Earthworks v. Waldher

2002 MT 272N

• Court: Montana Supreme Court
• Decided: December 3, 2002
• Docket: 02-209
• Status: Published

Opinion

No. 02-209

IN THE SUPREME COURT OF THE STATE OF MONTANA

2002 MT 272N

EARTHWORKS WEST, INC., and JAY C. SANDELIN,

Plaintiffs and Respondents,

v.

ELAINE COMFORT WALDHER, KEVIN WALDHER, GREENPOINT CREDIT CORP., FLATHEAD COUNTY TITLE COMPANY, and WASHINGTON INTERNATIONAL INSURANCE COMPANY,

Defendants and Appellants.

APPEAL FROM: District Court of the Eleventh Judicial District, In and for the County of Flathead, The Honorable Ted O. Lympus, Judge presiding.

COUNSEL OF RECORD:

For Appellants:

James C. Bartlett, Attorney at Law, Kalispell, Montana

For Respondents:

Michael A. Ferrington, Attorney at Law, Whitefish, Montana

Submitted on Briefs: August 8, 2002

Decided: December 3, 2002 Filed:

__________________________________________ Clerk Justice Jim Regnier delivered the Opinion of the Court.

¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1996 Internal

Operating Rules, the following decision shall not be cited as precedent but shall be filed as a

public document with the Clerk of the Supreme Court and shall be reported by case title,

Supreme Court cause number, and result to the State Reporter Publishing Company and to

West Group in the quarterly table of noncitable cases issued by this Court.

¶2 The Respondents, Earthworks West, Inc., and Jay Sandelin, entered into a verbal

agreement with Appellants Elaine and Kevin Waldher to perform certain work on the

Waldhers’ real property. A dispute subsequently ensued regarding the cost of Respondents’

services and Respondents filed a construction lien against the Waldhers for the purported

value of the work performed. Thereafter, Respondents filed a complaint in the Eleventh

Judicial District Court, Flathead County, to foreclose their construction lien. The District

Court entered judgment in favor of Respondents and the Waldhers appeal. We affirm.

¶3 The Waldhers present three issues on appeal:

¶4 1. Did the District Court err when it entered judgment in

favor of Jay Sandelin?

¶5 2. Did the District Court err when it declared the

construction lien valid and enforceable?

¶6 3. Did the District Court err in awarding a money judgment in

favor of Earthworks West, Inc.?

BACKGROUND

¶7 Earthworks West, Inc., a corporation located in Flathead

County, Montana, is “engaged in the business of performing and

supplying to the general public excavation, hauling, heavy

2 equipment and other work, labor, equipment, and materials.” At all

times relevant to this action, Jay Sandelin served as the president

of Earthworks. Appellants Elaine and Kevin Waldher, husband and

wife, own real property in Flathead County.

¶8 In April of 1999, the parties entered into an agreement for

the Respondents to perform certain work on the Waldhers' property.

The parties did not execute a written agreement so the details of

the arrangement are somewhat unclear. Purportedly, the agreement

contemplated the construction of a road and building pad on the

Waldhers’ property, as well as the installation of utilities. ¶9 This home improvement project was not the first time the

parties collaborated on a construction project. In the late 1990s,

Earthworks and Sandelin performed some work for Kevin Waldher on

what they refer to as the River Terraces project. Kevin did not

have enough money to finance the project so he executed an

assignment of a loader to “Jay Sandelin of Earthworks West, Inc.”

This assignment purportedly relieved Kevin of the remaining $50,000

due and owing on the River Terraces project. This assignment

ultimately became an issue in the present case as discussed in

greater detail below.

¶10 As for the home improvement project, Respondents performed the

arranged services from approximately the end of April 1999 through

June 7, 1999. A dispute subsequently ensued regarding the cost of

the services rendered. Respondents claimed they were entitled to

$13,230.79 for the work performed. The Waldhers tendered $2,000 to

Respondents but disputed the remaining charges. Therefore, on June

18, 1999, Kylanne Sandelin, Earthworks’ secretary and office

manager, filed a construction lien against the Waldhers for

3 $11,235.79, representing the allegedly unpaid debt of $11,230.79

plus a $5.00 filing fee.

