Elm Distributors, Inc. v. Tri-Centennial Corp.

Decision Date23 January 1989
Docket NumberNo. 86SC394,TRI-CENTENNIAL,86SC394
Citation768 P.2d 215
PartiesELM DISTRIBUTORS, INC., a Colorado corporation, Petitioner, v.CORPORATION, a Colorado corporation, Respondent.
CourtColorado Supreme Court

Fasing and Fasing, P.C., Gregory J. Fasing, Timothy L. Fasing, Denver, for petitioner.

Robert W. Johnson, Colorado Springs, for respondent.

KIRSHBAUM, Justice.

In Tri-Centennial Corp. v. Elm Distributors, Inc., No. 85CA0855 (Colo.App. Sept. 11, 1985), the Court of Appeals reversed the trial court's order of summary judgment for petitioner Elm Distributors, Inc. (Elm) and against Tri-Centennial Corporation (Tri-Centennial) and remanded the case to the trial court with directions to enter a summary judgment in favor of Tri-Centennial and against Elm. Having granted certiorari to review these determinations we affirm in part, reverse in part and remand with directions.

I

For purposes of evaluating the rulings of the trial court and the Court of Appeals with respect to the parties' summary judgment motions, the following facts may be gleaned from the evidentiary matter submitted to the trial court. 1

In 1982, Tri-Centennial, a real estate developer incorporated in Colorado and based in Colorado Springs, owned real property located on Bennett Street in Colorado Springs. Early that year it began to build duplexes pursuant to plans for development of the property.

The project plans required installation of freestanding fireplaces in the duplexes. Tri-Centennial initially attempted to purchase fireplace accessories and flues from Pre-Way Distributors (Pre-Way), a company located in Wisconsin. Pre-Way told Tri-Centennial to deal with Elm, a Colorado corporation. However, as a matter of policy Elm did not sell products directly to new customers. When Tri-Centennial contacted Elm, an Elm sales representative referred Tri-Centennial to Louis Lefkowitz at Contemporary Mountain Designs (CMD). 2 Lefkowitz regularly purchased Pre-Way products from Elm on open account at a fifty percent discount.

On March 1, 1982, Tri-Centennial entered into a written agreement to purchase twenty Pre-Way freestanding fireplaces and all associated pipe and fittings from CMD at a cost of $13,695.20. The price included tax, but not installation. 3

CMD purchased the Pre-Way fireplaces from Elm at a cost of $10,800. No sales tax was charged to CMD. Elm's invoices require delivery of all merchandise to the project site. Although some of the materials were initially delivered to a CMD storage site, all materials ultimately were delivered to the project site.

Tri-Centennial paid CMD for the items by three separate checks, each of which contained a restrictive endorsement in the form of a lien waiver. On December 15, 1982, Lefkowitz signed a lien waiver on behalf of himself, CMD and Elm acknowledging receipt of payment in full for the materials. In his deposition, Lefkowitz testified that although he signed the waiver form on behalf of Elm because he needed the funds and because Tri-Centennial refused to release the funds without his signature, he informed Tri-Centennial at the time that he was not Elm's agent.

Neither Lefkowitz nor CMD paid Elm, and early in 1983 both CMD and Lefkowitz initiated bankruptcy proceedings. Elm filed a mechanic's lien statement in El Paso County on February 9, 1983, pursuant to section 38-22-101, 16A C.R.S. (1982), after mailing notice of intent to file such lien to CMD and Tri-Centennial. Elm also recorded a notice of lis pendens on March 11, 1983. Tri-Centennial subsequently filed this civil action against Elm, CMD and Lefkowitz seeking damages of $50,000 against Elm for negligent conduct; requesting a declaration that the mechanic's lien is null and void; and seeking compensatory and punitive damages from Lefkowitz and CMD on grounds of fraud, misrepresentation and concealment.

Elm denied the allegations of the complaint and filed counterclaims and cross claims against Tri-Centennial, Lefkowitz and CMD. Elm's pleadings allege that it supplied materials for the project at the request of both Tri-Centennial and Lefkowitz, claim damages of $12,246.89 against "Louis Alan Lefkowitz, dba Contemporary Mountain Design," and seek a decree foreclosing the mechanic's lien.

Elm and Tri-Centennial ultimately executed a stipulation of facts, and both filed motions for summary judgment against each other and against Lefkowitz and CMD. The trial court granted Elm's motions and entered judgments for Elm against Lefkowitz for $12,246.89 plus interest and costs and against Tri-Centennial for $10,877.89 plus interest and costs. The trial court denied Tri-Centennial's motion insofar as it sought entry of summary judgment against Elm but entered judgment for Tri-Centennial against Lefkowitz for $10,877.89 plus interest and costs.

Tri-Centennial appealed the judgment entered against it and in favor of Elm, asserting that summary judgment should have been granted for Tri-Centennial and against Elm. 4 The Court of Appeals agreed with Tri-Centennial's argument and reversed the trial court's judgment. Relying on Schneider v. J.W. Metz Lumber Co., 715 P.2d 329 (Colo.1986), the Court of Appeals concluded that Lefkowitz was not Tri-Centennial's agent for purposes of the mechanic's lien statute and remanded the case to the trial court with directions to enter summary judgment dismissing Elm's claim for damages against Tri-Centennial.

II

Elm argues that the Court of Appeals erred because the undisputed evidence establishes that Lefkowitz acted as Tri-Centennial's agent in this transaction. We agree that the Court of Appeals erred in directing the trial court to enter summary judgment dismissing Elm's claim against Tri-Centennial, but reject the argument that the trial court's initial judgment in favor of Elm and against Tri-Centennial should be reinstated.

Section 38-22-101(1), 16A C.R.S. (1982), provides in pertinent part as follows:

[A]ll persons of every class performing labor upon or furnishing ... materials to be used in construction ... of any building ... or any other structure or improvement upon land ... shall have a lien upon the property ... for which they have furnished materials ... for the value of such ... material furnished, whether at the instance of the owner, or of any other person acting by his authority or under him, as agent, contractor, or otherwise for the ... materials furnished by each, respectively, whether supplied ... or furnished ... at the instance of the owner of the building or other improvement, or his agent; and every contractor, architect, engineer, subcontractor, builder, agent, or other person having charge of the construction ... either in whole or in part, of said building or other improvement shall be held to be the agent of the owner for the purposes of this article.

In Schneider v. J.W. Metz Lumber Co., 715 P.2d 329 (Colo.1986), we held that a materialman seeking to foreclose a mechanic's lien filed pursuant to this statute must establish that the materials in question were furnished at the instance of the owner or the owner's agent. We also held that in the absence of an agreement with the owner, the materialman can claim a statutory lien only if the recipient of the materials is determined to be a "contractor, architect, engineer, subcontractor, builder, agent or other person having charge of the construction ... either in whole or in part." Id. at 332. The parties agree that Elm...

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