Opinion
No. A06-1202, A06-1208.
Filed June 5, 2007.
Appeal from the District Court, Ramsey County, File No. C6-04-3199.
Mark E. Fuller, Mark Fuller Associates, Ltd., Edina, MN 55439 (for respondent LeMaster Construction).
Jennifer M. Macaulay, Macaulay Law Offices, St. Paul, MN 55105 (for appellant Mahoney).
Considered and decided by ROSS, Presiding Judge; KALITOWSKI, Judge; and HALBROOKS, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2006).
UNPUBLISHED OPINION
In this consolidated appeal from the district court's judgment in a mechanic's-lien foreclosure matter, appellant Seamus Mahoney argues that the district court erred by disregarding the statutory mechanic's-lien provisions and by failing to strictly construe the prelien-notice requirements in determining damages. As a result of these errors, appellant contends that the attorney-fees award must be vacated. Respondent LeMaster Construction, Inc. argues that the district court erred in its determination that there was no contract between the parties, instead awarding damages on a quantum meruit basis, and that the district court abused its discretion by awarding only a portion of the attorney fees it requested. We affirm.
FACTS
Following a fire at his home on September 12, 2003, appellant Mahoney was referred by his insurance agent to respondent LeMaster Construction, Inc., a company that specializes in fire and water remediation. Verdean LeMaster, the company owner, and Mahoney met that night, and LeMaster secured the home by boarding it up. The parties dispute whether LeMaster gave Mahoney a copy of the company's standard remediation agreement on September 12, 2003. But it is undisputed that Mahoney signed the agreement on September 26, 2003. The agreement provided, in part, that
Contractor is hereby authorized to complete all of the work, including, but not limited to, restorations, cleaning, repairing, removal, storage, testing, damage appraisal and return of the inventories personal property ("Contents") and all repairs to the building ("Structure") relating to the insurance claim for fire damage to contents and structure ("Loss") at the following location . . . ("Property"). Contractor shall repair the property for amount to be determined later between adjuster and contractor. Owner responsible for deductible and upgrades.
The agreement also contained the mechanics' prelien notice required by Minn. Stat. § 514.011 (2006) and provided for liquidated damages in the event of breach by the homeowner; 8% per annum interest on any unpaid balance; and costs, disbursements, and attorney fees in the event of litigation. Removal of Mahoney's personal property from the home commenced on September 16, 2003, and demolition started on October 7, 2003. LeMaster and Mahoney's insurance adjuster communicated about the scope of the work to be paid by the insurer for the remediation. On October 23, 2003, the adjuster met with Mahoney and LeMaster to review the scope of the project, the total cost of which was $58,256.39. It was also agreed that LeMaster would be paid for removing, cleaning, and storing Mahoney's personal property.
At some point after LeMaster had begun its work, Mahoney orally requested some additions or upgrades to the work that had been approved by his insurance company. On November 5, 2003, and November 11, 2003, LeMaster faxed change orders to Mahoney that reflected the proposed changes. Signed orders were never returned. As a result, on approximately November 19, 2003, LeMaster ceased work on the project. By that time, LeMaster claims that it had completed $15,060.14 of work on the restoration and $7,466.67 of work related to change orders and incurred $16,509 to remove, clean, and store Mahoney's personal property. While Mahoney's insurer ultimately paid him $58,256.39 for structural repairs and $16,509 for personal-property treatment, Mahoney has not paid anything to LeMaster.
LeMaster initiated a mechanics'-lien foreclosure action by leaving a mechanics'-lien statement at Mahoney's home with his girlfriend. Pursuant to the terms of the agreement that Mahoney signed on September 26, 2003, LeMaster claimed total damages of $85,307.88. Mahoney testified that he received the statement later that day. LeMaster subsequently filed a summons and complaint, seeking damages for mechanics'-lien foreclosure, breach of contract, and unjust enrichment.
The matter was tried to the district court. The district court determined that there was no valid contract because, although the amount that the insurance company agreed to pay Mahoney was established on October 23, 2003, the parties had not agreed to the essential terms of the work that Mahoney wanted LeMaster to complete and the price of that work versus what Mahoney would do himself. But the district court found that because LeMaster had completed work that was of value to Mahoney, LeMaster was entitled to quantum meruit damages. The district court, therefore, awarded LeMaster a total of $22,526.81 — $15,060.14 for the completed demolition and restoration work and $7,466.67 for work done pursuant to change orders. In response to Mahoney's challenge to the validity of the statutory prelien notice, the district court concluded that the mechanics' lien was perfected for the structural work done by LeMaster after September 16, 2003. With respect to LeMaster's claim for expenses related to Mahoney's personal property, the district court determined that there was no perfected, separate lien and no contractual basis for recovery, but awarded $9,649.99 in quantum meruit damages to LeMaster for "contents processing" up until December 30, 2003. Finding no contractual basis to award attorney fees, the district court awarded $10,000 to LeMaster as reasonable attorney fees pursuant to the mechanics'-lien statute. Mahoney's counterclaims for conversion, substandard work, and attorney fees were denied. Posttrial, the parties stipulated to some additional mechanics'-lien language in the district court's order. But all other posttrial motions were denied by the district court. This consolidated appeal follows.