¶11 On August 27, 1999, Respondents filed a complaint in the

District Court to foreclose their lien. On October 1, 1999, the

Waldhers filed an answer which asserted: (1) that the alleged fees

exceeded the parties’ oral arrangement; (2) that the purported lien

was not filed in conformance with Montana law and, thus, void; and

(3) a counterclaim against Respondents for attorney fees incurred

in the action. On July 25, 2000, the Waldhers filed a motion for

summary judgment on the grounds that “the Construction Lien filed

by the plaintiffs is void as a matter of law and Jay Sandelin has

no cause of action against the defendants.”

¶12 Following a hearing, the District Court denied the Waldhers’

motion for summary judgment. The case proceeded to a non-jury

trial on February 12, 2001. On December 20, 2001, the District

Court issued its Findings of Fact, Conclusions of Law, and

Judgment. The District Court determined that the construction lien

was valid and enforceable, the arrangement constituted a verbal,

implied-in-fact agreement based upon time and cost, and that the amount of the lien

reflected “the reasonable value of the labor, services, material, and equipment provided by

Plaintiffs to Defendants.” Accordingly, the District Court awarded Respondents $11,235.79,

plus interest, as well as attorney fees and costs. On January 16, 2002, the Waldhers filed a

notice of appeal from the District Court’s judgment.

STANDARD OF REVIEW

¶13 We review a district court’s findings of fact to determine whether they are clearly

erroneous. Daines v. Knight (1995), 269 Mont. 320, 324, 888 P.2d 904, 906. A finding is

4 clearly erroneous if it is not supported by substantial evidence, if the trial court

misapprehended the effect of the evidence, or if this Court is left with a definite and firm

conviction that the district court made a mistake. Daines, 269 Mont. at 325, 888 P.2d at 906.

We review a district court’s conclusions of law to determine whether the court’s

interpretation of the law is correct. Carbon County v. Union Reserve Coal Co., Inc. (1995),

271 Mont. 459, 469, 898 P.2d 680, 686.

DISCUSSION

ISSUE ONE

¶14 Did the District Court err when it entered judgment in favor of Jay Sandelin?

¶15 The Waldhers contend that the contracting parties for the improvement project were

themselves and Earthworks. They insist that no such contract existed between themselves

and Sandelin. As Sandelin was not a party to the contract, the Waldhers assert that he had no

cause of action against them and, therefore, “[t]he lawsuit brought by Jay Sandelin . . . was

without merit and . . . frivolous, warranting an award of attorney’s fees against him.”

¶16 The District Court implied that in performing the work on the

Waldhers' property, the Respondents utilized various pieces of machinery, including the loader mentioned above. The District

Court noted the assignment drafted by Kevin Waldher stating that he

“hereby unconditionally and irrevocably assigns and transfers [the

loader to] Jay Sandelin of Earthworks West, Inc.” Further, the

court found that “the testimony confirms that the loader was used

to improve the real property.” Therefore, since Kevin Waldher

transferred the loader to Sandelin, and since the parties used the

loader on the home improvement project, the District Court

5 concluded that the expense incurred in using the loader was

properly included within the construction lien and Sandelin was

rightfully a party to the action.

¶17 Rule 23(a)(4), M.R.App.P., requires that an appellant present

a concise, cohesive argument which “contain[s] the contentions of

the appellant with respect to the issues presented, and the reasons

therefor, with citations to the authorities, statutes and pages of

the record relied on.” This Court has repeatedly held that we will

not consider unsupported issues or arguments. In re Custody of

Krause, 2001 MT 37, ¶ 32, 304 Mont. 202, ¶ 32, 19 P.3d 811, ¶ 32.

Likewise, this Court is under no obligation to locate authorities

or formulate arguments for a party in support of positions taken on

appeal. In re B.P., 2001 MT 219, ¶ 41, 306 Mont. 430, ¶ 41, 35

P.3d 291, ¶ 41.

¶18 The Waldhers’ argument on this issue in their opening brief

consists of four sentences which contain no citations to the record

or any authorities. Their reply brief expands somewhat on the

issue (two additional paragraphs) but again merely utilizes

conclusory language with no citations to authority in support of

their position. A district court’s decision is presumed correct

and it is the appellant who bears the burden of establishing error

by that court. Matter of M.J.W., 1998 MT 142, ¶ 18, 289 Mont.

232, ¶ 18, 961 P.2d 105, ¶ 18. In short, the Waldhers simply have

not met their burden. Therefore, we hold that the District Court did not

err when it entered judgment in favor of Jay Sandelin.

