MSKTD & Associates, Inc. v. CCJ Enterprises, LLC, Jeffrey Sassmannshausen, Loretta Sassmannshausen, Salin Bank & Trust Company ( 2012 )

Pursuant to Ind.Appellate Rule 65(D), this
Memorandum Decision shall not be FILED
regarded as precedent or cited before any Aug 24 2012, 8:24 am
court except for the purpose of
establishing the defense of res judicata, CLERK
of the supreme court,
collateral estoppel, or the law of the case. court of appeals and
tax court
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEES:
TERRY L. CORNELIUS Attorney for CCJ Enterprises, LLC:
Cornelius & Weingartner JONATHAN H. NUSBAUM
Fort Wayne, Indiana Beers Mallers Backs & Salin, LLP
Fort Wayne, Indiana
Attorneys for Salin Bank & Trust
Company:
LARRY L. BARNARD
GRANT A. LISTON
Carson Boxberger, LLP
Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA
MSKTD & ASSOCIATES, INC., )
)
Appellant-Plaintiff, )
)
vs. ) No. 02A04-1202-PL-101
)
CCJ ENTERPRISES, LLC, JEFFREY )
SASSMANNSHAUSEN, LORETTA )
SASSMANNSHAUSEN, SALIN BANK )
& TRUST COMPANY, )
)
Appellees-Defendants. )
APPEAL FROM THE ALLEN SUPERIOR COURT
The Honorable David J. Avery, Judge
Cause No. 02D01-0909-PL-330
August 24, 2012
MEMORANDUM DECISION – NOT FOR PUBLICATION
RILEY, Judge
STATEMENT OF THE CASE
Appellant-Plaintiff/Counter-Defendant, MSKTD & Associates, Inc. (MSKTD)
appeals the trial court’s summary judgment in favor of Appellees-Defendants/Cross-
Defendants, CCJ Enterprises, LLC (CCJ), Jeffrey Sassmannshausen, Loretta
Sassmannshausen (Loretta), and Three Rivers Dermatology, LLC (TRD)(collectively, the
CCJ Parties); and Appellee-Defendant/Cross-Plaintiff/Counter-Plaintiff, Salin Bank &
Trust Company (Salin Bank).
We affirm.
ISSUE
MSKTD raises two issues on appeal, which we consolidate and restate as the
following single issue: Whether the trial court erred in determining that MSKTD’s
mechanic’s lien was not filed in a timely manner.
FACTS AND PROCEDURAL HISTORY
TRD is an LLC whose sole member is Dr. Jeffrey Sassmannshausen (Dr.
Sassmannshausen), a dermatologist. His wife Loretta is the Director of Operations. Prior
to 2005, the Sassmannshausens planned to build a medical facility along with a spa (the
Project). They consulted with International Design Concepts (IDC), an architectural firm
out of the Seattle, Washington area focusing on medical and hotel spas. IDC advised the
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Sassmannshausens on site selection and created preliminary design documents for the
Project. IDC charged the Sassmannshausens $451,000 for its services and they paid all
but $50,000.
In June 2004, the Sassmannshausens formed CCJ, an LLC, to acquire land on
Coldwater Road in Fort Wayne, Indiana (the Property). On March 31, 2005, CCJ
purchased the Property for $575,000, with a $57,500 cash down payment and additional
financing from Salin Bank in the amount of $517,500. CCJ executed a promissory note
in the amount of $517,500 to Salin Bank. That same day, CCJ granted Salin Bank a
mortgage on the Property and all improvements and structures situated thereon. On April
5, 2005, the mortgage was recorded. The promissory note was renewed several times,
with Salin Bank registering additional mortgages against the Property.
Following a few years’ delay, the Sassmannshausens sought to go ahead with the
Project. In May 2008, the Sassmannshausens met with several contractors, including
Mark Hoeppner of Hoeppner Construction Corporation (Hoeppner). Hoeppner created a
presentation for the Project, enlisting MSKTD to produce design sketches based on a
smaller scale of IDC’s earlier drawings. MSKTD provided Hoeppner with preliminary
elevations, a rough floor plan, and cut sheets that detailed the interior finishing.
