Ahern Rentals, Inc. v. Salter Construction, Inc. , 2014 Ark. App. LEXIS 558 ( 2014 )

Cite as 2014 Ark. App. 423ARKANSAS COURT OF APPEALS
DIVISION II
No. CV-14-20
AHERN RENTALS, INC. Opinion Delivered August 27, 2014
APPELLANT
APPEAL FROM THE FAULKNER
V. COUNTY CIRCUIT COURT
[NO. CV-2012-552]
SALTER CONSTRUCTION, INC.;
CENTERSTONE APARTMENTS OF HONORABLE MICHAEL A.
CONWAY, LLC; and WASHINGTON MAGGIO, JUDGE
INTERNATIONAL INSURANCE
COMPANY
APPELLEES REVERSED AND REMANDED.
ROBERT J. GLADWIN, Chief Judge
Appellant, Ahern Rentals, Inc. (“Ahern”), appeals from the July 12, 2013 order of the
Faulkner County Circuit Court. Ahern argues that the circuit court erred in dismissing its
complaint against appellees, specifically claiming that its notice complied with the statutory
requirements of Arkansas Code Annotated section 18-44-115(b) (Supp. 2013) in providing
(1) a general description of the labor, service, or materials furnished, and (2) an amount due;
and that it is entitled to assert its lien claim as a subcontractor in accordance with Arkansas
Code Annotated section 18-44-101(a) (Repl. 2003). We reverse and remand.
Ahern entered into a contract with White Water Builders, Inc. (“White Water”), a
subcontractor to the contractor, appellee Salter Construction, Inc. (“Contractor”), to provide
rental equipment in the construction of an improvement owned by appellee Centerstone
Apartments of Conway, LLC (“Owner”). White Water failed to fulfill its payment
Cite as 2014 Ark. App. 423obligations to Ahern for the equipment used in the construction and subsequently filed for
bankruptcy protection. Pursuant to section 18-44-115, Ahern timely provided Contractor
and Owner with a seventy-five-day notice (“75 Day Notice”) of its intent to file a
construction lien.1
Ultimately, Ahern filed its complaint on June 29, 2012, against Contractor, Owner,
Washington International Insurance Company (“WIIC”), and Marcos J. Martinez, the
guarantor of its contract with White Water, to foreclose its lien and pursue a breach-of-
guaranty agreement against Martinez. Appellees Contractor, Owner, and WIIC filed a
motion to dismiss the complaint pursuant to Rule 12(b)(6) of the Arkansas Rules of Civil
Procedure on July 20, 2012, arguing that (1) Ahern is not an entity entitled to assert a lien as
a rental-equipment company, (2) Ahern failed to provide a general description of the services
provided in its 75 Day Notice as required by section 18-44-115(b)(6)(A), and (3) Ahern failed
to provide an amount owed and unpaid in its 75 Day Notice as required by section
18-44-115(b)(6)(A).
Ahern responded to the motion to dismiss on August 6, 2012, and a hearing was held
on appellees’ motion on June 24, 2013. From that hearing, and based upon the motions and
pleadings of the parties, the circuit court granted appellees’ motion to dismiss Ahern’s
complaint and entered its order on July 12, 2013. Ahern subsequently filed a motion for
1
When making a claim for a construction lien, section 18-44-115 provides for what
is commonly referred to as the “75 Day Notice,” which is required to be given to the
property owner and the contractor by subcontractors, service providers, material suppliers,
and laborers within seventy-five days from the last day of labor, services, or materials provided
to the project.
2
Cite as 2014 Ark. App. 423default judgment against Martinez on August 22, 2013, and the circuit court entered a
judgment and decree against Martinez on September 24, 2013. Ahern filed a notice of appeal
with respect to the July 12, 2013 order on October 15, 2013, after the judgment against
Martinez had been entered, thus making the order final and appealable.
Initially, we address Ahern’s argument regarding its underlying entitlement to assert
its lien claim as a subcontractor in accordance with section 18-44-101(a). Despite the lack
of a specific finding by the circuit court on that issue, we presume that the circuit court
reviewed the parties’ arguments and determined that Ahern is entitled to assert such a lien
because the circuit court addressed the resulting issues related to Ahern’s 75 Day Notice.
Because that determination is inconsistent with Ahern’s position and because appellees did
not file a cross-appeal on this issue, we need not make an additional holding on this issue.