ISSUE TWO

¶19 Did the District Court err when it declared the construction lien valid and enforceable?

6 ¶20 The Waldhers refer us to several aspects of the construction

lien which they insist renders the lien void. They indicate that

the Respondents utilized an individual acknowledgment form as

opposed to a corporate acknowledgment form. They insist that this

form resulted in the signor, Kylanne Sandelin, identifying herself

as the sole lien claimant, barring Earthworks or Jay Sandelin from

foreclosing on the lien. Further, the Waldhers appear to challenge

the address provided for “the party with whom person claiming the

lien contracted to furnish services or materials.”

¶21 As indicated above, the Waldhers filed a motion for summary

judgment based, in part, on the validity of the construction lien.

The District Court denied this motion. In so doing, the District

Court concluded: Plaintiffs’ lien notice indisputably identifies the correct legal owner with a full legal description of the property and provides all other information as required by Section 71-3-535, MCA. There is also no issue of fact that the lien was both served upon and received at the address where both Defendants Elaine and Kevin Waldher, husband and wife, received their mail. Plaintiffs have also identified a green certified mailing receipt card without dispute by Defendants that the card was in fact signed by Defendant Kevin Waldher after being addressed and mailed to both Kevin and Elaine Waldher. . . .

Defendants also argue that the form of lien used and the manner of filing [sic] in the acknowledgment, renders the lien invalid. Specifically, Defendants contend that the second page of the lien, which contains the name and address of Kylanne Sandelin within the certification of mailing as opposed to the name and address of the owner, is incorrect. However, there is nothing within our lien statutes that requires the use of a specific form of lien, nor is there any requirement that the certification identify to whom and where the lien was sent. The only requirement is that “[t]he person claiming the lien shall certify to the county clerk and recorder that a copy of the lien has been served on the owner of record as provided in 71-3-534(2).” Section 71-3-535(2)(b), MCA. Such clearly appears on page 2 of the lien.

7 The District Court echoed this sentiment in its ultimate Findings

of Fact, Conclusions of Law, and Judgment. Therein, the District

Court further concluded:

[The] testimony [from the Clerk and Recorder’s Office] did not establish that the failure to so identify the representative capacity of the party signing the document within the body of the acknowledgment affected the validity of the document . . . .

. . . [T]he language of the lien form used by Plaintiffs . . . is . . . sufficient under Sections 1-5-609 and - 610, MCA, notwithstanding Defendants’ contention that a different form of acknowledgment should have been used.

The only other issue presented pertaining to the validity of the lien was in connection with the address used by Plaintiffs for the contracting parties . . . . However, Plaintiffs testified that they had mailed some 38 prior billings and correspondence to such address as shown on the face of the lien and none had been returned, hence the address used by Plaintiffs would be deemed the “last known address” of the Defendants; various invoices offered as exhibits were mailed to “Kevin Waldher . . .” and Defendant Kevin Waldher confirmed the receipt of same; and, finally, it is undisputed that the lien was so mailed and was received by Defendant Kevin Waldher, as evidenced by Plaintiff’s Exhibit C-2, consisting of the return receipt “green card” and postal mailing receipt, each with matching identification numbers. . . . .

Plaintiffs have met the requirements for their lien pursuant to Sections 71-3-534, -535 and -536, MCA, and their lien is thus valid and enforceable.

¶22 Pursuant to Montana’s construction lien statutes, a

person who furnishes services or materials pursuant to a real

estate improvement contract may claim a construction lien to secure

the payment of the contract price. Section 71-3-523, MCA. This

Court will strictly construe the procedural requirements of the

construction lien statutes, but once the procedure has been

fulfilled, we will liberally construe the statutes so as to give

effect to their remedial purpose. Swain v. Battershell, 1999 MT

8 101, ¶ 26, 294 Mont. 282, ¶ 26, 983 P.2d 873, ¶ 26. The procedural

requirements exist to notify the owner of real property that a lien

has been filed against his or her property, and to protect all

parties dealing with the property, including subsequent purchasers.

Swain, ¶ 26.

