Owen Lumber Co. v. Chartrand

• Court: Kansas Supreme Court
• Writing for the Court: LUCKERT, J.
• Citation: Owen Lumber Co. v. Chartrand, 276 Kan. 218, 73 P.3d 753 (Kan. 2003)
• Decision Date: 01 August 2003
• Docket Number: No. 89,476.,89,476.
• Parties: OWEN LUMBER COMPANY, Appellant, v. ARTHUR CHARTRAND, et al., Appellees.

276 Kan. 218

73 P.3d 753

OWEN LUMBER COMPANY, Appellant, v. ARTHUR CHARTRAND, et al., Appellees.

No. 89,476.

Supreme Court of Kansas.

Opinion filed August 1, 2003.

Michael P. Bandre, of Crouch, Spangler & Douglas, of Harrisonville, Missouri, argued the cause and was on the briefs for appellant.

Arthur J. Chartrand, of Olathe, was on the brief for appellees.

The opinion of the court was delivered by

LUCKERT, J.:

This case is an action to foreclose a mechanic's lien of a subcontractor, Owen Lumber Company, against property owned by Arthur and Carol Chartrand. The action was filed prior to the effective date of amendments to K.S.A. 60-1103 passed by the 2000 legislature. (L. 2000, ch. 175, sec. 7.) The district court ruled that the amendments to K.S.A. 60-1103(c) applied retrospectively to this case so that Owen Lumber's failure to serve a copy of the lien statement on the Chartrands as equitable owners precluded it from foreclosing its mechanic's lien. Owen Lumber timely appealed. The case was transferred to this court on the court's own motion pursuant to K.S.A. 20-3018.

We reverse.

FACTS

In December 1994, Arthur and Carol Chartrand contracted with Design Build Group, Inc., (Design Build) for the construction of a new home. Owen Lumber, a subcontractor, supplied some of the building materials to Design Build for the home. Because of concerns about the contractor's plans for the property, the Chartrands filed a notice of equitable interest with the Johnson County Registrar of Deeds on December 28, 1995. Owen Lumber filed a mechanic's lien on the home on January 5, 1996. 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, the Chartrands received a title report showing that numerous mechanic's liens had been filed against the property, including the lien filed by Owen Lumber. Mr. Chartrand personally reviewed Owen Lumber's mechanic's lien. The Chartrands took title to the real estate by a quitclaim deed from Design Build filed on February 5, 1996.

In January 1997, Owen Lumber filed an action to foreclose its lien. 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. Owen Lumber Co. v. Arthur Chartrand, 27 Kan. App. 2d 72, 998 P.2d 509, aff'd 270 Kan. 215, 14 P.3d 395 (2000) (Chartrand I). This court ruled that Owen Lumber was not required to file a notice of intent to perform pursuant to 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. Regarding the application of K.S.A. 60-1103(c), this court ruled that the statute's 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.

After the Court of Appeals' decision, but before this court granted review, the legislature passed 2000 H.B. 2905 amending 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 vs. 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 opinion affirming the Court of Appeals on December 8, 2000; therefore, 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.

PROSPECTIVE OR RETROSPECTIVE APPLICATION OF AMENDMENTS

2000 H.B. 2905 amended K.S.A. 60-1103(c) as follows:

"(c) Recording and notice. When a lien is filed pursuant to this section, the clerk of the district court shall enter the filing in the general index. The claimant shall (1) cause a copy of the lien statement to be served personally upon any one owner, any holder of a recorded equitable interest and any party obligated to pay the lien in the manner provided by K.S.A. 60-304, and amendments thereto . . . (2) mail a copy of the lien statement to any one owner of the property, any holder of a recorded equitable interest and to any party obligated to pay the same by restricted mail or (3) if the address of any one owner or such party is unknown and cannot be ascertained with reasonable diligence, post a copy of the lien statement in a conspicuous place on the premises. The provisions of this subsection requiring that the claimant serve a copy of the lien statement shall be deemed to have been complied with, if it is proven that the person to be served actually received a copy of the lien statement. No action to foreclose any lien may proceed or be entered against residential real property in this state unless the holder of a recorded equitable interest was served with notice in accordance with the provisions of this subsection." (Emphases noting amendments.) L. 2000, ch. 175, sec. 7.