DECISION I.
We first examine whether the district court erred in its determination that there was no contract between the parties. Whether a contract exists is generally an issue for the fact-finder that will be overturned only if "manifestly contrary to the evidence." Morrisette v. Harrison Int'l Corp., 486 N.W.2d 424, 427 (Minn. 1992). "Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the [district] court to judge the credibility of the witnesses." Minn. R. Civ. P. 52.01. "Findings of fact are clearly erroneous only if the reviewing court is left with the definite and firm conviction that a mistake has been made." Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (quotation omitted).
Contract formation requires mutual assent. Field-Martin Co. v. Fruen Milling Co., 210 Minn. 388, 389, 298 N.W. 574, 575 (1941). Formation is determined through an objective test, "judged by the words and actions of the parties and not by their subjective mental intent." Hill v. Okay Constr. Co., 312 Minn. 324, 332, 252 N.W.2d 107, 114 (1977). This intent "may be inferred wholly or partly from words spoken or written or from the conduct of the parties or a combination thereof." Cederstrand v. Lutheran Bhd., 263 Minn. 520, 532, 117 N.W.2d 213, 221 (1962).
"[T]he law does not favor the destruction of contracts because of indefiniteness, and if the terms can be reasonably ascertained in a manner prescribed in the writing, the contract will be enforced." King v. Dalton Motors, Inc., 260 Minn. 124, 126, 109 N.W.2d 51, 53 (1961) (footnote omitted). But a contract is void if it is so vague, indefinite, or uncertain that the contract's meaning and the parties' intent is left to speculation. Id. at 126, 109 N.W.2d at 52. Therefore, a "purported contract is fatally defective" if it contains "substantial and necessary terms . . . specifically left open for future negotiation." Id.; see also Triple B G, Inc. v. City of Fairmont, 494 N.W.2d 49, 53 (Minn.App. 1992) (stating that the need for new stipulations between parties to make terms certain invalidates the contract). "When the parties know that an essential term of their intended transaction has not yet been agreed upon, there is no contract." Malevich v. Hakola, 278 N.W.2d 541, 544 (Minn. 1979).
Here, the district court determined that the essential terms of the contract were never fully settled. And, in fact, the document that Mahoney signed on September 26 stated that "the scope of the work shall be as authorized by [Mahoney's] insurance company and agreed to by [Mahoney] and [LeMaster], all as more specifically set forth in attached Exhibit `A'." But "Exhibit `A'" was not attached. Although the parties had some agreement on the general nature and scope of the work, the specific terms were never committed to writing. The insurance adjuster testified that Mahoney and LeMaster were still discussing the scope of the work to be done when he left the October 23, 2003 meeting. At that time, Mahoney was considering new work on his basement and less work upstairs. As the district court found, this gap in the agreement left terms open for future negotiation. Thus, we agree that a contract was never formed.
But because the district court found that Mahoney received a benefit from LeMaster's work, the district court awarded LeMaster quantum meruit damages of $15,060.14 for demolition and restoration and $7,466.67 for work done pursuant to change orders. Quantum meruit is equitable relief that is "within the sound discretion of the [district] court." Nadeau v. County of Ramsey, 277 N.W.2d 520, 524 (Minn. 1979). Mahoney conceded to the district court that he was willing to pay for the work that LeMaster completed before November 19, 2003. And it is not disputed that Mahoney received a benefit from LeMaster's work. Therefore, we conclude that the district court did not abuse its discretion in granting this equitable relief to LeMaster.
II.
Mahoney argues that a valid mechanics' lien was never perfected because of faulty prelien notice and improper service. "[M]echanics' liens exist only by virtue of the statute creating them." Dolder v. Griffin, 323 N.W.2d 773, 780 (Minn. 1982) (quotation omitted). Statutory construction is a question of law, which this court reviews de novo. Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998). "When interpreting a statute, we first look to see whether the statute's language, on its face, is clear or ambiguous. `A statute is only ambiguous when the language therein is subject to more than one reasonable interpretation.'" Am. Family Ins. Group v. Schroedl, 616 N.W.2d 273, 277 (Minn. 2000) (quoting Amaral v. St. Cloud Hosp., 598 N.W.2d 379, 384 (Minn. 1999)). "A statute should be interpreted, whenever possible, to give effect to all of its provisions; `no word, phrase, or sentence should be deemed superfluous, void, or insignificant.'" Id. (quoting Amaral, 598 N.W.2d at 384).
