Korellis Roofing, Inc. v. Stolman

• Citation: 645 N.E.2d 29
• Decision Date: 10 January 1995
• Docket Number: No. 45A05-9403-CV-89,45A05-9403-CV-89
• Parties: KORELLIS ROOFING, INC., Appellant-Plaintiff, v. Matt STOLMAN, Appellee-Defendant.
• Court: Indiana Appellate Court

Page 29

645 N.E.2d 29

KORELLIS ROOFING, INC., Appellant-Plaintiff, v. Matt STOLMAN, Appellee-Defendant.

No. 45A05-9403-CV-89.

Court of Appeals of Indiana Fifth District.

Jan. 10, 1995.

David K. Ranich, Kathryn D. Schmidt, Burke Murphy Costanza & Cuppy, East Chicago, for appellant.

Saul I. Ruman, David M. Hamacher, Ruman Clements Tobin & Holub, Hammond, James J. Stankewicz, J.J. Stankewicz & Assoc., Merrillville, for appellee.

OPINION

SHARPNACK, Chief Judge.

Korellis Roofing, Inc. ("Korellis") appeals the trial court's judgment in its action to foreclose a mechanic's lien on property owned by Matt Stolman. We affirm in part and remand in part.

Korellis raises two issues for our review, which we restate as (1) whether the trial court abused its discretion in setting the mechanic's lien award lower than the amount requested by Korellis, and (2) whether the trial court abused its discretion in awarding Korellis $500.00 in attorney's fees.

On February 20, 1992, Korellis entered into a contract with Stolman to replace the roof on Stolman's residence in Whiting, Indiana, for an agreed price of $7,280.00. Work commenced on May 11, 1992. On May 12, 1992, the site was inspected by the Whiting building inspector, who stopped the work temporarily because he was concerned that the underlayment was not thick enough. After determining that the thickness was the minimum acceptable under the building code, the inspector permitted Korellis to continue the roofing job, which was completed on May 16, 1992. Stolman was dissatisfied with Korellis' work, and he subsequently inspected and documented on videotape the alleged defects in the roof.

On May 26, 1992, Stolman received Korellis' invoice in the amount of $7,280.00. Stolman contacted Korellis about his complaints and subsequently a meeting was held at Stolman's home with Peter Korellis, the Whiting building inspector, and the Whiting fire chief. The meeting did not result in a resolution of the dispute.

On June 4, 1992, Korellis mailed to Stolman a notice of intent to hold a mechanic's lien, and on July 1, 1992, Korellis filed its notice of mechanic's lien. On August 17, 1992, Korellis filed its complaint to foreclose. On October 28, 1992, Stolman filed his answer and countercomplaint. A bench trial was held on October 13 and 14, 1993. On November 16, 1993, the court rendered its decision that Korellis should recover $5,000.00 for services and materials provided to Stolman, that its mechanic's lien should be foreclosed, and that Korellis should recover $500.00 in attorney's fees. The court found against Stolman in his counterclaim.

Where findings have not been entered by the trial court, as in the present case, we will not reverse the trial court's determination on the evidence unless there is a total lack of supporting evidence or the evidence is undisputed and leads solely to a contrary conclusion. Lowry v. Lowry (1992), Ind.App., 590 N.E.2d 612. We neither reweigh the evidence nor judge the credibility of the witnesses. Id. We may consider only the evidence within the record supporting the judgment along with the reasonable inferences to be drawn therefrom. Id.

I

Korellis first argues that the trial court abused its discretion in setting the mechanic's lien award lower than Korellis had requested. Specifically, Korellis contends that the court should have awarded $7,280.00, the full amount due under its contract with Stolman, plus additional damages of $749.00 in prejudgment interest.

Indiana law is presently in conflict on the point of law raised in this issue. Korellis cites Walker v. Statzer (1972), 152 Ind.App. 544, 284 N.E.2d 127, for the proposition that the amount of the lien is measured and limited by the agreed price. Stolman cites Clark's Pork Farms v. Sand Livestock Systems (1990), Ind.App., 563 N.E.2d 1292, for the proposition that defects in workmanship constitute a defense to a mechanic's lien and diminish the amount due on the contract. Both assertions of law are correct.