Lien statutes are construed strictly, as they are in derogation to the common law. May
Constr. Co., Inc. v. Town Creek Constr. & Dev., LLC, 2011 Ark. 281, 383 S.W.3d 389;
Simmons First Bank v. Bob Callahan Servs., Inc., 340 Ark. 692, 13 S.W.3d 570 (2000). Strict
construction requires that nothing be taken as intended that is not clearly expressed, and the
plain meaning of the language employed should be used. May Constr. Co., supra. Even when
statutes are to be strictly construed, however, they must be construed in their entirety,
harmonizing each subsection where possible. Simmons First Bank, supra.A circuit court’s interpretation of a statute is reviewed de novo and will not be
reversed unless it is shown that the circuit court erred, and, absent a showing of error, the
circuit court’s interpretations are accepted as correct. Simmons First Bank, supra; Bryant v.
3
Cite as 2014 Ark. App. 423Cadena Contracting, Inc., 100 Ark. App. 377, 269 S.W.3d 378 (2007). The basic rule of
statutory construction is to give effect to the intent of the drafting body. Bryant, supra. In
reviewing issues of statutory interpretation, this court first construes a statute just as it reads,
giving the words their ordinary and usually accepted meaning in common language. May
Constr. Co., supra. When the meaning is clear and unambiguous, the court does not resort
to the rules of statutory interpretation. Id.I. Compliance Regarding Description of Labor, Service, or Materials Furnished
The circuit court ruled in its order granting appellees’ motion to dismiss that Ahern’s
75 Day Notice “failed to give a general description of the labor, services, or material furnished
by the Plaintiff, but rather listed that ‘equipment rental’ was provided.” The specific statute
that governs this description provides:
(6) The notice shall contain the following information:
(A) A general description of the labor, service, or materials furnished, and the amount
due and unpaid. . . .
Ark. Code Ann. § 18-44-115(b)(6)(A). This subsection was reviewed by our supreme court
in Ground Zero Construction, Inc. v. Walnut Creek, LLC, 2012 Ark. 243, 410 S.W.3d 579. The
court held that the 75 Day Notice in that case did not comply with section 18-44-115
because it merely tracked the language of the statute without providing any description. Id.
at 6, 410 S.W.3d at 582. The supreme court indicated, however, that the contractor could
have included the description of work as set forth in its contract with the owner of the project
to satisfy the statutory requirement for a general description, which stated that the work was
for “construction of water and sewer for a commercial subdivision, Walnut Creek.” Id. at
4
Cite as 2014 Ark. App. 4236–7, 410 S.W.3d at 582. The supreme court explained that the distinction was that the
contractor “failed to include any description whatsoever in its lien notice,” and therefore
failed to strictly comply with section 18-44-115(b)(6)(A).
Ahern claims, and we agree, that pursuant to Ground Zero, a lien claimant is statutorily
required to provide only a general description of the work provided in order to strictly
comply with the statute. Here, Ahern provided just such a description of the type of services
provided to the construction project by expressly providing that the lien amount being sought
was for “rental equipment” provided to a particular subcontractor. When compared to
Ground Zero, supra, in which the supreme court held that the description of labor, service, or
materials furnished listed as “in connection with sums owed and unpaid for labor and
materials provided . . . ”2 was inadequate, but suggested that a listing of “construction for
water and sewer . . .” would have amounted to a sufficient general description, Ahern’s
description of “rental equipment” is sufficiently descriptive to strictly comply with the
statutory requirement to provide a general description of the labor, service, or materials
provided.
Despite appellees’ assertion that Ahern’s description provided in its 75 Day Notice is
“comparable to the description rejected” in Ground Zero, when the two are actually
compared, Ahern’s notice accomplished something above and beyond the notice in Ground
Zero. Ahern’s notice provided Owner with a general description of its service and additional
information that enabled Owner to take steps to protect itself against loss, which is consistent
2
Ground Zero, 2012 Ark. 243, at 2, 410 S.W.3d at 580.
5
Cite as 2014 Ark. App. 423with what appellees claim is the statute’s underlying objective, citing Ellis v. Fayetteville
Lumber & Cement Co., 195 Ark. 385, 112 S.W.2d 613 (1938). Here, Ahern’s notice provided
the “short, general description” of its services to which the supreme court in Ground Zero was
alluding. Ahern described the service provided to appellees’ project as being “equipment
rental,” while also complying with the other requirements in its notice by providing a
description of the job to which the equipment rental service was provided, the name of
appellees’ subcontractor that hired Ahern, and the amount being claimed. Accordingly, we
hold that Ahern’s 75 Day Notice strictly complied with the statutory requirements.
