2 Ton Plumbing, L.L.C. v. Thorgaard , 779 Utah Adv. Rep. 6 ( 2015 )

This opinion is subject to revision before
publication in the Pacific Reporter
2015 UT 29
IN THE
SUPREME COURT OF THE STATE OF UTAH
2 TON PLUMBING, L.L.C.,
Appellee/Cross-Appellant,
v.
GREGORY THORGAARD; KENDRA THORGAARD;
WASHINGTON FEDERAL, INC., dba
WASHINGTON FEDERAL SAVINGS, et al.
Appellants/Cross-Appellees.
No. 20120390
Filed January 30, 2015
Fourth District, Heber Dep‘t
The Honorable Derek P. Pullan
No. 090500368
Attorneys:
David R. Nielson, Tracy A. Wilder, Salt Lake City, for appellee
Ronald G. Russell, Royce B. Covington, Jeffery A. Balls,
Salt Lake City, for appellants
ASSOCIATE CHIEF JUSTICE NEHRING authored the opinion of the
Court, in which CHIEF JUSTICE DURRANT, JUSTICE PARRISH,
JUSTICE LEE, and JUDGE KELLY joined.
Having recused herself, JUSTICE DURHAM does not
participate herein. DISTRICT JUDGE KEITH A. KELLY sat
ASSOCIATE CHIEF JUSTICE NEHRING, opinion of the Court:
INTRODUCTION
¶ 1 This case involves interpretation of various provisions of
the 2009 Mechanics‘ Liens statute. Specifically, we are asked to
consider (1) whether attorney fees and other costs may be
included in the value of a mechanics‘ lien, (2) when a notice of
2 TON v. THORGAARD
Opinion of the Court
release of lien and substitution of alternate security is timely filed,
and (3) whether the attorney fees award was reasonable.
BACKGROUND
¶ 2 Appellee/cross-appellant, 2 Ton Plumbing, L.L.C.
(2 Ton), contracted with BNB Development LLC, Performance
Construction, Inc., and Performance Construction of Utah, LLC
(collectively, Developers) to provide plumbing-related materials
and labor to fourteen properties in the Hailstone at Stillwater
development in Heber City, Utah. From June through September
2008, 2 Ton furnished improvements to Lot 30, one of the
Hailstone properties, but was not paid for its work.
¶ 3 On January 30, 2009, 2 Ton recorded a notice of
mechanics‘ lien (original notice of lien) against Lot 30 and eight
other lots in the development. The notice stated that it secured
$7,470.72 for ―furnishing plumbing, materials and installation,‖
―plus interest, costs and attorney fees.‖ Subsequently, BNB
Development (BNB), the owner of Lot 30 at the time the lien was
recorded, conveyed the property to BBRP, LLC. BBRP in turn
executed a trust deed for Lot 30 in favor of Zions Bancorporation
(Zions).
¶ 4 On July 27, 2009, after filing its original notice of lien,
2 Ton filed a complaint seeking to enforce its mechanics‘ liens
against Lot 30 and the other eight properties. The complaint
named BBRP and Zions as defendants in the lien foreclosure
action against Lot 30 and also included various other claims
against the Developers, including breach of contract and joint
venture liability. The following day, 2 Ton recorded a lis pendens,
providing notice of the lien foreclosure action against the nine
properties. BNB and Zions were served with a summons and
complaint on August 3, 2009, and August 17, 2009, respectively.
¶ 5 The Developers timely filed a joint answer to the
complaint, which BBRP joined. In the joint answer, BNB asserted
a counterclaim against 2 Ton alleging that 2 Ton had been
overpaid for its work in the Hailstone development. BBRP also
independently asserted 2 Ton‘s overpayment as a defense to the
lien foreclosure claim against Lot 30.
¶ 6 On October 14, 2009, Appellants Gregory and Kendra
Thorgaard purchased Lot 30 from BBRP. To secure their purchase
loan, the Thorgaards executed a trust deed in favor of Appellant
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Washington Federal (Appellants, the Thorgaards and their lender
Washington Federal, will be collectively referred to as ―the
Thorgaards‖).
¶ 7 2 Ton filed an amended complaint on November 20, 2009,
which did not name the Thorgaards as defendants. The same day,
2 Ton‘s counsel wrote to the Thorgaards advising them of the lien
and warning them that there would be greater legal expense if
further action was necessary. The letter invited the Thorgaards to
voluntarily satisfy the lien and indicated the amount owed. The
Thorgaards declined the invitation.
¶ 8 On April 30, 2010, 2 Ton filed a second amended
complaint, for the first time naming the Thorgaards and
Washington Federal as defendants in the lien foreclosure action.
2 Ton served the Thorgaards with the complaint on May 10, 2010
and Washington Federal on June 18, 2010. Like their predecessor
in interest, BBRP, the Thorgaards also contested the validity of the
lien on the basis that 2 Ton had been overpaid for its work.
¶ 9 That summer, on August 5, 2010, 2 Ton recorded an
amended notice of mechanics‘ lien against Lot 30 in the amount of
$20,983.42. The amended notice provided that ―there is currently
believed to be owed a total of $20,983.42 consisting of principal of
$7,147.41, plus lien fees of $110, plus interest and late fees of
$2,480.30, plus pro rata costs of $942.44, plus pro rata attorney fees
of $10,323.27, which amount could change, should additional
credits, charges, interest, costs and attorney fees be incurred.‖
¶ 10 On September 16, 2010, Washington Federal recorded its
notice of release of lien and substitution of alternate security and
made a cash deposit of $14,942.00. This document purported to
release 2 Ton‘s original January 30, 2009 notice of lien with its
claim of $7,147.41. Washington Federal did not address the
amended notice of lien that 2 Ton had recorded the month before
in the amount of $20,983.42.
¶ 11 On January 12, 2011, 2 Ton filed a third amended
complaint which, among other things, sought to invalidate
Washington Federal‘s lien release on the grounds that it attached
insufficient alternate security. 2 Ton argued that the alternate
security should have been 175 percent of the amount claimed in
its amended notice of lien—$20,983.42. 2 Ton also asserted a
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Opinion of the Court
claim against the alternate security, as required by Utah Code
section 38-1-28(4)(b) (2009).1
¶ 12 On January 28, 2011, the Thorgaards moved to dismiss
two counts of 2 Ton‘s third amended complaint—the lien
foreclosure claim, and the claim that the lien release and
substitution of alternate security was invalid. The Thorgaards
contended that their lien release was valid because they properly
submitted a cash deposit in the amount of 200 percent of 2 Ton‘s
original lien claim and thus fully complied with the pertinent
section of the Mechanics‘ Liens statute, Utah Code section 38-1-28.
