Jw Constr. Co. Inc. v. Elliott

• Decision Date: 17 March 2011
• Docket Number: No. 10CA0244.,10CA0244.
• Citation: 253 P.3d 1265
• Parties: JW CONSTRUCTION COMPANY, INC., a Colorado corporation, Plaintiff–Appellant,andJoseph Wodiuk, Third–Party Defendant–Appellant,v.Ryan K. ELLIOTT, a/k/a Ryan Elliott, and Christana R. Elliott, a/k/a Christana Elliott, Defendants and Third–Party Plaintiffs–Appellees.
• Court: Colorado Court of Appeals

253 P.3d 1265

JW CONSTRUCTION COMPANY, INC., a Colorado corporation, Plaintiff–Appellant,andJoseph Wodiuk, Third–Party Defendant–Appellant,

v.Ryan K. ELLIOTT, a/k/a Ryan Elliott, and Christana R. Elliott, a/k/a Christana Elliott, Defendants and Third–Party Plaintiffs–Appellees.

No. 10CA0244.

Colorado Court of Appeals, Div. II.

March 17, 2011.

Sherman & Howard, LLC, Bret R. Gunnell, Katherine D. Varholak, Matthew O. Stromquist, Denver, Colorado; Anderson, Dude, Bailey & Lebel, P.C., Steven P. Bailey, Colorado Springs, Colorado; for Plaintiff–Appellant and Third–Party Defendant–Appellant.Pendleton, Friedberg, Wilson & Hennessey, P.C., Edward M. Allen, Denver, Colorado, for Defendants and Third–Party Plaintiffs–Appellees.Opinion by Judge CASEBOLT.

This is a homeowner-builder dispute between defendants and third-party plaintiffs, Ryan K. Elliott and Christana R. Elliott, landowners who were building a custom home; plaintiff, JW Construction Co., Inc., their general contractor; and third-party defendant, Joseph Wodiuk, the president of JW. Wodiuk and JW appeal the judgment that found them liable for misrepresentation and concealment and imposed costs and attorney fees upon them for filing excessive mechanics' liens. We affirm in part, reverse in part, and remand.

I. Background

The Elliotts hired JW to construct a custom home for them. After construction had begun, JW and the Elliotts signed a formal agreement that provided for specified prices on some portions of the construction, “allowances” for other portions, and progress payments (“draws”) each month based on the “costs actually expended” by JW in the previous month. The Elliotts also agreed to a change order requiring payment for additional sums when they signed the formal agreement.

The Elliotts paid the amount specified in the change order and also paid the first four draws that JW submitted to them, but noted that the documentation submitted with some of the draw requests did not fully account for the total amount requested. The Elliotts asked JW to submit complete records to back up these draw requests, but JW failed to do so. JW submitted two more draw requests, numbered five and six, but the Elliotts refused to pay them and terminated the contract. The Elliotts paid the subcontractors directly for the work that was documented in draws five and six, notified JW on March 14, 2006, that they had made these payments, and continued construction of the home on their own.

JW filed its first mechanics' lien, which was for the entire amount requested in draw five, on March 15, 2006. JW filed its second mechanics' lien, which was for the entire amount requested in draw six, on May 5, 2006.

JW then commenced this action against the Elliotts to foreclose its mechanics' liens and also asserted claims for breach of contract, unjust enrichment, promissory estoppel, and quantum meruit. The Elliotts counterclaimed against JW and filed a third-party complaint against Wodiuk, asserting claims for breach of contract, negligence, misrepresentation and fraudulent concealment, and excessive liens. In response, JW and Wodiuk asserted, among other things, that the Elliotts' tort claims were barred by the economic loss rule. JW and Wodiuk also asserted this defense, with no further elaboration, in the trial management order. They did not, however, bring this assertion to the trial court's attention by any motion or argument before, during, or after trial.

At trial, the Elliotts presented evidence that the contract was a cost-plus contract, in which the total contract price would reflect the actual costs of construction plus a percentage fee. JW and Wodiuk presented evidence that the contract was a fixed price contract subject to allowances, in which certain portions of construction would be completed for a fixed price, and certain portions would be completed for the actual costs of construction plus JW's fee. The trial court determined that the contract was a fixed price contract subject to allowances.

