Collins & Hermann, Inc. v. TM2 Const. Co.

• Decision Date: 16 September 2008
• Docket Number: No. ED 90087.,ED 90087.
• Citation: 263 S.W.3d 793
• Parties: COLLINS & HERMANN, INC., Busy Bee Paving, Inc., Construction Logistics Equipment Company and Lawrence Excavating, Inc., Respondents/Cross-Appellants, v. TM2 CONSTRUCTION COMPANY, INC., Defendant, and Union Electric Company, d/b/a AmerenUE, Defendant/Appellant.
• Court: Missouri Court of Appeals

263 S.W.3d 793

COLLINS & HERMANN, INC., Busy Bee Paving, Inc., Construction Logistics Equipment Company and Lawrence Excavating, Inc., Respondents/Cross-Appellants, v. TM2 CONSTRUCTION COMPANY, INC., Defendant, and Union Electric Company, d/b/a AmerenUE, Defendant/Appellant.

No. ED 90087.

Missouri Court of Appeals, Eastern District, Division Four.

September 16, 2008.

James R. Keller, James D. Maschhoff, Herzog Crebs LLP, St. Louis, MO, for appellant Union Electric Company d/b/a/ AmerenUE.

Richard A. Stockenberg, Michael J. Zpevak, Robert B. Preston, Gallop, Johnson & Neuman, LC, St. Louis, MO, for Amicus Curiae Lafarge North America, Inc.

Neil J. Maune, St. Louis, MO, for respondent/cross-appellant Collins & Hermann, Inc.

Martin L. Daesch, Katherine Michelle Massa, Sandberg, Phoenix & Von Gontard, P.C., St. Louis, MO, for respondent/cross-appellant Busy Bee Paving, Inc.

Before MARY K. HOFF, P.J., and SHERRI B. SULLIVAN, J., and GEORGE W. DRAPER III, J.

Opinion

PER CURIAM.

Union Electric Company d/b/a Ameren-UE ("AmerenUE") appeals from the judgment in favor of Collins & Hermann, Inc., Lawrence Excavating, Inc., Busy Bee Paving, Inc., and Construction Logistics Equipment Company (collectively "Subcontractors"). Subcontractors originally brought mechanic's liens against Ameren-UE when the general contractor, TM2 Construction Company, Inc. ("TM2"), did not fully pay them for work they performed on several AmerenUE substations. The mechanic's liens were dismissed on the basis that AmerenUE is a quasi-public corporation and its substations are immune from mechanic's liens. Subcontractors obtained leave to file amended petitions alleging AmerenUE is liable under the Public Works Bond Statute (Section 107.170, RSMo 2000¹). The trial court entered its judgment in favor of Subcontractors on the bond statute claims. On appeal, AmerenUE argues the trial court erred in finding it was liable under Section 107.170 for not requiring TM2 to post a bond for Subcontractors' work because AmerenUE is not a "public entity" and its substations are not "public works" within the meaning of Section 107.170. We affirm.

Factual and Procedural Background

The parties submitted the case to the trial court upon a joint stipulation of facts, with oral argument in lieu of a trial with contested facts and testimony, which established the following: AmerenUE is a Missouri Corporation and wholly-owned subsidiary of Ameren Corporation, also a Missouri Corporation, publicly traded on the New York Stock Exchange. Ameren-UE is in the business of supplying electric and gas utility service to residents in large portions of the State of Missouri. AmerenUE is subject to regulation by the Missouri Public Service Commission (PSC) pursuant to Chapters 386 and 393 of the Missouri Revised Statutes. AmerenUE's authority to provide utility services to residents of the State of Missouri is derived solely from its regulation by the PSC.

AmerenUE owns certain real estate in Missouri where it has constructed electrical substations necessary to providing service to residents and businesses located in the areas surrounding the substations. In 2003 and 2004, AmerenUE entered into contracts for improvements at several of these substations located in St. Louis, Warren, and Jefferson Counties. TM2, as the general contractor, hired Subcontractors to perform the work on the substations, which was completed to the satisfaction of AmerenUE.

In October 2004, Subcontractors began complaining to AmerenUE that TM2 was not paying them. AmerenUE contacted TM2 and TM2 informed AmerenUE that it would pay Subcontractors. On January 5, 2005, TM2 filed for bankruptcy. At the time, TM2 had not fully paid for work performed on the substations. AmerenUE neither required TM2 to post any bonds or other financial security for the substation projects nor did it require lien waivers from TM2.

