Pelletier Corp. v. Chas. M. Freidheim Co.

• Decision Date: 11 March 1986
• Docket Number: No. C8-85-1402,C8-85-1402
• Citation: 383 N.W.2d 318
• Parties: PELLETIER CORPORATION, Appellant, v. CHAS. M. FREIDHEIM COMPANY. CHAS. M. FREIDHEIM COMPANY, Respondents, v. Ron MORTON, d.b.a. L & M Construction Company, Respondent.
• Court: Minnesota Court of Appeals

Page 318

383 N.W.2d 318

PELLETIER CORPORATION, Appellant, v. CHAS. M. FREIDHEIM COMPANY. CHAS. M. FREIDHEIM COMPANY, Respondents, v. Ron MORTON, d.b.a. L & M Construction Company, Respondent.

No. C8-85-1402.

Court of Appeals of Minnesota.

March 11, 1986.

Review Denied May 16, 1986.

Syllabus by the Court

1. The trial court did not abuse its discretion in vacating its summary judgment order.

2. The trial court did not err in determining that respondent Chas. M. Freidheim Company was not required to give appellant prelien notice.

3. The trial court did not abuse its discretion in denying appellant equitable relief from the enforcement of the mechanic's liens.

Wm. C. Mortensen, Wm. C. Mortensen Law, Minneapolis, for appellant.

J. Robert Nygren, Minneapolis, for respondents.

Ron Morton, pro se.

Heard, considered and decided by POPOVICH, C.J., and FOLEY and LANSING, JJ.

OPINION

POPOVICH, Chief Judge.

This is a consolidated action to enforce mechanic's liens by respondent Chas. M. Freidheim Company (Freidheim) against appellant Pelletier Corporation (Pelletier). The trial court awarded judgment in favor of Freidheim and Pelletier appeals. Pelletier argues (1) the court erroneously vacated a summary judgment granted in favor of Pelletier and (2) Freidheim failed to give Pelletier the statutorily-required prelien notice. We affirm.

FACTS

Gerald Pelletier is the president and sole shareholder of Pelletier Corporation (Pelletier), a corporation organized in July 1982 as a real estate development and investment business. Pelletier Corporation undertook two different projects in 1982: (1) contracting to build a single-family home on a lot it owned in Scott County, and (2) building two duplexes on two lots it owned in Hennepin County. Initially, an investor was to buy both units in Hennepin County, but that agreement fell through. Pelletier owned the three lots at all times relevant to this action.

Pelletier constructed the units on a bid basis. Gerald Pelletier testified he contracted with others to complete the various parts of the projects, such as excavating, carpentry, plumbing and electrical work. He further testified he did not consider himself a general contractor of the projects. He characterized his role as a coordinating one, rather than supervisory. He testified he checked the sites once or twice a week. On cross-examination, he acknowledged if the contractors had problems at the sites, they would contact him.

Gerald Pelletier applied for building permits for the three lots. The building permits indicate Pelletier Corporation is both the owner of the property and the contractor for the projects on the property.

Respondent Ron Morton, d/b/a L & M Construction Company (Morton) did all the concrete masonry and brick work for the three units. Pelletier paid Morton approximately $33,800 and Morton provided Pelletier with lien waivers. Morton purchased $11,275.64 worth of concrete and ready-mix from Freidheim for materials on the units. Morton failed to pay Freidheim for these purchases as well as other purchases unrelated to the Pelletier units. Freidheim's accounts indicate Morton owes Freidheim $54,256.90.

Freidheim did not give any prelien notice to Pelletier. In June 1983, Freidheim filed mechanic's liens on all three sites. Subsequently, four different actions were commenced relating to these liens. The actions were consolidated for trial in Scott County.

Prior to consolidation, Pelletier brought a summary judgment motion on one of its Hennepin County actions. Pelletier commenced this declaratory judgment action seeking to remove the liens on September 1, 1983, and moved for summary judgment on November 2, 1983.

During this period, Morton was subpoenaed several times for deposition but he failed to appear. Finally, pursuant to court order issued in one of the other Hennepin County cases, Morton was deposed on December 10, 1983.

The summary judgment motion was argued on November 14, 1983 in Hennepin County. On December 5, 1983, the Hennepin County district court issued an order granting summary judgment in favor of Pelletier on the basis that Freidheim did not give Pelletier the statutorily-required prelien notice. The trial court determined Freidheim failed to present any facts supporting its position that Pelletier was both the owner of the lots and the contractor, and thus it was not entitled to prelien notice under Minn.Stat. § 514.011, subd. 4a (1982). The court concluded Pelletier was the owner of the lots, but not the contractor.