They argued that a mechanics‘ lien claim is limited to the ―value
of the services rendered, labor performed, or materials or
equipment furnished or rented‖ and attorney fees and costs are
not included in this amount. The Thorgaards also argued that the
amended notice of lien was invalid and ―unenforceable‖ because
it was untimely filed and ―moreover . . . [could] not be used to
trigger a requirement for more security than what is required
under section 38-1-28.‖ After briefing and oral argument on the
matter, the district court denied the Thorgaards‘ motion to
dismiss. The Thorgaards appeal in part from that denial.
¶ 13 Ten days after the hearing on the motion to dismiss, on
June 13, 2011, 2 Ton recorded a second amended notice of
mechanics‘ lien against Lot 30 in the amount of $38,714.98. The
second amended notice of lien alleged, again, that $7,147.41 of this
amount was for improvements to the property while the
remaining sum consisted of lien fees, interest, late fees, costs, and
attorney fees.
¶ 14 As the litigation continued, the Thorgaards and
Developers continued to dispute the validity of the lien on the
basis that 2 Ton had been overpaid for its work. Ultimately, on
December 5, 2011, the Thorgaards stipulated to a finding of fact
1 In 2012, the ―Mechanics‘ Liens‖ section of the Utah Code was
renumbered, amended, and partially repealed. The amended
statutory scheme can now be found at Utah Code sections 38-1a-
101 to -804 (2014). Because the 2009 version of the code was in
effect ―at the time of the event regulated by the law in question,‖
we cite to that version throughout. State v. Folsom, 2015 UT 14,
¶ 10, __P.3d__.
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that the value of the services rendered, labor performed, or
materials or equipment furnished or rented by 2 Ton that had not
been paid on Lot 30 was $7,147.41.
¶ 15 Following the Thorgaards‘ stipulation, 2 Ton submitted
affidavit testimony and exhibits to support its claim for attorney
fees. 2 Ton alleged that it had incurred $37,019.53 in attorney fees
and $1,543.56 in costs prosecuting its lien against Lot 30. The
Thorgaards contested 2 Ton‘s claim for attorney fees on the basis
that the amount was unreasonable, that attorney fees should be
allocated to those defendants who caused 2 Ton to incur the
majority of those fees, and that attorney fees should be awarded
on a per capita basis against all fourteen lots in the development.
¶ 16 On March 19, 2012, the district court entered a ruling
and order on the award of attorney fees, and on April 16, 2012, it
entered a judgment against Lot 30 in the amount of $57,972.42.
The judgment included $7,147.41 in principal, $1,287.50 in costs,
$110 for a lien filing fee, $4,569.81 in interest, and $44,857.70 in
attorney fees. The Thorgaards also appeal from this judgment.
ISSUES AND STANDARDS OF REVIEW
¶ 17 The Thorgaards and Washington Federal raise three
issues on appeal. First, they contend that the district court erred
by ruling that attorney fees and costs are properly included in a
mechanics‘ lien and therefore erroneously found their notice of
release of lien and substitution of alternate security was invalid.
A district court‘s interpretation of relevant statutory provisions is
reviewed for correctness, giving ―no deference to the district
court‘s decision.‖2
¶ 18 Second, the Thorgaards argue that the district court
erroneously held that 2 Ton‘s amended notices of lien were timely
filed. Because we hold that the amended notices of lien were
invalid, we do not address this issue.
¶ 19 Finally, the Thorgaards challenge the district court‘s
award of $44,957.70 in attorney fees. A district court‘s calculation
2 Carter v. Univ. of Utah Med. Ctr., 2006 UT 78, ¶ 8, 150 P.3d 467;
see also Hutter v. Dig-It, Inc., 2009 UT 69, ¶ 8, 219 P.3d 918.
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of attorney fees will not be overturned absent a showing that the
district court abused its discretion.3
¶ 20 2 Ton raises one issue on cross-appeal. It argues that the
district court erred by allowing Washington Federal to record its
notice of release of lien and substitution of alternate security more
than ninety days after the original owner of Lot 30 was served
with a summons and complaint in the lien foreclosure action. We
review questions of statutory interpretation for correctness,
granting no deference to the district court‘s decision.4
ANALYSIS
¶ 21 ―Mechanics‘ liens are statutory creatures unknown to the
common law.‖5 The Utah Mechanics‘ Liens statute is to be
―liberally construed‖ to effect its purpose, which is ―to provide
protection to those who enhance the value of a property by
supplying labor or materials.‖6 Of course, ―[w]hile it is true that
our statutes are to be liberally construed to give effect to their
purpose and to promote justice,‖ we note that ―it is equally true
that they should not be distorted beyond the intent of the
legislature.‖7 Most statutes, including this one, are the result of a
legislative balancing of ―competing policy considerations.‖8
Accordingly, we begin our analysis with the plain language of the
statute. In so doing, we read the plain language of the Mechanics‘
Lien Act ―as a whole and interpret its provisions in harmony with
3Bakowski v. Mountain States Steel, Inc., 2002 UT 62 ¶ 33, 52 P.3d
1179; Dixie State Bank v. Bracken, 764 P.2d 985, 988 (Utah 1988).
4 Carter, 2006 UT 78, ¶ 8.
5 AAA Fencing Co. v. Raintree Dev. & Energy Co., 714 P.2d 289,
291 (Utah 1986).
6 Id.
7Graco Fishing & Rental Tools, Inc. v. Ironwood Exploration, Inc.,
766 P.2d 1074, 1079 (Utah 1988) (internal quotation marks
omitted).