Subcontractors filed mechanic's liens against one or more AmerenUE substations. On July 5, 2005, Subcontractors filed petitions to enforce the mechanic's liens in St. Louis, Warren, and Jefferson Counties where the respective substations were located.² AmerenUE filed motions in each lawsuit seeking dismissal of the mechanic's liens claims. The trial courts in all three counties independently granted AmerenUE's motions to dismiss the mechanic's liens counts finding that Ameren-UE is a "quasi-public regulated utility" and that the properties at issue are, therefore, "exempt from mechanic's liens."³

Thereafter, the three trial courts allowed Subcontractors to file amended lawsuits against AmerenUE alleging liability pursuant to Section 107.170. At the request of the parties, the three cases were consolidated before the St. Louis County trial court. The parties filed a joint stipulation of facts, which included a summary of payments AmerenUE had already made to Subcontractors. Based on these payments, all Subcontractors claims against AmerenUE for quantum meruit were either voluntarily dismissed or disposed of by the trial court in its judgment.

In its judgment, the trial court also found as follows with respect to Subcontractors' bond claims:

20. [Section] 107.170 requires all public entities in the State of Missouri to require every contractor for public works to furnish upon it a bond with good and sufficient sureties to protect all subcontractors, suppliers and materialmen.

21. It is the public policy in Missouri that the Mechanic's Lien Act and the Public Works Bond Act are to be construed to include people within their protection and not exclude....

22. Missouri courts have encouraged the policy of erring on the side of protection for contractors, subcontractors, laborers and materialmen....

23. Furthermore, [Section] 107.170 gives a right to surety bond protection to every person who would otherwise have a right to file and enforce a mechanic's lien....

24. Missouri courts have created a judicial exception that excludes certain property that is owned by quasi public corporations from the operation of the mechanic's lien laws....

25. The AmerenUE substations that are the subject of all plaintiffs' claims fall within the quasi public exception to the mechanic's lien laws.

26. AmerenUE is heavily regulated by the Missouri Public Service Commission.

27. Since the substations are not subject to the mechanic's lien laws, AmerenUE was obligated to require TM2 to post bond. [Section] 107.170.

AmerenUE now appeals. Subcontractors have filed a joint cross-appeal arguing that if we find the trial court erred in holding AmerenUE was liable under Section 107.170, we must also find the trial court erred in dismissing Subcontractors' mechanic's lien claims under Section 429.010. Subcontractors contend that Missouri's long-standing public policy is to provide subcontractors protection either under the Mechanic's Lien Act or the Public Works Bond Act; therefore, if one does not apply, then the other must.

Standard of Review

In a court-tried case, we will affirm the judgment of the trial court unless it is unsupported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). In a case tried on stipulated facts, the only issue on appeal is whether the trial court drew the proper legal conclusions from the stipulated facts. Eisel v. Midwest BankCentre, 230 S.W.3d 335, 337 (Mo. banc 2007). In making this determination, we accept the evidence and inferences favorable to the prevailing party and disregard all contrary evidence. Id. at 337-38. We review questions of law de novo. Id. at 338.

Discussion

In its sole point on appeal, Ameren-UE argues the trial court erred in finding it was liable under Section 107.170 for not requiring TM2 to post a bond for Subcontractors' work because AmerenUE is not a "public entity" and its substations are not "public works" within the meaning of Section 107.170. We disagree.

The public policy of Missouri, as expressed in Section 429.010 and Section 107.170, is that subcontractors and suppliers are entitled to the protection of either mechanic's liens or payment bonds depending on the nature of the property they improve. See Ladue Contracting Co. v. Land Development Co., 337 S.W.2d 578, 584 (Mo.App.1960) (purpose of the mechanic's lien law is to guarantee effective security to mechanics and materialmen who furnish labor and materials in the making of improvements on the property of others); see also Energy Masters Corp. v. Fulson, 839 S.W.2d 665, 669 (Mo.App. W.D.1992) (purpose of the bond requirement is to provide persons furnishing labor and material the bond security in lieu of mechanic's liens which are inapplicable to public property).

Chapter 429 governs mechanic's liens. Section 429.010, the statute that authorizes mechanic's liens, provides in pertinent part:

1. Any person who shall do or perform any work or labor upon land ..., or furnish any material ... for any building, erection or improvements upon land ... under or by virtue of any contract with the owner or proprietor thereof ..., upon complying with the provisions of sections 429.010 to 429.340, shall have for his or her work or labor done, ... or materials ... a lien upon such building, erection or improvements, and upon the land belonging to such owner or proprietor on which the same are situated.

Section 429.010.1; Holland v. Cunliff, 96 Mo.App. 67, 69 S.W. 737, 739-40 (1902).

Missouri courts have created an exception to the mechanic's lien law that bars the imposition of mechanic's liens on public property owned by a traditional governmental body held for the "benefit of the public" and "reasonably necessary for public use." River's Bend Red-E-Mix, Inc. v. Parade Park Homes, Inc., 919 S.W.2d 1, 3 (Mo.App. W.D.1996); see also Redbird Engineering Sales, Inc. v. Bi-State Development Agency of Missouri-Illinois Metropolitan Dist., 806 S.W.2d 695, 697 (Mo. App. E.D.1991); Union...