Owen Lumber Co. v. Chartrand

• Decision Date: 04 May 2007
• Docket Number: No. 96,391.,96,391.
• Citation: 157 P.3d 1109
• Parties: OWEN LUMBER COMPANY, Appellee, v. Arthur CHARTRAND and Carol Chartrand, Appellants.
• Court: Kansas Supreme Court

157 P.3d 1109

OWEN LUMBER COMPANY, Appellee, v. Arthur CHARTRAND and Carol Chartrand, Appellants.

No. 96,391.

Supreme Court of Kansas.

May 4, 2007.

Mark S. Gunnison, of Payne & Jones Chartered, of Overland Park, argued the cause, and Arthur J. Chartrand, of Chartrand Law Office, of Olathe, was with him on the briefs for appellant.

Michael P. Bandre, of Couch, Pierce, King & Hoffmeister, of Overland Park, argued the cause and was on the brief for appellee.

The opinion of the court was delivered by LUCKERT, J.:

This case involves a mechanic's lien of plaintiff Owen Lumber Company, a subcontractor, against property owned by defendants Arthur and Carol Chartrand. The case has been previously before this court twice. See Owen Lumber Co. v. Chartrand, 270 Kan. 215, 14 P.3d 395 (2000) (Chartrand I), and Owen Lumber Co. v. Chartrand, 276 Kan. 218, 73 P.3d 753 (2003) (Chartrand II). On this appeal, which was transferred to this court on its own motion pursuant to K.S.A. 20-3018(c), four issues are raised: (1) Did Owen Lumber properly serve notice of its mechanic's lien statement on the Chartrands as required by K.S.A. 60-1103(c)? (2) Does K.S.A. 60-1103(d) apply to limit the amount owed by the Chartrands on the mechanic's lien? (3) Did the district court err in awarding prejudgment interest? and (4) Were the Chartrands denied the opportunity for a fair trial because the same attorneys represented the plaintiff and other defendants in this multiparty case? We reject all claims of error.

Factual and Procedural Background

In 1994, the Chartrands contracted with Design Build Group, Inc. (Design Build) for the construction of a new home. When construction began, Design Build owned the property on which the home was built. Owen Lumber supplied some of the building materials to Design Build for the home. Because of apparent problems with Design Build's payment to subcontractors, the Chartrands filed an affidavit of equitable interest in the office of the Register of Deeds in Johnson County, Kansas, on December 28, 1995. Owen Lumber filed a mechanic's lien on the home on January 5, 1996. Initially, Owen Lumber gave notice of the lien to Design Build as the legal owner but did not give notice to the Chartrands.

Before taking title to the home, the Chartrands received a title report revealing numerous mechanics' liens filed against the property, including the lien filed by Owen Lumber. The Chartrands took title to the property by a quitclaim deed from Design Build on February 5, 1996. Owen Lumber subsequently filed an action to foreclose its lien in January 1997. The district court granted summary judgment in favor of the Chartrands because Owen Lumber had failed to file a notice of intent to perform as required by K.S.A.2002 Supp. 60-1103b and had failed to comply with the notice provisions of K.S.A. 60-1103(c).

The Court of Appeals reversed on both issues, and this court affirmed the Court of Appeals' decision in Chartrand I. This court held that Owen Lumber was not required to file a notice of intent to perform under K.S.A. 60-1103(a)(3) and K.S.A.2002 Supp. 60-1103b(b) because it filed the actual lien before the Chartrands took legal title to the property. 270 Kan. at 219-21, 14 P.3d 395. With regard to the application of K.S.A. 60-1103(c), this court determined that the statutory requirement of service of a mechanic's lien on "any one owner" of the property was satisfied when Owen Lumber notified Design Build, the legal owner of the property, of the lien. The statute did not require that Owen Lumber also notify the Chartrands, the equitable owners of the property. 270 Kan. at 226, 14 P.3d 395.

After the Court of Appeals' decision but before this court granted review of the case, the legislature passed 2000 H.B. 2905 which amended K.S.A. 60-1103(c) to require notice to the holder of a recorded equitable interest. The bill stated that the amendments were to take effect "[o]n the date of the issuance by the Kansas supreme court of an opinion in the case of Owen Lumber Company v. Chartrand, case no. 82,228, which affirms the decision of the Kansas court of appeals or on the date the Kansas supreme court denies the petition for review." L.2000, ch. 175, sec. 7. This court issued its Chartrand I opinion affirming the Court of Appeals on December 8, 2000; thus, the statutory amendments took effect on that date.

