Dave Kolb Grading, Inc. v. Lieberman Corp.
| Decision Date | 28 July 1992 |
| Docket Number | 60485 and 60526,Nos. 60472,s. 60472 |
| Citation | 837 S.W.2d 924 |
| Parties | DAVE KOLB GRADING, INC., Plaintiff, v. LIEBERMAN CORPORATION, Arbor Glen Development Corporation, et al., Defendants, and Just Labor, Inc., Jaffe Lighting Supply, Defendants, and Earl L. Hoffmann, et al., Defendants/ Appellants/Cross-Respondents, and Ronald Gass d/b/a Gass Concrete Contractors, Winter Bros. Concrete Co., Defendants/Respondents, and SCOF, Inc., Defendant/Respondent/Cross-Appellant, and J.H. Berra Construction Co., Defendant/Respondent/ Cross-Appellant. |
| Court | Missouri Court of Appeals |
Armstrong, Teasdale, Schlafly & Davis, Byron E. Francis, Michael A. Chivell, David G. Loseman, Lisa Wood Brickey, St. Louis, for defendant/appellant/cross-respondent Earl L. Hoffmann Homeowners, Lending Institutions and Trustees.
Curtis, Oetting, Heinz, Garrett & Soule, P.C., J. Patrick Chassaing; Charles M. Schmidt, St. Louis, for defendant/respondent/cross-appellant Southern Cross and O'Fallon Bldg. Products Co.
David L. Welsh, Nancy E. Emmel, Dubail Judge, P.C., St. Louis, for defendants/respondent/cross-appellant J.H. Berra Const., Inc.
Law Offices of R.W. Jacobsmeyer, R.W. Jacobsmeyer; Michael R. Allen, Clayton, for defendants/appellees/respondents Ronald Gass d/b/a Gass Concrete Contractors and Winter Bros. Concrete Co.
This appeal involves various equitable mechanics' lien actions. Defendants-appellants, Earl L. Hoffman, et al., who are homeowners, trustees and lending institutions (homeowners), appeal from the judgment, entered by the trial court in this court-tried case, in favor of lien claimants, Ronald Gass d/b/a Gass Concrete Contractors (Gass), Winter Brothers Concrete Company (Winter Bros.), Southern Cross and O'Fallon Building Products Company (SCOF), and J.H. Berra Construction Company (Berra). In addition, SCOF cross-appeals from the trial court's denial of certain liens, its calculation of prejudgment interest, and its determination of the priority of the liens. Berra cross-appeals from the trial court's judgment which barred it from recovering certain escrow funds from Landmark Bank of St. Charles County. We affirm in part and remand in part.
The evidence established that it was the usual practice of Lieberman Corporation (Lieberman) to form a different corporation for each project it developed. In March 1988, Lieberman incorporated Arbor Glen Development Corporation (Arbor Glen) for the sole purpose of developing Arbor Glen Subdivision (Subdivision) in St. Louis County. Arbor Glen was to build single family residences in the Subdivision. Arbor Glen, as the title owner of all the property encompassing the Subdivision, conveyed title to the individual lots when it closed with the purchasers.
In May 1988, Landmark Bank of St. Charles County (Bank) issued a loan commitment of $4,500,000.00 to Arbor Glen to provide funds for the development of the Subdivision. Arbor Glen designated $1,130,000.00 of that amount for the purchase of land for the Subdivision. On May 25, 1988, and May 31, 1988, Arbor Glen purchased two separate parcels of real estate, which were both conveyed by general warranty deeds. Arbor Glen recorded the deeds. On May 31, 1988, Arbor Glen executed a promissory note, payable to Bank in the amount of $1,130,000.00, which also provided for future advances of up to $4,500,000.00. On that same date, Arbor Glen executed a deed of trust to the property to Bank's trustee. The deed of trust, which described the Arbor Glen property as two distinct parcels, was recorded on June 1, 1988.
On June 30, 1988, Arbor Glen executed a promissory note payable to Bank which provided for a $4,500,000.00 revolving line of credit. Arbor Glen also executed a revised deed of trust to Bank's trustee for the parcel of real property. The revised deed of trust, which described the property as a single parcel, was recorded on July 25, 1988. The property was Arbor Glen's only asset.
