Franklin Bldg. Supply Co. v. SUMPER

• Decision Date: 04 March 2004
• Docket Number: No. 29822.,29822.
• Citation: 139 Idaho 846,87 P.3d 955
• Parties: FRANKLIN BUILDING SUPPLY CO., an Idaho Corporation, Plaintiff-Appellant, v. Douglas E. SUMPTER and Pamela K. Sumpter, husband and wife; Sterling Savings Bank, Defendants-Respondents, and Pond Construction, Inc.; Clarence and Susan Pond, husband and wife; Transnation Title & Escrow; CC Cabinets, Inc.; Price Rite Carpets; John W. Ward; Allen Ashby; and John K. Ward d/b/a Ward Plumbing, Defendants.
• Court: Idaho Supreme Court

87 P.3d 955

139 Idaho 846

FRANKLIN BUILDING SUPPLY CO., an Idaho Corporation, Plaintiff-Appellant, v. Douglas E. SUMPTER and Pamela K. Sumpter, husband and wife; Sterling Savings Bank, Defendants-Respondents, and Pond Construction, Inc.; Clarence and Susan Pond, husband and wife; Transnation Title & Escrow; CC Cabinets, Inc.; Price Rite Carpets; John W. Ward; Allen Ashby; and John K. Ward d/b/a Ward Plumbing, Defendants.

No. 29822.

Supreme Court of Idaho, Boise, November 2003 Term.

March 4, 2004.

Rehearing Denied April 14, 2004.

Jones, Gledhill, Hess, Andrews, Fuhrman, Bradbury & Eiden, PA, Boise, for appellant. Scott D. Hess argued.

Ling & Robinson, Rupert; Stoel Rives, LLP, Boise, for respondent. Thomas A. Banducci argued.

BURDICK, Justice.

Franklin Building Supply filed a materialman's lien on the home of Douglas and Pamela Sumpter after their contractor, Pond Construction, defaulted on its account with Franklin and filed for bankruptcy. The appeal challenges the district court's order holding that the lien was not timely filed and dismissing Franklin's foreclosure proceedings, and the district court's use of the statutory rate of interest to be applied on the lien claim. Because the lien was filed within ninety days of the date that the last item was supplied by the materialman, we reverse the district court's ruling as to timeliness of the lien; and we affirm the application of the statutory rate of interest.

FACTS AND PROCEDURAL BACKGROUND

In May 1998, Douglas and Pamela Sumpter entered into an agreement with Clarence Pond and Pond Construction, Inc. ("Pond") to build their home. Pond began construction in July 1998. On November 25, 1998, the city building inspector orally advised the Sumpters that they could occupy the home, and he issued the certificate of occupancy for the home on November 27, 1998, subject to the completion of the porch columns. After the Sumpters moved in, they prepared several punch lists of items that needed to be completed in the home. While the punch list items were being worked on, the Sumpters initially withheld final payment to Pond. The Sumpters signed the borrower's acceptance statement on December 17, 1998, but only sent it to Pond on December 29. The Sumpters made their final payment to Pond on January 11, 1999, although some punch list items still remained to be completed.

From July 2 to December 16, 1998, Franklin Building Supply ("Franklin") supplied the materials used to construct the Sumpters' home through Pond's open account. On December 16, 1998, Pond purchased a sheet of cedar and a locking door handle for the Sumpters' home, as well as some electrical cords and a hammer that were not used in the Sumpters' home. Franklin maintained separate open accounts for each of Pond's construction projects, and it submitted separate monthly bills to Pond for materials supplied for the Sumpters' home.

Pond failed to pay Franklin for the materials used in the Sumpters' home and eventually filed for bankruptcy. So as not to compound Pond's financial problems, Franklin waited as long as possible to file a lien on the Sumpters' home. On the ninetieth day following the December 16, 1998, order by Pond, Franklin filed its claim of lien on the Sumpters' property, in accordance with the I.C. § 45-507. The lien amount was the cost of the materials supplied to Pond, as well as eighteen percent interest for the period of July 1998 to December 16, 1998.

Franklin filed its complaint in September 1999 seeking to foreclose its lien. Both parties filed motions for summary judgment, which were denied by the district court because there were genuine issues of material fact, which required that the case proceed to trial. During the pendency of the trial to the court, Franklin sought to admit Pond's application for credit, for the purpose of establishing an 18 percent interest rate that was a term of the parties' credit agreement. The district court ruled the application inadmissible and held that statutory interest applied, because the Sumpters were not party to the credit agreement between Franklin and Pond.

On October 1, 2001, the district court issued its Findings of Fact, Conclusions of Law and Order granting dismissal of the claims against the Sumpters. The district court found that although Franklin's lien was filed within ninety days of the last items supplied by Franklin on the Sumpters' home, the statute required it to be filed within ninety days from the date of substantial completion of the home. The district court, therefore, concluded that Franklin's lien was untimely and entered judgment against Franklin.

