E.L. Gardner, Inc. v. Bowie Joint Venture

• Decision Date: 01 September 1984
• Docket Number: No. 1605,1605
• Parties: E.L. GARDNER, INC. v. BOWIE JOINT VENTURE. ,
• Court: Court of Special Appeals of Maryland

Page 302

64 Md.App. 302

494 A.2d 988

E.L. GARDNER, INC. v. BOWIE JOINT VENTURE.

No. 1605, Sept. Term, 1984.

Court of Special Appeals of Maryland.

July 12, 1985.

M. Evelyn Spurgin, Annapolis (Michael P. Darrow and Hillman, Brown & Darrow, Annapolis, on brief), for appellant.

Yale L. Goldberg, Rockville (Goldberg & Sinrod, Rockville, on brief), for appellee.

Argued before MOYLAN, WILNER and KARWACKI, JJ.

WILNER, Judge.

This is a mechanic's lien case, growing out of additions made to an existing shopping center in Prince George's County. Appellant supplied concrete to a subcontractor on the job; when it wasn't paid the amount due (alleged to be $33,178), it filed in the Circuit Court for Prince George's County a Complaint to establish and enforce a mechanic's lien in that amount.

Acting pursuant to Md.Code Ann. Real Prop. art., § 9-106(a) and Md.Rule BG 73, the court issued an order directing appellee, the owner of the property, to show cause why a lien should not be established. Appellee responded to the order, raising the sole defense that the value of the additions to which appellant contributed was less than 25% of the value of the total improvements to the land before the new construction. After an evidentiary hearing on the complaint and appellee's response, the court, in an order dated October 29, 1984, agreed with appellee that the prime contract "does not equate to twenty-five percent of the value of the project and for that reason, the Court is without jurisdiction to entertain this lien...." On that basis, the court dismissed the complaint.

In this appeal, appellant complains:

"I. The trial judge erred when he failed to issue an interlocutory order and set the case for trial because a genuine dispute as to material facts exists.

II. The trial judge erred when he used the value of the project after improvements to find that the contract does not equate to twenty-five percent of the value of the project.

III. The trial judge erred when he subtracted the contract price from the value of the project after improvements to find that the contract does not equate to twenty-five percent of the value of the project."

We think that appellant's first complaint has merit, and that the case must be remanded for further proceedings. For the guidance of the court, however, we shall address the other two issues as they may well arise again in the course of the proceedings on remand.

Md.Code Ann. Real Prop. art., § 9-102(a) provides, in relevant part that

"Every building erected ... repaired, rebuilt, or improved to the extent of 25 percent of its value is subject to establishment of a lien in accordance with this subtitle for payment of all debts ... contracted for work done for or about the building and for materials furnished for or about the building...."

The procedure for actually acquiring the lien authorized by § 9-102(a) is set forth in §§ 9-104--9-107, much of which is tracked almost verbatim in Md.Rules BG 71-73. The proceeding is commenced by a petition or complaint setting forth certain required information about the parties, the property, and the basis of the claim. Sec. 9-105; Rule BG 71. If, upon a review of the petition and any exhibits appended to it, the court determines, preliminarily, that a lien should attach, it must issue an order directing the owner to show cause why the requested lien should not attach. Sec. 9-106(a); Rule BG 73 a. That was done by the court.

Upon the owner's response (or upon his failure to respond within the time set by the show cause order), the court must review the matter again and take one of three actions. If the evidence then before it shows that "there is no genuine dispute as to any material fact and that the lien should attach [in whole or in part] as a matter of law," the court must enter a final order establishing the lien, at least for that part of the claim not in dispute. Sec. 9-106(b)(1); Rule BG 73 d 1(a). If, conversely, the evidence shows that "there is no genuine dispute as to any material fact and that the petitioner failed to establish his right to a lien as a matter of law, then a final order shall be entered denying the lien for cause shown." Sec. 9-106(b)(2); Rule BG 73 d 1(b).

If, however, the court determines from the evidence before it "that the lien should not attach, or should not attach in the amount claimed, as a matter of law, by any final order, but that there is probable cause to believe the petitioner is entitled to a lien," the court must enter an interlocutory order that, among other things, establishes the lien in the amount for which probable cause is found and assigns a date "for the trial of all the matters at issue in the action...." Sec. 9-106(b)(3); see also Rule BG 73 d2. In that event, "[u]ntil a final order is entered either establishing or denying the lien, the action shall proceed to trial on all matters at issue, as in the case of any other proceedings in equity." Sec. 9-106(d); see also Rule BG 73 d 5.

In essence, the sole function of the court at that stage of the proceeding is to determine whether there is a genuine dispute of material fact and, if not, whether the claimant is, or is not, entitled to a lien as a matter of law. As we pointed out in Tyson v. Masten Lumber & Supply, 44 Md.App. 293, 303, 408 A.2d 1051 (1979), cert. denied 287 Md. 758 (1980), the court is then "in the same position as a judge passing upon a motion for summary judgment" and it is "not justified in weighing the evidence and adjudicating the case...."

Not every dispute of fact will suffice to forestall a final order, of course. The dispute, as in the case of a summary judgment proceeding, must be material--i.e., the right of the claimant to the lien will depend, at least in part, on how that dispute is resolved. If there is a factual dispute of that nature, the court must ordinarily proceed in accordance with § 9-106(b)(3) and Rule BG 73 d2. ¹

There was, of course, an issue in dispute between the parties--whether the value of the additions to the shopping center equaled or exceeded 25% of the value of the preexisting improvements. As there was no real dispute about the numerator of the fraction--the total contract price for the improvements was conceded to be $1,939,087--the focus was on the value of the preexisting improvements.

Appellee contended that the preexisting improvements had a value of $9,500,000. To support that contention, it put into evidence an affidavit of an appraiser for Maryland National Bank appraising the value of the land and improvements after the new construction as $13,590,000, of which $2,000,000 was for the land and $11,590,000 was for the improvements. To obtain the value of the improvements before the new construction, appellee urged that the court simply deduct from the $11,590,000 the construction price of $1,939,087, leaving a pre-construction value of $9,650,913, which it somehow then rounded off to $9,500,000. Even at that lower figure, more favorable to appellant, the ratio of the new construction to the value of the preexisting improvements would be only 20.4%.

To establish a lower value of the preexisting improvements, and thus a higher ratio, appellant produced the testimony of Richard L. Stefan, an assessor employed by the State Department of Assessments and Taxation. Mr. Stefan had appraised the property for assessment purposes. He stated, in that regard, that he estimated the value of the property for 1984 tax purposes to be $9,498,350, of which $2,644,770 was attributable to the land, leaving $6,850,358 attributable to the improvements, that the owner (appellee) objected to that estimate, and that, after considering additional information, Stefan reduced the assessment on the improvements to $5,875,480. If the initial value ($6,850,358) is considered, the ratio would be 28.3%; if the lower, final value is considered, the ratio would be 33%. In either case, of course, the threshold criterion set by § 9-102(a) would be met.

Appellee argues in response that Mr. Stefan's testimony was inadmissible and should not have been considered by the court.

In Baltimore City v. Himmel, 135 Md. 65, 75-76, 107 A. 522 (1919), the Court stated, "[t]he general rule is well settled that the assessment of property made by public authorities for purposes of taxation is not admissible in condemnation proceedings...." In Gravenstine v. Gravenstine, 58 Md.App. 158, 172, 472 A.2d 1001 (198...