¶23 Section 71-3-535(3), MCA, articulates what information a

construction lien statement must include:

The lien statement must contain:

(a) the name and address of the person claiming the

lien; (b) a description of the real property against

which the lien is claimed sufficient to identify it;

(c) the name of the contracting owner;

(d) the name and address of the party with whom the person claiming the lien contracted to furnish services or materials;

(e) a description of the services or materials

provided;

(f) the amount unpaid for services or materials or, if no amount is fixed by the contract, a good faith estimate of the amount unpaid, designated as an estimate;

(g) (i) the date on which the services or materials were first furnished; and

(ii) the date on which the services or materials were last furnished; and

(h) a declaration that a notice of a right to claim a lien was given to the contracting owner or an explanation of why the notice was not required.

Further, §§ 71-3-534 and -535(2), MCA, provide that a lien claimant

shall certify to the county clerk and recorder that he or she has

served the property owner of record with a copy of the lien.

9 ¶24 In the present case, Kylanne Sandelin, Earthworks’ secretary and office

manager, filled out, executed, and filed the construction lien in dispute. Kylanne included

the following information in the construction lien: the name and address of the claimants, Jay

Sandelin and Earthworks West, Inc.; a legal description of the real property subject to the

lien; the name of the real property owners, Elaine Comfort Waldher and Kevin Waldher; the

name and address of the persons the claimants contracted with, Elaine and Kevin; the dollar

amount in dispute, $11,235.79; the commencement and final date of services rendered; and

the reason why notice of the right to claim a lien was not given. Further, Kylanne certified

that “on [June 18, 1999], as an agent of and on behalf of Earthworks West, I served a copy of

the foregoing mechanic’s lien dated June 18, 1999, upon each owner of record named in the

lien, by mailing a copy of the lien to the owner’s last known addresses by certified mail,

return receipt requested . . . .”

¶25 Based on the foregoing, we conclude that the construction lien

in question contained all of the information required by the

relevant construction lien provisions. Further, the procedure to

which Kylanne and the Respondents were subjected served the

notification purpose referenced above. The Waldhers have not met

their burden of establishing that the District Court entered

clearly erroneous findings or misinterpreted the law. As such, we

conclude that the District Court did not err when it declared the

construction lien valid and enforceable.

ISSUE THREE

¶26 Did the District Court err in awarding a money judgment in favor of Earthworks West,

Inc.?

10 ¶27 The Waldhers contend that they agreed to pay approximately $2500 for the

installation of utilities. As for the remaining work, building the road and pad, the Waldhers

insist that the parties contemplated a fixed rate of $2000. The Respondents agree with the

Waldhers regarding the charge for the utilities. However, the Respondents maintain that the

remainder of the work was to be charged on an hourly basis. The District Court found that

the “labor, services, materials, and equipment were provided by way of a verbal and implied-

in-fact agreement based upon time and cost of same . . . .” The Waldhers argue that the

District Court’s “findings are clearly erroneous, and this Court must conclude that they are

not supported by substantial evidence.”

¶28 As indicated above, § 71-3-523, MCA, provides that “[a] person

who furnishes services or materials pursuant to a real estate

improvement contract may claim a construction lien . . . to secure

the payment of his contract price.” Clearly, the parties' dispute

in this case revolves around the purported “contract price.” At

trial, the Waldhers presented evidence in support of their $2000

contention. Conversely, the Respondents presented evidence in

support of their hourly basis fee arrangement.

¶29 It is within the province of the finder of fact to weigh the

evidence presented and determine the credibility of the witnesses;

in the event of conflicting evidence on factual issues, the trier

of fact determines which will prevail. State v. Weitzel, 2000 MT

86, ¶ 20, 299 Mont. 192, ¶ 20, 998 P.2d 1154, ¶ 20. Although the

parties presented conflicting evidence regarding the contract

price, there is certainly sufficient evidence in the record to

support the District Court’s “hourly basis” determination.

11 However, once the District Court determined that the agreement

contemplated an hourly basis fee arrangement, the court still had

to determine whether the alleged costs of the services rendered

were reasonable given the verbal agreement’s silence on the issue.

¶30 Section 71-3-522(3)(b), MCA, provides that “[i]f no price is

agreed upon by the contracting parties, the contract price means

the reasonable value of all services or materials covered by the

contract.” Further, § 71-3-524, MCA, provides in pertinent part:

(1) A lien for furnishing materials arises only if: . . . .

(b) the materials are:

. . . .

(iv) tools, appliances, or machinery used on the particular improvement. However, a lien for supplying tools, appliances, or machinery used on the improvement is limited as provided by subsection (3).

