Butler Contracting v. Court Street

• Decision Date: 30 May 2006
• Docket Number: No. 26160.,26160.
• Citation: 631 S.E.2d 252
• Parties: BUTLER CONTRACTING, INC., Respondent/Appellant, v. COURT STREET, LLC; Morris Construction Co.; and Central Carolina Bank, Defendants, Of whom Court Street, LLC, and Morris Construction Co. are Appellants/Respondents.
• Court: South Carolina Supreme Court

631 S.E.2d 252

BUTLER CONTRACTING, INC., Respondent/Appellant, v. COURT STREET, LLC; Morris Construction Co.; and Central Carolina Bank, Defendants Of whom Court Street, LLC, and Morris Construction Co. are Appellants/Respondents.

No. 26160.

Supreme Court of South Carolina.

Heard April 19, 2006.

Decided May 30, 2006.

COPYRIGHT MATERIAL OMITTED

Thomas E. Dudley, III, and John T. Crawford, Jr., both of Kenison & Dudley, LLC, of Greenville, for Appellants/Respondents.

Craig H. Allen, of Greenville, for Respondent/Appellant.

Chief Justice TOAL:

This appeal raises issues relating to whether a mechanic's lien was timely perfected and the denial of prejudgment interest to the prevailing party. We affirm in part and reverse in part.

FACTUAL/PROCEDURAL BACKGROUND

Butler Contracting, Inc. (Subcontractor) signed a contract with Morris Construction Co. (Contractor) to provide labor and materials for interior walls and ceilings in a commercial renovation project. Court Street, LLC (Owner) hired the companies to transform and expand a former church site in Greenville into condominiums. The original contract amount between Subcontractor and Contractor was $493,156.¹ Including additional work and change orders, Subcontractor asserted it was owed a total of $713,364, of which Contractor paid $536,363, leaving a balance due of $177,001.

Henry Holseberg, a principal owner of both Owner and Contractor who apparently controlled both companies, did not dispute the original contract amount, the various amounts for additional work and changes asserted by Subcontractor, or the amount still owed to Subcontractor. Owner, however, filed a counterclaim seeking an offset for $94,878 in damages allegedly caused by delays attributable to Subcontractor and work which Subcontractor failed to timely or properly perform.²

During construction, Owner or Contractor apparently began having financial difficulties and fell behind in payments to various companies working on the project. Contractor did not prepare contemporaneous records of tasks Subcontractor allegedly failed to perform or provide detailed back-charges to Subcontractor as the project progressed. Instead, Contractor declined to pay Subcontractor's invoices in full. After Subcontractor filed a notice of mechanic's lien and a lawsuit seeking to enforce the lien, Contractor reviewed past records such as time and material sheets in an attempt to document the proper amount of back-charges allegedly owed by Subcontractor. Contractor's staff made these calculations during or after Holseberg's deposition; some two years after the project was completed.

Holseberg testified the work Subcontractor failed to do included work in the church basement, repairing areas damaged by other subcontractors, completing changes requested by owners who had purchased units, and completing "punch lists" of minor problems in finished units. Contractor eventually hired a drywall finisher fired by Subcontractor to help complete the necessary work. There apparently was some degree of miscommunication and disagreement between the parties regarding changes and repairs, with Subcontractor insisting it properly performed the work and objecting to potential back-charges due to confusion about which company had performed repairs.

Subcontractor provided labor and materials at the project on a regular basis from mid-1999 until December 2000, although it apparently was not constantly at the jobsite due to delays caused by asbestos removal and the work of other subcontractors. Danny Hodge testified Subcontractor was supposed to perform additional work in the church basement after December 2000, and was ready, willing, and able to do so, but Contractor never asked Subcontractor to complete the work.

In early 2001, Subcontractor, at the request of Contractor's supervisor, delivered one box of ceiling tiles to replace tiles at the project which had been damaged by water leaks. Hodge testified the ceiling tiles were surplus materials from the project stored at Subcontractor's warehouse. Subcontractor routinely included the cost of replacing some damaged ceiling tiles in its estimates, and often provided replacement tiles even though it was not explicitly required to do so by a particular contract. A project foreman for Contractor signed a form accepting delivery of the tiles. Holseberg testified the tiles were not needed, although he was uncertain whether they were used.

Subcontractor filed a notice and certificate of its mechanic's lien in circuit court approximately one month after delivering the ceiling tiles. About two months later, Subcontractor filed a lawsuit in circuit court against Owner and Contractor, asserting causes of action based in contract, the mechanic's lien statute, and quantum meruit. Subcontractor sought the balance due of $177,001, attorney's fees, prejudgment interest, and foreclosure and sale of the real property to satisfy its lien.

