Jtl Group, Inc. v. New Outlook, Llp

• Decision Date: 05 January 2010
• Docket Number: No. DA 09-0356.,DA 09-0356.
• Citation: 2010 MT 1,355 Mont. 1,223 P.3d 912
• Parties: JTL GROUP, INC., Plaintiff and Appellee, v. NEW OUTLOOK, LLP, Defendant and Appellant. New Outlook, LLP, Plaintiff and Appellant, v. JTL Group, Inc. and Weaver Gravel, Inc., Defendants and Appellees.
• Court: Montana Supreme Court

223 P.3d 912

2010 MT 1

355 Mont. 1

JTL GROUP, INC., Plaintiff and Appellee, v. NEW OUTLOOK, LLP, Defendant and Appellant.

New Outlook, LLP, Plaintiff and Appellant, v. JTL Group, Inc. and Weaver Gravel, Inc., Defendants and Appellees.

No. DA 09-0356.

Supreme Court of Montana.

Submitted on Briefs December 10, 2009.

Decided January 5, 2010.

For Appellant: Darrel L. Moss, Moss & Associates, P.C., Missoula, Montana.

For Appellee: Daniel D. Johns, Scott D. Hagel, Crowley Fleck, PLLP, Kalispell, Montana.

Justice PATRICIA O. COTTER delivered the Opinion of the Court.

¶ 1 New Outlook, LLP (New Outlook), appeals from a grant of partial summary judgment, an order of judgment following a bench trial, and an award of attorney fees in the Eleventh Judicial District Court. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 In 2004, New Outlook was the owner and developer of a five-lot residential subdivision near Kalispell, Montana, known as Cheery Lynn Sites. Sometime in the summer of 2004, Ralph K. Hemp, a partner or member of New Outlook, asked Bruce Weaver, the vice president of Weaver Gravel, Inc. (Weaver Gravel), to inspect the subdivision and submit a bid for improvements to the subdivision. These improvements consisted of the construction of an internal road and cul de sac, installation of water, sewer, and other utilities, and the construction of elevated gravel building pads and driveways.

¶ 3 Weaver Gravel ultimately contracted with JTL Group, Inc. (JTL), to perform the work on the subdivision, and a bid was prepared by JTL. The bid was submitted in the name of Weaver Gravel. The bid called for material and services to be paid for according to the number of units of each of the components of construction improvements that were provided to the subdivision. New Outlook accepted the bid. JTL installed road base material, asphalt paving, water lines, sewer lines and other utilities, and concluded its work on August 27, 2004. After completion, a dispute arose which primarily concerned the quantity of "pit run" gravel installed as base material beneath the subdivision road.

¶ 4 On October 14, 2004, JTL filed a construction lien on the property comprising the subdivision in the amount of $116,417.57. In May and early July 2005, JTL agreed to execute a partial release of the construction lien as it pertained to lots 3, 4, and 5, of the subdivision, in exchange for payment from New Outlook. The partial release allowed New Outlook to sell these lots. These payments reduced JTL's lien claim to $50,017.57.

¶ 5 In July 2005, JTL filed the instant suit against New Outlook, claiming breach of contract, unjust enrichment, and seeking to foreclose on its construction lien. New Outlook filed a counterclaim for slander of title against JTL. New Outlook also filed a separate action against Weaver Gravel for breach of contract and breach of warranty. Weaver Gravel in turn filed third-party claims against JTL, seeking indemnification. JTL and Weaver Gravel later resolved these third-party claims.¹ Prior to trial, New Outlook waived its breach of warranty claim against Weaver Gravel.

¶ 6 The statutes governing construction liens are found in Title 71, chapter 3, part 5 of the Montana Code Annotated. Section 71-3-531(2), MCA, states that "[a] person who may claim a construction lien pursuant to this part shall give notice of the right to claim a lien to the contracting owner in order to claim a lien." Sections 71-3-531(3) through (6), MCA, describe these notice requirements with particularity. JTL did not file a notice of its right to claim a construction lien upon New Outlook. However, § 71-3-531(1), MCA (2003),² provides several exceptions to this notice requirement. This section reads as follows:

The following are not required to give notice of the right to claim a lien as required by this section:

(a) an person who furnishes services or materials directly to the owner at the owner's request;

(b) a wage earner or laborer who performs personal labor services for a person furnishing any service or material pursuant to a real estate improvement contract;

(c) a person who furnishes services or materials pursuant to a real estate improvement contract that relates to a dwelling for five or more families; and

(d) a person who furnishes services or materials pursuant to a real estate improvement contract that relates to an improvement that is partly or wholly commercial in character.