(3) A lien arising for the supplying of tools, appliances, or machinery under subsection (1)(b)(iv) is limited as follows:

(a) if they are rented, the lien is for the reasonable rental value for the period of actual use, including any reasonable periods of nonuse provided for in the rental contract . . . .

¶31 In an apparent effort to reduce costs on the improvement

project, Kevin Waldher used Sandelin’s loader, with his permission,

to perform some of the necessary work. Therefore, the construction

lien not only included the hourly fee for the work performed by the

Respondents, but also included a rental value for Kevin’s use of

the loader. Upon consideration of all of the evidence submitted at

trial, the District Court found that the construction lien

12 contemplated “the reasonable value of the labor, services,

materials, and equipment provided by Plaintiffs to

Defendants . . . .” We conclude that there is sufficient evidence

in the record to support this finding. Therefore, we hold that the

District Court did not err when it entered judgment for the

Respondents in the amount of $11,235.79.

¶32 Affirmed.

/S/ JIM REGNIER We Concur:

/S/ KARLA M. GRAY /S/ TERRY N. TRIEWEILER /S/ PATRICIA COTTER /S/ W. WILLIAM LEAPHART /S/ JIM RICE

13 Justice James C. Nelson concurs and dissents.

¶33 I concur in the Court's resolution of Issue 1. I dissent

with respect to the Court's resolution of Issue 2. I concur in the

result of Issue 3, but not in the analysis. Since this opinion

will not be published and may not serve as precedent, my dissenting

opinion will be brief.

¶34 As observed by the majority, our decision in Swain v.

Battershell, 1999 MT 101, 294 Mont. 282, 983 P.2d 873, requires

that we strictly construe the procedural requirements of the

construction lien statutes. That obligation, in my view, should

dispose of Issue 2 in favor of the Waldhers. The construction lien

at issue here--a "fill in the blanks" form--was void on its face as

a matter of law. ¶35 It is undisputed that the lien claimant, Kylanne

Sandelin, furnished no services or materials to nor did she have

any claim against the Waldhers. Thus, she could not be the lien

claimant under and as required by §§ 71-3-523, MCA, and 71-3-

535(3)(a), MCA. Yet, it was Kylanne Sandelin individually who signed the lien. She did not sign the lien in any sort of a

representative capacity on behalf of Earthworks West, Inc., or for

Jay Sandelin as required by §§ 70-21-203, 1-5-602(2), and 1-5-

610(2), MCA. Indeed, she is not even named as a plaintiff in the

suit brought to foreclose the lien. In short, no construction lien

was filed of record by or on behalf of Earthworks West Inc., or Jay

Sandelin, the plaintiffs in the foreclosure suit.

14 ¶36 Moreover, § 71-3-535(2)(b), MCA, requires that the lien

claimant certify to the county clerk and recorder that a copy of

the lien has been served on the owner of record of the property

named in the lien. Section 71-3-534(2), MCA, requires that the

county clerk not file the lien unless this certification by the

lien claimant is attached. The construction lien at issue here

contains no such certification. Kylanne Sandelin certifies that

she served herself; but the lien completely fails to contain the

statutorily required certification that she served the owner of

record. The county clerk erred in even filing the purported lien. ¶37 These are just two of the procedural flaws in the construction

lien. The Waldhers detail more in their briefs on appeal. It has

long been a fundamental principle of the law of Montana that a

construction lien is perfected only after full compliance with the

lien statutes. Varco-Pruden v. Nelson (1979), 181 Mont. 252, 255,

593 P.2d 48, 49-50 (citation omitted). Suffice it to say that,

here, there was not even minimal, much less full compliance with

the lien statutes. The two failures mentioned above are enough to

defeat the claim that a construction lien was perfected by

Earthworks West, Inc., and by Jay C. Sandelin.

¶38 As to Issue 3, I concur in the result. I do not agree with

the majority grounding its decision in the construction lien

statutes, as there was, in my view, no construction lien. While

Earthworks West, Inc., and Jay C. Sandelin may well have been

entitled to damages on a contract or quantum meruit theory, they

certainly were not on the basis of a construction lien.

15 ¶39 I would reverse on Issue 2 and award the Waldhers their costs

and attorney fees under § 71-3-124(1), MCA, for defeating the

construction lien. I dissent from our failure to do so.

/S/ JAMES C. NELSON