On remand, the district court found that the 2000 amendments to K.S.A. 60-1103(c) applied retrospectively and that, because Owen Lumber had failed to serve notice of its lien upon the Chartrands, it was precluded from foreclosing its lien. In Chartrand II, this court observed that the legislature clearly indicated its intent that the amendments were to apply to foreclosure actions pending at the time the amendments became effective. The court went on, however, to address the question of whether such retrospective application affected a vested or substantive right and thereby violated the Due Process Clauses of the United States and Kansas Constitutions. 276 Kan. at 221-28, 73 P.3d 753.

After considering the factors articulated in Resolution Trust Corp. v. Fleischer, 257 Kan. 360, 369, 892 P.2d 497 (1995) (nature of the rights at stake, how the rights were affected, and the nature and strength of the public interest furthered by the legislation), and noting that Owen Lumber had complied with the statutes in effect at the time of filing its lien and the foreclosure action, this court held that it would violate due process to retrospectively apply the amendments contained in K.S.A.2002 Supp. 60-1103(c) without giving the lienholder a reasonable time to comply with the new requirements. Chartrand II, 276 Kan. at 227-28, 73 P.3d 753.

Thus, the Chartrand II court held that Owen Lumber "should serve the lien statement in the manner required within 60 days of the date of the mandate in this case." 276 Kan. at 228, 73 P.3d 753. In so holding, the Chartrand II court rejected Owen Lumber's contention that the new provisions were satisfied by the Chartrands' "actual knowledge" of the mechanic's lien, stating that "[a]ctual notice or knowledge is different from actual receipt of a copy of the lien statement." 276 Kan. at 230, 73 P.3d 753. Having stated that there was no allegation and no evidence that Owen Lumber ever attempted to serve a copy of the lien statement upon the Chartrands or mail a copy to them by restricted mail, the Chartrand II court noted the well known Kansas rule of law that "`only strict compliance with the [statutory provisions] will give rise to an enforceable mechanic's lien.'" 276 Kan. at 230, 73 P.3d 753 (QUOTING Scott v. Strickland, 10 Kan.App.2d 14, 20, 691 P.2d 45 [1984]). The case was reversed and remanded to the district court. Chartrand II, 276 Kan. at 231, 73 P.3d 753.

The district court set the matter for trial to determine whether Owen Lumber subsequently complied with the mandate in Chartrand II. After the trial, the district court made extensive findings of fact and conclusions of law and entered judgment on the mechanic's lien in favor of Owen Lumber in the amount of $12,980.61, plus prejudgment interest in the amount of $11,682.55, continuing at a rate of "$3.56 per day for each day from February 6, 2005 until the date judgment is entered, and continuing postjudgment interest at the statutory rate." The court's journal entry of judgment was filed on May 10, 2005.

The Chartrands' motion for reconsideration was denied, and now they bring a timely appeal.

ISSUE 1: Did Owen Lumber Properly Serve Notice of its Mechanic's Lien Statement on the Chartrands as Required by K.S.A. 60-1103(c)?

First, the Chartrands contend that Owen Lumber should not be permitted to foreclose on its mechanic's lien because Owen Lumber failed to properly serve a copy of the lien statement on them as required by K.S.A. 60-1103(c) and in compliance with this court's mandate in Chartrand II. This contention lacks merit.

Standards of Review

The Chartrands' argument requires this court to interpret the language of K.S.A. 60-1103(c). The interpretation of a statute is a question of law over which this court has unlimited review. Foster v. Kansas Dept. of Revenue, 281 Kan. 368, 374, 130 P.3d 560 (2006).

Moreover, the Chartrands' argument requires our review of the district court's findings of fact and conclusions of law contained within its memorandum decision. The function of an appellate court is to determine whether the court's findings of fact are supported by substantial competent evidence and whether the findings are sufficient to support the court's conclusions of law. Substantial evidence is such legal and relevant evidence as a reasonable person might accept as sufficient to support a conclusion. U.S.D. No. 233 v. Kansas Ass'n of American Educators, 275 Kan. 313, 318, 64 P.3d 372 (2003). An appellate court's review of conclusions of law is unlimited. Nicholas v. Nicholas, 277 Kan. 171, 177, 83 P.3d 214 (2004).

Evidence on Remand

It is undisputed that after the remand Owen Lumber did not achieve personal service or service by restricted mail upon the Chartrands. However, during the trial to the court on remand, there was evidence that Owen Lumber attempted service. A secretary of Owen Lumber's attorney testified that she prepared a cover letter and mailed it with a photocopy of the mechanic's lien to the Chartrands. According to the secretary, she mailed two sets — one via certified mail, restricted delivery, and one via first-class mail. The restricted mail was returned as "unclaimed." The "unclaimed" mail was admitted into evidence. The secretary testified that the first-class mail was never returned.

The Chartrands also testified on remand. Arthur Chartrand stated that he and his wife received several cards from the post office indicating that "something was there," but he "didn't feel compelled to go to the post office to pick up" the mail. He indicated that the mail at the post office might have...