Titanus Cement Wall Co., Inc. v. Watson, Docket Nos. 90869
| Decision Date | 06 May 1987 |
| Docket Number | Docket Nos. 90869,90870 |
| Citation | 405 N.W.2d 132,158 Mich.App. 210 |
| Parties | TITANUS CEMENT WALL COMPANY, INC., Plaintiff, v. John A. WATSON d/b/a Lumberjack Builders, Robert Salkema, Michigan State Housing Development Authority, ERB Lumber Company, Heights Heating & Cooling, Defendants, Homeowner Construction Lien Recovery Fund, Defendant-Appellee, and Glen W. and Marlene A. Stoddard, Defendants-Appellants. ERB LUMBER COMPANY, Plaintiff, v. John A. WATSON, d/b/a Lumberjack Builders, First Federal Savings Bank & Trust, Ray W. Malow Company, Defendants, David R. and Dorothea D. Heintz, First Federal Savings Bank & Trust, Defendants-Appellants, and Homeowner Construction Lien Recovery Fund, Defendant-Appellee. |
| Court | Court of Appeal of Michigan — District of US |
Snyder & Handler, P.C. by Wallace M. Handler, and Booth, Patterson, Lee, Karlstrom & Steckling by Carl G. Karlstrom, Pontiac, for defendants.
Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., and Walter V. Kron and Larry G. Watterworth, Asst. Attys. Gen., for Homeowner Const. Lien Recovery Fund.
Before DANHOF, C.J., and BRONSON and GILLESPIE, * JJ.
The predominant issue raised in this appeal is one of first impression and concerns whether contractors who supply materials and labor to a builder/developer for the construction of a single-family residence may recover the contract price of the materials and labor from the Homeowners Construction Lien Recovery Fund, Secs. 201 to 207 of the Construction Lien Act (Act), M.C.L. Sec. 570.1101 et seq.; M.S.A. Sec. 26.316(101) et seq., in the event they are unable to collect the contract price from the builder/developer.
Pursuant to a written contract, Titanus Cement Wall Company (Titanus) and Erb Lumber Company (Erb) each supplied materials or labor to John Watson (Watson), doing business as Lumberjack Builders, for the construction of a number of single family residences. Watson owned the land on which the homes were being constructed. Shortly after completing their contractual obligations, Titanus and Erb filed lien claims against the properties on which they had provided the services. When Watson did not pay Titanus or Erb, each filed suit to, among other things, foreclose their respective liens. The Homeowners Construction Lien Recovery Fund (Fund) was named as a defendant in one of the suits and was later added as a defendant in the other. By the time the instant complaints were filed, Glen and Marlene Stoddard had purchased one of the homes upon which a lien claim was being made and David and Dorothea Heintz had purchased another. Both had made full payment to Watson. The Stoddards were named as defendants in the suit filed by Titanus. The Heintzes were named as defendants in the suit filed by Erb, as was First Federal Savings Bank & Trust, which we presume is the Heintzes' mortgagee. Watson was named as a defendant in both suits.
At approximately the same time as Titanus and Erb filed their complaints, an involuntary bankruptcy petition was filed against Watson. The petition was eventually converted to a voluntary Chapter 7 petition. Apparently, the bankruptcy court modified the automatic stay provided by 11 U.S.C. Sec. 362 to allow Titanus and Erb to prosecute their foreclosure actions against the Stoddards' property and the Heintzes' property and to prosecute their claims against the Fund.
On July 30, 1985, the Oakland Circuit Court entered an order consolidating the Titanus suit, the Erb suit, and nineteen similar actions, all of which were against Watson or related parties. 1
On August 14, 1985, the circuit court entered an order of summary disposition, MCR 2.116(C)(8), in favor of the Fund and dismissed the Fund as a defendant in the Titanus suit. The court held that the instant factual situation was not one which the Legislature intended to be covered by the Fund.
On August 21, 1985, the circuit court granted a similar motion for summary disposition and on the same grounds dismissed the Fund from the Erb lawsuit.
