Gauzy Excavating and Grading Co. v. Kersten Homes, Inc., 78855

• Decision Date: 19 November 1996
• Docket Number: No. 78855,78855
• Citation: 934 S.W.2d 303
• Parties: GAUZY EXCAVATING AND GRADING COMPANY, Respondent, v. KERSTEN HOMES, INC., et al., Appellants.
• Court: Missouri Supreme Court

Page 303

934 S.W.2d 303

GAUZY EXCAVATING AND GRADING COMPANY, Respondent, v. KERSTEN HOMES, INC., et al., Appellants.

No. 78855.

Supreme Court of Missouri En Banc.

Nov. 19, 1996.

Rehearing Denied Dec. 17, 1996.

R. Henry Branom, Jr., Roger W. Pecha, Clayton, for appellants.

Charles T. Rouse, Salem, for respondent.

LIMBAUGH, Judge.

Plaintiff Gauzy Excavating and Grading Company ("Gauzy") sued Kersten Homes, Inc., Christopher Kersten, and others to enforce a mechanic's lien on Lots 2, 3, 4, and 5 of Kersten Place Subdivision in Hazelwood, Missouri. The trial court found that a valid mechanic's lien existed and entered judgment in favor of Gauzy. On appeal, defendants assert, inter alia, that the trial court erred in entering judgment on the mechanic's lien because Gauzy had not given the notice required under § 429.012.1, RSMo 1986. A panel of the Court of Appeals, Eastern District, affirmed by a 2-1 vote, and thereafter In a court-tried case, such as this, we will sustain the judgment of the trial court "unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law." Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).

this Court granted transfer. We now reverse the judgment of the trial court.

In early 1990, Christopher Kersten and Gauzy entered into an oral agreement under which Gauzy was to dig basements and trenches for sewer lines for a subdivision owned and being developed by Kersten. It is uncontested that Gauzy fulfilled all of its duties under the agreement and that Kersten was satisfied with Gauzy's work. When Gauzy began working for Kersten, a separate escrow agreement was already in place between the property owner--Kersten, the lender--Mark Twain bank, and the title insurer--Title Insurance Company of Minnesota d/b/a Missouri Title, that set forth the procedures for the submission and payment of contractors' bills. Missouri Title selected a company called EMI to service the agreement and to make the actual payments to contractors.

During the project, Gauzy submitted bills and lien waivers to Kersten every two weeks. From the record, it appears Kersten made two payments, through EMI, on the amount he owed Gauzy, but failed to make any additional payments. When payment was not forthcoming, Gauzy contacted EMI regarding the money owed, but still no payment was made. Gauzy then filed a mechanic's lien against Lots 2, 3, 4, and 5 of Kersten Place Subdivision on February 15, 1991. Suit to enforce the lien was filed August 13, 1991. The trial court entered a consent judgment against Kersten and imposed a mechanic's lien on the properties, which by then had been purchased from Kersten by various homeowners who were named as codefendants. Those purchasers, and their title insurance companies, are the only appellants on transfer to this Court.

Appellants contend that Gauzy's mechanic's lien is invalid because Gauzy failed to give the notice required by § 429.012.1., which states:

Every original contractor, who shall do or perform any work or labor upon, or furnish any material, fixtures, engine, boiler or machinery for any building, erection or improvements upon land, or for repairing the same, under or by virtue of any contract, shall provide to the person with whom the contract is made prior to receiving payment in any form of any kind from such person, (a) either at the time of the execution of the contract, (b) when the materials are delivered, (c) when the work is commenced, or (d) delivered with first invoice, a written notice which shall include the following disclosure language in ten point bold type:

NOTICE TO OWNER

FAILURE OF THIS CONTRACTOR TO PAY THOSE PERSONS SUPPLYING MATERIAL OR SERVICES TO COMPLETE THIS CONTRACT CAN RESULT IN THE FILING OF A MECHANIC'S LIEN ON THE PROPERTY WHICH IS THE SUBJECT OF THIS CONTRACT PURSUANT TO CHAPTER 429, RSMO. TO AVOID THIS RESULT YOU MAY ASK THIS CONTRACTOR FOR "LIEN WAIVERS" FROM ALL PERSONS SUPPLYING MATERIAL OR SERVICES FOR THE WORK DESCRIBED IN THIS CONTRACT. FAILURE TO SECURE LIEN WAIVERS MAY RESULT IN YOUR PAYING FOR LABOR AND MATERIAL TWICE.

Subsection 2 then states:

Compliance with subsection 1 of this section shall be a condition precedent to the creation, existence or validity of any mechanic's lien in favor of such original contractor.

By its unambiguous terms, these sections require all original contractors to provide a specific notice to the person with whom the contract for work is made before suit can be brought. The notice is designed "to warn inexperienced property owners of the danger to them which lurks in the mechanics' lien statute." BCI Corporation v. Charlebois Construction Co., 673 S.W.2d 774, 779 (Mo banc 1984). Our courts have demanded strict compliance with the notice provision and have been reluctant to allow exceptions other than those provided by the statute itself. Landmark Systems v. Delmar Redevelopment Corp., 900 S.W.2d 258, 261 (Mo.App.1995); White River Development Co. v. Meco Systems, 806 S.W.2d 735, 738 (Mo.App.1991).

At trial, Gauzy's counsel conceded he could not prove the notice had been given, and accordingly, the trial court entered a finding that no notice was given. Nevertheless, the court imposed the mechanic's lien because Gauzy "substantially complied" with the notice requirement.

Gauzy, relying on Overberg Decorating Center, Inc. v. Selbah Properties, 741 S.W.2d 879 (Mo.App.1987), argues that it was not required to give the statutory notice of § 429.012.1 because the escrow agreement between the parties involved in the development of Kersten Place Subdivision afforded Kersten even greater protection than that provided by the statutory notice. Overberg involved a written contract under which a contractor provided...