That same month, Hoeppner asked MSKTD to review its sketches to determine a
projected cost for the Project. On May 12, 2008, one of MSKTD’s principals informed
Hoeppner that it estimated costs of $190 to $200 per square foot, assuming an unfinished
basement and not including site and soft costs. The Sassmannshausens eventually
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selected Hoeppner for the Project since his proposal was approximately $30 lower per
square foot than the other contractors. Hoeppner later informed the Sassmannshausens
that MSKTD would serve as architect for the Project.
MSKTD continued work on the design thereafter. Loretta met with MSKTD
several times from June 2008 to September 2008. Loretta provided her input on the
design and her expectations for the Project. She also made a number of requests to
increase the scope of the Project. These included increases in the square footage for the
first floor, the basement, and the parking lot. Her proposed modifications also included a
ciborium, or open-domed structure at the building’s entrance, which would result in an
additional $97,000 in construction costs. On June 25, 2008, MSKTD sought Hoeppner’s
input on the increased scope of the Project. Hoeppner apparently had not known the
specific cost but instructed MSKTD to “do whatever they tell you and we’ll value
engineer it at the end.” (Appellant’s App. p. 144). Loretta also requested that MSKTD’s
work be performed on a fast-track in order to get construction going as soon as possible.
On July 15, 2008, the Sassmannshausens and Hoeppner entered into a letter of
intent (LOI) for the design and construction of the Project which was to be followed by a
definitive design-build agreement based on form contracts issued by the American
Institute of Architects. The LOI was non-binding except as to exclusivity and
reimbursement of Hoeppner’s “out of pocket expenses incurred in contemplation of the
Project.” (Appellant’s App. p. 231). The LOI also described the Project as a one-story
building with a first floor of 10,500 square feet and a basement of 7,000 square feet. The
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parties’ initial budget for the Project was, subject to the final design plans, $135-$140 per
square foot. Based on this budget, the Sassmannshausens sought financing from Salin
Bank in the amount of $2.8 million. Although Hoeppner’s attorney prepared a design-
build contract, the Sassmannshausens failed to sign the contract.
On July 15, 2008, MSKTD issued its first of four invoices to Hoeppner for its
services. On July 17, 2008, MSKTD prepared a contract between itself and Hoeppner.
The contract recited parameters for a building of approximately 19,000 square feet at a
cost of nearly $160 per square foot. Hoeppner did not sign the contract and apparently
never paid MSKTD’s invoices.
In September 2008, MSKTD provided completed design documents to the
Sassmannshausens, who took them to Salin Bank. Salin Bank informed the
Sassmannshausens that its appraiser determined that the Project’s cost would exceed $2.8
million and that it refused to finance any amount in excess. Thereafter, Loretta had
meetings with MSKTD and Hoeppner to cut down the plans and thereby reduce project
costs to meet the $2.8 million budget.
In October or November 2008, Hoeppner went out of business. In a letter dated
November 14, 2008, MSKTD informed Loretta that Hoeppner had gone out of business
and offered to take over as design-builder for the Project. MSKTD met with Loretta in
November 2008 and December 2008 to provide value engineering services, i.e.,
modification of the design to lower construction costs without departing from the overall
design concept. MSKTD invoiced CCJ directly for its value engineering services in the
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amount of $3,796. While MSKTD had never invoiced CCJ previously, the
Sassmannshausens or CCJ paid this bill.
In a letter dated January 5, 2009, the Sassmannshausens informed MSKTD that
they were not going ahead with the Project. The Sassmannshausens then took IDC and
MSKTD’s plans to another design-builder and received designs allowing them to
complete the Project within the $2.8 million budget. However, Salin Bank withdrew
from the Project as a result of the financial industry collapse.
