Projects Unlimited, Inc. v. Copper State Thrift & Loan Co.

• Decision Date: 06 September 1990
• Docket Number: No. 860340,860340
• Parties: PROJECTS UNLIMITED, INC., a Utah corporation, Plaintiff and Appellant, v. COPPER STATE THRIFT & LOAN CO., Valley Bank & Trust Co., Cottonwood Thrift & Loan Co., Western Savings & Loan Co., Bradshaw Development Co., et al., Defendants and Appellees.
• Court: Utah Supreme Court

Page 738

798 P.2d 738

PROJECTS UNLIMITED, INC., a Utah corporation, Plaintiff and Appellant, v. COPPER STATE THRIFT & LOAN CO., Valley Bank & Trust Co. Cottonwood Thrift & Loan Co., Western Savings &amp Loan Co., Bradshaw Development Co., et al., Defendants and Appellees.

No. 860340.

Supreme Court of Utah.

Sept. 6, 1990.

Rehearing Denied Oct. 11, 1990.

Ellen Maycock, Robert F. Babcock, and Darrel J. Bostwick, Salt Lake City, for plaintiff-appellant.

Jon C. Heaton and James Boevers, Salt Lake City, for Copper State Thrift & Loan Co., Valley Bank & Trust Co., Cottonwood Thrift & Loan Co., and Western Sav. & Loan Co.

Jeffrey M. Jones, Salt Lake City, for Copper State.

Dennis V. Haslam and Kathy A. F. Davis, Salt Lake City, for Cottonwood Thrift.

Steven D. Crawley, Salt Lake City, for Bradshaw Development Co.

Richard H. Nebeker, Salt Lake City, for Metler.

Matthew F. Hilton, Draper, for Stringfellow and Highland Orchards.

Allen Sims and Gary E. Doctorman, Salt Lake City, for Hugo F. Diederick.

Richard A. Rappaport, Salt Lake City, for Carolyn L. Nielsen.

Julian D. Jensen, Salt Lake City, for Brent Ivie Elec., Inc.

Bruce A. Maak, Salt Lake City, for Deseret Pacific Mortg. and Scott A. Kafesjian.

GREGORY K. ORME, Court of Appeals Judge:

Projects Unlimited, Inc., appeals from a summary judgment invalidating its mechanic's lien against the interests of Copper State Thrift & Loan Company, Valley Bank & Trust Company, and Cottonwood Thrift & Loan Company, Inc. We affirm the summary judgment as to Cottonwood Thrift, but reverse as to Copper State and Valley Bank.

I. FACTS

Bradshaw Development Company, Inc. ("Bradshaw"), owned a parcel of land, the Highland Orchards property, which it planned to develop into the Highland Orchards Condominium project. The property was divided into two parcels with the objective of constructing condominiums in two phases--phase I and phase II. Phase I, when completed, would consist of eighteen condominium units. Bradshaw engaged Projects Unlimited, Inc. ("Projects") to construct some of the phase I units. In September 1982, Bradshaw and Projects entered into a contract for the construction of two units--FF-6-A1 and FF-6-B1, hereinafter referred to as units 1 and 2. Those parties entered into a second contract in April 1983 concerning the contruction of six additional units--FF-5-A1, FF-5-B1, FF-11-A1, FF-11-A2, FF-11-B1, and FF-11-B2, hereinafter referred to as units 3 through 8, respectively. The contracts allocated prices on a per-unit basis.

Copper State Thrift & Loan Company financed construction of the eight units. The Copper State loan to Bradshaw was secured by two trust deeds. The first deed was recorded in December 1982 and covered units 1 and 2. The second deed was recorded in June 1983 and covered units 3 through 8.

Relying on the terms of its loan agreement with Bradshaw, Copper State refused to advance additional funds to Bradshaw in June 1983. Sometime thereafter, Bradshaw stopped making payments to Projects. On October 7, 1983, Projects ceased construction with a substantial balance still owing to Projects. Bradshaw did not record its condominium declaration until August 1983.

During construction, units 1, 2, and 3 were sold. The sales of units 1 and 2 were financed by Valley Bank & Trust Company, which recorded trust deeds on those units in May 1983. Copper State subordinated its December 1982 trust deed to the May 1983 trust deeds of Valley Bank. The sale of unit 3 was financed by Western Savings & Loan Company, which is not a party to this appeal. After construction was halted, units 4 and 5 were sold. The sales of these units were financed by Cottonwood Thrift & Loan Company and secured by trust deeds recorded in December 1983.