Pursuant to the loan agreement with Bank, Arbor Glen was to use the $4,500,000.00 for the purchase of the property for the Subdivision, for the development and improvement of the site, and for the construction of single-family homes on the individual lots. Bank was to disburse funds to Arbor Glen as construction progressed in accordance with draw requests which were endorsed by a title company.
In addition, although a separate escrow account was never established, there were two escrow agreements between Arbor Glen, Bank, and St. Louis County (County) which allocated funds specifically for the construction of sanitary and storm sewers and streets on the two different plats which comprised the Subdivision. The escrow agreements were in conformity with the County Subdivision Ordinance, § 1005, St. Louis County Code. Bank was to disburse these funds upon written authorization from St. Louis County Department of Planning (Dept. of Planning). The funds were part of the $4,500,000.00 loan commitment. Bank was to release the funds either to Arbor Glen or to Lieberman, rather than to make direct payments to the contractors and suppliers.
Employees of Lieberman solicited bids from contractors and suppliers and awarded contracts for the labor and materials needed to develop the Subdivision. Lieberman and Arbor Glen had the same place of business and the same employees and officers. Some of the contracts with the contractors and suppliers were with Lieberman and some were with Arbor Glen. SCOF was awarded the contract to supply lumber and millwork for the homes within the Subdivision. Berra was to install the storm and sanitary sewers for the entire Subdivision. Gass was awarded the contract to install the flatwork concrete for each house. Winter Bros. supplied the concrete to Gass for some lots and directly to Lieberman for other lots and for the common areas of the Subdivision.
During the fall of 1988, purchasers entered into contracts with Arbor Glen to buy homes in the Subdivision and deposited earnest money for the construction of homes on the lots chosen by them. After a purchaser selected the style of home and certain options, Arbor Glen forwarded documents to the various contractors entitled "Start Orders," which indicated the names of the individual purchasers and their respective lots.
In compliance with a letter from Lieberman on July 22, 1988, when Arbor Glen submitted draw requests, Bank wired funds directly to an account maintained by Lieberman at another bank. In addition, pursuant to Arbor Glen's draw requests and with the written authorization from the Dept. of Planning, Bank disbursed the escrow funds directly to the same Lieberman account. Dept. of Planning approved the release of all but $18,369.40 of the escrow funds to Lieberman. Although Bank contends that it has disbursed all of the $4,500,000.00 to Lieberman, whether Bank disbursed $18,369.40 of that sum is disputed on appeal. Lieberman, however, did not use all of the loan proceeds for the development of the Subdivision.
On or about January 3, 1989, Lieberman informed the contractors and suppliers that it would not pay them for their labor and materials. Lieberman shut down its business; and all construction at the Subdivision ceased. At that time, about twenty homes in the Subdivision were in various stages of construction and the sale of three completed homes had been closed. Arbor Glen later defaulted on the promissory note held by Bank. On February 28, 1989, Bank's trustee sold the property to Bank by sheriff's sale.
After work ceased on the Subdivision, various laborers and material suppliers served notices of their intent to file mechanics' liens on the lots of those persons who contracted for homes and deposited earnest money with Arbor Glen and whose names appeared on the Start Orders supplied to the lien claimants. In late January 1989, pursuant to a writ of replevin, SCOF recovered some of its construction materials which were not installed in the individual homes in the Subdivision. On March 31, 1989, plaintiff, Dave Kolb Grading, Inc., brought the present action to enforce its mechanic's liens. Other lien claimants joined the suit as defendants. The lien claimants also asserted claims against Lieberman and Arbor Glen for breach of contract and in quantum meruit. In addition, Berra brought an action against Bank for, inter alia, breach of the escrow agreements relating to the development of the Subdivision site. Homeowners entered the case as defendants.
At trial, six lien claimants presented their claims. After trial, pertinent to this appeal, the court awarded mechanics' liens against the following properties in the following amounts, excluding interest:
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