On February 24, 2009, MSKTD recorded its Sworn Statement of Intention to Hold
a Lien against the Property, identifying CCJ as the owner. On September 3, 2009,
MSKTD filed a four-Count Complaint against CCJ, the Sassmannshausens, and Salin
Bank. The Complaint sought to foreclose on MSKTD’s mechanic’s lien and alleged that
the Sassmannshausens and CCJ were liable for MSKTD’s architectural fees for the
Project. Count IV alleged that MSKTD was a third party beneficiary to the LOI between
Hoeppner and the Sassmannshausens. On October 14, 2009, Salin Bank filed its Answer
along with a Cross-Complaint against CCJ and the Sassmannshausens and its
Counterclaim against MSKTD. On November 20, 2009, CCJ and the Sassmannshausens
filed their Answer and Counterclaim against MSKTD.
On May 26, 2011, Salin Bank filed its motion for partial summary judgment on
the priority of its mortgages over MSKTD’s mechanic’s lien. On June 7, 2011, MSKTD
amended its Complaint to add TRD as a defendant. On July 25, 2011, MSKTD filed its
motion for partial summary judgment to foreclose on its lien and to determine that its
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mechanic’s lien had priority over Salin Bank’s encumbrances on the Property. On July
26, 2011, the CCJ Parties filed their motion for summary judgment. In addition to
challenging their liability to MSKTD, the CCJ Parties contested the validity of MSKTD’s
mechanic’s lien and the timeliness of its filing.
On December 2, 2011, the trial court ruled on the parties’ motions for summary
judgment. First, the trial court determined that MSKTD had untimely filed its
mechanic’s lien. As a result, the trial court denied MSKTD’s motion for partial summary
judgment; granted the CCJ Parties’ motion for summary judgment in part; and granted
Salin Bank’s partial motion for summary judgment, in the latter case entering judgment
for Salin Bank. Further, the trial court granted summary judgment in favor of the CCJ
Parties on MSKTD’s claims for damages as a third-party beneficiary to the LOI between
the Sassmannshausens and Hoeppner. However, the trial court denied summary
judgment for the CCJ Parties on the issue of the Sassmannshausens’ personal liability to
MSKTD and whether MSKTD was entitled to recovery under quantum meruit for its
architectural services.
MSKTD now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Standard of Review
Summary judgment is appropriate if there is no genuine issue of material fact and
the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). A fact
is material if its resolution would affect the outcome of the case. Williams v. Tharp, 914
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N.E.2d 756, 761 (Ind. 2009). An issue is genuine if a trier of fact is required to resolve
the parties’ differing accounts of the truth or if the undisputed facts support conflicting
reasonable inferences. Id.In reviewing a decision upon a summary judgment motion, we apply the same
standard as the trial court. Cho v. Purdue Research Foundation, 803 N.E.2d 1161, 1167
(Ind. Ct. App. 2004). We do not reweigh the evidence designated by the parties. Id.Instead, we liberally construe the evidence in the light most favorable to the non-moving
party. Id. The moving party bears the burden of showing prima facie that there are no
genuine issues of material fact and that it is entitled to judgment as a matter of law. Id.Once this burden has been met, the non-moving party must respond by setting forth
specific facts demonstrating a genuine need for a trial, and cannot rest upon the
allegations or denials in the pleadings. Id. We review only the designated evidentiary
material in the record, construing that evidence liberally in favor of the non-moving
party, so as not to deny that party its day in court. Id.The trial court entered findings of fact and conclusions thereon in support of its
judgment. Special findings are not required in summary judgment proceedings and are
not binding on appeal. Id. However, such findings offer this court valuable insight into
the trial court’s rationale and facilitate appellate review. Id. Where, as here, the parties
have made cross-motions for summary judgment, our standard of review is the same; we
consider each motion separately to determine whether the moving parties are entitled to
judgment as a matter of law. Myers v. Coats, 966 N.E.2d 652, 656-57 (Ind. Ct. App.
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2011). On appeal, we can affirm summary judgment under any theory supported by the
designated evidence. Branham v. Celadon Trucking Services, Inc., 744 N.E.2d 514, 521
(Ind. Ct. App. 2001), trans. denied.
II. Analysis
A. Mechanic’s Lien
Indiana’s mechanic’s lien statute is found at Ind. Code § 32-28-3-1, et seq.