8 McArthur v. State Farm Mut. Auto. Ins. Co., 2012 UT 22, ¶ 14,
274 P.3d 981.
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other provisions in the same statute.‖9 This is because a statute
―is passed as a whole‖ and ―[c]onsequently, each part or section
should be construed in connection with every other part or section
so as to produce a harmonious whole.‖10 However, ―where the
statute fails, courts cannot create rights, and should not do so by
unnatural and forced construction.‖11 ―[A] lien created solely by
statute depends on the terms of the statute . . . .‖12 Because a
mechanics‘ lien is a ―statutory creature,‖ we begin with a review
of the relevant statutory provisions of the Mechanics‘ Liens
statute.
¶ 22 In 2012, the ―Mechanics‘ Liens‖ section of the Utah Code
was renumbered, amended, and partially repealed. The current
statutory provisions now appear under the chapter name
―Preconstruction and Construction liens,‖ and can be found in the
Utah Code at section 38-1a-101 through section 38-1a-804. Of
particular note, two sections central to this case, Utah Code
sections 38-1-16 and 38-1-17 (2009), were repealed by the Utah
Legislature in 2012. This case involves the 2009 version of the
Utah Code. Because ―we apply the law as it exists at the time of
the event regulated by the law in question,‖13 we will refer to the
2009 version of the Mechanics‘ Liens statutes throughout.
¶ 23 Under section 38-1-3 of the Utah Code, a subcontractor
―shall have a lien upon the property upon or concerning which
they have rendered service, performed labor, or furnished or
rented materials or equipment for the value of the service
rendered, labor performed, or materials or equipment furnished
9 Sill v. Hart, 2007 UT 45, ¶¶ 7, 13, 162 P.3d 1099 (internal
quotation marks omitted) (interpreting the plain language of the
Mechanics‘ Lien Act and holding that a possible interpretation
failed in part because it was ―counter to the purpose and context‖
of the Act).
10 Id. ¶ 7 (internal quotation marks omitted).
11 Eccles Lumber Co. v. Martin, 87 P. 713, 716 (Utah 1906).
12 AAA Fencing Co., 714 P.2d at 292.
13 State v. Folsom, 2015 UT 14, ¶ 10, __ P.3d__ (internal
quotation marks omitted).
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or rented.‖14 A lien ―attach[es] as of the date of the
commencement of the first work on the improvement or structure
involved,‖15 but in order to perfect the lien, a lien claimant must
follow the procedures dictated by the statute.16
¶ 24 Section 38-1-7 of the Utah Code provides that a lien
claimant ―shall file‖ a ―written notice to hold and claim a lien.‖17
Subsection 38-1-7(2)(a) specifies further that a lien claimant‘s
notice of lien ―shall‖ set forth, among other things, the ―amount of
the lien claim.‖18 The lien claimant must file the completed notice
of lien with the county recorder no later than ―180 days after the
day on which occurs final completion of the original contract.‖19
And, ―[w]ithin 30 days after filing the notice of lien, the lien
claimant shall deliver or mail . . . a copy of the notice of lien to
(i) the reputed owner of the real property; or (ii) the record owner
of the real property.‖20
¶ 25 After filing the notice of lien, section 38-1-11 requires
that the lien claimant record a lis pendens with the county
recorder and ―file an action to enforce the lien,‖ both within 180
days from the day on which the lien notice was filed.21 If that
action is successful, ―[t]he court shall cause the property to be sold
in satisfaction of the liens and costs.‖22 ―Costs‖ include ―the costs
14 UTAH CODE § 38-1-3.
See Calder Bros. Co. v. Anderson, 652 P.2d 922, 924 (Utah 1982);
15
UTAH CODE § 38-1-5.
16 AAA Fencing Co., 714 P.2d at 291 (―[C]ompliance with the
statute is required before a party is entitled to the benefits created
by the statute.‖).
17 UTAH CODE § 38-1-7(1)(a)(i).
18 Id. § 38-1-7(2)(a).
19 Id. § 38-1-7(1)(a)(i)(A).
20 Id. § 38-1-7(3)(a).
21 Id. § 38-1-11(2), (3).
22 Id. § 38-1-15 (The sale shall be conducted ―as in the case of
foreclosure of mortgages, subject to the same right of
redemption.‖).
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of preparing and recording the notice of claim of lien and such
reasonable attorneys‘ fee as may be incurred in preparing and
recording said notice of claim of lien.‖23 In terms of attorney fees,
the statute specifically provides that the ―successful party‖ in an
action to enforce a mechanics‘ lien ―shall be entitled to recover a
reasonable attorneys‘ fee, to be fixed by the court, which shall be
taxed as costs in the action.‖24 The Act further provides that the
court has the power to apportion costs between a contractor and
an owner, ―but in all cases each subcontractor exhibiting a lien
shall have his costs awarded to him,‖ including reasonable
attorneys‘ fees.25
¶ 26 Utah Code section 38-1-28 sets forth procedures by
which a party disputing a lien‘s validity may release the lien and
clear the subject property‘s title. The statute provides that ―[t]he
owner of any interest in real property that is subject to a
mechanics‘ lien recorded under this chapter, . . . who disputes the
correctness or validity of the lien may record a notice of release of
lien and substitution of alternate security.‖26
¶ 27 The statute requires that the notice of release of lien be
filed within ―90 days after the day on which the person filing a
notice of release of lien and substitution of alternate security is
served with a summons and lien foreclosure complaint.‖27
Among other things, the notice must include ―as an attachment a
surety bond or evidence of a cash deposit‖ in an amount equal to
23 Id. 38-1-17.
24 Id. 38-1-18(1). Additionally, under section 38-1-16, ―[e]very
person whose claim is not satisfied . . . may have judgment
docketed for the balance unpaid, and execution therefor against
the party personally liable.‖ Id. § 38-1-16 (2009).
25 Id. § 38-1-17; see also Shupe v. Menlove, 417 P.2d 246, 249 (Utah
1966) (―It is plain that [sections 38-1-17 and 38-1-18] should be
construed together and that when attorney fees are awardable
thereunder they are to be treated as costs which, as expressed in
38-1-17 the court ‗shall apportion the costs according to the right of
the case.‘‖).
