Stonebrook Constr., LLC v. Chase Home Fin., LLC
| Decision Date | 26 April 2012 |
| Docket Number | No. 37868.,37868. |
| Parties | STONEBROOK CONSTRUCTION, LLC, Plaintiff–Appellant, v. CHASE HOME FINANCE, LLC, Defendant–Respondent, and Joshua Ashby and Katrina Ashby, husband and wife; Alliance Title & Escrow Corp., Defendants. |
| Court | Idaho Supreme Court |
Smith, Driscoll & Associates, PLLC, Idaho Falls, for appellant.
Buster J. Driscoll argued. Hawley Troxell Ennis & Hawley LLP, Boise, for respondent. Steven F. Schossberger argued.
This appeal arises from an action brought by Stonebrook Construction, LLC (Stonebrook or "the LLC") against Chase Home Finance, LLC (Chase), seeking to foreclose a mechanic's lien. The district court granted Chase's motion for summary judgment, holding that Stonebrook was precluded from placing a lien against the subject property because it did not properly register under the Idaho Contractor Registration Act (ICRA or "the Act").
Stonebrook appeals, arguing that Chase lacked standing to assert this defense and is not within the class intended to be protected by the ICRA. Alternatively, Stonebrook contends that the good-faith registration of one member of the LLC constituted actual or substantial compliance with the requirements of the ICRA. We affirm.
In 2006, Tyler Schwendiman and Brandon Burton began operating a construction contracting business under the assumed business name "Stonebrook Construction." At that time, Schwendiman also applied for and received a registered general contractor license. In 2007, Schwendiman and Burton filed a certificate of organization with the Idaho Secretary of State and continued operating their business as a limited liability company known as Stonebrook Construction, LLC. This entity did not apply for registration under the ICRA; rather, Stonebrook's members believed that Schwendiman's previous registration fulfilled the requirements of the Act.
Stonebrook entered into a contract to build a home on property in Bonneville County owned by Joshua and Katrina Ashby (the Ashbys). Between November of 2007 and June of 2008, the LLC provided labor and materials for the construction work on the Ashbys' home. The Ashbys executed a deed of trust against the property under which Chase is the successor beneficiary. The deed of trust was recorded on June 4, 2008. The Ashbys failed to pay Stonebrook the amount owed for the work and the LLC recorded a claim of lien against the subject property on August 8, 2008. Stonebrook timely brought an action to foreclose its lien, and Chase moved for summary judgment on the ground that Stonebrook was precluded from placing a lien against the subject property because it failed to comply with the registration requirements of the ICRA. The district court granted Chase's motion and dismissed Stonebrook's claim of lien. Stonebrook appealed and now asks this Court to vacate the district court's judgment and remand for further proceedings.
This Court reviews appeals from an order of summary judgment de novo, and the "standard of review is the same as the standard used by the trial court in ruling on a motion for summary judgment." Curlee v. Kootenai Cnty. Fire & Rescue, 148 Idaho 391, 394, 224 P.3d 458, 461 (2008) (citations omitted). Thus, summary judgment is appropriate if "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." I.R.C.P. 56(c). Under this standard, "disputed facts are construed in favor of the non-moving party, and all reasonable inferences that can be drawn from the record are drawn in favor of the non-moving party."
Curlee, 148 Idaho at 394, 224 P.3d at 461. Where "the evidence reveals no disputed issues of material fact, then only a question of law remains, over which this Court exercises free review." Lockheed Martin Corp. v. Idaho State Tax Comm'n, 142 Idaho 790, 793, 134 P.3d 641, 644 (2006). This Court exercises "free review over interpreting a statute's meaning and applying the facts to the law." VFP VC v. Dakota Co., 141 Idaho 326, 331, 109 P.3d 714, 719 (2005).
Stonebrook argues that the district court erred by permitting Chase to raise Stonebrook's ICRA registration status as a defense and submits two arguments in support of its contention. Stonebrook first argues that Chase cannot raise the issue of the LLC's alleged failure to comply with the ICRA because Chase lacks "standing" to assert the statute as a defense. This argument is without merit. As we recently reiterated, "[s]tanding is a subcategory of justiciability, and the standing inquiry is focused on the party seeking relief." Taylor v. AIA Servs. Corp., 151 Idaho 552, 564, 261 P.3d 829, 841 (2011) (citing Martin v. Camas Cnty., 150 Idaho 508, 513, 248 P.3d 1243, 1248 (2011) ). Therefore, a defendant's standing "is not at issue" when evaluating the merits of a defense. Id.