Minnesota law provides that "[w]hoever . . . contributes to the improvement of real estate by performing labor, or furnishing skill, material or machinery . . . shall have a lien upon the improvement, and upon the land on which it is situated or to which it may be removed." Minn. Stat. § 514.01 (2006). The lien attaches "from the time the first item or material or labor is furnished upon the premises for the beginning of the improvement." Minn. Stat. § 514.05, subd. 1 (2006). Proper notice includes:
Every person who enters into a contract with the owner for the improvement of real property and who has contracted or will contract with any subcontractors or material suppliers to provide labor, skill or materials for the improvement shall include in any written contract with the owner the notice required in this subdivision and shall provide the owner with a copy of the written contract. If no written contract for the improvement is entered into, the notice must be prepared separately and delivered personally or by certified mail to the owner or the owner's authorized agent within ten days after the work of improvement is agreed upon.
Minn. Stat. § 514.011, subd. 1 (2006). The notice must use the statutory language. Id. "Mechanic's lien laws are strictly construed as to the question whether a lien attaches" because "this statute was adopted to remedy the unfairness arising from the foreclosure of mechanics liens on property of unsuspecting owners." Dolder, 323 N.W.2d at 780 (quotations omitted). Therefore, the statutory requirements must be followed strictly. Id.
Here, the district court determined that because there was no contract, a separate prelien notice was required under Minn. Stat. § 514.011 (2006). In its determination of the date that the "work of improvement" was agreed upon, the district court found that there was an oral agreement between the parties before September 15, 2003, authorizing LeMaster to board up the house. But because there was no separately prepared prelien notice in an acceptable form given to Mahoney until he received and signed LeMaster's agreement on September 26, 2003, the district court found that only LeMaster's work on and after September 16, 2003, was covered by the lien. Because the district court's determination that the prelien notice requirement was met is consistent with the language of Minn. Stat. § 514.011, we conclude that there is no error.
As an alternative argument, Mahoney asserts that even if the prelien notice was valid, the lien statement fails because LeMaster overstated its claim and failed to properly serve it upon him. A mechanics' lien is effective only after the lienholder properly serves notice of the lien's filing to the landowner within "120 days after doing the last of the work, or furnishing the last item of skill, material, or machinery," by providing "a copy of the statement . . . personally or by certified mail on the owner or the owner's authorized agent or the person who entered into the contract with the contractor." Minn. Stat. § 514.08, subd. 1 (2006). A lienholder who has filed a lien statement and served a copy by the above procedure may sue to foreclose the lien. Minn. Stat. § 514.11 (2006).
"The purpose of service of process is to give notice `reasonably calculated, under all circumstances, to apprise interested parties of the pendency of the action.'" Smith v. Flotterud, 716 N.W.2d 378, 382 (Minn.App. 2006) (quoting Mullane v. Cent. Hanover Bank Trust Co., 339 U.S. 306, 314, 70 S. Ct. 652, 657 (1950)), review denied (Minn. Sept. 27, 2006). "Mechanic's lien laws . . . are construed liberally after the lien has been created." Dolder, 323 N.W.2d at 780 (quotation omitted). Minnesota appellate courts "have repeatedly stated this principle." Id. Liberal construction ensures that the litigant is not deprived of his or her "day in court." Smith, 716 N.W.2d at 382 (quotation omitted).
"[T]he rules of civil procedure apply to lien actions unless the mechanics' lien statutes are inconsistent or in conflict with the rules of civil procedure." Ryan Contracting, Inc. v. JAG Invs., Inc., 634 N.W.2d 176, 186 (Minn. 2001) (citing Minn. R. Civ. P. 81.01(a) App. A); see also Eischen Cabinet Co. v. Hildebrandt, 683 N.W.2d 813, 818 (Minn. 2004) (relying upon general legal authorities and Minnesota Rules of Civil Procedure when the language of the statute is silent to interpret question of service of a mechanics'-lien statement). Reviewing courts have scrutinized service of a lien statement for substantial compliance with procedural formalities. Pella Prods., Inc. v. Arvig Tel. Co., 488 N.W.2d 316, 318 (Minn.App. 1992) (stating that lienholder "did not substantially comply with the statute when it served the mechanics' lien statement by first class mail"), review denied (Minn. Sept. 30, 1992). Service is proper "[u]pon an individual by delivering a copy to the individual personally or by leaving a copy at the individual's usual place of abode with some person of suitable age and discretion then residing therein." Minn. R. Civ. P. 4.03(a). Substantial compliance with Minn. R. Civ. P. 4.03 requires (1) actual notice and (2) attempted substituted service. Thiele v. Stich, 425 N.W.2d 580, 584 (Minn. 1988).
