Shelcon Constr. Grp., LLC v. Haymond, s. 42845–8–II

• Decision Date: 27 May 2015
• Docket Number: 44995–1–II.,Nos. 42845–8–II,s. 42845–8–II
• Citation: 351 P.3d 895,187 Wash.App. 878
• Parties: SHELCON CONSTRUCTION GROUP, LLC, a Washington limited liability company, Respondent. v. Scott M. HAYMOND and Jane Doe Haymond, husband and wife; A–3 Venture LLC, a Washington limited liability company; A–4 Venture, an unknown entity type; A–1111 Venture LLC, a Washington limited liability company; 14224 Pioneer Living Trust; and Anchor Mutual Savings Bank, Appellants. Shelcon Construction Group, LLC, a Washington limited liability company, Respondent, v. Scott M. Haymond and Jane Doe Haymond, husband and wife; A–3 Venture LLC, a Washington limited liability company; A–4 Venture, an unknown entity type; A–1111 Venture LLC, a Washington limited liability company; 14224 Pioneer Living Trust, Defendants, Anchor Mutual Savings Bank, Appellant.
• Court: Washington Court of Appeals

187 Wash.App. 878

351 P.3d 895

SHELCON CONSTRUCTION GROUP, LLC, a Washington limited liability company, Respondent.

v.Scott M. HAYMOND and Jane Doe Haymond, husband and wife;

A–3 Venture LLC, a Washington limited liability company;

A–4 Venture, an unknown entity type;

A–1111 Venture LLC, a Washington limited liability company;

14224 Pioneer Living Trust;

and Anchor Mutual Savings Bank, Appellants.

Shelcon Construction Group, LLC, a Washington limited liability company, Respondent

v.Scott M. Haymond and Jane Doe Haymond, husband and wife;

A–3 Venture LLC, a Washington limited liability company;

A–4 Venture, an unknown entity type;

A–1111 Venture LLC, a Washington limited liability company;

14224 Pioneer Living Trust, Defendants

Anchor Mutual Savings Bank, Appellant.

Nos. 42845–8–II

44995–1–II.

Court of Appeals of Washington, Division 2.

May 27, 2015.

Allan L. Overland, Attorney at Law, Margaret Yvonne Archer, Attorney at Law, Tacoma, WA, for Appellants.

Lawrence Ballis Linville, David E. Linville, Linville Law Firm PLLC, Seattle, WA, for Respondent.

Opinion

WORSWICK, P.J.

¶ 1 In this consolidated appeal, Scott Haymond and Anchor Mutual Savings Bank (Anchor Bank) appeal judgments and decrees of foreclosure finding Haymond liable for $245,151.42 plus 18 percent interest, and prioritizing Shelcon Construction Group, LLC's (Shelcon) mechanic's lien above Anchor Bank's deed of trust. Haymond argues that the trial court erred by (1) awarding Shelcon 18 percent interest in the absence of a signed agreement to that amount, and by (2) miscalculating the amount of interest owed. Anchor Bank argues that the trial court erred by ruling that Shelcon's mechanic's lien on Haymond's property took priority over Anchor Bank's deed of trust on the same property despite the fact that Shelcon released its lien before Anchor Bank recorded its deed of trust. We find no error and affirm.

FACTS

A. Procedural Summary

¶ 2 This consolidated case has a long and complicated history. In summary, Shelcon sued Haymond and Anchor Bank to foreclose its mechanic's lien on real property and to obtain payment on construction contracts. It also sought a declaration that its lien was superior in priority to Anchor Bank's deed of trust on the property.

¶ 3 Anchor Bank obtained summary judgment based exclusively on Williams v. Athletic Field, Inc.,¹

this court's case concerning lien notice. Following a bench trial between, the trial court granted lien foreclosure and contract damages to Shelcon. Our Supreme Court subsequently overturned the case upon which the trial court had relied in granting summary judgment to Anchor Bank.² The parties stipulated to an order vacating the summary judgment in Anchor Bank's favor, and a bench trial followed between Shelcon and Anchor Bank. The trial court ruled that Shelcon's mechanic's lien took priority over Anchor Bank's deed of trust.

B. Mechanic's Lien

¶ 4 Scott Haymond, a real estate developer, owned several legal entities.³ He initiated a development project, commonly known as “the Farm,” at which he planned to build a commercial building.

¶ 5 Haymond contracted with Shelcon, a general contractor, to perform construction work at the Farm, including earthwork, excavation, demolition, clearing, and grading. Around January 17, 2006, Shelcon and Haymond first agreed to a scope of work for a contract price of $732,941.92. Haymond and Shelcon subsequently amended the scope of work and contract price several times.

¶ 6 On July 5 at 8:35 a.m., Shelcon's owner Shane Martin went to the Farm to prepare for clearing and grubbing⁴ by measuring the Farm's boundaries. Martin marked the boundaries with fluorescent ribbon to assist Shelcon's employees in visually determining the boundary lines. Martin later testified that he never cleared and grubbed without first marking boundary lines. A few days later on July 10th and 11th, Shelcon employees cleared and grubbed the Farm.

¶ 7 On June 20, 2008, Shelcon recorded a $303,291.29 mechanic's lien at the Pierce County Auditor's Office for its work on the Farm. The lien reflected work beginning July 5, 2006.