In determining whether the provisions of any statute apply prospectively or retrospectively, the general rule is that a statute operates prospectively unless there is clear language indicating that the legislature intended it to operate retrospectively. In re Tax Appeal of Alsop Sand Co., Inc., 265 Kan. 510, 523-24, 962 P.2d 435 (1998). Even where the legislative intent is clear, courts must still consider whether retrospective application of legislation will affect vested or substantive rights. See Southwestern Bell Tel. Co. v. Kansas Corporation Comm'n, 29 Kan. App. 2d 414, 422, 29 P.3d 424 (2001) (legislative intent was clear that procedural amendment was to apply retrospectively, but question remained whether amendment affected substantive rights).

In this case, the legislature clearly indicated its intent that the amendments were intended to apply to foreclosure actions pending at the time the amendments became effective, including the case at bar, by stating that no action to foreclose a lien "may proceed" unless notice has been served as required by the subsection. Owen Lumber does not dispute that this was the clear intent.

The more difficult question is whether such retrospective application affects a vested or substantive right and thereby violates the due process provisions of the United States and Kansas Constitutions. The determination of whether a statute affects a "vested right" is rarely straightforward. As Justice Six, writing for this court, previously noted:

"One commentator has aptly noted: `[I]t has long been recognized that the term "vested right" is conclusory—a right is vested when it has been so far perfected that it cannot be taken away by statute.' Hochman, The Supreme Court and the Constitutionality of Retroactive Legislation, 73 Harv. L. Rev. 692, 696 (1960). Numerous authorities have recognized inconsistencies in the use of the term `vested rights' in the context of retroactive legislation, and some have questioned the wisdom of a vested rights analysis. See Phillips v. Curiale, 128 N.J. 608, 621, 608 A.2d 895 (1992) (`"[D]iscerning commentators and judges" have questioned the value of vested rights analysis.'); Peterson v. City of Minneapolis, 285 Minn. 282, 287, 173 N.W.2d 353 (1969) (`[R]etroactive laws . . . are usually upheld as long as they do not interfere with vested legal rights. The rule itself seems simple enough, but the difficulty comes in defining what is a vested right.').

"We, too, find the `vested rights' area of the law to be murky. Courts and litigants sometimes rely on broad pronouncements that a particular right is or is not a `vested right,' without careful scrutiny of the facts underlying the cases cited in support of the conclusion. As explained below, the analysis of whether a right is `vested' may include considerations other than merely the nature of the right as `property.' Separating the ultimate due process analysis from the `vested rights' inquiry is virtually impossible under the cases we have reviewed." Resolution Trust Corp. v. Fleischer, 257 Kan. 360, 364-65, 892 P.2d 497 (1995).

The issue in Fleischer was whether the holder of an accrued tort action, which had not been reduced to judgment, had a vested property right in the cause of action. The court held that, under the facts of the case, the answer was "`yes,' as qualified by our analysis." 257 Kan. at 374. The analysis reaching that conclusion was lengthy, but in part, stated:

"Reviewing `vested rights' cases requires a look beyond the labels to the ingredients which shaped the courts' conclusions. Important factors are: (1) the nature of the rights at stake (e.g., procedural, substantive, remedial), (2) how the rights were affected (e.g., were the rights partially or completely abolished by the legislation; was any substitute remedy provided), and (3) the nature and strength of the public interest furthered by the legislation. See Hochman, 73 Harv. L. Rev. at 697. Although, as one court has noted, these factors `are as nebulous as the term itself,' Peterson, 285 Minn. at 288, they nonetheless help explain why courts have reached what, on the surface, appear to be conflicting conclusions about whether particular rights are `vested rights,' immune from retroactive legislation. Several courts have incorporated Hochman's factors or similar ones into tests

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