The Elliotts also presented evidence at trial that JW had altered or fabricated three invoices, which were submitted as backup for draw requests one and four. The Elliotts argued that because of these misrepresentations, they paid JW more than its “costs actually expended.” They contended that JW had breached the contract because the agreement allowed only periodic payments for actual costs incurred, that they were justified in terminating JW, and that they were entitled to damages amounting to the increased cost of completion that they had incurred after termination of the contract.

In addition, the Elliotts presented evidence that, at the time they agreed to the change order, JW and Wodiuk knew that the items covered in the change order would not cost more than the amounts already itemized with fixed prices in the final contract. The Elliotts argued that these actions constituted misrepresentation and concealment, which induced them to agree to the change order and to pay the additional sums noted in it. The Elliotts also argued that the altered and fabricated invoices constituted misrepresentations and that they were entitled to damages in tort against both JW and Wodiuk for the amount they overpaid JW.

JW argued that the Elliotts had breached the contract by terminating it without justification and by failing to pay the amounts requested in draws five and six. In the alternative, it requested payment of the amounts of the draws under the equitable theories of relief that it had pleaded. In addition, it asserted that the Elliotts suffered no damages because the amount that they paid, even if more than the actual costs of construction, was still not more than the fixed price agreed to in the contract.

Following a bench trial, the court found that JW had altered or fabricated three of the invoices that were attached as backup documentation for the draw requests. It determined that the submission of draw requests for more than JW's actual costs constituted a breach of the payment provision of the contract, and that the altered and fabricated invoices constituted a breach of the duty of good faith and fair dealing. It therefore determined that the Elliotts were justified in terminating the contract with JW. However, it awarded only one dollar in damages on the contract claim because it determined that the Elliotts had significantly changed the planned construction after JW's breach, and had not met their burden to prove the cost of completion without those changes.

The trial court also determined that the altered and fabricated invoices were misrepresentations and that JW had fraudulently concealed information about its true costs to complete the change order. It found that the Elliotts had paid JW more than the actual costs of construction and awarded damages to the Elliotts. It further found that Wodiuk had participated in the misrepresentations and concealment and held him personally liable.

The trial court also found that at the time JW filed its mechanics' liens, it was aware that the Elliotts had paid directly to subcontractors at least some portions of draws five and six and, therefore, the liens were excessive. Furthermore, the court determined that because JW had intentionally misrepresented amounts in the prior draws, it knew that the full amounts of draws five and six were not due under the contract. The court awarded costs and attorney fees to the Elliotts and against JW pursuant to section 38–22–128, C.R.S.2010, for defending against these excessive liens. Concerning JW's equitable claims, the trial court determined that JW had not conferred any benefit for which the Elliotts had not already paid.

Upon the Elliotts' posttrial motion, the trial court amended the judgment to impose personal liability against Wodiuk for the costs and attorney fees awarded upon the excessive lien claim. This appeal followed.

II. Wodiuk's Liability for Filing Excessive Lien

Wodiuk contends that because the excessive lien statute only allows for recovery of costs and attorney fees against the person who files the lien, and he did not file the lien in this case, the trial court erred by holding that he was personally liable for these amounts. We agree.

A. Standard of Review

We interpret statutes de novo. Dubois v. People, 211 P.3d 41, 43 (Colo.2009). In construing a statute, we must give effect to the intent of the legislature. Id. If the legislative intent is clear from the plain language of the statute, there is no need to resort to interpretive rules of statutory construction. McKinney v. Kautzky, 801 P.2d 508, 509 (Colo.1990).

B. Law

Section 38–22–128 provides:

Any person who files a lien under this article for an amount greater than is due without a reasonable possibility that said amount claimed is due and with the knowledge that said amount claimed is greater than that amount then due, and that fact is shown in any proceeding under this article, shall forfeit all rights to such lien plus such person shall be liable to the person against whom the lien was filed in an amount equal to the costs and all attorney's fees.

C. Application

It is undisputed that JW, a corporation, was the entity that signed the construction contract and filed the liens at issue here. According to the plain language of the statute, only the “person who files a lien” is liable for costs and attorney fees. Because a corporation has an independent legal identity, Micciche v. Billings, 727 P.2d 367, 369 (Colo.1986), the plain language of the statute dictates that only the corporation is liable for costs and attorney fees, not an officer of the corporation who has signed it in an official capacity. Accordingly, only JW is liable for the costs and attorney fees expended by the Elliotts in defending against the liens.

There are, of course, situations in which a court will disregard the corporate form and hold shareholders or directors liable for the obligations of the corporation. Id. at 372–73....