II. Compliance Regarding Provision of Amount Due
Ahern’s 75 Day Notice contained the words “estimated price” in the amount of
$29,800 as its description of the amount due and unpaid. When the final invoices were tallied
and the “10 Day Notice” was subsequently provided to appellees pursuant to section
18-44-114 (Supp. 2013), the final lien amount requested was for $27,451.78. Ahern
maintains that the circuit court improperly held that Ahern’s 75 Day Notice did not provide
an amount due and unpaid.
Ahern reiterates that section 18-44-115(b)(6)(A) states that the 75 Day Notice shall
contain a general description of the labor, service, or materials furnished, and the amount due
and unpaid. Ahern submits that the statute simply requires the claimant to state “the amount
due and unpaid” in order to strictly comply, pointing out that there is no qualifying language
that would invalidate the lien claim if the amount stated in the 75 Day Notice is different than
the amount later sought in future notices or a complaint to foreclose on the lien. Nor is there
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Cite as 2014 Ark. App. 423any qualifying language in the statute that invalidates the lien claim if the amount sought in
the 75 Day Notice includes amounts for profits, which are not lienable. See Hickman v.
Kralicek Realty & Constr. Co., 84 Ark. App. 61, 129 S.W.3d 317 (2003) (holding that where
a claimant seeks a lien on an amount more than the services, labor, or materials provided, the
circuit court must determine the cost of the services, labor, or materials actually furnished and
used in the project and disallow a lien for those items which are not lienable, such as profits).
In Hickman, supra, the claimant was not barred from pursuing its lien on valid amounts
allowed for in the statute when it initially sought judgment for an amount more than it could
claim in its lien. Id. Rather, it is the burden of the claimant to prove at trial whether he is
entitled to the full amount sought in the lien claim. See Del Mack Constr., Inc. v. Owens, 82
Ark. App. 415, 118 S.W.3d 581 (2003). Additionally, there is no case law that invalidates a
lien for claiming an amount different than what can be proved at trial as lienable. While
acknowledging that the amount stated in Ahern’s 75 Day Notice is admittedly $2,348.22
more than what is claimed in its 10 Day Notice and affidavit of account, Ahern argues, and
we agree, that the discrepancy is not fatal to its lien claim. We hold that Ahern strictly
complied with the requirement of the statute by providing an amount due and unpaid, even
if the initial amount provided in the 75 Day Notice was ultimately for more than it could
prove as lienable.
Whether the amount stated in the 75 Day Notice can be proved at trial is not a
requirement of section 18-44-115 when determining strict compliance. To interpret the
plain language of section 18-44-115(b)(6)(A) to require the amount stated in the 75 Day
7Cite as 2014 Ark. App. 423Notice to be proved in full at trial in order to maintain a valid lien claim would be to imply
something that is not expressly stated in the statute, and such an interpretation violates the
rules of strict construction. Simmons First Bank, supra. The merits of whether the entire stated
amount due and unpaid in the 75 Day Notice is lienable is an issue of proof to be decided by
the trier of fact at trial, not through a Rule 12(b)(6) motion. Speights v. Stewart Title Guar.
Co., 358 Ark. 59, 186 S.W.3d 715 (2004).
Furthermore, the intent of the 75 Day Notice to owners and contractors of a
commercial construction project is to notify them that the claimant issuing the notice “is
currently entitled to payment but has not been paid.” Ark. Code Ann. § 18-44-115(b)(4).
The Arkansas General Assembly has expressly recognized that
[o]wners and developers of commercial real estate are generally knowledgeable and
sophisticated in construction law, are aware that unpaid laborers, subcontractors, and
material suppliers are entitled to assert liens against the real estate if unpaid, and know
how to protect themselves against the imposition of mechanics’ and material suppliers’
liens.
Ark. Code Ann. § 18-44-115(b)(1)(A). Ahern claims that this is precisely why there is no
requirement to provide a “pre-construction lien notice” to owners of a commercial
construction project. Upon reading Ahern’s 75 Day Notice, appellees could, or should, have
known not only who sent the notice, the amount that was being claimed, the type of services
that were provided, and to which subcontractor those services were provided, but also that
they could have paid the named claimant the amount stated in order to protect themselves
from a lien claim.
8
Cite as 2014 Ark. App. 423Based on our presumption that the circuit court determined that Ahern was entitled
to assert his lien against appellees, and because we hold that Ahern’s 75 Day Notice complied
with the relevant statutory requirements with respect to the description of the services
provided and the amount due and owing, we reverse and remand for further proceedings
consistent with this opinion.
Reversed and remanded.
GLOVER and WHITEAKER, JJ., agree.
Millar Jiles, LLP, by: Daniel C. Brock, for appellant.
Gill Ragon Owen, P.A., by: Roger H. Fitzgibbon, Jr., and Danielle M. Whitehouse, for
appellees.
9