The supreme court has held that Minn. R. Civ. P. 4.03 governing personal service applies to service of a summons for a mechanics'-lien action. Ryan Contracting, 634 N.W.2d at 186. Because the statute did not "specify how each step of the action must proceed . . . the rules of civil procedure govern." Id. at 186 n. 11. "Where the lien statutes differ from the rules, the lien statutes continue to govern." Id.
Here, LeMaster's process server served the lien statement at Mahoney's "usual place of abode," "by leaving a copy" of the lien statement with Mahoney's girlfriend, a "person of suitable age and discretion then residing therein." Mahoney also acknowledged that his girlfriend gave it to him later that same day.
The district court found that Mahoney "admitted to receiving the mechanics' lien statement," and therefore found that personal service satisfied the mechanics'-lien statute. Because service to Mahoney substantially complied with both the mechanics'-lien statute and Minn. R. Civ. P. 4.03, the district court did not err in its determination that service was proper.
Mahoney also asserts that the lien was improper because it overstated LeMaster's legitimate claim. A mechanics' lien may not be perfected "for a greater amount than the sum claimed in the lien statement, nor for any amount, if it be made to appear that the claimant has knowingly demanded in the statement more than is justly due." Minn. Stat. § 514.74 (2006). Contract price is rebuttably presumed to describe the reasonable value of the improvement. Enviro-Fab, Inc. v. Blandin Paper Co., 349 N.W.2d 842, 848 (Minn.App. 1984), review denied (Minn. Sept. 12, 1984). But an "honest mistake" or "mere failure to prove some items in the lien statement" is not enough to violate the statute. Delyea v. Turner, 264 Minn. 169, 175, 118 N.W.2d 436, 440 (1962). "To deprive the claimant of his right to a lien under this statute there must be a showing of fraud, bad faith, or an intentional demand for an amount in excess of that due." Id. Nor may the claimant be denied costs for overhead, office, travel, supplies, clerical and rental expenses, sales representatives and estimators, building, depreciation, and profit. Enviro-Fab, 349 N.W.2d at 848.
LeMaster's lien claim was based on the provisions contained in the signed agreement. The district court's later determination that the agreement was not a binding contract, while dispositive of other issues, is not a basis to find LeMaster's conduct to have been in bad faith. To the contrary, the district court stated that there was no evidence of fraud or bad faith on LeMaster's part. We agree.
III.
LeMaster argues that the district court abused its discretion by not awarding the full amount of attorney fees it requested. "On review, this court will not reverse a [district] court's award or denial of attorney fees absent an abuse of discretion." Becker v. Alloy Hardfacing Eng'g Co., 401 N.W.2d 655, 661 (Minn. 1987).
In a mechanics'-lien foreclosure action, a prevailing lienholder is entitled to "costs and disbursements to be fixed by the court." Minn. Stat. § 514.14 (2006). As part of the lienholder's costs and disbursements, the court may award reasonable attorney fees. See Obraske v. Woody, 294 Minn. 105, 108, 199 N.W.2d 429, 431 (1972) (discussing attorney fees as costs and disbursements). Although the award of attorney fees in a mechanics'-lien foreclosure claim is discretionary, Asp v. O'Brien, 277 N.W.2d 382, 385 (Minn. 1979), the district court should review (1) the time and effort required, (2) the novelty or difficulty of the issues, (3) the skills and standing of the attorney, (4) the value of the interest involved, (5) the results secured at trial, (6) the loss of opportunity for other employment, (7) the taxed party's ability to pay, (8) the customary charges for similar services, and (9) the certainty of payment. Jadwin v. Kasal, 318 N.W.2d 844, 848 (Minn. 1982). Attorney fees awarded should be in proportion to the mechanics'-lien judgment. Asp, 277 N.W.2d at 385.
Here, the district court granted LeMaster $10,000 of its requested $23,093.90 in fees, costs, and disbursements. Although the district court's decision did not discuss the application of the Jadwin factors, the discretionary grant of attorney fees does not require use of the factors. See Klingelhutz v. Grover, 306 Minn. 271, 273, 236 N.W.2d 610, 612 (1975) (affirming grant of $150 in attorney fees instead of the requested $1,543.35 without explanation from the district court). The statute measures the value of the mechanics' lien not by the costs to which the lienholder has a right but by the value of the improvement. The district court, having considered all of the evidence in this matter, determined its award for reasonable attorney fees. We conclude that the district court was within its discretion.