26 Id. § 38-1-28(1).
27 Id. § 38-1-28(1)(c).
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either 150 percent, 175 percent, or 200 percent of the amount
claimed by the lien claimant on his or her notice of lien.28 The
surety bond or evidence of a cash deposit must be ―made payable
to the lien claimant‖ and ―conditioned for the payment of . . . the
judgment that would have been rendered, or has been rendered
against the property in the action to enforce the lien; and . . . any
costs and attorneys‘ fees awarded by the court.‖29 If the property
owner disputes the amount claimed in the notice of lien, he may
petition the court to hold a hearing to determine the correct
amount of the lien claim ―for the sole purpose of providing
alternate security.‖30
¶ 28 Within thirty days of recording the notice of release of
lien, the property owner must serve the lien claimant with a
copy.31 And within ninety days of receipt of the notice, the lien
claimant must add the alternate security as a party to the lien
foreclosure action if a suit is pending.32 After meeting the
statutory requirements set forth in subsections 38-1-28(1) and (2),
―the real property described in the notice shall be released from
the mechanics‘ lien to which the notice applies.‖33
¶ 29 In short, posting the alternate security causes the lien to
no longer be secured by the original real estate, and instead the
lien becomes secured by the bond or cash equivalent posted. The
posting of alternate security does not eliminate the lien or alter the
rights and obligations of the parties. Instead, the alternate
security serves as substitute security for the lien and judgment on
the action to enforce the lien.34 After alternate security is
28Id. § 38-1-28(2)(c) (explaining that the percentage required to
be posted depends on the amount of the lien claimed).
29 Id. § 38-1-28(2)(c)(iii)–(iv).
30 Id. § 38-1-28(7)(a).
31 Id. § 38-1-28(4)(a).
32 Id. § 38-1-28(4)(b).
33 Id. § 38-1-28(1), (3)(a).
34 See Royster Constr. Co. v. Urban West Cmtys., 47 Cal. Rptr. 2d
684, 688 (Ct. App. 1995) (―The recording of the release bond does
not extinguish the lien; rather, the bond is substituted for the land
(con‘t.)
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Opinion of the Court
substituted for the property, the lien foreclosure action proceeds
against the alternate security and the party ―disput[ing] the
correctness or validity of the lien,‖ but not the subject property.35
Section 38-1-28 ―does not otherwise affect the rights of interested
parties‖ in the underlying action to enforce the lien.36
¶ 30 The procedures under Utah Code section 38-1-28 balance
the rights of land owners with the rights of lien claimants. 37 The
statute provides lien claimants with a substitute source of security
from which the claimant may ultimately recover. At the same
time, it furthers the public policy in favor of alienability of
as the object to which the lien attaches, with the lien transferred
from the land to the bond.‖); Am. Bank v. Wadsworth Golf Constr.
Co. of the Sw., 307 P.3d 1212, 1218 (Idaho 2013) (―[T]he lien release
bond is merely meant to act as substitute security for the real
property and does not otherwise affect the rights of interested
parties.‖); Gil Ruehl Mech., Inc. v. Hartford Fire Ins. Co., 164 S.W.3d
512, 513–14 (Ky. Ct. App. 2004) (interpreting Kentucky‘s
mechanics‘ lien release bond statute ―as creating a bond that is a
‗mere substitute for the lien property‘‖(citation omitted)).
35 UTAH CODE § 38-1-28(1).
36 Am. Bank, 307 P.3d at 1218.
37 Projects Unlimited, Inc. v. Copper State Thrift & Loan Co., 798
P.2d 738, 743 (Utah 1990) (―[W]e recognize that liens create an
encumbrance on property that deprives the owner of his ability to
convey clear title and impairs his credit . . . . State legislatures and
courts attempt to balance these competing interests through their
mechanic‘s lien statutes and judicial interpretations thereof.‖
(citations omitted) (internal quotation marks omitted)); accord
Hunzinger Constr. Co. v. SCS of Wis., Inc., 694 N.W.2d 487, 491 (Wis.
Ct. App 2005) (―[T]he release bond procedure . . . provides a
means by which, before a final determination of the lien claimant‘s
rights and without prejudice to those rights, the property may be
freed of the lien, so that it may be sold, developed or used as
security for a loan. The procedure thus protects both the property
owner by allowing the bond to substitute for the land as the object
to which the lien attaches and the claimant by providing an
alternate source of recovery on the claim of lien.‖).
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property38 by allowing land owners to sell (or refinance) their
property while a lien foreclosure action is ongoing. But a release
of lien and substitution of alternate security under section 38-1-28
―does not otherwise affect the rights of interested parties‖ in the
underlying action to enforce the lien.39
I. THE VALIDITY OF 2 TON‘S NOTICES
OF MECHANICS‘ LIEN
¶ 31 Resolution of the claims before us requires interpretation
of Utah‘s Mechanics‘ Liens statute. ―It is well settled that when
faced with a question of statutory interpretation, our primary goal
is to evince the true intent and purpose of the Legislature.‖40 ―The
best evidence of the legislature‘s intent is the plain language of the
statute itself.‖41 ―[W]e presume that the legislature was deliberate
in its choice of words and used each term advisedly and in
accordance with its ordinary meaning. Where a statute‘s
language is unambiguous and provides a workable result, we
need not resort to other interpretive tools, and our analysis
ends.‖42
¶ 32 However, ―our plain language analysis is not so limited
that we only inquire into individual words and subsections in
isolation; our interpretation of a statute requires that each part or
section be construed in connection with every other part or
section so as to produce a harmonious whole.‖43 When interpreting
statutory text, we presume ―that the expression of one [term]
38 Boyle v. Baggs, 350 P.2d 622, 624-25 (Utah 1960).
39 Am. Bank, 307 P.3d at 1218.
40 Marion Energy, Inc. v. KFJ Ranch P’ship, 2011 UT 50, ¶ 14, 267
P.3d 863 (internal quotation marks omitted).
41 State v. Miller, 2008 UT 61, ¶ 18, 193 P.3d 92 (internal
quotation marks omitted).
42 Torrie v. Weber Cnty., 2013 UT 48, ¶ 11, 309 P.3d 216
(alteration in original) (internal quotation marks omitted).
43Anderson v. Bell, 2010 UT 47, ¶ 9, 234 P.3d 1147 (internal
quotation marks omitted).
