Carlson-Grefe Construction, Inc. v. Rosemount Condominium Group Partnership

474 N.W.2d 405, 1991 Minn. App. LEXIS 873, 1991 WL 163096
CourtCourt of Appeals of Minnesota
DecidedAugust 27, 1991
DocketC2-91-612
StatusPublished
Cited by3 cases

This text of 474 N.W.2d 405 (Carlson-Grefe Construction, Inc. v. Rosemount Condominium Group Partnership) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Carlson-Grefe Construction, Inc. v. Rosemount Condominium Group Partnership, 474 N.W.2d 405, 1991 Minn. App. LEXIS 873, 1991 WL 163096 (Mich. Ct. App. 1991).

Opinion

OPINION

KLAPHAKE, Judge.

Appellant challenges summary judgment granted to the respondent mortgagees in a priority dispute involving mechanics’ liens and mortgage interests. The trial court held, and we agree, that neither the presence of a construction trailer containing *407 plumbing fixtures nor a ceremonial groundbreaking constitutes the actual and visible beginning of an improvement on the ground under Minn.Stat. § 514.05, subd. 1 (1990). We affirm.

FACTS

Because this is an appeal from summary judgment, we state the facts in the light most favorable to the appellant, Carlson-Grefe Construction, Inc. (Carlson-Grefe).

Respondent Rosemount Condominium Group Partnership (Rosemount Condominium) owned real estate in Rosemount, Minnesota, on which it planned to build a condominium complex. 1 On March 19, 1988, respondent State Mechanical, Inc., a plumbing contractor, moved its construction trailer onto the Rosemount condominium property. On March 28, 1988, State Mechanical began storing in the trailer plumbing fixtures it planned to install in the condominiums. State Mechanical prefabricated the fixtures in its shop before delivering them to the trailer.

After State Mechanical began storing the plumbing fixtures in the trailer, respondent Fridlund Group Partnership contracted with Carlson-Grefe to construct the condominium building and with State Mechanical to provide the plumbing for the condominium development. On May 10, 1988, Rose-mount Condominium executed several mortgages in favor of respondent Midway National Bank of St. Paul (Midway), respondent the City of Rosemount Housing and Redevelopment Authority (Rosemount HRA), and respondent Dakota County Housing and Redevelopment Authority (Dakota HRA). The Midway and Rose-mount HRA mortgages were recorded on May 13, 1988, and re-recorded on October 26, 1988. 2 The Dakota HRA mortgage has been satisfied.

On May 11, 1988, a ceremonial groundbreaking took place on the property. Midway had no notice of this ceremony, and did not attend. On August 8, 1988, Carlson-Grefe began construction.

Midway foreclosed its mortgage and purchased the property at the foreclosure sale on November 15, 1990. The redemption period is currently running.

In July 1990, Carlson-Grefe also began foreclosure proceedings, joining interested parties to determine priority. The trial court held that neither the presence of State Mechanical’s trailer nor the ceremonial groundbreaking constituted the “actual and visible beginning of the improvement on the ground” as a matter of law. Thus, the trial court granted summary judgment to Midway and Rosemount HRA, declaring their mortgages superior to the Carlson-Grefe and State Mechanical liens. The trial court allowed Carlson-Grefe to add Eileen Greenwood, general partner in both Rosemount Condominium and Fridlund Group Partnership, as a defendant, but refused to allow the addition of Marguerite Fridlund, the widow of a general partner in Fridlund Group Partnership, as a defendant. The trial court denied Carlson-Grefe’s motion to amend the complaint to add an additional cause of action based on a letter outlining the approximate amount owed under the contract.

ISSUES

1. Did the trial court abuse its discretion in refusing to allow Carlson-Grefe to amend its complaint?

2. Consistent with Minn.Stat. § 514.05, subd. 1 (1990), does the presence of a construction trailer containing plumbing materials and/or a ceremonial groundbreaking constitute the “actual and visible beginning of the improvement on the ground?”

*408 ANALYSIS

Standard of Review

On appeal from summary judgment, this court reviews the entire record to determine whether any genuine issues of material fact exist and whether the trial court erred in applying the law. Hubred v. Control Data Corp., 442 N.W.2d 308, 310 (Minn.1989). For purposes of our review here, we resolve disputed facts in favor of Carlson-Grefe and examine only the trial court’s application of the law.

I.

Carlson-Grefe claims the trial court abused its discretion in refusing to allow an amendment to its complaint. Although included in the summary judgment decision, the denial of Carlson-Grefe’s motion to amend was not a final judgment, nor did it determine the action and prevent an appeal-able judgment. Minn.R.Civ.App.P. 103.-03(a), (e); see also Spaeth v. City of Plymouth, 344 N.W.2d 815, 824-25 (1984) (non-appealable order does not become appeal-able by joining it to appealable order). Thus, we will not review the amendment issue.

II.

Carlson-Grefe challenges the trial court’s determination that the Midway and Rosemount HRA mortgages took priority over the mechanics’ liens. Minn.Stat. § 514.05, subd. 1 (1990) addresses priority disputes among lienholders, owners, and mortgagees. The statute provides:

All liens, as against the owner of the land, shall attach and take effect from the time the first item of material or labor is furnished upon the premises for the beginning of the improvement, and shall be preferred to any mortgage or other encumbrance not then of record, unless the lienholder had actual notice thereof. As against a bona fide purchaser, mortgagee, or encumbrancer without actual or record notice, no lien shall attach prior to the actual and visible beginning of the improvement on the ground.

Id. (emphasis added). Carlson-Grefe contends the presence of the construction trailer containing plumbing fittings constitutes the actual and visible beginning of the improvement on the ground. We disagree.

Midway and Rosemount HRA’s status as bona fide mortgagees without notice depends on whether there was an actual and visible beginning of an improvement on the ground before the mortgages were recorded. See M.E. Kraft Excavating & Grading Co. v. Barac Constr. Co., 279 Minn. 278, 284, 156 N.W.2d 748, 752 (1968). Once a visible improvement on the ground has begun, the mortgagees are deemed to have notice of mechanics’ liens and stand in the same position, for priority purposes, as an owner. Reuben E. Johnson Co. v. Phelps, 279 Minn. 107, 113, 156 N.W.2d 247, 251 (1968).

The underlying policy of the statute enables property owners and developers to procure financing by granting mortgagees priority against lien claimants filing claims after the mortgage is recorded, so long as the mortgagee’s inspection of the property does not reveal the actual and visible beginning of the improvement on the ground. Id. at 112-13, 156 N.W.2d at 252. This policy prevents the injustice that would occur

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Bluebook (online)
474 N.W.2d 405, 1991 Minn. App. LEXIS 873, 1991 WL 163096, Counsel Stack Legal Research, https://law.counselstack.com/opinion/carlson-grefe-construction-inc-v-rosemount-condominium-group-partnership-minnctapp-1991.