Safeport, Inc. v. Equipment Roundup & Mfg.

• Decision Date: 06 November 2002
• Citation: 60 P.3d 1076,184 Or.App. 690
• Parties: SAFEPORT, INC., an Oregon corporation, Respondent-Cross-Appellant, v. EQUIPMENT ROUNDUP & MANUFACTURING, INC., an Oregon corporation, Appellant-Cross-Respondent, Equipment Roundup & Manufacturing, Inc., an Oregon corporation, Third-Party Plaintiff-Appellant-Cross-Respondent, v. Clay Allen, Third-Party Defendant-Respondent-Cross-Appellant, and Pioneer Trust Bank, Third-Party Defendant-Respondent.
• Court: Oregon Court of Appeals

60 P.3d 1076

184 Or.App. 690

SAFEPORT, INC., an Oregon corporation, Respondent-Cross-Appellant, v. EQUIPMENT ROUNDUP & MANUFACTURING, INC., an Oregon corporation, Appellant-Cross-Respondent, Equipment Roundup & Manufacturing, Inc., an Oregon corporation, Third-Party Plaintiff-Appellant-Cross-Respondent, v. Clay Allen, Third-Party Defendant-Respondent-Cross-Appellant, and Pioneer Trust Bank, Third-Party Defendant-Respondent.

98C-10775; A112787.

Court of Appeals of Oregon.

Argued and Submitted August 1, 2002.

Decided November 6, 2002.

Robert J. Miller, Eugene, argued the cause for appellant-cross-respondent. With him on the briefs were Brien F. Hildebrand and Moomaw, Miller & Hildebrand, LLP.

Thomas J. Murphy, Tigard, argued the cause for respondents-cross-appellants Safeport, Inc. and Clay Allen. With him on the briefs was Scott•Hookland LLP.

No appearance for respondent Pioneer Trust Bank.

Before LANDAU, Presiding Judge, and BREWER and SCHUMAN, Judges.

BREWER, J.

Defendant Equipment Roundup & Manufacturing, Inc., appeals a judgment foreclosing its construction lien. It assigns error to the trial court's denial of its request for attorney fees and to the court's denial of its motion to reopen the record and amend its pleading to comply with statutory requirements for an award of attorney fees. Defendant also assigns error to the trial court's grant of priority over defendant's lien and its costs and disbursements in this action. Finally, defendant challenges the dismissal of its quantum meruit claim against the owner of the foreclosed property. Plaintiff Safeport, Inc., cross-appeals, assigning error to the trial court's denial of its request for a jury trial on its breach of contract claim. On defendant's appeal, we reverse and remand with respect to the denial of attorney fees and otherwise affirm. On plaintiff's cross-appeal, we reverse and remand.

Plaintiff is a corporation, the sole shareholder of which third-party defendant Clay Allen serves as plaintiff's president. Allen owns real property on which plaintiff sought to establish a dry-land boat storage business. Plaintiff contracted with defendant to assemble a rack structure that would hold and store boats. Plaintiff agreed to make payments to defendant as the work progressed. During the construction process, problems arose that required extra work. Defendant performed the extra work with plaintiff's approval, but plaintiff later disputed that it was responsible for the charge for that work, which amounted to $20,142.49. Plaintiff also objected that the structure did not meet the specifications required by the contract and informed defendant that it would not make any more payments. As a result, defendant stopped work and filed a construction lien against the improvement and real property for $84,662.49, the amount of the original contract plus the charge for the extra work, less the amount of payments it had already received. Citing ORS 87.057(2), plaintiff demanded a list of materials and supplies with the charges therefor and a statement of the contractual basis for the owner's obligation. In its written reply, defendant asserted that ORS 87.057(2) requires a lien claimant to furnish such a list or a statement of the contractual basis, and it further stated that the original contract provided the basis for plaintiff's obligation. In addition, defendant included with its written response a list itemizing the labor and material costs for the extra work.

Plaintiff then brought this action against defendant for breach of contract, breach of warranty, breach of the duty of good faith and fair dealing, fraud, and negligence. Plaintiff demanded a jury trial. In its answer, defendant asserted counterclaims for breach of contract based on the amount unpaid on the contract and for quantum meruit. Defendant also brought a third-party claim against Allen and Pioneer Trust Bank (bank), seeking to foreclose its construction lien against the real property and alleging a superior interest to bank's mortgage lien against the property. In addition, defendant alleged a quantum meruit claim against Allen, asserting that Allen would be unjustly enriched if he were permitted to retain the benefit of the improvement without paying for its reasonable value.