Mechanic’s liens provide a mechanism for contractors who have not been paid to seek
payment from construction project owners by attaching a lien to real estate. See Gill v.
Pollert, 810 N.E.2d 1050, 1058 (Ind. 2004). MSKTD is an architectural firm. Under I.C.
§ 32-28-11-1 “registered architects” may secure and enforce mechanic’s liens under I.C.
ch. 32-28-3.
Mechanic’s liens were unknown at common law and are purely creatures of
statute. Cho, 803 N.E.2d at 1167. As a consequence, mechanic’s liens can only exist
when the claimant has complied with the applicable statutory steps. Id. The courts
generally have strictly construed the requirements for creating a lien, while liberally
applying the remedial aspects of the mechanic’s lien statutes. Id.Under I.C. § 32-28-3-3, a person who wishes to acquire a mechanic’s lien must
file a sworn statement and notice of the person’s intention to hold a lien. In addition to
providing details on the amount claimed and the identities of the claimant, owner, and
land, the filing must occur within certain deadlines. See I.C. § 32-28-3-3(a-c). The
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relevant time frame in this case is set forth in I.C. § 32-28-3-3(a), which provides that
liens against commercial property be filed within 90 days of completion of the work.
B. Timely Filing
Although the trial court’s December 2, 2011 summary judgment adjudicated three
issues contained in the parties’ various motions for summary judgment, here MSKTD
appeals, and the parties’ arguments address, only that part of the judgment pertaining to
the timely filing and validity of MSKTD’s mechanic’s lien.
The trial court concluded that MSKTD’s mechanic’s lien was not timely filed
because the lien was based on MSKTD’s work done under the design-build arrangement
with Hoeppner, which concluded on or before November 14, 2008. The deadline for
filing a mechanic’s lien under this contract was February 12, 2009 and MSKTD did not
file its sworn statement of intent to hold a lien until February 24, 2009. On appeal,
MSKTD argues that its work for the Sassmannshausens was a continuation of its work
for Hoeppner. Thus, it argues that the trial court should have instead measured its time
limit to file a mechanic’s lien from the date its work for the Sassmannshausens ended,
December 8, 2008.
In support of its determination, the trial court relied on Kendallville Lumber Co. v.
Adams, 176 N.E. 555 (Ind. Ct. App. 1931). In Kendallville Lumber, a lumber company
sought to foreclose on a mechanic’s lien for building materials it had furnished separately
to a contractor and to a homeowner, albeit for the same residential construction project.
Id. at 556. Kendallville Lumber supplied the contractor with building materials for
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nearly six months before the contractor became insolvent and abandoned the project. Id.Thereafter, the homeowner, Adams, completed construction, but had notified
Kendallville Lumber that no more materials were to be furnished to the contractor and all
further materials for the project would be paid for by Adams. Id. On appeal, this court
affirmed the trial court’s finding that the evidence established that Kendallville Lumber
had furnished building materials for the project under two separate contracts, one with the
contractor and one with Adams. Id. at 557. However, because Kendallville Lumber
waited too long to file its mechanic’s lien after it last provided materials under its
agreement with the contractor, the lien was invalid as to claims arising under the first
contract as Kendallville Lumber could not tack on its claim for materials furnished under
the first contract to its claim for materials furnished under the second contract. Id. at 558.
Indiana decisions following Kendallville Lumber reached the same conclusion. In
Wavetek Indiana, Inc. v. K.H. Gatewood Steel Co., Inc., 458 N.E.2d 265, (Ind. Ct. App.
1984), we concluded that a subcontractor had not timely filed its mechanic’s lien for
work done under two contracts with the same contractor. We recited the general rule as:
where labor or materials are furnished under separate contracts, even
though the contracts are between the same persons, and relate to the same
building or improvement, the contracts cannot be tacked together to enlarge
the time for filing a lien for what was done or furnished under either, but a
lien must be filed for what was done under each contract within the
statutory period after its completion.
Id. at 268.
