Byerly v. Bank of Colo.

411 P.3d 732
CourtColorado Court of Appeals
DecidedMarch 14, 2013
DocketNo. 12CA0721
StatusPublished
Cited by1 cases

This text of 411 P.3d 732 (Byerly v. Bank of Colo.) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Byerly v. Bank of Colo., 411 P.3d 732 (Colo. Ct. App. 2013).

Opinion

Opinion by JUDGE TERRY

¶ 1 After a real estate development project failed, plaintiff, David Daniel Byerly (Contractor), the development's project manager, filed a mechanic's lien for $824,000, and later amended the lien to $641,000. The trial court, relying on section 38-22-101(3), C.R.S.2012, ruled that Contractor had a valid lien for $417,095, an amount commensurate with what it found to be the value of his services, and found that the lien was not excessive and therefore not invalid under section 38-22-128, C.R.S.2012.

¶ 2 Defendants, Bank of Colorado and Delta Properties II, LLC (collectively, the Bank), appeal the trial court's judgment, entered following a bench trial, in favor of Contractor. We reverse and remand with directions.

I. Background

A. The Contract

¶ 3 In 2006, Wildwing Development, LLC (Developer) hired Contractor to help it develop a residential subdivision in the town of Timnath, Colorado. Contractor's duties included planning, developing, managing, constructing, and marketing the subdivision, which Developer intended to complete in four phases. Contractor and Developer signed a contract that included the following compensation terms:

? Developer agrees to pay Contractor $7,000 a month for his services.
? Developer also agrees to compensate Contractor with "2.5 residential lots or the cash value of 2.5 lots for each Phase of the Project ('Lot Compensation')."
? If Contractor elects to receive the "Earned Cash Value" in lieu of receiving lots, his Lot Compensation "shall be determined and paid in cash" based on a specified formula.
? If Contractor elects to receive residential lots, he may do so "in lieu of the Earned Cash Value for that Phase ('Earned Lots') by giving written notice of such selection to [Developer]. The then current market price of the Earned Lot or Lots selected by [Contractor] shall be deducted from the Earned Cash Value to which [Contractor] is entitled, thus lowering his Earned Cash Value. If the market price of the Earned Lot or Lots selected by [Contractor] exceeds the Earned Cash Value to which [Contractor] is entitled at the time [Contractor] selects the Earned [L]ot or [L]ots, then Contractor shall reimburse [Developer] for the difference at the time of conveyance of the Earned Lot or Lots to [Contractor]."
*734? Developer is not "obligated to pay Earned Cash Value for a Phase until both of the following requirements have been met with respect to that Phase: [1] ... The development/ construction loan for that Phase (the 'Construction Loan') has been paid in full; and [2] ... [Developer] has earned a net profit ... on the sale of lots within that Phase equal to or greater than the Earned Cash Value to be paid to [Contractor]."
? Developer will release Earned Lots to Contractor "without regard to the foregoing restrictions on cash payments so long as the Earned Lot(s) selected by [Contractor] either have been or can be released from the Construction Loan without further payment by [Developer]."
? Contractor has "earned" Lot Compensation "when the Town of Timnath accepts and signs off on all subdivision infrastructure improvements within that Phase ('Earned Lot Compensation')."

¶ 4 The contract between Developer and Contractor was never recorded with the county clerk and recorder.

B. The Mechanic's Lien

¶ 5 By late 2009, Developer had sold only half of the thirty-two villa home lots (valued at $110,000 each) and only four of the seventy-six single family home lots (valued between $294,500 and $350,000) in the first development phase. It had not paid Contractor's monthly fee for several months. The Bank, which had issued construction loans to Developer, declared Developer to be in default. Meanwhile, though Developer was in no position to compensate Contractor, it sent him a letter stating that, as of January 5, 2010, Contractor had "earned" Lot Compensation for the first phase. The Bank later foreclosed on its loans to Developer and acquired the unsold land parcels. Neither Developer nor the Bank ever tendered Lot Compensation-whether in-kind or cash-to Contractor.

¶ 6 In March 2010, shortly before the Bank's foreclosure, Contractor recorded a mechanic's lien on one of the parcels of land for $824,000 (later amended to $641,000), and then filed a complaint in foreclosure, naming the Bank as an interested party. The amended lien included $84,000 of unpaid monthly fees, and $557,000 in Lot Compensation, which Contractor calculated "based upon when [homes located in the surrounding area] were sold and how [Contractor] felt a judge may perceive what the fair market value for them would be."

¶ 7 Contractor admitted at trial that the two conditions precedent to Developer's duty to pay the Earned Cash Value portion of the Lot Compensation had not been met-that is, Developer had not paid off its construction loans and had not earned a net profit. Contractor further acknowledged that the condition precedent to Developer's release of Earned Lots (namely, the release of any of the lots from their construction loans) had not been met.

¶ 8 In addition to the mechanic's lien claim now under consideration, Contractor asserted a breach of contract claim against Developer and was awarded a default judgment based on eighteen months of unpaid monthly fees ($126,000 at a rate of $7,000 a month), plus interest and costs. Notably, Contractor was not awarded any Lot Compensation against Developer.

C. The Trial Court's Findings and Judgment

¶ 9 Following a bench trial, the trial court made the following findings of fact and conclusions of law regarding the value of Contractor's lien:

? Contractor's work was adequate and lienable.
? The conditions precedent to Contractor receiving Lot Compensation never occurred, and, based on Developer's poor financial situation, could never occur.
? Developer did not record its contract with Contractor with the county clerk and recorder.
? Ordinarily, under sections 38-22-101(2) - (3), C.R.S.2012, the contract price is the ceiling for a mechanic's *735lien filed against a landowner. However, if no contract is recorded, then the landowner is liable for the "full value" of the services and labor provided.
? In this case, because no contract was recorded, Contractor was entitled to the "full and accurate value of his services" for the entire period of time that Developer's project was "viable and had a chance to move forward."
? The "full and accurate value" of Contractor's services was $12,000 a month for every month he worked through November 2009; $7,000 a month from December 2009 to February 2011; plus interest. After subtracting what Contractor had already been paid ($7,000 a month from March 2006 through July 2009), the total principal amount owed to Contractor was $346,000. To that, the court added 12% interest from March 2, 2010 to November 17, 2011, for a total of $417,095.

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Bluebook (online)
411 P.3d 732, Counsel Stack Legal Research, https://law.counselstack.com/opinion/byerly-v-bank-of-colo-coloctapp-2013.