Vulcraft, a Div. of Nucor Corp. v. Midtown Business Park, Ltd.

• Decision Date: 25 October 1990
• Docket Number: 18795,Nos. 18814,s. 18814
• Citation: 1990 NMSC 95,110 N.M. 761,800 P.2d 195
• Parties: VULCRAFT, A DIVISION OF NUCOR CORPORATION, a Texas corporation, and Prosteel Distributors, Inc., a Colorado corporation, Plaintiffs-Appellants, v. MIDTOWN BUSINESS PARK, LTD., et al., Defendants, and Metzger Construction Company, Inc., a New Mexico corporation, Defendant-Appellee, and Gate City Steel Corporation, Defendant-Appellant. VULCRAFT, A DIVISION OF NUCOR CORPORATION, a Texas corporation, et al., Plaintiffs-Appellants, v. METZGER CONSTRUCTION COMPANY, Defendant-Appellee, v. UNITED STEEL FABRICATORS, INC., et al., Defendants.
• Court: New Mexico Supreme Court

Page 195

800 P.2d 195

110 N.M. 761

VULCRAFT, A DIVISION OF NUCOR CORPORATION, a Texas

corporation, and Prosteel Distributors, Inc., a Colorado corporation, Plaintiffs-Appellants, v. MIDTOWN BUSINESS PARK, LTD., et al., Defendants, and Metzger Construction Company, Inc., a New Mexico

corporation, Defendant-Appellee,

and

Gate City Steel Corporation, Defendant-Appellant.

VULCRAFT, A DIVISION OF NUCOR CORPORATION, a Texas

corporation, et al., Plaintiffs-Appellants, v. METZGER CONSTRUCTION COMPANY, Defendant-Appellee, v. UNITED STEEL FABRICATORS, INC., et al., Defendants.

Nos. 18814, 18795.

Supreme Court of New Mexico.

Oct. 25, 1990.

[110 N.M. 762] Butt, Thornton & Baehr, P.C., James P. Lyle, Albuquerque, for plaintiffs-appellants Vulcraft & Prosteel.

Rodey, Dickason, Sloan, Akin & Robb, P.A., Rex D. Throckmorton, Ogden M. Reid, Albuquerque, for defendant-appellee Metzger Constr.

Vernon W. Salvador, Albuquerque, for defendant-appellant Gate City Steel.

OPINION

BACA, Justice.

Plaintiffs-appellants Vulcraft and Prosteel Distributors, Inc. (Prosteel) seek payment of $125,131.40 plus interest as consideration for steel construction material supplied to defendant United Steel Fabricators, Inc. (United Steel) for use by defendant-appellee Metzger Construction Company (Metzger) in the construction of Midtown Business Park. Plaintiffs-appellants filed a complaint seeking to foreclose on their claims of a materialman's lien, demanding judgment for the amount owed, seeking treble damages on checks issued by United Steel but returned for insufficient funds, and seeking judgment for the amount owed on a theory of unjust enrichment. Appellant Gate City Steel Corporation (Gate City) was named a defendant by virtue of its claimed interest in the project because of its own lien filed against the property. It cross claimed below, seeking to foreclose its lien and have its lien declared superior in right to those filed by the other parties, and also appeals the judgment. Metzger moved for summary judgment, arguing that Vulcraft and Prosteel were estopped to assert a lien because of releases signed when they received the checks for which insufficient funds were available, and that appellants were not entitled to a lien because of their status as suppliers. The motion was granted, and the district court, following its denial of a motion for reconsideration, certified for interlocutory appeal its decision to deny the lien claims. We granted appeal on whether summary judgment was appropriate on the question of appellant's status and their capacity to file liens.

For the purposes of this appeal, the facts of this case are straightforward. Metzger acted as the general contractor for the Midtown Business Park. It ordered steel for the construction from United Steel, which then contracted with Gate City, Vulcraft, and Prosteel for the purchase of steel. United Steel manufactured fittings from the steel provided by the suppliers to conform to the plans and specifications for the project pursuant to its contract. Ulti mately,, although United Steel was paid by Metzger, payment was not passed on to Gate City, Vulcraft, and Prosteel, who proceeded to file liens. This suit resulted.

This case presents an issue of first impression in this jurisdiction: whether NMSA 1978, Section 48-2-2 (Repl.Pamp.1987), authorizes a materialman furnishing supplies to a middleman that contracted with a general contractor to provide specially fabricated material in accordance with project specifications to assert a lien against the building project, even though the middleman did no work at the construction site.

