ACI Northwest, Inc. v. Monument Heights, LLC

IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 41269
KEITH A. SIMS, dba KASCO OF IDAHO, )
LLC, an Idaho limited liability company, )
)
Plaintiff, ) Boise, December 2014 Term
)
v. ) 2015 Opinion No. 2
)
) Filed: January 21, 2015
ACI NORTHWEST, INC., )
) Stephen W. Kenyon, Clerk
Defendant-Third Party Plaintiff- )
Appellant, )
)
and )
)
MONUMENT HEIGHTS, LLC, an Idaho )
limited license company; DAN S. )
JACOBSON, an individual; SAGE )
HOLDINGS, LLC, an Idaho limited license )
company; STEVEN G. LAZAR, an )
individual; THE MITCHELL A. MARTIN )
AND KAREN C. MARTIN FAMILY )
TRUST DATED AUGUST 9, 2005; )
DEVON CHAPMAN, an individual, )
)
Defendants-Respondents, )
)
and )
)
CHARLES R. DEAN, Successor Trustee; )
and JOHN AND JANE DOES 1-100, )
owners, being all persons claiming an )
interest in the [subject] property, )
)
Defendants, )
)
and )
)
ANTHONY ST LOUIS, a single person; )
ANDREA STEPHENS, a single person; )
LILLY PROPERTIES, INC., a Nevada )
corporation; and HLT REAL ESTATE, )
LLC, an Idaho limited liability company, )
1
)
Third-Party Defendants-Respondents. )
_____________________________________ )
Appeal from the District Court of the First Judicial District of the State
of Idaho, Kootenai County. Hon. Benjamin R. Simpson, District Judge.
Judgment for defendants in action to foreclose mechanic’s liens affirmed.
Costs on appeal are awarded to respondents.
James, Vernon & Weeks, PA, Coeur d’Alene, attorneys for appellant.
Cynthia K.C. Meyer argued.
Lukins & Annis, P.S., Coeur d’Alene, attorneys for respondents.
Jonathon D. Hallin argued.
______________________________
WALTERS, Justice pro tem
This appeal involves the attempted foreclosure of two mechanic’s liens on property
encumbered by deeds of trust. In ParkWest Homes, LLC v. Barnson (ParkWest II), 154 Idaho
678, 302 P.3d 18 (2013), this Court held that an action to foreclose a mechanic’s lien on property
encumbered by a deed of trust must “name the trustee who holds legal title to the property”
within the six-month statutory limitation to lien enforcement. Id. at 685, 302 P.3d at 25. Without
the trustee named in the action, the mechanic’s lien is lost as to the trustee’s interest and “a
subsequent holder of legal title to property encumbered by a deed of trust and a mechanic’s lien,
takes the property free and clear of the mechanic’s lien.” Id.
Appellant ACI Northwest Inc. (ACI) challenges this holding from ParkWest II after the
district court determined that ACI lost its mechanic’s liens for failing to name the trustees in its
foreclosure action against Respondents Monument Heights LLC (Monument Heights), Dan
Jacobson, Sage Holdings LLC, Steven Lazar, the Mitchell A. Martin and Karen C. Martin
Family Trust dated August 9, 2005, Devon Chapman, HLT Real Estate LLC, Anthony St. Louis,
Andrea Stevens, and Lilly Properties Inc. (collectively “the Monuments Heights group”). Due to
this determination, the district court granted summary judgment in favor of the Monuments
Heights group. ACI appeals to this Court. We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
On May 27, 2008, ACI began furnishing labor to Monument Heights on certain real
property owned by Monument Heights. On August 1, 2008, Monument Heights executed and
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delivered a deed of trust (hereinafter “Monument Heights Deed of Trust”) conveying three
separate parcels of real property to Pioneer Title Company (Pioneer), the trustee, as security for
payment of indebtedness owed by Monument Heights to Dan Jacobson, Sage Holdings LLC,
Steven Lazar, the Mitchell A. Martin and Karen C. Martin Family Trust dated August 9, 2005,
and Devon Chapman (collectively “the Jacobson group”), the beneficiaries. On August 6, 2008,
the Monument Heights Deed of Trust was recorded with the Kootenai County Recorder.
On January 29, 2009, ACI recorded a mechanic’s lien with the Kootenai County
Recorder in the amount of $53,437.10 on the property owned by Monument Heights upon which
ACI had furnished labor. On July 28, 2009, ACI recorded an Endorsement to Claim of Lien for
Payment on Account. The endorsement stated that ACI received a payment of $25,000 from
Monument Heights on February 11, 2009. On August 10, 2009, ACI initiated proceedings for
judicial foreclosure of its mechanic’s lien.
On January 20, 2010, Charles R. Dean, Jr., was appointed as the successor trustee under
the Monument Heights Deed of Trust. An Appointment of Successor Trustee was recorded with
the Kootenai County Recorder on February 5, 2010.
On March 11, 2011, Monument Heights sold a portion of its real property encumbered by
the Monument Heights Deed of Trust to Anthony St. Louis and Andrea Stevens. St. Louis and
Stevens conveyed a deed of trust (hereinafter “St. Louis & Stevens Deed of Trust”) to Pioneer as
security for payment of indebtedness owed to Monument Heights, recorded with the Kootenai
County Recorder. On March 15, 2011, Monument Heights assigned its interest under the St.
Louis & Stevens Deed of Trust to Lilly Properties. Monument Heights recorded its assignment
with the Kootenai County Recorder.