¶ 7 Prior to trial, New Outlook sought summary judgment on JTL's failure to file notice of a right to claim a construction lien. New Outlook argued that JTL's failure to do so rendered the construction lien unenforceable. JTL sought partial summary judgment that its construction lien was valid. JTL argued that the exceptions under § 71-3-531(1)(a) and (d), MCA, applied and that it was not required to file a notice of its right to claim a lien in this case.

¶ 8 On November 5, 2007, the District Court denied New Outlook's motion and granted JTL's motion for partial summary judgment, holding that JTL was exempt from giving New Outlook notice of its right to claim a lien under § 71-3-531(1)(d), MCA. The District Court held that the purpose of the notice requirements in § 71-3-531(1), MCA, was to protect the individual home-owner, who is likely "not savvy" when it comes to construction contracts and the payments of accounts and liens. The District Court determined these policy concerns were not present since New Outlook is a real estate developer. In addition, the District Court concluded that it would look to the nature of the enterprise to determine whether it is "commercial" in character. In this case, the improvement for which JTL filed its lien was not a house or dwelling, but was instead a road, which could not be characterized as residential. Accordingly, notice of the right to claim the lien was not required and JTL's attempts to foreclose on its construction lien could go forward.

¶ 9 A bench trial on the parties' claims was scheduled to commence on December 3, 2007. On November 29, New Outlook filed a motion to disqualify the presiding judge, the Hon. Katherine R. Curtis, for cause. The trial was postponed by an order of this Court while a substitute judge was brought in and the motion was resolved. The motion was ultimately decided against New Outlook on February 5, 2008, and attorney fees and costs were awarded to JTL following a hearing.

¶ 10 The bench trial was held on June 23-25, 2008. The District Court issued findings of fact, conclusions of law, and an order for partial judgment on August 1, 2008. In its findings, the District Court determined that New Outlook conceded that it owed $21,665.57 to Weaver Gravel, but disputed the $50,017.57 claimed by JTL. The District Court determined that the money claimed was actually owed to JTL and not Weaver Gravel, because it was JTL that actually performed the work and filed a construction lien on the subject property.

¶ 11 The District Court noted that JTL and New Outlook presented conflicting testimony at trial regarding the amount of pit run gravel supplied by JTL. Ultimately, the District Court determined that JTL failed to meet its burden of proof with regard to the additional amount claimed in its lien over and above the amount New Outlook conceded that it owed. The District Court further found that JTL did not file its lien in bad faith or with actual malice, and did not deliberately inflate the amount it claimed it was owed on the lien.

¶ 12 In its conclusions of law, the District Court determined that JTL's lien was valid under LHC, Inc. v. Alvarez, 2007 MT 123, 337 Mont. 294, 160 P.3d 502. The District Court further concluded that JTL had complied with all the procedural requirements of Montana's construction lien statutes, and that it was owed $21,665.57, the amount which New Outlook conceded it owed for the work done on the subdivision. The District Court also awarded JTL prejudgment interest. Further, the District Court dismissed New Outlook's slander of title claim against JTL since it concluded that JTL's lien was valid.³

¶ 13 The District Court also denied New Outlook's claim for breach of contract against Weaver Gravel. The District Court concluded that this claim was based on a prayer for indemnification for any amounts that New Outlook might be ordered to pay over and above the contract amount owed to Weaver Gravel. Since the District Court found that no extra amount was owed by New Outlook, it denied New Outlook's breach of contract claim against Weaver Gravel.

¶ 14 The District Court also awarded JTL and Weaver Gravel costs and reasonable attorney fees. JTL and Weaver Gravel were both represented by the same attorneys. Pursuant to the District Court's order, JTL and Weaver Gravel submitted a bill of costs and an affidavit in support of an award of attorney fees. New Outlook filed objections. The parties were given an opportunity to request a hearing on attorney fees on or before JTL/Weaver Gravel's response to New Outlook's objections were due, or the hearing was deemed waived. New Outlook did not timely request a hearing.

¶ 15 On April 29, 2009, the District Court entered findings of fact, conclusions of law, and its order on attorney fees and costs. JTL's affidavits sought a total of $119,072.50 in attorney fees. The District Court determined in its findings that the affidavits itemized the hourly rates of the attorneys, contained descriptions of the work performed and hours expended in performing the work, thus representing the "lodestar fee" pursuant to Laudert v. Richland Co. Sheriff's Dept., 2001 MT 287, 307 Mont. 403, 38 P.3d 790.

¶ 16 New Outlook raised several objections to JTL's claimed amount of attorney fees. New Outlook argued that much of the work of JTL's counsel was excessive, redundant, or otherwise unnecessary, and that the time entries were either duplicative or not sufficiently detailed. New Outlook also argued that JTL improperly sought...