Franklin appeals, challenging the district court's interpretation of the lien statute, I.C. § 45-507, and its evidentiary ruling barring admission of Pond's credit application. On Franklin's appeal in this Court, we assigned the case to the Court of Appeals; the Court of Appeals reversed and remanded the case to the district court to determine the amount due to Franklin under its claim of lien, including interest and other costs or fees provided by law. This Court granted the Sumpters' petition for review.

STANDARD OF REVIEW

"When considering a case on review from the Court of Appeals, this Court gives serious consideration to the Court of Appeals; however, this Court reviews the trial court decision directly. This Court is not merely reviewing the correctness of the Court of Appeals' decision; rather, this Court is hearing the matter as if the case were on direct appeal from the district judge's decision." Northland Ins. Co. v. Boise's Best Autos & Repairs, 131 Idaho 432, 433, 958 P.2d 589, 590 (1998). Where there is no dispute as to the factual circumstances, our review consists of ascertaining the effect of applicable law on the undisputed facts. Simplot v. William C. Owens, M.D., P.A., 119 Idaho 243, 244, 805 P.2d 449, 450 (1990).

A district court's findings of fact in a court-tried case will be liberally construed on appeal in favor of the judgment entered, in view of the district court's role as trier of fact. Western Heritage Ins. Co. v. Green, 137 Idaho 832, 835, 54 P.3d 948, 951 (2002) (citing Conley v. Whittlesey, 133 Idaho 265, 269, 985 P.2d 1127 (1999); Lindgren v. Martin, 130 Idaho 854, 857, 949 P.2d 1061, 1064 (1997)). Review of the decision is limited to ascertaining whether the evidence supports the findings of fact and whether the findings of fact support the conclusions of law. Id. If the findings of fact are based on substantial evidence, even if the evidence is conflicting, they will not be overturned on appeal. Id. However, this Court exercises free review over questions of law. Id.

DISCUSSION

I.

Idaho's materialman's lien statute provides that every person who performs labor, furnishes materials or renders professional services in the construction of a building or other structure "has a lien upon the same for the work or labor done or professional services or materials furnished." I.C. § 45-501 (Supp.1998). "The purpose of these statutes is to compensate persons who perform labor upon or furnish material to be used in construction, alteration or repair of a structure." Barber v. Honorof, 116 Idaho 767, 768-69, 780 P.2d 89, 90-91 (1989). The laws regarding materialman's liens are liberally construed in favor of the person who performs labor upon or furnishes materials to be used in the construction of a building. L & W Supply Corp. v. Chartrand Family Trust, 136 Idaho 738, 742-43, 40 P.3d 96, 100-01 (2002).

"Lien foreclosures under I.C. § 45-501 et seq. are strictly actions in rem and are not in personam proceedings: `The lien statute operates in rem, and not in personam. It creates no personal charge against the owner of the property, but rather a charge against the property to the extent of its value.'" Pierson v. Sewell, 97 Idaho 38, 44, 539 P.2d 590, 596 (1975) (citation omitted). The materialman's lien statute is remedial in nature. Electrical Wholesale Supply Co., Inc. v. Nielson, 136 Idaho 814, 824, 41 P.3d 242, 252 (2001). A lien itself is not a penalty, but rather is designed to provide a contractor with security. Guyman v. Anderson, 75 Idaho 294, 296, 271 P.2d 1020, 1021 (1954). To create a valid lien, there must be substantial compliance with the requirements of the statutes. L & W Supply, 136 Idaho at 743, 40 P.3d at 101.

At the time of the filing of Franklin's lien in 1998, Idaho Code § 45-507 provided in relevant part:

Any person claiming a lien pursuant to the provisions of this chapter must, within ninety (90) days after the completion of the labor or services or furnishings of materials, or the cessation of the labor, services or furnishings of materials for any cause, file for the record ... a claim containing a statement of his demand....

The district court in this case found that "Idaho courts have consistently held that the time for filing a lien claim begins to run from the substantial completion of the contract." The district court also found that "items of a trivial character will not extend the time for claiming a lien." In support of its findings, the district court cited to Pierson v. Sewell, 97 Idaho 38, 539 P.2d 590 (1975) and Gem State Lumber Co. v. Witty, 37 Idaho 489, 217 P. 1027 (1923). Both of these cases affirm the principle that the sixty-day period for the filing of liens cannot be extended or revived by the furnishing of trivial labor or materials once the contract has been completed. The Court in Pierson held that the time for filing the lien claim began to run from the cessation of the subcontractor's furnishing of materials. Pierson, 97 Idaho at 41, 539 P.2d at 591. Pierson, a subcontractor, supplied materials and labor through his employees and, thus, had a right to a lien on the dwelling, pursuant to I.C. § 45-501 then in existence. The Court determined that Pierson had furnished labor and materials on January 14, 1972, in order to complete his subcontract in connection with the...