Wagner Interior Supply of Wichita, Inc. v. Dynamic Drywall, Inc.
| Decision Date | 24 February 2017 |
| Docket Number | No. 113,037,113,037 |
| Citation | 389 P.3d 205,305 Kan. 828 |
| Parties | WAGNER INTERIOR SUPPLY OF WICHITA, INC., Appellant, v. DYNAMIC DRYWALL, INC., et al., Defendants, (Puetz Corporation and United Fire & Casualty Company), Appellees. |
| Court | Kansas Supreme Court |
Vincent F. O'Flaherty, of Law Offices of Vincent F. O'Flaherty, Attorney, LLC, of Kansas City, Missouri, argued the cause and was on the briefs for appellant.
Ryan M. Peck, of Morris, Laing, Evans, Brock & Kennedy, Chartered, of Wichita, argued the cause, and Nanette Turner Kalcik and Richard A. Kear, of the same firm, were with him on the briefs for appellees.
Puetz Corporation (Puetz) was the general contractor to build a hotel in Wichita, Kansas. One of its subcontractors, Dynamic Drywall, Inc. (Dynamic), obtained materials for its part of the project from Wagner Interior Supply of Wichita, Inc. (Wagner), but failed to pay for them. Wagner filed a lien statement with the district court in Sedgwick County, claiming a lien against the hotel property. The owner of the hotel, Wichita Hospitality Group, LLC, was in the process of refinancing the project and Wagner's lien stood as a cloud on the title, so Puetz filed a bond with the district court to secure payment of Wagner's claim. With approval of the bond by the district court came the discharge of the lien under the terms of K.S.A. 60–1110.
Puetz contends Wagner's lien was defective because it had not been properly perfected, so the lien could have been challenged and removed, preventing foreclosure, had there been time for litigation. Although it chose to file the bond rather than litigate the lien, Puetz claims the opportunity was not lost, as its argument about the defects in Wagner's lien filing survived the release of the lien and still can be asserted as a defense to Wagner's claim against the bond. Wagner takes the position that any defenses Puetz may have had against the lien filing have no relevance now, since the filing of the approved bond discharged the lien. The district court reviewed summary judgment motions from both Puetz and Wagner and granted judgment to Puetz. On Wagner's appeal, the Court of Appeals reversed the district court. We affirm that decision.
In September 2012, Wichita Hospitality Group engaged Puetz to act as general contractor for the construction of a new Holiday Inn Express & Suites hotel in Wichita. Puetz subcontracted the drywall work on the project to Dynamic and paid Dynamic for its part of the work. Dynamic ordered materials for the project from Wagner, but it did not pay for those materials that Wagner provided and that were used in the construction. Dynamic later filed a petition for bankruptcy relief.
Near the end of November 2013, Wagner, as an unpaid supplier, filed a lien statement with the clerk of the district court of Sedgwick County, claiming a lien against the hotel property in the amount of its unpaid claim, $108,162.97. At the time Wagner filed its lien statement, Wichita Hospitality Group was refinancing the hotel and Wagner's filing placed a cloud on the title, affecting the refinancing. To clear that problem, Puetz presented a bond to the district court pursuant to K.S.A. 60–1110, titled "Release of Lien Bond" with Puetz as principal and United Fire & Casualty Company (United) as surety, specifically securing the payment of Wagner's claim. Under the provisions of that statute, once the bond was approved by a judge of the district court and filed with the court clerk, Wagner's lien was discharged. The approved bond was filed on January 13, 2014.
In February 2014, Wagner filed suit against Dynamic, Puetz, and United for payment for the materials it had supplied to Dynamic for the hotel. Wagner made a claim against the bond for the money it was owed and sought damages from Dynamic and Puetz for unjust enrichment. Both sides filed motions for summary judgment and, in November 2014, the district court entered an order granting summary judgment to Puetz and United. Wagner's claim against Dynamic was stayed because of Dynamic's bankruptcy.
On Wagner's timely appeal, the Court of Appeals reversed the order of the district court and directed that judgment be granted to Wagner. See Wagner Interior Supply of Wichita, Inc. v. Dynamic Drywall, Inc. , No. 113037, 2015 WL 5750465 (Kan. App. 2015) (unpublished opinion).
Standard of review
The case is before us to review the district court's order for summary judgment that was reversed by the Court of Appeals. Our standard of review is de novo.
Adams v. Board of Sedgwick County Comm'rs , 289 Kan. 577, 584, 214 P.3d 1173 (2009).
We also are required to interpret and apply K.S.A. 60–1110 to undisputed facts. When engaging in statutory interpretation we exercise unlimited review. Redd v. Kansas Truck Center , 291 Kan. 176, 187, 239 P.3d 66 (2010).
A mechanic's lien is purely a statutory creation and, to create an enforceable lien, the requirements of the statute must be followed strictly. Haz–Mat Response, Inc. v. Certified Waste Services Ltd. , 259 Kan. 166, 170, 910 P.2d 839 (1996). K.S.A. 60–1102(a) and 60–1103(a) prescribe the requirements for an unpaid supplier to perfect a lien against the real estate where the materials were used.
The Kansas mechanic's lien law is remedial, providing effective security to anyone furnishing labor, equipment, material, or supplies used or consumed for the improvement of real property under a contract with the owner. The theory behind granting a lien against the property is that the property benefitting from the improvement should be charged with payment for the labor, equipment, material, or supplies used in the improvement. Haz–Mat Response, Inc. , 259 Kan. at 170, 910 P.2d 839.
Since the facts are undisputed, the arguments raised by Puetz and Wagner center on K.S.A. 60–1110, which provides:
Puetz maintains that when it filed the approved bond, its defense against the defectively filed lien merely migrated over to become a defense against the claim by Wagner against the bond. As Puetz sees it, any other interpretation would act to cure the errors Wagner made in filing its lien, and K.S.A. 60–1110 was not intended to improve the position of a party who had attempted, but failed, to file an effective lien. Wagner, however, contends the statute specifically discharged the lien when the approved bond was filed, and with the lien went any arguments about its validity. Both Puetz and Wagner insist the statute is absolutely clear in support of their opposite interpretations.
We considered the requirements for claims against a statutory lien bond in Murphree v. Trinity Universal Ins. Co. , 176 Kan. 290, 269 P.2d 1025 (1954). The issue was whether claims could be made against the contractor's statutory bond for materials and labor that were not provided to the contractor or a subcontractor, but were directly requested by and furnished to the owner. We held those who carried out their transactions directly with the owner had no claim against the contractor's bond. 176 Kan. at 294, 269 P.2d 1025. We also discussed the nature of the statutory bond and observed:
176 Kan. at 294, 269 P.2d 1025.
We again took up a question on the right to claim against a statutory lien bond in Bob Eldridge Constr. Co., Inc. v. Pioneer Materials, Inc. , 235 Kan. 599, 684 P.2d 355 (1984). The facts in Eldridge bear many similarities to those in the present case and both parties have given it substantial attention.
The Bob Eldridge Construction case
Bob Eldridge Construction Company, Inc. (Eldridge), was a general contractor building two apartment buildings for the elderly in Haysville and Wichita. Eldridge subcontracted its drywall work on the project to R & S Construction Company (R & S). Pioneer Materials, Inc. (Pioneer), supplied all drywall for the two buildings, under an arrangement by which Eldridge and R & S would call to place orders as they were needed. R & S left the...
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