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should be interpreted as the exclusion of another,‖44 and will not
―infer substantive terms into the text that are not already there.‖45
―[W]e assume, absent a contrary indication, that the legislature
used each term advisedly . . . [and] seek to give effect to omissions
in statutory language by presuming all omissions to be
purposeful.‖46
A. 2 Ton’s Amended Notices of Lien Are Invalid Because
Attorney Fees and Costs Should not Be Included
in the Value of a Mechanics’ Lien
¶ 33 2 Ton recorded three notices of lien, each for the same
underlying claim, but the latter two amended the amount of
2 Ton‘s mechanics‘ lien claim to include attorney fees and costs up
to the date of the amended notices. The Thorgaards argue that the
Mechanics‘ Liens statute limits a mechanics‘ lien to the ―value of
the service rendered, labor performed, or materials or equipment
furnished or rented.‖47 They maintain the Utah Code does not
allow a lien claimant to include attorney fees or costs incurred in
prosecuting the lien claim in the ―amount of the lien claim‖ set
forth in the notice of lien.48 We agree.
¶ 34 Any reference to ―attorney fees‖ is notably absent from
section 38-1-3‘s statutory language, which sets forth ―what may be
attached‖ in a lien claim, as well as from section 38-1-7, which
states the information that ―shall‖ be contained in the notice of
lien. The legislature omitted attorney fees and costs from the
value of a lien, and we presume this choice was purposeful.49
Moreover, to stretch the language describing the value of a
mechanics‘ lien in a way that includes attorney fees is inconsistent
with our general rule that ―[a]ttorney fees are awarded only when
44 Marion Energy, 2011 UT 50, ¶ 14 (alteration in original)
(internal quotation marks omitted).
45 Berrett v. Purser & Edwards, 876 P.2d 367, 370 (Utah 1994).
46Marion Energy, 2011 UT 50, ¶ 14 (internal quotation marks
omitted).
47 UTAH CODE § 38-1-3 (2009).
48 Id. § 38-1-7(2)(a)(vi).
49 See Marion Energy, 2011 UT 50, ¶ 14.
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authorized by statute or by contract.‖50 Had the legislature
intended for attorney fees and costs to be included in the value of
a mechanics‘ lien, it could have said so, particularly in light of
―the Legislature‘s ability and willingness to single out attorney
fees‖51 elsewhere in the Utah Code.
¶ 35 Viewed as a whole, the Mechanics‘ Liens statute shows
that our legislature created a careful plan for awarding a lien
claimant attorney fees. Allowing attorney fees and other costs to
be included in the original amount of a mechanics‘ lien would
frustrate this plan. Section 38-1-18 provides that if a lien claimant
elects to enforce the mechanics‘ lien, ―the successful party shall be
entitled to recover a reasonable attorneys‘ fee, to be fixed by the
court, which shall be taxed as costs in the action.‖52 This
provision clarifies that an award of attorney fees is a conditional
award that depends upon the outcome of the action to enforce the
lien. Pursuant to section 38-1-18, a ―successful party‖ must be
ascertained before a lien claimant is entitled to claim attorney fees.
¶ 36 Furthermore, to allow a lien claimant to include attorney
fees and costs in the lien claim would distort the provisions for the
posting of alternate security.53 Section 38-1-18(1) makes clear that
an award of attorney fees is conditioned on the successful
prosecution of a lien enforcement action. If attorney fees were
included in the amount of the lien claim, then as litigation
proceeded in the action to enforce the lien and more attorney fees
were incurred, the amount of the lien would increase. A party
seeking to post alternate security would be chasing a moving
target, because as the lien amount increased, the amount required
for alternate security would correspondingly increase.
50 Jensen v. Sawyers, 2005 UT 81, ¶ 127, 130 P.3d 325.
51 Tholen v. Sandy City, 849 P.2d 592, 596 (Utah Ct. App. 1993).
52 UTAH CODE § 38-1-18(1); see also id. § 38-1-17 (―[B]ut in all
cases each subcontractor exhibiting a lien shall have his costs
awarded to him, including the costs of preparing and recording
the notice of claim of lien and such reasonable attorneys‘ fee as
may be incurred in preparing and recording said notice of claim of
lien.‖).
53 Id. § 38-1-28.
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¶ 37 2 Ton argues that attorney fees are part of a mechanics‘
lien against the property because attorney fees are costs, and
costs—in addition to the amounts owed on the lien—are paid
from the property sale proceeds. In essence, they contend that
because the property secures both the lien and costs, attorney fees
that accrue may be added to the lien against the property even
before the lien foreclosure action has been resolved.54
¶ 38 2 Ton‘s position not only conflicts with the plain
language of the statutory scheme, but it is inconsistent with the
very nature of a lien. ―In its broadest sense and common
acceptation, the word ‗lien‘ is understood and used to denote a
legal claim or charge collectible out of property either real or
personal, as security, for the payment of some debt or
obligation.‖55 Since a party has no obligation to pay attorney fees
in a lien foreclosure action unless the action has concluded and
that party has lost, such attorney fees cannot properly be included
in the mechanics‘ lien claim amount. In Park v. Jameson, we held
that attorney fees could constitute a lien on the property, but this
was only after judgment on the action to enforce the lien had been
awarded by the court in favor of the lien claimant.56 It would not
make sense to include attorney fees in the amount of the lien
54 Utah Code section 38-1-16 reads, ―Every person whose claim
is not satisfied as herein provided may have judgment docketed
for the balance unpaid, and execution therefor against the party
personally liable.‖ (emphasis added). Given the specificity with
which the legislature describes how attorney fees are to be
awarded in section 38-1-18, we do not read the legislature‘s
passing reference to ―claim‖ as permitting a lien claimant to
include attorney fees and costs in his notice of lien. See Madsen v.
Brown, 701 P.2d 1086, 1090 (Utah 1985) (―It is a long-standing rule
of statutory construction that a provision treating a matter
specifically prevails over an incidental reference made thereto in a
provision treating another issue, not because one provision has
more force than another, but because the legislative mind is
presumed to have stated its intent when it focused on that
particular issue.‖).
55 Olsen v. Kidman, 235 P.2d 510, 511 (Utah 1951).
56 364 P.2d 1, 4 (Utah 1961); see also UTAH CODE § 38-1-18.
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Opinion of the Court
claim when those attorney fees can neither be ascertained nor
awarded to the lien claimant until the conclusion of the lien
enforcement action (and only if the lien claimant has prevailed).
