substantial part of the work of improvement in accord with the plans and specifications of such contract, not that he enters upon the jobsite and does the construction there."

(Emphasis omitted.) Ideal Basic Industries v. Juniata Farmers, 205 Neb. 611, 615, 289 N.W.2d 192, 195 (1980) (quoting 53 Am.Jur.2d Mechanics' Liens § 72 (1970)). In Chicago Lumber Co. v. Horner, 210 Neb. 833, 836, 317 N.W.2d 87, 89 (1982), we said:

We have held that one who furnishes materials without performing any work or labor in installing them or putting them in place is a materialman and is given a lien under the provisions of [the Nebraska Construction Lien Act] because the materials furnished were used in the construction of the building or other structure.

If we were to apply the rule in Chicago Lumber Co. to this case, Northwestern would be entitled to a lien as a materialman but Blue Tee would be considered a supplier to a materialman, and would not be granted protection under the Nebraska Construction Lien Act.

The trial court held, and CDI argues, that the ruling in Paxton & Vierling Steel Co. v. Barmore, 187 Neb. 54, 187 N.W.2d 590 (1971), is controlling. In that case we held, without explanation, that a steel fabricator is a materialman. That the steel fabricator was held to be a materialman was not...