Lane Myers Constr., LLC v. Countrywide Home Loans, Inc.

• Decision Date: 27 September 2012
• Docket Number: No. 20101047–CA.,20101047–CA.
• Citation: 287 P.3d 479,718 Utah Adv. Rep. 77,2012 UT App 269
• Parties: LANE MYERS CONSTRUCTION, LLC, Plaintiff and Appellant, v. COUNTRYWIDE HOME LOANS, INC.; National City Bank of Indiana; Dick Kyker; Kim Kyker; All Stone Masonry, LLC; Sunset Drywall, Inc.; Vander Veur Insulations, Inc.; Mountainview Builders Supply, Inc.; National City Bank; and Does 1–10, Defendants and Appellees.
• Court: Utah Court of Appeals

287 P.3d 479

718 Utah Adv. Rep. 77

2012 UT App 269

LANE MYERS CONSTRUCTION, LLC, Plaintiff and Appellant,

v.COUNTRYWIDE HOME LOANS, INC.; National City Bank of Indiana; Dick Kyker; Kim Kyker; All Stone Masonry, LLC; Sunset Drywall, Inc.; Vander Veur Insulations, Inc.; Mountainview Builders Supply, Inc.; National City Bank; and Does 1–10, Defendants and Appellees.

No. 20101047–CA.

Court of Appeals of Utah.

Sept. 27, 2012.

Third District, Silver Summit Department, 070500707; The Honorable Keith A. Kelly, The Honorable Bruce C. Lubeck ¹.

Rick L. Sorensen, Salt Lake City, for Appellant.

Leslie Van Frank and Bradley M. Strassberg, Salt Lake City, for Appellee Countrywide Home Loans, Inc.

Lincoln Harris, Zachary E. Peterson, and Paul P. Burghardt, Salt Lake City, for Appellee National City Bank of Indiana.

Before Judges McHUGH, VOROS, and ROTH.

OPINION

ROTH, Judge:

¶ 1 Lane Myers Construction, LLC (Lane Myers) challenges the award of attorney fees to Countrywide Home Loans, Inc. (Countrywide) pursuant to section 38–1–18 of the Utah Mechanics' Lien Act on the basis that Countrywide was not the successful party. See generallyUtah Code Ann. § 38–1–18(1) (2010) (current version at id. § 38–1a–707(1) (Supp. 2012)) (“[I]n any action brought to enforce any lien under this chapter the successful party shall be entitled to recover a reasonable attorneys' fee....”).² Lane Myers also contends that the trial court erred in granting summary judgment for National City Bank of Indiana (National City) when it decided that Lane Myers's certification that there were no liens or claims that might result in a lien was equivalent to a written waiver and release of lien rights form required by the mechanics' lien act. See generally id.§ 38–1–39(2), (4) (current version at id. § 38–1a–802(2), (4) (Supp. 2012)) (describing a form that includes the components of an enforceable waiver of lien rights). National City cross-appeals, asserting that the trial court erred when it reduced its request for attorney fees under section 38–1–18. We affirm the award of attorney fees to Countrywide but reverse the grant of summary judgment in favor of National City. The reversal of summary judgment makes National City's attorney fees claim moot.

BACKGROUND

¶ 2 In February and May 2006, Lane Myers entered into two separate construction agreements with Dick and Kim Kyker (the home buyers) to build a residence in Oakley, Utah, (the Oakley home) and another in Park City, Utah (the Mountain home). The home buyers obtained construction financing from Countrywide for the Oakley home and from National City for the Mountain home. Those loans did not cover the complete costs of constructing either of the homes. When the home buyers failed to pay Lane Myers the amounts due on the construction contracts, Lane Myers recorded a mechanics' lien and a lis pendens against each home. Lane Myers joined Countrywide, National City, and the home buyers as defendants in a lawsuit seeking to foreclose its mechanics' liens and to have those liens declared prior in right to the trust deeds recorded on the Oakley home by Countrywide and the Mountain home by National City to secure the construction financing. At that point, the facts relevant to each defendant's case diverge.

I. The Oakley Home (Countrywide)

¶ 3 The home buyers eventually paid Lane Myers in full for its construction work on the Oakley home, including attorney fees incurred by Lane Myers up to that point. On July 23, 2008, Lane Myers recorded a release of lien and a release of lis pendens for that property. Lane Myers did not dismiss Countrywide from the foreclosure case, however, and nearly a year later, Lane Myers filed an amended complaint, asserting the same mechanics' lien foreclosure claim that it had asserted in its original complaint against Countrywide on January 23, 2008.³ Countrywide moved for summary judgment on the basis that Lane Myers had been paid in full and had released the lien. In the motion, it contended that it was not only entitled to a judgment of dismissal as a matter of law but also to its reasonable attorney fees pursuant to section 38–1–18 of the mechanics' lien act. Section 38–1–39 provides, “[I]n any action brought to enforce any lien under this chapter the successful party shall be entitled to recover a reasonable attorneys' fee....” Id.§ 38–1–18(1). Lane Myers conceded that dismissal of the claim against Countrywide was appropriate but asserted that Countrywide was not entitled to attorney fees because it had not succeeded on the merits. The trial court agreed with Countrywide, granting the motion for summary judgment and awarding it $27,729.50 in attorney fees incurred after July 23, 2008.