¶ 39 Our conclusion that a mechanics‘ lien is limited to ―the
value of the service rendered, labor performed, or materials or
equipment furnished or rented‖57 is supported both by a common
understanding of the word ―lien‖58 as well as language
throughout the statute that indicates that the terms ―lien‖ and
―costs and attorney fees‖ are separate and distinct.59 For example,
section 38-1-28(2)(c)(iv) provides that
(2) A notice of release of lien and substitution of
alternate security . . . shall . . . have as an
attachment a surety bond or evidence of a cash
deposit that . . . is conditioned for the payment of:
(A) the judgment that would have been rendered,
or has been rendered against the property in the
action to enforce the lien; and
(B) any costs and attorneys’ fees awarded by the
court . . . .60
57 UTAH CODE § 38-1-3.
58 See, e.g., Olsen, 235 P.2d at 511; BLACK‘S LAW DICTIONARY 1006
(9th ed. 2009).
59 See UTAH CODE § 38-1-7(3)(c) (―Failure to deliver or mail the
notice of lien to the reputed owner or record owner precludes the
lien claimant from an award of costs and attorneys’ fees . . . .‖
(emphases added)); id. § 38-1-17 (―[I]n all cases each subcontractor
exhibiting a lien shall have his costs awarded to him, including the
costs of preparing and recording the notice of claim of lien and
such reasonable attorneys’ fee as may be incurred in preparing and
recording said notice of claim of lien.‖ (emphases added)); id.
§ 38-1-18(1) (―[I]n any action brought to enforce any lien under this
chapter the successful party shall be entitled to recover a reasonable
attorneys’ fee, to be fixed by the court, which shall be taxed as costs
in the action.‖ (emphasis added)); id. § 38-1-28(2)(c)(iv).
60 Id. § 38-1-28(2)(c)(iv) (emphases added).
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¶ 40 In view of the legislature‘s separation of subsection (A)
and (B) by the conjunctive ―and,‖ it follows that the terms ―lien‖
and ―costs and attorneys‘ fees‖ represent separate and distinct
concepts. If a mechanics‘ lien could be amended to include costs
and attorney fees, subsection (B) would be rendered
superfluous.61 Moreover, our own court of appeals has noted that
―attorney fees should not be confused with the more generic term
‗costs‘ because without specific statutory language, costs do not
include attorney fees.‖62
¶ 41 Section 38-1-28 reinforces the tie between the lien
enforcement action, the alternate security amount used to obtain
the lien release, and attorney fees. When the owner of any interest
in real property is subject to a mechanics‘ lien in an amount of less
than $15,000 she must attach either a surety bond or evidence of a
cash deposit that is 200 percent of the amount claimed by the lien
claimant.63 If the lien claimant prevails, the amount of security in
excess of the lien claim may be used towards attorney fees.
However, attorney fees will only be awarded to the lien claimant
if the lien claimant (1) timely files an action to enforce the lien
under section 38-1-11 and (2) prevails. A lien claimant cannot
―put the cart before the horse‖ by amending his lien notice to
increase the lien claim amount with attorney fees that have not yet
been awarded.64
¶ 42 Finally, our conclusion that a mechanics‘ lien does not
secure attorney fees and costs is supported by existing case law in
61 See State v. Jeffries, 2009 UT 57, ¶ 9, 217 P.3d 265 (explaining
that statutes ―should be construed . . . so that no part [or
provision] will be inoperative or superfluous, void or insignificant,
and so that one section will not destroy another‖ (alterations in
original) (internal quotation marks omitted)).
62 Tholen, 849 P.2d at 596.
63 UTAH CODE § 38-1-28(2)(c)(ii)(C).
64 This is especially so given that the statute requires that the
alternate security contain a 50 to 100 percent buffer on top of the
lien amount, presumably to cover some if not all of the costs and
attorney fees. Id. § 38-1-28(2)(c)(ii).
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Opinion of the Court
other jurisdictions.65 Appellants‘ contend that the value of a
mechanics‘ lien is limited to ―the value of the service rendered,
labor performed, or materials or equipment furnished or
rented.‖66 This is consistent with both the language of the statute
as well as our decisions recognizing that mechanics‘ liens ―protect
original contractors, subcontractors, and others who enhance the
value of real property through improvements.‖67 While ―service
rendered, labor performed, or materials or equipment furnished
or rented‖ help improve and enhance the value of real property,
attorney fees and costs do not.68
65 See Nat’l Lumber Co. v. United Cas. & Sur. Ins. Co., 802 N.E.2d
82, 86 (Mass. 2004) (―[O]ur inquiry is limited to whether a
mechanic‘s lien recorded pursuant to [the mechanics‘ lien statute],
includes contractual interest and reasonable attorney‘s fees in
addition to the amount claimed for labor and materials. We
conclude that it does not.‖); Artsmith Dev. Grp., Inc. v. Updegraff,
868 A.2d 495, 496 (Pa. Super. Ct. 2005) (explaining that the
―statutory basis for a mechanics‘ lien expressly limits the lien to
amounts owed for labor and materials only‖ and therefore,
―interest [and] attorneys‘ fees . . . were not properly the subject of a
mechanics‘ lien claim‖).
66 UTAH CODE § 38-1-3.
67 Sill v. Hart, 2007 UT 45, ¶ 12, 162 P.3d 1099; see also A.K. & R.
Whipple Plumbing & Heating v. Guy, 2004 UT 47, ¶ 24, 94 P.3d 270
(―The purpose of the mechanic‘s lien is to protect those whose
labor or materials have enhanced the value of property.‖); Projects
Unlimited, Inc. v. Copper State Thrift & Loan Co., 798 P.2d 738, 743
(Utah 1990) (―[T]he purpose of the mechanic‘s lien act is remedial
in nature and seeks to provide protection to laborers and
materialmen who have added directly to the value of the property
of another by their materials or labor.‖ (internal quotation marks
omitted)).
68 See All Clean, Inc. v. Timberline Props., 2011 UT App 370, ¶ 19,
264 P.3d 244 (―Because All Clean‘s flood mitigation work in
Timberline‘s building was not an improvement of any building or
structure or an improvement to any premises, so as to fall within
the scope of the mechanics‘ lien statute, we affirm the trial court‘s
decision that the statute did not apply here and that All Clean was
(con‘t.)