On November 6, 1985, the court entertained a motion by the Stoddards to reconsider the court's August 14, 1985, ruling that Titanus was not entitled to recover from the Fund. The court denied the motion. At the same hearing, it was decided that a single order applicable to all twenty-one cases should be entered dismissing the Fund from all of the actions. Such an order was entered on December 12, 1985. From this order, the Stoddards, the Heintzes, and First Federal Savings Bank & Trust appeal 2. Titanus and Erb have not appealed.
Appellants first argued that Titanus and Erb are proper parties to recover from the Fund. Appellants argue that the Fund was established to protect homeowners from the precise situation that occurred here and insure that homeowners not be placed in a situation where they might be required to pay twice for improvements.
Under Sec. 203(1) of the Act, the owner of a "residential structure" may prevent a claim of a construction lien from attaching to his or her property by filing with the circuit court an affidavit, stating that he or she has done all of the following:
Under Sec. 203(3) of the Act, the person who has recorded a claim of lien but who is precluded from recovery on the lien because of a subsection 1 affidavit may recover from the Fund the amount for which the lien is established if he or she demonstrates that certain requirements have been fulfilled. M.C.L. Sec. 570.1203(3); M.S.A. Sec. 26.316(203)(3).
The crucial issue here is whether either Titanus or Erb is entitled to receive payment from the Fund. M.C.L. Sec. 570.1203(6); M.S.A. Sec. 26.316(203)(6) provides an explicit answer to this question: "Payment from the fund shall be made only if the court finds that a subcontractor, supplier, or laborer § entitled to payment from the fund." (Emphasis added.) Thus, disbursements from the Fund may be made only to subcontractors, suppliers, or laborers. There is no provision in the Act which would permit disbursements to contractors. We conclude that Titanus and Erb are contractors as that term is defined in the Act.
M.C.L. Sec. 570.1103(5); M.S.A. Sec. 26.316(103)(5) provides:
" 'Contractor' means a person who, pursuant to a contract with the owner or lessee of real property, provides an improvement to real property."
When the contracts between Titanus and Watson and between Erb and Watson were entered into, Watson was the owner of the land. Improvements were provided pursuant to these contracts. Therefore, for the purposes of the Act, Titanus and Erb are "contractors."
It is equally clear that Titanus and Erb are not subcontractors, suppliers or laborers. A person is not a subcontractor if he contracts with the owner or lessee of the property on which the improvement is to be constructed. M.C.L. Sec. 570.1106(4); M.S.A. Sec. 26.316(106)(4). A "supplier" provides materials or equipment pursuant to a contract with a contractor or subcontractor. M.C.L. Sec. 570.1106(5); M.S.A. Sec. 26.316(106)(5). A laborer provides labor pursuant to a contract with a contractor or subcontractor. M.C.L. Sec. 570.1104(8); M.S.A. Sec. 26.316(104)(8). Because Titanus and Erb are contractors, and not subcontractors, suppliers or laborers, they are not entitled to recover on their liens from the Fund.
Our conclusion that the Legislature did not intend for the Fund to apply to situations where a developer/builder constructs homes for sale on land which he owns is fortified by the fact that disbursements from the Fund are to be made only to satisfy liens on "residential structures." M.C.L. Sec. 570.1203(1); M.S.A. Sec. 26.316(203)(1). "Residential structures" are defined in M.C.L. Sec. 570.1106(3); M.S.A. Sec. 26.316(106)(3) as:
"(3) 'Residential structure' means an individual residential condominium unit or a residential building containing not more than 2 residential units, the land on which it is or will be located, and all appurtenances thereto, in which the owner or lessee contracting for the improvement is residing or will reside upon completion of the improvement."
Since Watson was the owner who contracted for the improvements and since he did not intend to reside in any of the houses upon completion, the homes were not "residential structures" as that term is used and must be applied under the Act. It is without import that single family residences would commonly be considered to be "residential structures." A statutory definition supersedes a commonly accepted or dictionary definition. LeGalley v. Bronson Community Schools, 127 Mich.App. 482, 485-486, 339 N.W.2d 223 (1983). Where a statute contains a definition, that definition is binding on the court. General Motors Corp. v. Bureau of Safety &...
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