Wilger Enterprises v. Broadway Vista

• Decision Date: 06 June 2005
• Docket Number: No. 24,747.,24,747.
• Citation: 2005 NMCA 088,115 P.3d 822
• Parties: WILGER ENTERPRISES, INC., Plaintiff-Appellee, v. BROADWAY VISTA PARTNERS, a California Partnership; FHK Companies, a California Partnership; Nailman, Ltd., Co.; Edison Source d/b/a Edison Source Corp.; Sucon, Inc. d/b/a Suitt Contractor; KPT, Inc.; and Mid-State Erectors, Inc., Defendants-Appellants.
• Court: New Mexico Supreme Court

Page 822

115 P.3d 822

2005 NMCA 088

WILGER ENTERPRISES, INC., Plaintiff-Appellee, v. BROADWAY VISTA PARTNERS, a California Partnership; FHK Companies, a California Partnership; Nailman, Ltd., Co.; Edison Source d/b/a Edison Source Corp.; Sucon, Inc. d/b/a Suitt Contractor; KPT, Inc.; and Mid-State Erectors, Inc., Defendants-Appellants.

No. 24,747.

Court of Appeals of New Mexico.

June 6, 2005.

Julie J. Vargas, Hunt & Davis, P.C., Albuquerque, NM, for Appellee.

Robert A. Johnson, Johnson & Nelson, P.C., Albuquerque, NM, for Appellant Broadway Vista Partners.

David P. Gorman, Sheehan, Sheehan & Stelzner, P.A., Albuquerque, NM, for Appellant KPT, Inc.

Shay E. Meagle, Puccini & Meagle, P.A., Albuquerque, NM, for Appellant Sucon, Inc.

OPINION

VIGIL, Judge.

{1} Broadway Vista Partners (Owner) contends that the lien of Wilger Enterprises, Inc., (Contractor) is invalid because Contractor did not give Owner a written prelien notice of its right to claim a lien in the event of nonpayment under NMSA 1978, Section 48-2-2.1 (1993). We hold that Section 48-2-2.1 did not require Contractor to provide Owner with a prelien notice and affirm the district court order granting Contractor summary judgment on its complaint to foreclose its mechanic's lien.

BACKGROUND

{2} Owner and Furr's Supermarkets, Inc., agreed to build a shopping center on land owned by Owner in Albuquerque, New Mexico through the mechanism of a twenty-five year lease with options to renew for four additional periods of five years each. "As a material part of the consideration" to Owner, Furr's agreed to build a "48,000 square foot Furr's supermarket building together with sidewalks adjacent to the building, a loading dock and all on-site improvements." Furr's was also required to share in 71.11% of the costs for the "off-site improvements" which were to be installed by Owner. The "off-site improvements" Owner agreed to install included "traffic control devices, street paving, storm drains, curbs, curb cuts, gutters, median strips, sidewalks, street lights," and "necessary utilities to the property line of the Shopping Center." Since the lease provided that Owner would own the supermarket after Furr's constructed it, Owner agreed to reimburse Furr's for its costs to construct the supermarket up to a total of $3,017,522 in four periodic progress payments. During the construction, Furr's was to pay "interim rent" to Owner, which was adjusted upward as Owner installed the "off-site improvements" and made the periodic payments to Furr's. After construction was completed, Furr's was to pay rent to Owner plus "bonus rent," equal to one and one-half percent of Furr's gross sales each year that exceeded its gross sale during its fifth year of operation. The lease also required Furr's to purchase casualty and fire insurance during the lease term, naming Owner and Furr's as the insureds "as their respective interests may appear" and it also provided a formula for disbursing an award to the Owner and Furr's in the event of a total or partial condemnation of the premises.

{3} Furr's then contracted with Contractor to construct the supermarket. Before construction on the supermarket started, Furr's told Contractor that Owner was going to reimburse Furr's for the construction costs, which Contractor verified in a call to Owner. When Contractor sent Furr's its first pay request, Furr's asked Owner to make the progress payments directly to Contractor rather than reimbursing Furr's as specified in the lease. Everyone agreed. Under this arrangement, Owner paid the Contractor directly after Contractor submitted an application for payment to Owner, and the application was approved by the architect and the civil engineer hired by Furr's for the project. Owner made five payments to Contractor following this procedure. Owner refused to make two additional payments requested by Contractor because they would have resulted in Owner paying more than the $3,017,522 it was obligated to pay under its lease with Furr's.

{4} Contractor then recorded a Claim of Lien with the Bernalillo County Clerk and filed a complaint to foreclose its mechanic's lien on Owner's property to recover the amount due for its work on the supermarket. In ruling on cross-motions for summary judgment filed by Contractor and Owner, the district court granted Contractor's motion for summary judgment, and Owner appeals.