In November 1983, Projects recorded a notice of mechanic's lien against the Highland Orchards property. The notice described Bradshaw as the owner of the subject property. The lien notice described the property by a metes and bounds description including all of the phase I and phase II property. ¹ The notice did not describe the eight constructed units, by employing their descriptions as used in the condominium declaration or otherwise, nor did it allocate unpaid amounts attributable to each unit. The notice did not distinguish between work performed under the September 1982 and April 1983 contracts. The notice of lien cited the construction starting date as October 10, 1982, and the ending date as October 7, 1983. Although the notice of lien contained the signature and seal of a notary and the date of notarization, it did not give the notary's address or commission expiration date.

Bradshaw and Projects negotiated to release from the lien units 4 and 5, financed by Cottonwood Thrift. The lien release specifically stated that units 4 and 5 were released from the scope of the lien in exchange for the payment of $90,000. Thereafter, Projects filed an amended notice of lien. The amended notice was essentially identical to the initial notice except that $85,000 was added to the "credits and offsets" figure and subtracted from the "balance owing" figure. The same metes and bounds description was used to describe the property. The amended notice did not exempt units 4 and 5 from the property description, but attached to it were a map of the entire condominium project and a copy of the partial release.

Projects commenced an action to foreclose the lien and recorded a lis pendens in March 1984. The complaint alleged that Bradshaw had breached its contracts with Projects. The complaint also called for a determination of priorities among the various claimants. Valley Bank was not named as a defendant in the complaint but had actual knowledge of the action at least by August 1984, when it reviewed a title report showing Projects' lis pendens and initiated relevant correspondence with Projects. On May 24, 1985, almost twenty months after it ceased construction, Projects filed an amended complaint which joined Valley Bank and others as defendants. Bradshaw failed to answer either complaint, and a default judgment was entered against it in December 1985.

Copper State, Cottonwood Thrift, Valley Bank, and Western Savings ("the Banks") moved for summary judgment on the remaining claims. They collectively argued that Projects' lien was invalid under the mechanic's lien statute and under the Condominium Ownership Act. Essentially, their arguments under the mechanic's lien statute were that (1) the jurat lacked the notary's address and the date her commission expired, (2) the notice describes more property than was actually subject to the lien, (3) the notice describes property which Bradshaw initially did not own, and (4) the lien did not distinguish between work performed under the September 1982 and April 1983 contracts. The Banks also argued that the Condominium Ownership Act required Projects to file a separate lien on each condominium unit as described in the condominium declaration.

Valley Bank also argued that Projects had failed to join it as a defendant within the statutorily prescribed time and was therefore barred from later amending its complaint to add that bank as a defendant. Moreover, Cottonwood Thrift argued that it was not a proper party to the suit because Projects had released the units it financed from the scope of the lien. Projects filed a cross-motion for partial summary judgment on its claim against Copper State, its construction lender.

The trial court granted the Banks' summary judgment motions and denied Projects' motion. The court concluded that (1) Projects had unequivocally released from the lien's coverage the units financed by Cottonwood Thrift, (2) Projects failed to join Valley Bank as a party within the required time, and (3) the lien was invalid due to improper notarization "and on grounds otherwise set forth in the moving defendants' memoranda on file."

On appeal, Projects challenges each of the trial court's conclusions. Primarily, it argues that Utah does not require a lien notarization to contain the notary's address and/or commission expiration date.

The Banks assert the same arguments on appeal that they asserted in the trial court. In particular, they argue that we should affirm the trial court's decision on the notarization issue. Moreover, the Banks assert that, even assuming we were to agree with Projects on the notarization issue, we can and should affirm the summary judgment due to other failures in the lien notice. And indeed, "we may affirm trial court decisions on any proper ground(s), despite the trial court's having assigned another reason for its ruling." Buehner Block Co. v. UWC Assocs., 752 P.2d 892, 895 (Utah 1988); see also State v. One 1979 Pontiac Trans Am, 771 P.2d 682, 684 (Utah Ct.App.1989). The Banks also cross-appeal, seeking an award of attorney fees in the district court and on appeal.

II. STANDARD OF REVIEW

"Summary judgment is proper only when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law." Transamerica Cash Reserve, Inc. v. Dixie Power & Water, Inc., 789 P.2d 24, 25 (Utah 1990); see Utah R.Civ.P. 56(c). In our determination of whether the trial court properly granted summary judgment, we must review the facts in the light most favorable to the losing party. E.g., Ron Case Roofing & Asphalt Paving, Inc. v. Blomquist, 773 P.2d 1382, 1385 (Utah 1989). Moreover, we review the trial court's legal conclusions for correctness and give no particular deference to that court's view of the law. Id.

III. MECHANIC'S LIENS GENERALLY

We begin our analysis by recognizing that "[t]he purpose of the mechanic's lien act is remedial in nature and seeks to provide protection to laborers and materialmen who have added directly to the value of the property of another by their materials or labor." Calder Bros. Co. v. Anderson, 652 P.2d 922, 924 (Utah 1982). On the other hand, we recognize that liens create "an encumbrance on...