DeWitt-Erickson Const., Inc. v. Moran Const. Co., WITT-ERICKSON

• Decision Date: 25 September 1987
• Docket Number: WITT-ERICKSON
• Citation: 739 P.2d 1071,86 Or.App. 474
• Parties: DeCONSTRUCTION, INC., an Oregon corporation, Respondent, v. MORAN CONSTRUCTION CO., a foreign corporation, Appellant, Freightliner Corporation, a foreign corporation, the Port of Portland, a municipal corporation, United Concrete Mobile, Inc., an Oregon corporation, and United Equipment, Inc., an Oregon corporation, Defendants. A8204-02630; CA A36199.
• Court: Oregon Court of Appeals

Page 1071

739 P.2d 1071

86 Or.App. 474

DeWITT-ERICKSON CONSTRUCTION, INC., an Oregon corporation, Respondent, v. MORAN CONSTRUCTION CO., a foreign corporation, Appellant Freightliner Corporation, a foreign corporation, the Port of Portland, a municipal corporation, United Concrete Mobile Inc., an Oregon corporation, and United Equipment, Inc., an Oregon corporation, Defendants.

A8204-02630; CA A36199.

Court of Appeals of Oregon.

Argued and Submitted June 2, 1986.

Decided July 22, 1987.

Reconsideration Denied Sept. 25, 1987.

James N. Westwood, Portland, argued the cause for appellant. With him on briefs, were John F. Purcell and Miller, Nash, Wiener, Hager & Carlsen, Portland.

Paul H. Krueger, Salem, argued the cause for respondent. With him on brief, was Clark, Marsh, Lindauer & McClinton, Salem.

Before WARDEN, P.J., and VAN HOOMISSEN and YOUNG, JJ.

YOUNG, Judge.

Moran Construction Co. (defendant) appeals from a judgment for plaintiff in an action for breach of a construction contract and for the foreclosure of a construction lien. The breach of contract claim was tried to a jury and the lien claim was simultaneously tried to the court. The controlling issue in both claims is whether plaintiff substantially performed its contract with defendant. The jury returned a verdict for plaintiff on the contract claim, but the court disallowed the lien claim. Judgment was entered on the verdict. Plaintiff was awarded attorney fees for prevailing on the contract claim, and defendant was awarded attorney fees for prevailing on the lien claim. ¹ On appeal, defendant asserts that the court's finding that plaintiff did not substantially perform was the law of the case and that the court therefore erred in giving effect to the jury's verdict to the contrary. We affirm.

Defendant was the general contractor on a project to expand Freightliner Corporation's headquarters building on Swan Island in Portland. It contracted with plaintiff to install piling for the foundation. Defendant later became concerned that several auger cast piles might be defective. After having them tested, defendant refused to accept three piles and charged plaintiff with the cost of testing and replacement. It also charged plaintiff for an amount which it claimed that plaintiff owed it on another job. Plaintiff seeks to recover the unpaid amounts in this action. Plaintiff and defendant stipulated that the claims should be tried together. The jury returned a verdict for $19,176.70 in plaintiff's favor. The court then disallowed the lien, because it found that plaintiff had not substantially performed. ²

Defendant bases its primary argument on ORS 87.060(3):

"In suits to enforce the liens created by ORS 87.010, the court shall allow or disallow the lien. If the lien is allowed, the court shall proceed with the foreclosure of the lien and resolve all other pleaded issues. If the lien is disallowed, and a party has made a demand for a jury trial as provided for in subsection (4) of this section, the court shall empanel a jury to decide any issues triable of right by a jury. All other issues in the suit shall be tried by the court."

Defendant argues that the trial court was required to decide the validity of the lien before there could be any issues for the jury to consider; the court's finding of a material failure to perform, therefore, was the law of the case and the jury's verdict was, at most, advisory. Defendant emphasizes that the statute does not provide any right to a jury determination in a lien foreclosure action, unless the court first disallows the lien. For example, if a lien is invalid because of a failure of substantial performance, the same failure necessarily breaches the contract, and the lienor is left to a quantum meruit recovery, if any. Welch v. Webb, 47 Or.App. 771, 776, 615 P.2d 391 (1980).

If plaintiff had sought only to foreclose a lien, defendant's arguments might be well taken. However, plaintiff's complaint was not limited to that claim; it included a separate claim for damages for breach of the contract. Plaintiff could have brought the contract claim independently of the lien foreclosure; if it had, the jury verdict would be conclusive. ORS 87.060(3) governs the procedure in an equitable action to foreclose a lien; it is irrelevant to a legal action for breach of contract. The statute provides a remedy to a party which is unable to prove the validity of a lien, often because of a technical failure which does not affect the underlying claim. It codifies a judicially created rule which originated at a time when a plaintiff could not combine an equitable lien claim with a legal contract claim in the same action. ³ Under the statute, a party whose lien fails may fall back on a contract or quantum meruit claim if the facts pleaded will support it. The party does not...