C. Lien Release and Deed of Trust

¶ 8 Meanwhile, at 2:14 p.m. on July 5, 2006, several hours after Martin began measuring boundaries at the Farm, Haymond granted a deed of trust to Washington First International Bank (Washington First) on the Farm, to secure a $1,540,000 loan. The parties recorded this deed of trust on July 5, 2006.

¶ 9 Around April 2008, Haymond sought a loan from Anchor Bank. Haymond sought financing to pay off the loan to Washington First and to provide extra funding to himself. When Anchor Bank learned of Shelcon's lien on the Farm, it told Haymond that it would not lend to him unless the Shelcon lien was released. Haymond asked Shelcon to release the lien, promising to pay Shelcon with loan proceeds from Anchor Bank. Shelcon released its lien with the purpose of enabling Haymond to obtain funding from Anchor Bank. Shelcon did not believe its release precluded it from claiming the unpaid work later. At the time of the lien release, Haymond owed Shelcon $303,291.29 and had paid only $17,000.

¶ 10 The lien release, recorded July 16, 2008, provided in part: “THE UNDERSIGNED LIEN CLAIMANT hereby releases the lien on the property owned or reputedly owned by....” CP (Sept. 11, 2013) at 647. The release contained no language addressing whether Haymond had paid Shelcon or whether the lien release was limited or conditional in any way.

¶ 11 Prior to the lien release, Haymond requested an additional $300,000 in the loan amount from Anchor Bank, saying that his budget was “really close and tight.” CP (Sept. 11, 2013) at 648. After the lien release, Haymond contacted Anchor Bank and claimed that the lien had been a misunderstanding. He falsely claimed that he owed Shelcon $303,291.29 for a project unrelated to the Farm, and that he had fully paid that amount. Anchor Bank accepted this explanation. Shelcon was unaware of this misrepresentation.

¶ 12 Also after the lien release, Haymond submitted several Shelcon invoices to Anchor Bank. The three invoices were dated July 21, 2008, and all three showed work being “100% complete” on discrete projects.⁵ CP (Sept. 11, 2013) at 648. Shelcon had prepared these invoices and Haymond provided them to Anchor to obtain loan disbursements. Shelcon and Haymond understood that these three invoices, totaling $79,200, “represented part, but not all, of what Shelcon was owed at the time that the invoices were submitted.”⁶ CP (Sept. 11, 2013) at 648. Haymond did not disclose to Anchor Bank that he owed additional money to Shelcon. These were the only invoices that Haymond provided to Anchor Bank. Anchor Bank approved payment of these invoices, and inspected the Farm to verify that work described in the invoices was complete.

¶ 13 Anchor Bank never communicated with Shelcon or any of its employees, although it had Shelcon's contact information. Anchor Bank did not attempt to verify with Shelcon whether Haymond had paid the $303,291.29 lien amount. Instead, Anchor Bank relied upon the lien release and proceeded with the loan to Haymond. On August 22, 2008, Haymond recorded a deed of trust on the Farm to Anchor Bank as security for a $3,900,000 loan and release of Washington First's deed of trust.

D. Second Lien and 18 Percent Interest

¶ 14 Shelcon and Haymond amended their scope of work and contract price on September 8, 2008, when Shelcon sent a letter and a contract to Haymond. This contract summarized all of Shelcon's work to date and all of Haymond's payments to date. It set out changes in the future scope of work and included new payment terms. These payment terms provided that Haymond pay Shelcon for any future extra work at cost plus 15 percent, that any overdue payments would accrue interest at 18 percent, and that Shelcon would be entitled to attorney fees and costs for any future enforcement actions. The contract called for immediate payment. The contract also included a merger clause:

This Contract including Job Proposal and Scope of Work and the General Conditions attached hereto represent the entire agreement between the OWNER and CONTRACTOR and supersedes all prior negotiations, representations, correspondence, proposals or agreements. This Contract may be amended only by written instrument signed by both the OWNER and CONTRACTOR.

CP (Aug. 28, 2013) at 11.

¶ 15 Neither party signed this contract. Martin personally presented the contract to Haymond and the two discussed it, and Haymond never objected to its terms. Haymond accepted the revisions and accepted its terms and conditions. After the date of the contract, Shelcon began to charge Haymond cost plus 15 percent for all extra work, and Haymond began paying this amount.

¶ 16 After the initial lien release on July 16, 2008, Shelcon continued to work at the Farm until February 12, 2009. On May 1, 2009, Shelcon recorded a second lien on the Farm for $309,369.58. This amount included work Shelcon had initially included in the first lien. The lien requested interest, but it did not specify in what amount.

E. Lawsuits

¶ 17 On December 31, 2009, Shelcon filed suit against Haymond and Anchor Bank. Shelcon sought contract damages in the amount of “no less than $300,000.00,” with the interest rate as provided in the contract. CP (Aug. 28, 2013) at 7. It also sought foreclosure of its lien against the defendants' interests in the Farm, and an order declaring its lien interest superior to all others.

¶ 18 After Anchor Bank was dismissed on summary judgment, Shelcon's claims against Haymond proceeded to a bench trial. At trial, Haymond asked Martin whether he knew that 18 percent interest was “illegal and protested by Mr. Haymond.” VRP (Sept. 19, 2011) at 173. Martin replied that he did not know 18 percent was illegal. Haymond then asked: “Is it correct that you're not asking for [18 percent interest] anymore?” VRP (Sept. 19, 2011) at 173. Martin responded, “From what I understand now, legally, you can only get 12...