Here, the trial court found that there was no genuine issue of material fact that
MSKTD furnished its architectural services under separate contracts with Hoeppner and
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the Sassmannshausens. Under the design-build contractual arrangement for the Project,
Hoeppner procured the services of subcontractors, including MSKTD, for the Project.
The designated evidence shows that MSKTD rendered architectural services to Hoeppner
from May 5, 2008 until Hoeppner went out of business on or before November 14, 2008.
These services included preparation of preliminary design documents, client meetings,
and preparation of final design documents. Beginning July 15, 2008, MSKTD rendered
four invoices to Hoeppner, which were not paid. However, MSKTD did not approach the
CCJ Parties for payment of these four invoices.
As design-builder for the Project, directions as to Project cost came through
Hoeppner, who was selected by the Sassmannshausens based on his estimate of $2.8
million. However, MSKTD’s final design required a budget of over $4.1 million. After
Salin Bank refused to provide financing in excess of $2.8 million in September 2008,
Loretta met with MSKTD and Hoeppner to reduce the Project costs by revising the
building’s exterior. Yet, by their own admission, MSKTD did not engage in value
engineering at that time.
After Hoeppner went out of business, MSKTD informed Loretta accordingly and
offered to take over for Hoeppner as design-builder. MSKTD met with Loretta on two
occasions, November 19, 2008 and December 8, 2008, and rendered value engineering
services. More importantly, both principals of MSKTD testified that they did not provide
value engineering services until after Hoeppner dropped out. The extent of cost reduction
achieved through value engineering was apparently $1 million. MSKTD billed TRD
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$3,659 for such services and it is undisputed that this bill was paid. As a result, we agree
with the trial court there is no genuine issue of material fact that MSKTD’s value
engineering services for the Sassmannshausens were rendered separately from and not
pursuant to MSKTD’s contract with Hoeppner.
Nonetheless, MSKTD argues that there was only one contract, “which included
the initial design and the value engineering to bring the design down to the available
financing.” (Appellant’s Reply Br. p. 4). MSKTD relies on Miller Monuments, Inc. v.
Asbestos Insulating and Roofing Company, 185 N.E.2d 533 (Ind. Ct. App. 1962).
However, this case is distinguishable from the matter before us. In Miller Monuments,
the project owner refused to pay for corrective work rendered by a subcontractor. Id. at
534. The subcontractor later performed additional work to meet the project owner’s
objections and filed a mechanic’s lien for its unpaid services. Id. In determining that the
subcontractor’s mechanic’s lien was timely filed, albeit past the sixty day time limit, this
court found it determinative that the additional work was 1) to correct a problem with the
work originally contemplated under the contract; and 2) not performed gratuitously or
under a new contract to make repairs or perform services that were contemplated under
the original contract. Id. at 535.
In essence, by asserting that its services rendered directly to the Sassmannshausens
were a continuation of the services rendered to Hoeppner, MSKTD attempts to tack on
work performed through Hoeppner under the design-build arrangement to its work
performed directly for the Sassmannshausens. However, despite MSKTD’s assertions
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that value engineering was called for under its agreement with Hoeppner and that its
work with Loretta represented continuing work with the intention of completing the job,
by its own admission, value engineering was not undertaken until after its agreement with
Hoeppner expired. Consequently, MSKTD’s reliance on Miller Monuments is
unavailing.
We find that the trial court correctly determined that MSKTD’s mechanic’s lien
was invalid because it was not timely filed. Accordingly, the trial court did not err in
denying MSKTD’s motion for partial summary judgment and granting both Salin Bank
and the CCJ Parties’ summary judgment.1
CONCLUSION
Based on the foregoing, we conclude that the trial court properly denied
MSKTD’s motion for partial summary judgment. We therefore affirm the trial court’s
grant of summary judgment in favor of CCJ Parties and Salin Bank as to this issue as
well as the trial court’s judgment for Salin Bank on their Counterclaim against MSKTD.
Affirmed.
NAJAM, J. and DARDEN, S. J. concur
1
Based on our conclusion that MSKTD’s mechanic’s lien was not timely filed, we need not address Salin
Bank’s claim that its encumbrances on the Property have priority.
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