Opinion
Bankruptcy No. 05-07284. Adversary No. 06-9158.
January 19, 2007.
Michael P. Mallaney, West Des Moines, IA, for Debtor.
Abbe Stensland, Moyer Bergman, PLC, Cedar Rapids, IA, for Plaintiff/Trustee Renee Hanrahan
Tom Fiegen, Cedar Rapids, IA, for Defendant Martinson Construction Co.
ORDER RE: MOTION FOR SUMMARY JUDGMENT
This matter came before the undersigned on December 15, 2006 pursuant to assignment. Plaintiff/Trustee Renee Hanrahan was represented by Attorney Abbe Stensland. Defendant Martinson Construction Co. was represented by Attorney Tom Fiegen. After hearing arguments of counsel, the Court took the matter under advisement. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(K).
STATEMENT OF THE CASE
Trustee seeks summary judgment decreeing that Martinson Construction does not have a valid lien on the real estate against which Martinson filed its mechanic's lien. She requests the Court order Martinson to release its lien.
STATEMENT OF FACTS
Martinson Construction Co. performed concrete work on Debtor's property between December 2004 and October 18, 2005. An involuntary bankruptcy petition was filed against Debtor on October 21, 2005. On November 8, 2005, Martinson filed a motion for relief from the automatic stay to perfect its mechanic's lien on the property. This motion was granted with the consent of Trustee by order filed December 1, 2005.
Martinson filed its mechanic's lien on December 8, 2005, claiming a lien of $86,540. The real estate description described on its mechanic's lien filing is that set out in Trustee's Exhibit SJ103 ("Property A"). This legal description includes two parcels. Martinson's corporate counsel prepared the mechanic's lien based on information received from the Grundy County Recorder regarding the legal description of Debtor's real estate.
Martinson actually performed its concrete work on a separate parcel ("Property B"). The County Recorder did not include Property B when responding to Martinson's counsel's request for the legal description of Debtor's real estate. Thus, Martinson poured concrete on Property B but filed its mechanic's lien against Property A.
On October 23, 2006, the parties filed a stipulation in Debtor's bankruptcy case in which both Trustee and Martinson acknowledge that Martinson's mechanic's lien described Property A, rather than Property B. Trustee has filed this stipulation with the Clerk of Court in Grundy County. Now, however, Martinson asserts that a portion of its work, valued at $150, was performed on Property A. The Court notes that Property A and Property B are contiguous and make up the total of the land on which Debtor operated a farm implement dealership.
Trustee asserts that Martinson's mechanic's lien did not attach to Property A and requests summary judgment ordering Martinson to release its lien. Martinson argues that it justifiably relied on the Grundy County Recorder's information regarding the legal description when filing its mechanic's lien. It asserts Trustee had notice of its lien on the date the bankruptcy petition was filed because the concrete was still green at that time. Martinson also argues Trustee's attempt to "lien strip" violates the Bankruptcy Code.
CONCLUSIONS OF LAW
A motion for summary judgment may only be granted when there are no material facts in controversy, and the moving party is entitled to a judgment as a matter of law. Fed.R.Bankr.P. 7056; Fed.R.Civ.P. 56(a). In considering a motion for summary judgment, the Court views the evidence in a light most favorable to the nonmoving party. In re Marlar, 267 F.3d 749, 755 (8th Cir. 2001). The moving party has the burden of showing that there is no genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
THE STIPULATION
As an initial matter, the Court finds that Martinson is bound by the October 23, 2006 stipulation in which it agreed that it performed its concrete work on property other than that against which it filed its mechanic's lien. Stipulations by the parties regarding questions of fact are conclusive. Gander v. Livoti, 250 F.3d 606, 609 (8th Cir. 2001). "Valid stipulations are controlling and conclusive, and courts must enforce them." Id. In light of the parties' stipulation, Martinson cannot now claim some if its work, to the value of $150, was performed on Property A against which it filed its mechanic's lien.
MECHANIC'S LIENS
"A mechanic's lien is a creature of the statute, and in order that a lien may be created there must be a substantial compliance with the terms and provisions of the statute." Bernstein v. Alcorn, 190 N.W. 975, 976 (Iowa 1922). Iowa law grants a lien to a creditor who has performed services which improve the affected real estate. Iowa Code § 572.2. This lien may be perfected under section 572.8 which requires the filing of a statement of account of the demand setting forth, among other things, "[t]he correct description of the property to be charged with the lien." Iowa Code § 572.8(2).
No Iowa courts have directly addressed the effect of a mechanic's lien statement filed with an incorrect description of the property. Other courts have considered the issue. In Butler Supply Comm. Co. v. Citizens Bank, 175 S.W.3d 684, 686 (Mo.Ct.App. 2005), the court found that the requirements of Missouri's mechanic's lien statute were not met where the description of the property on the lien statement was for a tract of land completely distinct from the one on which work was done and had different owners. Likewise, the court in McCarron's Bldg. Center, Inc. v. Einertson, 482 N.W.2d 529, 532 (Minn.Ct.App. 1992), noted that an erroneous description on a mechanic's lien statement is fatal when it plainly describes an incorrect lot and wholly excludes the property intended to be liened. See also 56 C.J.S. Mechanics' Liens § 170 (1992); 53 Am. Jur. 2d Mechanics Liens § 237 (2006) (noting a mechanic's lien is insufficient if it does not describe the land upon which improvements were made but instead describes an entirely different tract of land); C.C. Marvel, Annotation,Sufficiency of Notice, Claim, or Statement of Mechanic's Lien with Respect to Description or Location of Real Property, 52 A.L.R.2d 12, § 5[c] (1957) (setting out rule that "an entirely erroneous, misleading, or technically and unambiguously erroneous, description, as the case may be, is insufficient.").
ANALYSIS
Trustee's Complaint and Motion for Summary Judgment present a fairly narrow request for relief. The question is whether Martinson has a lien against Property A. Based on the foregoing, the answer is no. The Mechanic's Lien statement Martinson filed does not include the correct description of the property to be charged with its lien. It performed services which improved Property B. The description of the real estate included in its Mechanic's Lien statement is for Property A. Martinson does not have a lien on Property A and should file a release of the Mechanic's Lien.
Martinson raises arguments which are not dispositive on the narrow issue presented herein. How Martinson came by the real estate description it used on its Mechanic's Lien filing is not relevant. Simply, Iowa Code sec. 572.2 gives a creditor a mechanic's lien on the property affected by the improvements it performs on it. Martinson did not perform improvements on the property described in its Mechanic's Lien filing, Property A. Therefore, it does not have a lien on Property A and should file a release of the Mechanic's Lien to correct the property record.
WHEREFORE, Trustee's Motion for Summary Judgment is GRANTED.
FURTHER, Martinson Construction Co.'s Mechanic's Lien does not attach to or constitute a valid lien against Property A, the real estate described in Trustee's Exhibit SJ103.
FURTHER, Martinson is ordered to file a release of the Mechanic's Lien it filed describing Property A with the Grundy County Clerk of Court.