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Opinion of the Court
¶ 43 We conclude that the district court erred when it
determined that the lien claim amount listed in a mechanics‘ lien
notice may include attorney fees and costs. Because the amount
of a mechanics‘ lien claim is limited to the value of the services,
labor, and material that the lien claimant alleges he is owed, we
hold that it is improper to add attorney fees and costs to that
amount.69 Accordingly, we hold that 2 Ton‘s amended notices of
lien are invalid because they improperly included attorney fees
and costs in the amount of the lien claim. 2 Ton‘s original notice
of lien, however, was and is valid.
¶ 44 Because we hold that the amended notices of lien are
invalid, we do not address the Thorgaards‘ alternative argument
that the notice of lien was not timely amended.
B. 2 Ton’s Cross-Appeal
¶ 45 2 Ton argues that the district court erred by allowing the
Thorgaards to record their notice of release of lien and
substitution of alternate security more than ninety days after
service was accomplished on the property‘s original owner in
violation of Utah Code section 38-1-28(1)(c). In other words,
2 Ton asks us to hold that a property owner cannot release a lien
and post alternate security if he or she is served with the
summons and complaint midway through a lien foreclosure
action. Because section 38-1-28(1) unambiguously allows ―[t]he
owner of any interest in real property that is subject to a
mechanics‘ lien‖ to file a notice of release of lien within ninety
days after that person is served, we affirm the district court‘s ruling
that the notice of release of lien was timely.70
therefore not entitled to the benefit of the statute‘s attorney fees
provision.‖ (citation omitted) (internal quotation marks omitted));
Daniels v. Deseret Fed. Sav. & Loan Ass’n, 771 P.2d 1100, 1103 (Utah
Ct. App. 1989) (―The profits a person is entitled to as the result of
an investment do not constitute improvements to the realty nor do
they fall within the statutory meaning of services or materials as
contemplated in the mechanic‘s lien law statutes.‖).
69 See UTAH CODE § 38-1-3.
70 2 Ton argues that section 38-1-28(1)(c) should be construed to
require a release to be recorded within ninety days of the date
service was completed on ―the original owner(s), and not from the
(con‘t.)
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Opinion of the Court
¶ 46 Utah Code section 38-1-28(1)(c) allows owners of real
property to release a lien from that property by posting alternate
security ―before the expiration of 90 days after the day on which
the person filing a notice of release of lien . . . is served with a
summons and lien foreclosure complaint.‖71 Under the statute,
the alternate security that replaces the lien must be 150 percent of
the amount claimed in notice of lien if the claim is for $25,000 or
more, 175 percent if the lien claim is between $15,000 and $25,000,
and 200 percent if the lien is less than $15,000.72 If the lien
claimant is successful, the 50 to 100 percent surplus in excess of
the lien claim amount may be used to pay the lien claimant‘s
attorney fees and costs. On that basis, 2 Ton argues that the intent
of the ninety day provision ―is to require the lien to be released
[by the original owner] at the beginning of the lawsuit, before
significant fees are incurred.‖ 2 Ton contends that a successful
date of service on any subsequent owner(s).‖ In support of this
argument, 2 Ton argues that subsequent owners cannot ―acquire[]
greater rights in the property than their predecessor.‖ This
interpretation is not supported by the plain language of the statute
which states simply that an owner of any interest may file a notice
of release within ninety days after ―the person filing a notice of
release of lien . . . is served.‖ UTAH CODE § 38-1-28(1)(c) (emphasis
added). When interpreting a statute, ―we assume that each term
in the statute was used advisedly; thus the statutory words are
read literally.‖ Sill, 2007 UT 45, ¶ 11 (internal quotation marks
omitted). The plain meaning of ―the person filing‖ indicates that
the owner who is filing the release has the right to file it within
ninety days after he or she is served. Because the statute refers
very generally to ―the person filing‖ we cannot read into this
language a limitation that ―the person‖ refers only to the original
owner.
71 As noted, the statute has since been renumbered and
amended. The new statutory language requires owners to release
the lien and post alternate security ―at any time before the date
that is 90 days after the first summons is served in an action to
foreclose the preconstruction or construction lien for which the
notice under this section is submitted for recording.‖ UTAH CODE
§ 38-1a-804(1)(c) (2014) (emphasis added).
72 Id. § 38-1-28(2)(c)(ii).
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Opinion of the Court
lien claimant may be deprived of his right to fully recover his
legal expenses if the transfer of property to a new owner resets the
ninety day period.
¶ 47 We disagree with 2 Ton‘s interpretation of the statute.
The amount of alternate security does not affect the court‘s ability
to ―apportion the costs according to the right of the case,‖ which
includes awarding the successful party ―a reasonable attorneys‘
fee.‖73 Section 38-1-28(1)(c) is unambiguous—―[t]he owner of any
interest in real property‖ may record a notice of release of lien at
any time ―before the expiration of 90 days after the day on which
the person filing a notice of release‖ is served with a summons and
complaint.74 When faced with a question of statutory
interpretation, our general rule is that we will ―give effect to
omissions in statutory language‖ by presuming them to be
purposeful.75 Utah Code section 38-1-28(1) was written to allow
―the owner of any interest in real property‖ to record a notice of
release of lien and substitution of alternate security within ―90
days after the day on which the person filing . . . is served with a
summons and lien foreclosure complaint.‖ It does not include
any language limiting the class of persons entitled to file such a
release only to original owners, nor does it contain language
exempting later purchasers from its provisions.
¶ 48 2 Ton argues that allowing subsequent owners to post
alternate security under 38-1-28(1) creates a ―loophole‖ in the
statute that allows owners and their successors in interest to ―beat
down a lien claimant who had to incur significant legal expense to
prove his claim.‖ On that basis, 2 Ton encourages us to hold that
a release may be recorded and alternate security substituted only
within ninety days of the date of service on the original owner.