On defendant's motion for summary judgment, the trial court dismissed all of plaintiff's claims except for its breach of contract claim. The court bifurcated defendant's lien foreclosure counterclaim from the parties' contract claims, trying the lien foreclosure claim first. After the foreclosure trial, the court concluded that the lien was valid. The court found that defendant had substantially performed the contract, that it had installed the structures in a good and workmanlike manner, and that any further performance by defendant was excused by plaintiff's refusal to pay for the work already performed.

In a post-trial hearing, the court awarded defendant the amount of the lien claim less $8,100 for remaining work to be performed under the contract. The court also concluded that plaintiff did not have a right to a jury trial on its breach of contract claim, because ORS 87.060(3) directs that, if the lien is allowed, the court will resolve all other pleaded issues. Having concluded in the lien foreclosure proceeding that defendant had not breached the contract, the court dismissed plaintiff's breach of contract claim. The court also dismissed defendant's quantum meruit claim, concluding that defendant had failed to sustain its burden of proof with respect to that claim.

Defendant then submitted a statement for attorney fees. After conducting an evidentiary hearing, the court determined that an award of attorney fees was justified but nevertheless declined to make such an award because defendant had failed to plead and prove that it had furnished plaintiff with a list of materials and the charge therefor or a statement of contractual basis for the lien, as required by ORS 87.057(3).

Finally, the court determined that defendant's lien was entitled to priority over bank's mortgage, but only as to the segregated portion of the labor charge, $12,980.75. The court found that defendant had failed to provide bank with notice of the materials portion of the charge. The court awarded defendant its costs and disbursements but did not provide that those costs were entitled to priority over bank's mortgage.

ATTORNEY FEES

We begin by addressing defendant's assignments of error relating to the denial of its petition for attorney fees. Defendant argues that the trial court erred in denying attorney fees pursuant to ORS 87.060(5), which provides:

"When notice of intent to foreclose the lien has been given, pleaded and proven as provided for in ORS 87.057, the court, upon entering judgment for the lien claimant, shall allow as part of the costs all moneys paid for the filing or recording of the lien and all moneys paid for title reports required for preparing and foreclosing the lien. In a suit to enforce a lien perfected under ORS 87.035 the court shall allow a reasonable amount as attorney fees at trial and on appeal to the party who prevails on the issues of the validity and foreclosure of the lien."

ORS 87.057, in turn, provides, in part:

"(2) Where a notice of intent to foreclose a lien has been given as provided by subsection (1) of this section, the sender of the notice upon demand of the owner shall furnish to the owner within five days after the demand a list of the materials and supplies with the charge therefor, or a statement of a contractual basis for the owner's obligation, for which a claim will be made in the suit to foreclose.

"(3) A plaintiff or cross-complainant seeking to foreclose a lien in a suit to foreclose shall plead and prove compliance with subsections (1) and (2) of this section. No costs, disbursements or attorney fees otherwise allowable as provided by ORS 87.060 shall be allowed to any party failing to comply with the provisions of this section."

In its first assignment of error, defendant argues that it is not a plaintiff or cross-complainant within the meaning of ORS 87.057(3) but, instead, is a third-party plaintiff. Therefore, defendant argues, any failure on its part to comply with subsection (3) cannot justify the denial of attorney fees under ORS 87.060. In its second assignment of error, defendant argues, in part, that, even if ORS 87.057 does apply to it as a third-party plaintiff, the trial court erred in concluding that defendant did not prove compliance and erred in denying defendant's motion to amend the pleadings to conform to the evidence. Defendant asserts that it offered sufficient evidence to prove that it complied with ORS 87.057(2). As defendant notes, the trial court declined to award attorney fees, not because plaintiff did not receive the required information but because the court found that defendant did not plead and prove that it had provided the information.

We need not address defendant's first assignment of error because we conclude that, even if ORS 87.057 does apply here, defendant proved compliance with its requirements, and the trial court erred in denying defendant's motion to amend its pleading to conform to that evidence. Plaintiff does not challenge defendant's assertion that it submitted to the trial court the evidence required by the statute. Indeed, both plaintiff and defendant attached copies of the relevant documents to their submissions in connection with plaintiff's motion for partial summary judgment. Instead, plaintiff urges that, because the summary judgment motion was unsuccessful, the evidence did not become part of the relevant record. Plaintiff asserts that defendant had to present evidence of its purported compliance at trial, or no later than the post-trial hearing on its attorney fee claim, and that defendant failed to do so.

On the last point, plaintiff is mistaken. ORCP 68 C(4)(c)(i) provides that, in an attorney fee...