Section 48-2-2, the mechanics' and materialmen's lien statute, provides, in relevant part:

Every person performing labor upon * * * or furnishing materials to be used in the construction, alteration or repair of any * * * building * * *, or any other structure * * * has a lien upon the same for the work or labor done, for the specific contract or agreed-upon charge for the * * * materials furnished by each respectively, whether done, provided, hauled or furnished at the instance of the owner of the building or other improvement, or his agent, and every contractor, subcontractor, architect, builder or other person having charge of any mining, or of the construction, alteration or repair, either in whole or in part, of any building, or other improvement shall be held to be the agent of the owner for the purposes of this section.

In this case, appellants assert that United Steel acted as a subcontractor for Metzger, bringing them within the terms of Section 48-2-2, while Metzger asserts that United Steel was a mere supplier of steel products, making appellants suppliers to a materialman and therefore unable to file a lien. In other words, this case turns on the definition of subcontractor as that term is used in Section 48-2-2. If there exists a material issue of fact as to whether United Steel acted as a subcontractor on the project, appellants, as suppliers to United Steel, would be entitled to a trial on that issue unless other issues presented in the summary judgment motion prove dispositive. Should appellants prevail, they would be entitled to foreclose a lien on the project within the meaning of the statute.

The lien statute does not allow a party who furnishes material to a contractor's supplier to file a lien. See Ronald A. Coco, Inc. v. St. Paul's Methodist Church, 78 N.M. 97, 100, 428 P.2d 636, 639 (1967). In Coco, a contractor, hired to construct a church building, purchased materials from Wood Products, including beams provided by the plaintiff, Coco. Coco was never paid and attempted to file a lien; the district court denied the lien, and we affirmed. It was not contended, as it is here, that Wood Products was a subcontractor--no claim was made that Wood Products was anything but a middleman supplying material for use in the building. The court did note, however, that: "If Wood Products had undertaken to construct the wood beams itself then it could arguably have been a subcontractor, but such is not the fact here." Id.; see also State ex rel. W.M. Carroll & Co. v. K.L. House Constr. Co., 99 N.M. 186, 656 P.2d 236 (1982) (in interpretation of Little Miller Act, NMSA 1978, Section 13-4-19, court indicated that supplier to subcontractor, who apparently was situated similarly to United Steel, would prevail on lien under Section 48-2-2).

The issue left unresolved by Coco has returned in this case. Appellants are situated as was Coco--they supplied materials to a middleman, who in turn supplied material to a contractor working at the building site. It is uncontested that United Steel did no actual work at the site, but appellants argue that United Steel is nonetheless a subcontractor within the meaning of our statute and thus in privity with the owner. They contend that United Steel fabricated from the raw material provided by appellants a significant amount of steel goods specially manufactured according to Metzger's specifications for use in the project. Thus, we must determine whether the statute allows one who does no work at the site to nevertheless be an agent of the owner.

Two divergent lines of authority are urged upon us to define "subcontractor." One line requires that work must be done at the construction site for a party to qualify as a subcontractor. As a Louisiana court articulated its view:

[A] subcontractor is a worker who actually participates in the building or erection of the edifice. A materialman is one who supplies material either manufactured or fabricated for use in that building. If the fabricator of material does not engage in any process that incorporates the item furnished into the immovable under construction, he is a materialman. It matters not whether his product is procured from another manufacturer and delivered unchanged to the building site or if it is shaped by him from other materials before it is delivered to the job site.

Leonard B. Hebert, Jr. & Co. v. Kinler, 336 So.2d 922, 924 (La.App.1976).¹

The alternative view is articulated in Theisen v. County of Los Angeles, 54 Cal.2d 170, 183, 352 P.2d 529, 537-38, 5 Cal.Rptr. 161, 169-70 (1960) (in bank):

[T]he essential feature which constitutes one a subcontractor rather than a materialman is that in the course of performance of the prime contract he constructs a definite, substantial part of the work of improvement in accord with the plans and specifications of such contract, not that he enters upon the job site and does the construction there. We are not here concerned with the mere furnishing of materials from which doors were to be constructed by the general contractor nor are we interested in the sale of standard stock-in-trade doors. Specifically we are dealing with a contract whereby the doors were to be fabricated according to the specifications of the prime contract and as a constituent part of the construction of the public improvement which was the subject of the contract. We do not accept the view of some other jurisdictions that to be a subcontractor one must install work at the site of the improvement. Rather, we conclude that one who agrees with the prime contractor to perform a substantial specified portion of the work of construction which is the subject of the general contract in accord with the plans and specifications by which the prime contractor is bound has "charge of the construction" of that part of the work of improvement and is a subcontractor although he does not undertake to himself incorporate such portion of the projected structure into the building.

(Citations omitted); see Piping Specialties Co. v. Kentile, Inc., 229 Cal.App.2d 586, 589, 40 Cal.Rptr. 537, 539 (1964) (emphasizing the meaning of a stock-in-trade item as being "whether or not the item is one which manufacturers stand ready to produce and deliver, on order, according to designs already in existence" and emphasizing meaning of substantial as "imp...