A few days after the summary judgment order was filed, Freidheim's attorney contacted the court and requested a stay of the order. On December 14, 1983, the trial court issued an order staying the December 5 summary judgment order. Subsequently, Freidheim moved to reconsider the summary judgment order. The trial court vacated the order and denied Pelletier's motion for summary judgment. In its memorandum, the court explained that, based on Morton's December 10, 1983 deposition, a genuine issue of material fact existed regarding whether Pelletier was a contractor.

After a short trial to the court, the trial court found Pelletier was a contractor-owner under Minn.Stat. § 514.011, subd. 4a, and therefore Freidheim was not required to give Pelletier prelien notice. The trial court also concluded Freidheim was not guilty of laches, was not estopped from asserting its liens and was not guilty of bad faith under Minn.Stat. § 549.21 (1982). The court concluded Freidheim was entitled to recover $71,173.46 plus interest. Further, the court concluded Freidheim had valid mechanic's liens on the three lots. The trial court ordered the liens be enforced by foreclosure.

ISSUES

1. Did the Hennepin County trial court abuse its discretion in vacating its summary judgment order?

2. Did the trial court err in determining Pelletier was both a contractor and owner of the property in issue, and therefore Freidheim was not required to give Pelletier prelien notice?

3. Did the trial court abuse its discretion in denying Pelletier equitable relief from the enforcement of the mechanic's liens?

ANALYSIS

1. Pelletier argues the Hennepin County trial court erred in vacating the December 5, 1983 summary judgment order.

Minn.R.Civ.P. 60.02 provides that:

[T]he court may relieve a party * * * from a final judgment * * *, order, or proceeding and may order a new trial or grant such other relief as may be just for the following reasons: (1) Mistake, inadvertence, surprise or excusable neglect; * * * or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time * * *.

To set aside a summary judgment, the moving party must satisfy four conditions. The party must (1) possess a reasonable defense on the merits, (2) have a reasonable excuse for the failure or neglect involved, (3) have acted with due diligence after notice of the entry of judgment, and (4) show that no substantial prejudice will result to the other party. Finden v. Klaas, 268 Minn. 268, 271, 128 N.W.2d 748, 750 (1964) (vacating a default judgment); see also Conley v. Downing, 321 N.W.2d 36, 40 (Minn.1982) (vacating a summary judgment). The trial court has discretion to grant relief under rule 60.02 and its decision will not be reversed absent an abuse of that discretion. Simons v. Schiek's, Inc., 275 Minn. 132, 138, 145 N.W.2d 548, 552 (1966).

We do not believe the trial court abused its discretion in vacating the summary judgment. First, Freidheim had a reasonable defense on the merits of the case. Freidheim raised a legitimate argument that it was not required to give prelien notice to Pelletier under Minn.Stat. § 514.011 (1982). Second, Freidheim had a reasonable excuse for failing to submit evidence of a material factual dispute at the summary judgment motion. The action was only two months old at the time of the motion. We cannot say Freidheim was lax in its discovery during that short period of time. Freidheim's attorney advised Pelletier's attorney he wanted to be present for Morton's deposition. Pelletier made numerous attempts to depose Morton before the summary judgment motion but Morton would not cooperate. This case is unlike Boulevard Del, Inc. v. Stillman, 343 N.W.2d 50 (Minn.Ct.App.1984), where the party made no effort to depose those who had personal knowledge of facts that could defeat a summary judgment motion.

Because we believe Freidheim's failure to oppose the summary judgment motion with material disputed facts is excusable conduct, we need not address whether a vacation of the summary judgment order is precluded by Freidheim's failure to seek a continuance. See State v. $14,000 Dollars in Various Denominations of United States Currency, 345 N.W.2d 277, 280 (Minn.Ct.App.1984).

Third, Freidheim acted with due diligence after the trial court ordered summary judgment. Freidheim's attorney contacted the court within a few days after the order was filed and requested a stay. Finally, Pelletier did not suffer substantial prejudice as a result of the court's order vacating the summary judgment order. Pelletier did obtain a release of funds that were escrowed with a title company, but it agreed to indemnify the title company in the event that the liens were subsequently declared...