Schaffer v. Frank Moyer Const., Inc.

• Decision Date: 31 May 2001
• Docket Number: No. 99-0669.,99-0669.
• Citation: 628 N.W.2d 11
• Parties: Gregory R. SCHAFFER d/b/a Gregory R. Schaffer Construction, Appellee, v. FRANK MOYER CONSTRUCTION, INC., Appellant.
• Court: Iowa Supreme Court

628 N.W.2d 11

Gregory R. SCHAFFER d/b/a Gregory R. Schaffer Construction, Appellee, v. FRANK MOYER CONSTRUCTION, INC., Appellant.

No. 99-0669.

Supreme Court of Iowa.

May 31, 2001.

David L. Wetsch of Wetsch & Associates and Jeanne K. Johnson, Des Moines, for appellant.

Catherine C. Dietz-Kilen of Harrison & Dietz-Kilen, Des Moines, for appellee.

Considered en banc.

LAVORATO, Chief Justice.

In this action for foreclosure of a mechanic's lien, the district court entered judgment for Gregory R. Schaffer, a subcontractor, against Frank Moyer Construction, Inc., a contractor. Frank Moyer Construction, Inc. appeals, challenging the district court's (1) finding that the lien was valid and enforceable, (2) dismissal of its counterclaim, and (3) award of trial and appellate attorney fees and costs. We affirm and remand with directions.

I. Facts.

We review actions to enforce mechanic's liens de novo. Baumhoefener Nursery, Inc. v. A & D P'ship, II, 618 N.W.2d 363, 366 (Iowa 2000). While we give weight to the district court's findings of fact, we are not bound by them. Iowa R.App. P. 14(f)(7); Baumhoefener, 618 N.W.2d at 366. On our de novo review, we make the following findings of fact.

Frank Moyer Jr. is president of Frank Moyer Construction, Inc. (For convenience we will refer to the individual and company collectively as Moyer.) On January 12, 1995, Moyer entered into a real estate contract with Michelle LaMasters and Steven Hartung. The contract called for Moyer to sell Hartung and LaMasters land located at 13462 Lakeshore Drive, Clive, Iowa, and to build and sell them a custom house on that land. LaMasters and Hartung agreed to pay Moyer $418,350 for the house and lot.

Construction started in February 1995. LaMasters and Hartung wanted Gregory Schaffer to do the trim carpentry work on the home. Moyer hired Schaffer to provide such work.

The agreement between Moyer and Schaffer was not reduced to writing. At the time, Schaffer had other job commitments. For this reason, Schaffer told Moyer that he could not guarantee a completion date. He also told Moyer that he would not have a full crew working on the house and that he alone would be working on the job unless he was able to have more workers there. Moyer agreed to these terms.

Schaffer began the trim work in June. In August, Moyer fired Schaffer apparently because Moyer was dissatisfied with the progress of the trim work. Moyer hired Larry Sutherland to complete the trim work.

On September 11, Schaffer submitted a bill to Moyer for work completed before Moyer fired him. The bill was for $7577. On October 3, Schaffer filed a verified statement of account to perfect his mechanic's lien for the work he had done. See Iowa Code §§ 572.2, .8 (1995).

On October 24, Moyer served Schaffer with a notice of demand to bring suit. See Iowa Code § 572.28 ("Upon the written demand of the owner, the owner's agent, or contractor, served on the lienholder requiring the lienholder to commence action to enforce the lien, such action shall be commenced within thirty days thereafter, or the lien and all benefits derived therefrom shall be forfeited.").

II. Proceedings.

On November 8, Schaffer filed the present suit against Moyer seeking a judgment for $7577 and foreclosure of his mechanic's lien against the property.

On November 17, Moyer deeded the property to LaMasters and Hartung.

On December 1, Moyer moved to dismiss the suit on the ground that Schaffer's mechanic's lien was unenforceable because Schaffer had failed to provide LaMasters and Hartung notice of his mechanic's lien pursuant to Iowa Code section 572.14(2). The district court granted the motion, but on appeal we reversed and remanded for further proceedings. See Schaffer v. Frank Moyer Constr., Inc., 563 N.W.2d 605 (Iowa 1997) (Schaffer I).

Following remand, Moyer filed an answer and affirmative defenses. For its affirmative defenses, Moyer asserted that (1) the property was at all times the owner-occupied dwelling of LaMasters and Hartung; (2) Schaffer had failed to serve them notice of his mechanic's lien; (3) LaMasters and Hartung had paid Moyer in full thereby rendering the lien unenforceable against the company pursuant to Iowa Code section 572.14(2); (4) Schaffer had failed to join LaMasters, Hartung, and other interested parties as indispensable parties; and (5) Schaffer had failed to perform the carpentry work in a good and workmanlike manner.