Indiana courts have considered three circumstances in which the amount of a mechanic's lien has been at issue. The first circumstance is where no contract exists between the lien claimant and the property owner. In such a case, damages are based upon the reasonable value of the labor and materials provided. See Wilson v. Jenga Corp. (1986), Ind.App., 490 N.E.2d 375, 376. Reasonable value is not necessarily identical to cost. Id. Damages are intended to compensate a contractor "to the extent of the value of any labor done, material furnished, or either, including any use of such leased equipment and tools, and all claims for wages of mechanics and laborers." Indiana Code § 32-8-3-1.

The second circumstance is where a subcontractor of a general contractor seeks a lien on property where he has furnished labor and materials. In such a case, a contract exists between the contractor and subcontractor, but not between the subcontractor and the property owner, and our courts have held that while the contract price may be prima facie evidence of reasonable value, the lien is for the reasonable value of the work and material and not for their price as fixed by contract. Kendall Lumber & Coal Co. v. Roman (1950), 120 Ind.App. 368, 91 N.E.2d 187, 191.

The third circumstance is where a contract exists between the contractor and the property holder. This is the present case. As noted above, Korellis cites Walker, supra, for the holding that "where the principal contractor has furnished labor and materials for a price agreed upon by him and the owner of the property, the amount of the lien is measured and limited by the agreed price." Walker, 284 N.E.2d at 132. In other words, where there exists a fixed price due under a contract between the lien claimant and the property owner, the amount of the lien is the contract price. See 56 C.J.S. Mechanics' Liens § 198 ("[G]enerally, unless deductions are to be made by reason of payments made or lack of complete performance, the amount of the lien of a claimant who has furnished labor or materials for an agreed price under a contract made by him directly with the owner is measured and limited by the price fixed in the contract.")

Stolman, in turn, cites Clark's Pork, supra, for the contrary holding that evidence of defects in workmanship constitutes a defense to the mechanic's lien and diminishes the amount due on the contract. Clark's Pork, 563 N.E.2d 1292. In that case, a contract existed between Sand, the contractor, and Clark, the property owner, for the construction of several farm buildings at a price of $364,029.00. Id. at 1294-95. After the construction was complete, Clark discovered that the buildings were defective, and he withheld the last payment due on the contract, approximately $80,000.00. Id. Sand filed suit, seeking contract damages, foreclosure of a mechanic's lien, and damages under quantum meruit. Id. Clark filed a counterclaim alleging breach of contract. Id. After a trial, the court awarded Sand its contract balance of $80,568.00, attorney's fees of $84,204.50, and prejudgment interest of $10,636.00. Id. The trial court also awarded Clark $251,082.00 on his counterclaim. Id. On appeal, the court stated as follows:

"Pursuant to its complaint Sand, among other things, had to prove Gene [Clark] contracted with it for improvements to the real estate and Gene owed money on the contract. Gene, in defending against Sand's claim, could and did assert 'defects' in the improvements that were the subject of the contract.... These defects necessarily constitute a defense to Sand's complaint because they diminish the amount due under the contract up to the amount of the claimed lien; damages in excess of that amount are recoverable only pursuant to Gene's counterclaim. In other words, to the extent Gene is damaged by Sand's breach, ... there is only the question of what amount, if any, Gene owes Sand, on the contract. In turn, the answer to this question determines whether or not Sand is entitled to foreclosure of its lien because Sand's mechanic lien attaches to the Clark's [sic] real estate only to the extent Gene owes Sand on the contract.

... The proper judgment would have awarded Sand $0 on its complaint and awarded Gene the difference between $251,082.00 and $80,568.00, or $170.514.00, on the counterclaim.... Of course, if Sand's judgment is $0, then it is not entitled to foreclose its mechanic's lien. Therefore, we also order the judgment of foreclosure vacated."

Id. at 1298-99. Similarly, in G. Cowser Const. Inc. v. Nicksic (1993), Ind.App., 622 N.E.2d 1007, the court affirmed a judgment where an award for a counterclaim alleging defective workmanship was considered a setoff against a mechanic's lien.

In the present case, there existed a written contract between the parties containing a fixed price of $7,280.00 for the work to be performed by Korellis. Stolman argues that the trial court's award of $5,000.00 reflects the trial court's consideration of evidence of shoddy workmanship and damages to Stolman's property caused by Korellis. Stolman contends, in essence, that the trial court already had calculated a setoff from the amount of the lien based upon the evidence of defects. As there are no findings, however, we cannot know if the trial court had this in mind.

We note that the trial court held that Stolman "should take nothing by way of his counter-claim," which alleged breach of contract, fraud, and violation of...