However, such a restrictive reading is inconsistent with the
statute‘s plain language, which requires, unequivocally, that the
release be recorded within ninety days of the date service was
accomplished on ―the person filing a notice of release‖ who owns
―any interest‖ in the property.76 Moreover, 2 Ton‘s concern about
73 Id. §§ 38-1-17, 38-1-18(1).
74 Id. § 38-1-28(1)(c) (emphasis added).
75 Marion Energy, 2011 UT 50, ¶ 14.
76 UTAH CODE § 38-1-28(1).
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Opinion of the Court
a loophole is unfounded. The notice of release of lien and
substitution of alternate security transforms the action into an
action against both the alternate security and the owner ―who
disputes the correctness or validity of the lien.‖77 And the court
has full discretion under section 38-1-18 to award the successful
party ―a reasonable attorneys‘ fee.‖78
¶ 49 Here, the Thorgaards were subsequent owners of Lot
30—they purchased the property from BBRP and Washington
Federal replaced Zions as the lender. Washington Federal was
served with a summons and lien foreclosure complaint on June
18, 2010. ―[B]efore the expiration of 90 days after‖ being served,
Washington Federal made a cash deposit of $14,942 as alternate
security and at the same time recorded its notice of release of lien
as required by Utah Code section 38-1-28. Under the plain
language of the statute, the district court was correct in
determining that Washington Federal timely recorded its lien
release.
¶ 50 In sum, we conclude that 2 Ton‘s amended and second
amended notices of lien are invalid because 2 Ton improperly
amended them to include attorney fees and costs. However
2 Ton‘s original notice of lien was and remains valid, as not only
was it properly filed, but the parties stipulated to its validity and
accuracy. The district court was correct when it held that the
Thorgaards‘ notice of release of lien and substitution of alternate
security was timely. But because the Thorgaards timely filed their
notice of release of lien and because they submitted the proper
amount of alternate security under section 38-1-28, the district
court accordingly should have released the real property from the
lien.
77 Id.
78 See also id. § 38-1-28(7)(k) (explicitly contemplating an award
of attorney fees in an action against the alternate security and
stating that they ―shall be considered . . . under any other
provision of this chapter‖).
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II. DUE TO ITS ERROR, THE DISTRICT COURT MUST
RECALCULATE THE ATTORNEY FEE AWARD
¶ 51 The Thorgaards ultimately stipulated that the amount of
the lien claim stated in 2 Ton‘s original notice of lien—$7,147.41—
was correct. On December 27, 2011, the district court entered a
judgment against the defendants in the lien foreclosure action,
which included the Thorgaards and Washington Federal. Because
2 Ton was the successful party in the lien action, it was entitled to
have its costs awarded, including reasonable attorney fees.79 On
April 16, 2012, the district court awarded 2 Ton $44,857.70 in
attorney fees.
¶ 52 The Thorgaards argue that the district court abused its
discretion when it awarded 2 Ton $44,857.70 in attorney fees.
Specifically, they argue (1) that the district court improperly failed
to allocate the attorney fees, first, between the contract and lien
claims and, second, among the defendants who incurred the
attorney fees; (2) that the court should have allocated attorney fees
on a per capita basis to all fourteen lots; and (3) that an award of
attorney fees that is more than six times the principal lien amount
is per se unreasonable.
¶ 53 ―Calculation of reasonable attorney fees is in the sound
discretion of the trial court, and will not be overturned in the
absence of a showing of a clear abuse of discretion.‖80 Though
―an award of attorney fees must be supported by evidence in the
record,‖ ―trial courts enjoy broad discretion in evaluating
evidence to determine what constitutes a reasonable fee.‖81 In this
case, the district court abused its discretion by awarding attorney
fees on the basis of an invalid notice of lien. Therefore, we must
remand for the district court to recalculate the award after
considering the fees incurred by the Thorgaards, who had to
defend themselves against 2 Ton‘s improperly amended notices of
lien, and whose property was not properly released under Utah
Code section 38-1-28. In other words, because the improperly
79 UTAH CODE § 38-1-18(1).
80 Dixie State Bank v. Bracken, 764 P.2d 985, 988 (Utah 1988)
(citation omitted).
81 Id. at 988–89.
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Opinion of the Court
amended notices of lien were an error that permeated almost the
entire course of the litigation, we remand for the district court to
recalculate the reasonable attorney fees owed 2 Ton.
¶ 54 Mechanics‘ liens are wholly creatures of statute, having
no place at common law. In this setting, the only access to an
attorney fees award is that granted by that statute. Attorney fees
first appear in section 38-1-17 of the Mechanics‘ Lien Act. In this
section, the court is instructed to apportion costs
between the owner and the contractor . . . according
to the right of the case, but in all cases each
subcontractor exhibiting a lien shall have his costs
awarded to him, including . . . such reasonable
attorneys‘ fees as may be incurred in preparing and
recording said notice of claim of lien.82
Under Utah Code section 38-1-18, attorney fees must be awarded
to the successful party in the action to enforce a lien: ―in any
action brought to enforce any lien under this chapter the
successful party shall be entitled to recover a reasonable
attorneys‘ fee, to be fixed by the court, which shall be taxed as
costs in the action.‖ As the successful party in the lien foreclosure
action, 2 Ton was entitled to have the court award its costs,
including reasonable attorney fees.
¶ 55 However, because 2 Ton improperly amended its notice
of lien to reflect an improper calculation, and because the court
erroneously accepted the amendments and refused to accept the
alternate security and release the property, we hold that the
attorney fee award must be reversed. Accordingly, we remand
for the district court to recalculate 2 Ton‘s reasonable attorney
fees, and to consider and discount the attorney fees incurred by
the Thorgaards as a result of the error. Because we reverse the
award of attorney fees, we need not address the Thorgaards‘
specific grounds for challenging the award.
CONCLUSION
¶ 1 We conclude that the district court erred when it
permitted 2 Ton to include attorney fees and costs in the amount
of its lien claim. Thus, 2 Ton‘s amended and second amended
82 UTAH CODE § 38-1-17.
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Opinion of the Court
notices of lien were invalid. But 2 Ton‘s original notice of lien was
valid. The Thorgaards‘ notice of release of lien and substitution of
alternate security was timely recorded and properly referenced
2 Ton‘s original notice of lien. Because the Thorgaards complied
with all statutory requirements, the district court erred in refusing
to release Lot 30 from the lien. Yet because the Thorgaards
stipulated to the accuracy of the original lien claim, 2 Ton, as the
prevailing party, was entitled to recover its costs and a reasonable
attorney fee award. We hold that the district court must
recalculate that award after considering the effect of the errors on
the fees incurred by both parties.
25