Later, the district court sustained Schaffer's motion to join LaMasters, Hartung, and Liberty Savings Bank, which held a mortgage against the property. Schaffer dismissed these defendants when Moyer posted a bond in twice the amount of Schaffer's claim. Pursuant to Iowa Code section 572.15, the bond had the effect of discharging Schaffer's mechanic's lien on the property.

The court also sustained Moyer's motion to amend its answer to assert a counterclaim. In its counterclaim, Moyer asserted that Schaffer and Moyer orally agreed that Schaffer would provide finish carpentry work in a timely and workmanlike manner. Moyer further asserted that Schaffer breached the agreement and as a result of this breach, Moyer incurred $11,000.60 for (1) repairs; (2) interest expenses associated with the delay; and (3) labor and material charges associated with the work done by Sutherland. Moyer asked for a judgment in its favor against Schaffer for the $11,000.60.

Moyer moved for summary judgment on its counterclaim, which the district court overruled at the time it entered its ruling on the merits of the case. In that ruling, the district court concluded that Schaffer's lien was valid and enforceable even though he had not provided notice to LaMasters and Hartung under Iowa Code section 572.14(2). The court ruled in the alternative that even if the lien was not enforceable, Schaffer was still entitled to enforce his contract with Moyer. On this alternative theory, the court found that (1) Schaffer had "substantially performed his obligations" under his oral agreement with Moyer for carpentry trim work; (2) Moyer had refused to pay him; and (3) Schaffer was entitled to reasonable compensation for the work he had completed. The court entered judgment against Moyer Construction in favor of Schaffer for $7577 plus interest. The court denied Moyer's counterclaim.

Following this ruling, the district court rejected Moyer's Iowa Rule of Civil Procedure 179(b) motion in which Moyer asserted, among other things, that it had established its counterclaim for expenses it incurred in remedying Schaffer's defective workmanship.

In another post-trial ruling, the district court—over Moyer's objections—awarded Schaffer $20,875.27 in attorney fees and costs, plus interest.

III. Issues.

On appeal, Moyer raises four issues. First, it contends that the district court erred in concluding that Schaffer had a valid and enforceable mechanic's lien. In support of its contention, Moyer argues that Schaffer had failed to properly serve notice on LaMasters and Hartung.

Second, Moyer contends the district court erred in concluding Schaffer could recover against it on a breach-of-contract claim. In support of this contention, Moyer argues that alternative theories of recovery may not be joined in an action to enforce a mechanic's lien.

Third, Moyer contends that the district court erred in failing to award it damages on its counterclaim for amounts it expended to redo Schaffer's work.

Last, Moyer contends the district court abused its discretion in awarding Schaffer attorney fees and costs.

IV. Validity of the Mechanic's Lien.

In its motion for summary judgment, reasserted in its motion for directed verdict, Moyer contended that it was entitled to judgment as a matter of law. In support of its contention, Moyer argued the facts were uncontroverted that LaMasters and Hartung had an equitable ownership in the property before Schaffer filed his mechanic's lien. Moyer argued further that because of this ownership interest, the building was an "owner-occupied" dwelling and this fact required Schaffer to serve LaMasters and Hartung with notice of his mechanic's lien pursuant to Iowa Code section 572.14(2). Schaffer's failure to serve such notice, Moyer asserted, rendered his lien invalid and unenforceable. For these reasons, Moyer contends on appeal that the district court erred in failing to grant the summary judgment motion and motion for directed verdict.

A. Applicable law. Iowa Code section 572.2 describes who is entitled to a mechanic's lien:

Every person who shall furnish any material or labor for, or perform any labor upon, any building or land for improvement, alteration, or repair thereof ... by virtue of any contract with the owner, the owner's agent, trustee, contractor or subcontractor ... shall have a lien upon such building or improvement, and land belonging to the owner ... to secure payment for material or labor furnished or labor performed.

Iowa Code § 572.2 (emphasis added).

An "owner" includes "every person for whose use or benefit any building, erection, or other improvement is made...." Iowa Code § 572.1(3).

A "subcontractor" includes

every person furnishing material or performing labor upon any building, erection, or other improvement, except those having contracts therefore directly with the owner, the owner's agent, or trustee.

Iowa Code § 572.1(5).

According to the plain language of section 572.2, before a lien can arise, the contract referred to in section 572.2 must be with "the owner, the owner's agent, trustee, contractor, or subcontractor." This court has therefore refused to enforce a mechanic's lien when the contractor has performed for someone other than a person who has a present and beneficial interest in the property. See Clemens Graf Droste Zu Vischering v. Kading, 368 N.W.2d 702, 710 (Iowa 1985) (holding that contracts between contractors and vendor, entered into after vendor conveyed his interest in the building to vendee, to improve the building...