J.D. Construction, Inc. v. IBEX International Group, LLC

240 P.3d 1033, 126 Nev. 366, 126 Nev. Adv. Rep. 36, 2010 Nev. LEXIS 42
CourtNevada Supreme Court
DecidedOctober 7, 2010
Docket52543, 52961
StatusPublished
Cited by31 cases

This text of 240 P.3d 1033 (J.D. Construction, Inc. v. IBEX International Group, LLC) is published on Counsel Stack Legal Research, covering Nevada Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
J.D. Construction, Inc. v. IBEX International Group, LLC, 240 P.3d 1033, 126 Nev. 366, 126 Nev. Adv. Rep. 36, 2010 Nev. LEXIS 42 (Neb. 2010).

Opinion

OPINION

By the Court,

Douglas, J.:

Appellants J.D. Construction, Inc., Jerry Daugherty, and Carrie Daugherty (collectively, J.D. Construction) placed a mechanic’s lien on property owned by respondent IBEX International Group, LLC. IBEX sought to expunge the lien, pursuant to NRS 108.2275, arguing that it was frivolous and/or excessive. The district court concluded that the lien was excessive and expunged the lien.

In this opinion, we address the proper scope and nature of NRS 108.2275 proceedings where a property owner seeks to expunge a frivolous or excessive lien. We conclude that when a property owner seeks to remove a lien by arguing it is frivolous or excessive, the district court must determine the material facts in order to reach a conclusion regarding whether a lien is frivolous or excessive.

We conclude that in making these factual determinations, the district court is not required to hold a full evidentiary hearing, but instead may base its decision on affidavits and documentary evidence submitted by the parties.

We also conclude that this procedure meets due process requirements. However, pursuant to the time frame mandated by NRS 108.2275(3), if the district court determines that a hearing is necessary, the hearing must be held within 15 to 30 days of the court’s order for a hearing. And while any hearing must be initiated within that time frame, the statute does not require the district court to resolve the matter within that time frame.

Finally, we conclude that, in evaluating whether a lien is excessive, the district court must use a preponderance-of-the-evidence standard, rather than the reasonable-cause standard used for frivolous liens, and the burden is on the lien claimant to prove the lien and the amount claimed.

In this case, J.D. Construction had the burden to show the adequacy of its lien, and it failed to do so. Accordingly, we affirm the order of the district court because it reached the right result even though for the wrong reason. 1

*370 FACTS AND PROCEDURAL HISTORY

The underlying dispute arises from a contract between IBEX and J.D. Construction for J.D. Construction to build a medical facility for $5,000,000. The contract stated that J.D. Construction was to be paid in installments based upon the percentage completed and required that any changes to the contract amount be priced as a change order. The parties agree that the contract amount was later increased to at least $5,438,761.88. However, they submitted conflicting affidavits in district court regarding whether there were any additional amendments to the contract.

J.D. Construction stopped working on the project on January 25, 2008. 2 A few days prior to that, on January 21, 2008, Valley Construction Services, Inc. (VCS), the company designated by the parties to determine the percentage of the project that was complete, sent its inspector, Gary Parrish, to calculate the percentage of completion. At that time, VCS adjusted its calculation of the percentage completed to 23.09 percent from the 39.55 percent it had previously calculated. In his deposition, Parrish stated that the percentage completed dropped because prior to the January inspection he conducted his inspections based on a budget document that indicated a three-story structure. When he received the plans and realized that the project was actually a four-story structure, he had to adjust his estimates of completion accordingly. The parties dispute the percentage of work completed when J.D. Construction stopped work.

J.D. Construction recorded a notice of lien on the property in the amount of $1,450,497.90. 3 IBEX filed a complaint, alleging breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, intentional misrepresentation/fraud, and negligent misrepresentation, and requested a court order quieting title to the property and expunging the lien.

IBEX then filed a motion to expunge or reduce J.D. Construction’s allegedly frivolous and/or excessive lien pursuant to NRS 108.2275. IBEX alleged that the amount of the contract between IBEX and J.D. Construction was $5,438,761.88 and that because the project was only 23.09 percent complete, J.D. Construction *371 was actually overpaid 4 and the lien was excessive and/or frivolous. J.D. Construction responded with affidavits and documents supporting the amount of its lien. 5

At the July 2008 hearing on the motion to expunge, the district court, after oral arguments, ordered the parties to conduct discovery on the issue of percentage of completion. The district court ordered the parties to depose IBEX’s representative at the project and the person at VCS most knowledgeable regarding the percentage completed. J.D. Construction was only able to depose VCS’s field inspector, Parrish, regarding the percentage completed. 6 J.D. Construction submitted a supplemental brief, which included an expert report estimating the project was 52 to 55 percent complete as of January 21, 2008.

At the continued hearing in September 2008, the district court granted the motion to expunge the lien, finding “the lien is not frivolous, but is excessive.” 7 The district court found the amount of the contract was $5,438,751, and stated: “Valley Construction Services, Inc. has provided the most credible estimate of percentage completion, and based upon Valley Construction Services," Inc.’s calculation the Project was 23.09% complete upon J.D. Construction, Inc.’s departure from the Project.” J.D. Construction now appeals.

DISCUSSION

In this appeal, we determine the proper scope and nature of NRS 108.2275 proceedings where a property owner seeks to expunge a frivolous or excessive lien.

We first address the proper scope of an NRS 108.2275 hearing. Because the determination of whether a lien is frivolous or excessive requires a determination of the material facts'of the case, we conclude that factual determinations are appropriate in an NRS 108.2275 hearing.

*372

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Bluebook (online)
240 P.3d 1033, 126 Nev. 366, 126 Nev. Adv. Rep. 36, 2010 Nev. LEXIS 42, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jd-construction-inc-v-ibex-international-group-llc-nev-2010.