The case was referred with finality to a master-in-equity. After a bench trial, the trial court found the mechanic's lien had been timely served and recorded as required by statute. The trial court awarded $152,001 to Subcontractor, which represented a reduction of $25,000 from the original demand stemming from delays attributable to Subcontractor. The trial court did not offset any damages claimed by Contractor for work it allegedly performed that was Subcontractor's responsibility. Subcontractor requested payment of attorney's fees of $43,529 as the prevailing party, and the trial court separately awarded $35,000 in attorney's fees. The trial court denied Subcontractor's request for prejudgment interest.

Owner and Contractor appealed and Subcontractor cross-appealed. We certified this case from the court of appeals pursuant to Rule 204(b), SCACR, and the parties present the following issues for review:

I. Did the trial court err in ruling Subcontractor timely served and recorded its mechanic's lien?

II. Did the trial court err in ruling Subcontractor was not entitled to prejudgment interest on the balance due?

STANDARD OF REVIEW

A proceeding for the enforcement of a statutory lien, such as a mechanic's lien, is legal in nature. Willard v. Finch, 123 S.C. 56, 116 S.E. 96 (1923); Stoudenmire Heating & Air Conditioning Co. v. Craig Bldg. Partnership, 308 S.C. 298, 301, 417 S.E.2d 634, 636 (Ct.App.1992). In an action at law, when a case is tried without a jury, the trial court's findings of fact will be upheld on appeal when they are reasonably supported by the evidence. Stated another way, the trial court's findings of fact will not be disturbed on appeal unless wholly unsupported by the evidence or unless it clearly appears the findings were influenced or controlled by an error of law. The trial court's findings in such a case are equivalent to a jury's findings in a law action. Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976); Willard, 123 S.C. at 58, 116 S.E. at 96; Stoudenmire, 308 S.C. at 301, 417 S.E.2d at 636.

LAW/ANALYSIS

I. Perfection of Mechanic's Lien

Owner argues the trial court erred in ruling that Subcontractor timely served and recorded a mechanic's lien within the statutory ninety-day deadline. Owner asserts that Subcontractor's "unilateral, unsolicited delivery" of one box of ceiling tiles to the jobsite did not revive Subcontractor's expired right to file a mechanic's lien. The delivery of "surplus materials" was not required by the contract, and the materials were "merely provided as a gratuity or an act of friendly accommodation." In fact, the delivery was nothing more than "a contrived effort to revive lien rights." We disagree.

"A person to whom a debt is due for labor performed or furnished or for materials furnished and actually used in the erection, alteration, or repair of a building or structure upon real estate," by virtue of an agreement with or with the consent of the owner or his agent, shall have a mechanic's lien upon the real property to secure payment of the debt. S.C.Code Ann. § 29-5-10(a) (Supp.2005). The right to a lien arises inchoate; i.e., when the labor is performed or material is furnished, the right exists but the lien has not been perfected. Preferred Sav. and Loan Assn., Inc. v. Royal Garden Resort, Inc., 301 S.C. 1, 3, 389 S.E.2d 853, 854 (1990); Wood v. Hardy, 235 S.C. 131, 138, 110 S.E.2d 157, 160 (1959); Williamson v. Hotel Melrose, 110 S.C. 1, 30, 96 S.E. 407, 409 (1918). When the person claiming the lien was employed by someone other than the owner, such as a contractor, he must notify the owner of the furnishing of labor or material in order for the lien to attach to the property. S.C.Code Ann. § 29-5-40 (1991); Lowndes Hill Realty Co. v. Greenville Concrete Co., 229 S.C. 619, 629, 93 S.E.2d 855, 860 (1956); Shelley Constr. Co. v. Sea Garden Homes, Inc., 287 S.C. 24, 26-27, 336 S.E.2d 488, 490-91 (Ct. App.1985).³

In order to perfect and enforce a mechanic's lien, the person asserting the lien (1) must serve upon the owner or person in possession and file with the register of deeds or clerk of court a notice or certificate of lien containing the lien amount, a description of the real property, and other required information "within ninety days after he ceases to labor on or furnish labor or materials for such building or structure"; (2) must commence a lawsuit seeking to enforce the lien within six months after ceasing to provide labor or materials for such real property; and (3) must file a notice of the pending action (lis pendens) within six months after ceasing to provide labor or materials for such real property. S.C.Code Ann. §§ 29-5-90 and 29-5-120 (1991 & Supp.2005); Preferred Sav. & Loan Assn., 301 S.C. at 3-4, 389 S.E.2d at 854; Franke Associates by Simmons v. Russell, 295 S.C. 327, 329, 368 S.E.2d 462, 463 (1988); Multiplex Bldg. Corp. v. Lyles, 268 S.C. 577, 235 S.E.2d 133 (1977); Crystal Pools, Inc. v. Old Claussen's Bakery Partners, 303 S.C. 68, ...