Jordan Construction, Inc. v. Federal National Mortgage Ass'n

2017 UT 28, 408 P.3d 296, 839 Utah Adv. Rep. 9, 2017 WL 2256891, 2017 Utah LEXIS 82
CourtUtah Supreme Court
DecidedMay 22, 2017
DocketNo. 20160474
StatusPublished
Cited by20 cases

This text of 2017 UT 28 (Jordan Construction, Inc. v. Federal National Mortgage Ass'n) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jordan Construction, Inc. v. Federal National Mortgage Ass'n, 2017 UT 28, 408 P.3d 296, 839 Utah Adv. Rep. 9, 2017 WL 2256891, 2017 Utah LEXIS 82 (Utah 2017).

Opinion

On Direct Appeal

Chief Justice Durrant,

opinion of the Court:.

Introduction

¶ 1 This ease concerns a general contractor’s attempt to recover on a mechanic’s lien. Scott Bell, an employee of Jordan Construction, Inc., hired Jordan Construction as the general contractor to build a new home on property that he owned (the Property). Several months after the start of construction, Mr. Bell secured long-term financing and executed a trust deed on the Property. Mr. Bell then failed to pay Jordan Construction the full amount due for its work. When the home was nearly finished, Jordan Construction discovered that Mr. Bell had been misusing company funds and terminated him. Mr. Bell responded by suing Jordan Construction. Jordan Construction in turn recorded a mechanic’s lien and lis pendens on the Property and counterclaimed for breach of contract, embezzlement, and foreclosure of the mechanic’s lien. Jordan Construction chose not to name the holder .of the trust deed at that time.

¶ 2 While the suit was pending, Jordan Construction discovered that some subcontractors had not been paid for their work on the Property. Nearly nine' months after the completion of construction, Jordan Construction filed an amendment to its notice of mechanic’s lien to include the additional amounts owed to the subcontractors. Jordan Construction then obtainfed summary judgment on its counterclaims against Mr. Bell, applied for a writ of execution, and took steps to initiate a sheriffs sale of the Property.

¶ 3 Mfeanwhile, Mr. Bell had defaulted on his mortgage. The trust deed holder conducted a non-judicial foreclosure sale,-and Federal National Mortgage Association- (FNMA)1 purchased the trustee’s deed. FNMA then filed a motion asking the district court to quash the writ of execution and ■ halt the sheriffs sale because- neither it, nor its predecessor in interest, had been named in this action. Over Jordan Construction’s objection, [300]*300the district court quashed the writ and halted the sale. Jordan Construction then filed a third-party complaint against FNMA, asserting that its mechanic’s lien had priority over FNMA’s trustee’s deed.

¶ 4 Having been brought in as a party to this action, FNMA then prevailed on a series of motions 'before the district court. Jordan Construction assérts on appeal that the district court erred in those decisions. First; the district court concluded that FNMA is not bound by the judgment rendered against Mr. Bell earlier in the case under either the lis pendens or the doctrine of res judicata. Second, the court ruled that Jordan Construction’s amended notice of lien — which nearly doubled the amount claimed — was untimely. Third, it ruled that, under the 2008 Utah Code, Jordan Construction was not entitled to recover prejudgment interest on its mechanic’s lien claim. In all, FNMA, by obtaining these rulings, whittled down the amount that Jordan Construction had sought in its third-party ' complaint — $336,568.66—to $126,956.92, the amount listed on the face of the original lien. FNMA then' stipulated to the payment of $126,956.92. The district court concluded that FNMA was the successful party and awarded it attorney fees under the mechanic’s lien statute, a decision which Jordan Construction also challenges on appeal.

■¶ 5 We affirm the district court’s ruling as to each issue. . .

Background

• ¶ 6 This case evolved in two phases. We first discuss the procedural facts involved in the first phasej- where Jordan Construction asserted and prevailed on its counterclaims against Mr. Bell. We then discuss the second phase, where FNMA was brought into this action as a third-party defendant.

¶ 7 In 2006, Jordan Construction was hired by its employee, Mr. Bell, to be the general contractor on the construction ■ of his new home, Construction on the home began in October 2006. Mr. Bell obtained long-term financing on January 31, 2008, executing a trust deed that encumbered the Property with the trustee’s right to sell the property in case of default.

¶ 8 Near the end of construction, in October 2008, Jordan Construction discovered that Mr. Bell had been embezzling from the company and terminated his 'employment. The next month,' Mr. Bell and his brother, Todd Bell, brought suit against Jordan Construction alleging, among other things, breach of contract. In December 2008, Jordan Construction recorded a Notice of Mechanic’s Lien in the amount of $126,956.92 for its work on Mr. Bell’s home.2 It then counterclaimed for breach of contract, unjust enrichment, promissory estoppel, conversion, and foreclosure of its mechanic’s lien, simultaneously recording a Us pendens on the Property. It did not, however, name the holder of the trust deed as a party to the action.

¶ 9 In the months after the suit was filed, Jordan Construction continued to investigate Mr. Bell’s activities, discovering that he “kept few receipts and records demonstrating how many of the subcontractors were paid.” Jordan Construction’s principal, Wesley Lewis, had to perform a detailed accounting to determine how much Jordan Construction owed to subcontractor's for work done on the Property, a task that was complicated by Mr. Bell’s failure to keep accurate records. This accounting revealed a total of $232,976.81. In July 2009, Jordan Construction amended its notice of mechanic’s lien to reflect its newly calculated amount.

¶ 10 Several months after the amendment, in January 2010, Jordan Construction moved for partial summary judgment on all of its claims against Mr. Bell. Mr. Bell did not oppose the motion, and the court granted it in February 2010. Although Jordan Construction had requested summary judgment on the mechanic’s lien claim in its motion, the court’s February 2010 order did not mention that claim, an oversight the court did not correct until nearly eighteen months later.

¶ 11 In June 2010, the court entered an order containing its findings of fact and con-[301]*301elusions of law regarding. Jordan Construction’s counterclaims against Mr. Bell, but this order again made no mention of the mechanic’s lien claim. Additionally, Jordan Construction still had not joined the holder of the trust deed to this action. Two months later, Jordan Construction sought permission from the district court to file a third-party complaint against the trust deed holder, but it did not serve that complaint.

¶ 12 Meanwhile, Mr. Bell had defaulted on the promissory note that was secured by the trust deed on the Property. FNMA purchased the trustee’s deed at a non-judicial foreclosure sale on October 1, 2010. Jordan Construction later applied for a writ of execution in January 2011. As part of the application for this writ, Jordan Construction served on FNMA a “Checklist for Writ of Execution for Judgment Debtor and Persons with an Interest in the Property,” “Notice of Execution and Exemptions,” and a “Reply and Request for Hearing form.” FNMA did not file a reply dr request a hearing.

¶ 13 Jordan Construction did not immediately act on the writ, but instead moved in June 2011 to amend the court’s order granting partial summary judgment against Mr. Bell to include the mechanic’s lien foreclosure claim. The court, recognizing that its original order, should have included the mechanic’s lien claim, granted the motion in July 2011 and modified its findings of 'fact and conclusions of law in August 2011 to include that claim.

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Cite This Page — Counsel Stack

Bluebook (online)
2017 UT 28, 408 P.3d 296, 839 Utah Adv. Rep. 9, 2017 WL 2256891, 2017 Utah LEXIS 82, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jordan-construction-inc-v-federal-national-mortgage-assn-utah-2017.