In this case, Chase was the defendant and invoked Stonebrook's failure to comply with the ICRA as a defense. Chase's standing is therefore not an issue because it is not the party seeking relief. We hold that a defendant is not required to prove standing before raising a contractor's registration status as a defense in an action brought by the contractor.1
Stonebrook's second argument relies on precedent addressing the standards for application of a statute to establish negligence per se:
In order for the violation of a statute to be pertinent in a particular case, the statute must be applicable; that is, the statute must be designed to protect (1) the class of persons in which the plaintiff is included (2) against the type of harm which has in fact occurred as a result of its violation.
Kinney v. Smith, 95 Idaho 328, 331, 508 P.2d 1234, 1237 (1973) (citing Prosser on Torts 191–202 (3d ed. 1964)). Stonebrook argues that in order for Chase to invoke the ICRA in its defense, Chase must demonstrate that it is within the class the ICRA was designed to protect and that its injury is the type of harm the Act was designed to prevent. We disagree.
When the Legislature enacted the ICRA, it took the extraordinary step of expressly stripping the economic protections typically extended to contractors. First, the Act's penalty section prohibits unregistered contractors from bringing or maintaining "any action in any court of this state for the collection of compensation for" any contracting work done. I.C. § 54–5217(2). Second, the Act contains a separate provision expressly denying unregistered contractors the right to place a lien. I.C. § 54–5208.2 The Act contains no language limiting the circumstances under which these penalties apply. In view of the unambiguous language specifying the significant penalties imposed upon unregistered contractors, the issue to be resolved is not whether Chase is entitled to invoke the Act for its benefit, but whether Stonebrook complied with the Act's registration requirements.
Chase argues that the Act specifically requires limited liability companies to register and contains no exception permitting a limited liability company to rely on the registration of one of its members. Stonebrook contends that it complied with the Act because Burton and Schwendiman were acting in combination as a unit known as Stonebrook Construction, first as partners under an assumed business name and later as a limited liability company. Thus, Stonebrook argues, Schwendiman's personal registration satisfies the registration requirement because there is no requirement for every member of a unit to register separately. We hold that Schwendiman's registration does not constitute actual compliance with the ICRA.
This Court exercises "free review over interpreting a statute's meaning and applying the facts to the law." VFP VC, 141 Idaho at 331, 109 P.3d at 719. The standard this Court applies when interpreting statutes is well established:
Interpretation of a statute begins with an examination of the statute's literal words. Where the language of a statute is plain and unambiguous, courts give effect to the statute as written, without engaging in statutory construction. Only where the language is ambiguous will this Court look to rules of construction for guidance and consider the reasonableness of proposed interpretations.
Curlee, 148 Idaho at 398, 224 P.3d at 465 (citing Idaho Conservation League, Inc. v. Idaho State Dep't of Agric., 143 Idaho 366, 368, 146 P.3d 632, 634 (2006) (internal citations omitted)). A statute "is ambiguous where reasonable minds might differ or be uncertain as to its meaning." Payette River Prop. Owners Ass'n v. Bd. of Comm'rs of Valley Cnty., 132 Idaho 551, 557, 976 P.2d 477, 483 (1999) (citing Ada Cnty. v. Gibson, 126 Idaho 854, 856, 893 P.2d 801, 803 (Ct.App.1995) ). "However, ambiguity is not established merely because the parties present differing interpretations to the court." Id.
Under the ICRA, it is "unlawful for any person to engage in the business of, or hold himself out as, a contractor within this state without being registered" according to the provisions of the Act. I.C. § 54–5204(1). Further, a contractor that does not register as required by the Act "shall be denied and shall be deemed to have conclusively waived any right to place a lien upon real property as provided for in chapter 5, title 45, Idaho Code." I.C. § 54–5208. The Act defines a contractor as "[a]ny person who in any capacity undertakes, offers to undertake, purports to have the capacity to undertake, or submits a bid to, or does himself or by or through others, perform construction." I.C. § 54–5203(4)(a). A "person" is "any individual, ... limited liability company, ... or other entity or organization capable of conducting business, or any combination...
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