STANDARD OF REVIEW

{5} Summary judgment is appropriate where "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." Rule 1-056(C) NMRA. The facts are not disputed. In particular, it is undisputed that Contractor never gave Owner a written prelien notice under Section 48-2-2.1. The issue presented is whether Contractor was required to provide Owner with a written prelien notice under Section 48-2-2.1 to have an enforceable mechanic's lien. We review this legal question de novo. See Joslin v. Gregory, 2003-NMCA-133, ¶ 6, 134 N.M. 527, 80 P.3d 464 (stating that application of a statute is a question of law when the facts are undisputed); Blackwood & Nichols Co. v. N.M. Taxation & Revenue Dep't, 1998-NMCA-113, ¶ 5, 125 N.M. 576, 964 P.2d 137 ("Construction of a statute is a question of law that we review de novo.").

DISCUSSION

{6} The prelien notice statute at Section 48-2-2.1(B) states:

No lien of a mechanic or a materialman claimed in an amount of more than five thousand dollars ($5,000) may be enforced by action or otherwise unless the lien claimant has given notice in writing of his right to claim a lien in the event of nonpayment and that notice was given not more than sixty days after initially furnishing work or materials, or both, by either certified mail, return receipt requested, [f]ax with acknowledgement or personal delivery to:

(1) the owner or reputed owner of the property upon which the improvements are being constructed; or

(2) the original contractor, if any.

{7} However, a prelien notice does not have to be given to perfect "claims of liens made by mechanics or materialmen who contract directly with the original contractor" and an "original contractor" is defined as "a contractor that contracts directly with the owner." Section 48-2-2.1(A).

{8} Owner argues that Contractor's lien is unenforceable under the literal terms of the statute because Contractor failed to give Owner a written prelien notice of its right to claim a lien in the event of nonpayment as provided in the statute. Contractor responds that it is an "original contractor" and, properly construed, the statute does not require an "original contractor" to give an owner a prelien notice of its right to claim a lien in the event of nonpayment.

{9} We first determine whether Contractor is an "original contractor" under Section 48-2-2.1. Owner argues that because the written contract to build the Furr's supermarket was between Contractor and Furr's and not between Contractor and Owner, Contractor is not an "original contractor." We reject Owner's argument because nothing in the statutory definition of "original contractor" excludes a contract made by an owner with a contractor through an agent. See Warshaw v. Pyms, 266 So.2d 355, 357 (Fla.Dist.Ct.App.1972) ("An owner of real estate can become directly obligated to an engineer, for performance by the latter of services relating to his property, by a contract which is made with the engineer by the owner through an agent, as effectively as if the parties made such contract face-to-face."); Armstrong v. Blackadar, 118 So.2d 854, 861 (Fla.Dist.Ct.App.1960) ("Florida [law] does not preclude an owner of property from contracting through an agent for improvements to be made on his property so as to subject the property to a lien").

{10} Owner and Furr's were jointly engaged in the undertaking of constructing the supermarket for their mutual benefit. A joint venture "is generally considered to be a partnership for a single transaction," Lightsey v. Marshall, 1999-NMCA-147, ¶ 18, 128 N.M. 353, 992 P.2d 904 (internal quotation marks and citation omitted), and the relationship between Furr's and Owner established by the lease to construct the supermarket has the earmarks of a joint venture. "A joint venture exists when two or more parties (1) enter into an agreement, (2) to combine their money, property or time in the conduct of some particular business deal, (3) agree to share in the profits and losses of the venture jointly, and (4) have the right of mutual control over the subject matter of the enterprise or over the property." Id. ¶ 13 (internal quotation marks and citation omitted). In addition to the relationship created by the lease, Owner directly involved itself in the project when it agreed to pay Contractor directly instead of reimbursing Furr's as provided in the lease. Those payments were made only after approval was given by the civil engineer and architect hired by Furr's. The supermarket was constructed at the instance of Owner through Furr's and Owner directly paid Contractor for its work and materials. Under these circumstances, Owner could not disclaim liability for Contractor's lien under NMSA 1978, Section 48-2-11(1953) (allowing an owner to post a notice that he is not responsible for improvements made on his land within three days of learning of the construction, alteration, or repair, or intended construction, alteration, or repair). See Arctic Lumber Co. v. Borden, 211 F. 50, 51, 54-55 (9th Cir.1914) (stating that where the owner of land leased his property under a contract obligating the lessee to construct a building, and the lessee was held to be an agent of the owner, the owner was precluded from eluding liability by posting a notice of non-liability) (discussed with approval in Skidmore v. Eby, 57 N.M. 669, 672, 262 P.2d 370, 373 (1953)).

{11} In Stroh Corp. v. K & S Dev. Corp., 247 N.W.2d 750, 751 (Iowa 1976), the owner of a vacant lot entered into a lease which required...