Vugterveen Systems, Inc. v. Olde Millpond Corp.

• Decision Date: 21 April 1995
• Docket Number: Docket No. 154137
• Citation: 533 N.W.2d 320,210 Mich.App. 34
• Parties: VUGTERVEEN SYSTEMS, INC., a Michigan Corporation, Plaintiff-Appellee, v. OLDE MILLPOND CORPORATION, a Michigan Corporation, Defendant-Appellant, Cross-Appellee, and ERB Lumber Company, a Michigan Corporation, Defendant-Appellee, Cross-Appellant, and United Bank of Michigan, N.A., Defendant.
• Court: Court of Appeal of Michigan — District of US

Page 320

533 N.W.2d 320

210 Mich.App. 34

VUGTERVEEN SYSTEMS, INC., a Michigan Corporation, Plaintiff-Appellee, v. OLDE MILLPOND CORPORATION, a Michigan Corporation Defendant-Appellant, Cross-Appellee and ERB Lumber Company, a Michigan Corporation Defendant-Appellee, Cross-Appellant and United Bank of Michigan, N.A., Defendant.

Docket No. 154137.

Court of Appeals of Michigan.

Submitted Aug. 1, 1994, at Grand Rapids.

Decided April 21, 1995, at 9:30 a.m.

Released for Publication June 19, 1995.

Rhoades, McKee, Boer, Goodrich & Titta by Mary L. Williams, Grand Rapids, for Vugterveen Systems, Inc.

Randall L. Velzen, Grand Rapids, for Olde Millpond Corp.

Tolley, Fisher & Verwys, P.C. by Michael C. Walton and Philip G. Henderson, Grand Rapids, for Erb Lumber Co.

Before HOOD, P.J., and MARILYN J. KELLY and MARTLEW, ^* JJ.

MARILYN J. KELLY, Judge.

Defendant, Olde Millpond Corporation, appeals as of right from a circuit court judgment attaching liens in favor of plaintiff, Vugterveen Systems, Inc., and cross-plaintiff, Erb Lumber Company. We affirm but instruct the court to modify the amount of the liens.

I

Olde Millpond Corporation was the developer of a condominium project. Charles Hornbach, president of Olde Millpond, initiated the project in 1986. In 1988, he contracted with VanderWall Construction, Inc., to act as general contractor. Subsequently, VanderWall subcontracted with Vugterveen to do the drywall work in the project. Vugterveen installed drywall in two of the buildings, each containing two residential units. Erb provided the lumber for the project.

Vugterveen worked on the two buildings under separate agreements. The contract price for the first building was $11,600, which Olde Millpond paid in full. Vugterveen signed a waiver of lien for that building. It agreed to drywall the two units in the second building for $9,750 but stopped work for lack of payment before completing them. Vugterveen recorded a construction lien in the amount of $7,800 for the unpaid work it had done.

Erb furnished lumber for both buildings pursuant to a builder sales agreement with VanderWall. After requesting a copy of Olde Millpond's notice of commencement from VanderWall on May 31, 1988, Erb filled out a notice of furnishing lumber. It stated that the material was being furnished to VanderWall for the "construction of 4338/4333 Olde Millpond Drive in connection with the improvement of the real property described by the Notice of Commencement a copy of which is attached." Erb sent a copy of the notice of furnishing to VanderWall and to Hornbach. The balance due on the account was $20,239.07.

Hornbach removed VanderWall from the job on October 27, 1988. On December 30, 1988, Erb filed a claim of lien for $20,239.07 "plus accruing finance charges as of November 30, 1988."

On December 5, 1989, Vugterveen filed a complaint for foreclosure of its construction lien against Olde Millpond. On December 18, 1989, Erb filed a counterclaim and cross-claim also seeking to have its construction lien foreclosed.

The case was heard in a three-day bench trial in September 1991. In an oral opinion issued March 9, 1992, the court ruled that Erb was entitled to a lien against both buildings in the amount of $7,300.84 plus interest, costs and attorney fees. Vugterveen was entitled to a lien for the balance due on the work it had completed and for attorney fees. Each sum represents a prorated share of the original construction lien amount, in accord with the trial judge's decision to adopt the formula for proration set forth in Smalley v. Gearing, 121 Mich. 190, 79 N.W. 1114 (1899).

Olde Millpond raises ten issues on appeal. Cross-appellant, Erb, raises three.

II

Olde Millpond asserts that the trial court erred in denying its motion for summary disposition. When the motion was heard, the judge suggested that, since the trial date was in two weeks and the issues complex, the case would be resolved faster if tried. The parties agreed. Therefore, the judge did not directly deny the motion.

It is unnecessary for this Court to review an issue on which no ruling was made. Richmond Twp. v. Erbes, 195 Mich.App. 210, 219, 489 N.W.2d 504 (1992). However, were we to review it, we would find no abuse of discretion. As the judge observed, the issues in the case were complex and the trial was at hand. Trial presented the most efficient method to resolve the issues.