II. The Mountain Home (National City)

¶ 4 National City also filed a motion for summary judgment on Lane Myers's mechanics' lien foreclosure claim for money owing on the Mountain home. ⁴ According to National City, the Request for Disbursement forms Lane Myers submitted in order to draw funds from the construction loan (the draw requests) had effectively waived any mechanics' lien rights for construction work completed prior to the date of each request. Each draw request contained identical language:

The Borrower(s) and General Contractor state that ... available proceeds of the loan are sufficient to finally and fully complete and pay for completion of improvements, and that no suppliers, subcontractors, laborers, or other persons are claiming or are entitled to claim a lien against the property securing the loan.

During the course of construction between September 2006 and August 2007, Lane Myers and the home buyers executed at least eleven progress payment draw requests containing this language.

¶ 5 On August 22, 2007, Lane Myers made a final draw request on a printed form identical to those submitted for the progress payments. At the top of the draw request, Lane Myers wrote, “Final Draw.” In addition to the language quoted above, the form stated,

IF THIS IS THE FINAL DRAW I/WE FURTHER CERTIFY THAT:

1. The General Contractor has to date been paid in full for all work performed and for all labor, materials furnished by the General Contractor and all sub-contractors, materialmen, suppliers and laborers and that no such sub-contractors, suppliers, materialmen, laborers or other persons providing goods and services used in the improvements to the property have unpaid claims except as specifically set forth as follows:

____

(Emphasis added.) No exceptions were noted in the space provided. The form then continued,

2. That no liens or claims that may result in liens exist against the above-described property other than set forth herein.

3. That the General Contractor has received payments for all stages of construction/rehabilitation of the property other than the final disbursement.

4. That the borrower(s) have requested, from the Lender, final disbursement of the construction/rehab funds in order to make final payment to the General Contractor and that upon said disbursement by Lender the General Contractor will be paid in full under the Construction Contract.

(Emphasis added.) No “liens or claims that may result in liens” were listed as exceptions on the final draw request, and the form was executed by both the home buyers and Lane Myers.

¶ 6 National City asserted that the language of the draw requests created “a lien release for the Mountain ... [h]ome” pursuant to section 38–1–39 of the mechanics' lien act that “barred” any “claim for foreclosure of its lien.” Section 38–1–39 provides that a claimant's written consent “that waives or limits the lien claimant's lien rights is enforceable only if the lien claimant executes a waiver and release that is signed by the lien claimant” and “receives payment of the amount identified in the waiver and release.” Utah Code Ann. § 38–1–39(2) (2010) (current version at id. § 38–1a–802(2) (Supp. 2012)).⁵The trial court agreed, concluding that the draw requests “compl[ied] substantially with Utah law” to “effectively and clearly, on their face, release any claims for work done prior to the date of execution.” As a result, it granted National City's motion for summary judgment and dismissed Lane Myers's mechanics' lien claim with prejudice. The trial court also awarded National City $38,314 in attorney fees as the successful party under the attorney fees provision of the mechanics' lien act. See id.§ 38–1–18(1) (2010) (current version at id. § 38–1a–707(1) (Supp. 2012)).

ISSUES AND STANDARDS OF REVIEW

¶ 7 Lane Myers challenges the award of attorney fees to Countrywide on the basis that Countrywide was not a successful party within the contemplation of the mechanics' lien act. “Attorney fee determinations that involve statutory interpretation present questions of law.” Uhrhahn Constr. & Design, Inc. v. Hopkins, 2008 UT App 41, ¶ 10, 179 P.3d 808.

¶ 8 Lane Myers also challenges the grant of summary judgment to National City on the basis that the trial court improperly determined that the draw request language representing that there were “no liens or claims that may result in liens” was legally equivalent to the waiver and release of lien required by the mechanics' lien act. The propriety of a grant of summary judgment is a question of law, and the appellate court therefore does not grant any deference to the trial court's legal conclusions. See Higgins v. Salt Lake Cnty., 855 P.2d 231, 235 (Utah 1993).

ANALYSIS

I. Countrywide Is Entitled to Attorney Fees Under the Mechanics' Lien Act.

¶ 9 Lane Myers challenges the award of attorney fees to Countrywide under section 38–1–18 of the mechanics' lien act. Section 38–1–18 provides that “in any action brought to enforce any lien under this chapter the successful party shall be entitled to recover a reasonable attorneys' fee.” Utah Code Ann. § 38–1–18(1). “[A] successful party [under Utah Code section 38–1–18] includes one who successfully enforces or defends against a lien action.” Uhrhahn, 2008 UT App 41, ¶ 32,...