III

Olde Millpond asserts that the notices of furnishing by Erb and Vugterveen were improper under the Construction Lien Act. M.C.L. § 570.1101 et seq.; M.S.A. § 26.316(101) et seq. The interpretation or construction of a statute is a question of law. Smeets v. Genesee Co. Clerk, 193 Mich.App. 628, 633, 484 N.W.2d 770 (1992). We review questions of law de novo. In re Lafayette Towers, 200 Mich.App. 269, 272, 503 N.W.2d 740 (1993).

The Construction Lien Act requires a supplier to provide a notice of furnishing to the designee named in the notice of commencement within twenty days after furnishing the first material. M.C.L. § 570.1109(1); M.S.A. § 26.316(109)(1). However, failure to provide a notice of furnishing within the time specified does not

defeat the lien claimant's right to a construction lien for work performed or materials furnished by the lien claimant before the service of the notice of furnishing except to the extent that payments were made by or on behalf of the owner or lessee to the contractor pursuant to either a contractor's sworn statement or a waiver of lien in accordance with this act for work performed or material delivered by the lien claimant. [M.C.L. § 570.1109(6); M.S.A. § 26.316(109)(6).]

Vugterveen's notice of furnishing was late, but Olde Millpond conceded that Vugterveen was not paid. Vugterveen substantially complied with the statute. Its lien claim is not defeated by the untimeliness of its notice of furnishing.

IV

Olde Millpond also contends that the claims of lien filed by Erb and Vugterveen were unenforceable because excessive in amount. However, it has been established that a lien is not lost because the amount claimed is excessive, unless the claim was made in bad faith. In such instances, the proper remedy is to reduce the amount of the lien to the correct amount. Tempo, Inc. v. Rapid Electric Sales & Service, Inc., 132 Mich.App. 93, 104, 347 N.W.2d 728 (1984). Erb's error here appears to have been made in good faith. See Currier Lumber Co. v. Ruoff, 298 Mich. 505, 299 N.W. 163 (1941). The trial court reduced the amount of Erb's lien, correcting the error. Moreover, Olde Millpond received the intended benefit of a $5,000 payment made to Erb. It was not entitled to credit for another $5,000 payment which Erb misdirected. Finally, Vugterveen's lien claim was supported by the evidence.

V

Olde Millpond also asserts that Erb and Vugterveen failed to prove the amount of their lien claims.

A lien claimant is required to prove by a preponderance of the evidence the amount claimed to be owing to a reasonable certainty. R & T Sheet Metal, Inc. v. Hospitality Motor Inns, Inc., 139 Mich.App. 249, 255, 361 N.W.2d 785 (1984). The record testimony supports Vugterveen's claim. Moreover, the trial court determined the correct amount of Erb's lien. Since the court's finding on the amount of Erb's lien was not clearly erroneous, we will not set it aside. Id., at p. 255, 361 N.W.2d 785.

VI

Olde Millpond contends that the trial court erred in attaching Erb's construction lien to all the residential condominium units rather than to the specific units for which materials were furnished.

In support of its position, it points to that section of the Construction Lien Act which limits the extent of the lien when a condominium is involved. It states:

Except as otherwise provided in this section, a construction lien for an improvement furnished to a condominium unit or to a limited common element shall attach only to the condominium unit to which the improvement was furnished. [M.C.L. § 570.1126(1)(a); M.S.A. § 26.316(126)(1)(a).]

Erb responds by relying on M.C.L. § 570.1107(2); M.S.A. § 26.316(107)(2), which provides that a construction lien "shall attach to the entire interest of the owner or lessee who contracted for the improvement...." It argues that the clause permits its lien to attach to the entire project. It asserts, also, that it complied with the requirements of M.C.L. § 570.1107(1); M.S.A. § 26.316(107)(1), which provides:

Each contractor, subcontractor, supplier, or laborer who provides an improvement to real property shall have a construction lien upon the interest of the owner or lessee who contracted for the improvement to the real property, as described in the notice of commencement....

The statutory section governing the notice of commencement requires the following language to appear in the notice of commencement:

To lien claimants and subsequent purchasers:

Take notice that work is about to commence on an improvement to the real property described in this instrument. A person having a construction lien may preserve the lien by providing a notice of furnishing to the above named designee and the general contractor, if any, and by timely recording a claim of lien, in accordance with law.

A person having a construction lien arising by virtue of work performed on this improvement should refer to the name of the owner or lessee and the legal description appearing in this notice....[M.C.L. § 570.1108(2)(f); M.S.A. § 26.316(108)(2)(f).]

Erb asserts that it relied on Olde Millpond's notice of commencement to prepare its notice of furnishing. Olde Millpond identified the entire project in its notice of commencement, under the statutes cited above. Therefore, Erb argues, it should not be penalized for naming the entire project.

M.C.L. § 570.1302(1); M.S.A. § 26.316(302)(1) permits substantial compliance with the provisions of the Construction Lien Act in order for a construction lien to be validly enforceable. See Norcross Co. v....