On June 1, 2011, Lazar (part of the Jacobson group) recorded an assignment of his
interest under the Monument Heights Deed of Trust to HLT Real Estate LLC.
On June 14, 2011, ACI recommenced furnishing labor, materials, and services in the
improvement of the Monument Heights property. On July 26, 2011, ACI recorded a second
mechanic’s lien with the Kootenai County Recorder, securing the principal sum of $462,780.46.
On January 12, 2012, ACI filed an amended complaint seeking to judicially foreclose its
mechanic’s liens. ACI had not named or sought to join to its action Dean, the trustee of the
Monument Heights Deed of Trust, or Pioneer, the trustee of the St. Louis & Stevens Deed of
Trust.
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On February 26, 2013, the Monument Heights group moved for summary judgment
against ACI. The district court determined that ACI was required to join the trustees Dean and
Pioneer to its action to judicially foreclose its mechanic’s liens pursuant to Idaho Code section
45-510 and this Court’s holding in ParkWest II. 1 ACI had failed to do so within the statutory six-
month period in Idaho Code section 45-510, and therefore the Monument Heights group was
entitled to summary judgment as a matter of law. On April 17, 2013, the district court issued a
partial summary judgment against ACI. The partial summary judgment stated that ACI’s two
mechanic’s liens were “lost and unenforceable” against the legal title held by trustees Dean and
Pioneer.
On May 17, 2013, the district court entered a restated judgment in favor of the Monument
Heights group against ACI. On June 7, 2013, ACI filed a notice of appeal. The district court
subsequently entered an amended judgment.
II. ISSUES ON APPEAL
1. Whether the district court erred in granting summary judgment to the Monument Heights
group based on this Court’s holding in ParkWest II.
2. Whether either party is entitled to an award of attorney’s fees on appeal.
III. STANDARD OF REVIEW
“On appeal from the grant of a motion for summary judgment, this Court
utilizes the same standard of review used by the district court originally ruling on
the motion.” Arregui v. Gallegos-Main, 153 Idaho 801, 804, 291 P.3d 1000, 1003
(2012). Summary judgment is proper “if the pleadings, depositions, and
admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” Idaho Rule of Civil Procedure 56(c). “When
considering whether the evidence in the record shows that there is no genuine
issue of material fact, the trial court must liberally construe the facts, and draw all
reasonable inferences, in favor of the nonmoving party.” Dulaney v. St. Alphonsus
Reg’l Med. Ctr., 137 Idaho 160, 163, 45 P.3d 816, 819 (2002). “If the evidence
reveals no disputed issues of material fact, then only a question of law remains,
over which this Court exercises free review.” Lapham v. Stewart, 137 Idaho 582,
585, 51 P.3d 396, 399 (2002).
Conner v. Hodges, 157 Idaho 19, 23, 333 P.3d 130, 134 (2014).
IV. ANALYSIS
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ACI filed its complaint and amended complaint before this Court issued its opinion or substitute opinion in
ParkWest II. The opinion in ParkWest II was first issued on February 4, 2013, and a substitute opinion was issued
on April 18, 2013. (The substitute opinion pertained to a different issue than Idaho Code section 45-510.) The
Monument Heights group moved for summary judgment shortly after the February 4, 2013, opinion.
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A. The six-month limitation in Idaho Code section 45-510 to enforce a mechanic’s lien
operates as a limit of not only the remedy, but also liability and the right to enforce
the lien.
“‘The right of a materialman to assert a lien against a structure for which materials have
been furnished is a right granted and therefore determined by statute.’ In Idaho, the right exists in
I.C. §§ 45-501 and 505.” BMC W. Corp. v. Horkley, 144 Idaho 890, 893, 174 P.3d 399, 402
(2007) (quoting Layrite Prods. Co. v. Lux, 91 Idaho 110, 113, 416 P.2d 501, 504 (1966)). “The
purpose of these statutes is to compensate persons who perform labor upon or furnish material to
be used in construction, alteration or repair of a structure.” Franklin Bldg. Supply Co. v. Sumpter,
139 Idaho 846, 850, 87 P.3d 955, 959 (2004) (quoting Barber v. Honorof, 116 Idaho 767, 768–
69, 780 P.2d 89, 90–91 (1989)).
“The mechanic’s lien statutes are liberally construed in favor of those to whom the lien is
granted . . . .” ParkWest Homes LLC v. Barnson (ParkWest I), 149 Idaho 603, 605, 238 P.3d 203,
205 (2010). “This rule, however, ‘does not permit the court to create a lien where none exists or
was intended by the legislature.’” L&W Supply Corp. v. Chartrand Family Trust, 136 Idaho 738,
743, 40 P.3d 96, 101 (2002) (quoting Great Plains Equip., Inc. v. Nw. Pipeline Corp., 132 Idaho
754, 760, 979 P.2d 627, 633 (1999)). “Therefore, while ‘this section will be liberally construed,’
‘the statutory requirements must be substantially complied with in order to perfect a valid
mechanic’s lien.’” Id. (quoting Pierson v. Sewell, 97 Idaho 38, 41, 539 P.2d 590, 593 (1975)).
A claim of lien must be filed within ninety days “after the completion of the labor or
services, or furnishing of materials.” I.C. § 45-507(2). “A mechanic’s lien generally ‘relates back
to the date of commencement of the work or improvement of the commencement to furnish the
material.’” Credit Suisse AG v. Teufel Nursery, Inc., 156 Idaho 189, 198, 321 P.3d 739, 748
(2014) (quoting White v. Constitution Mining & Mill. Co., 56 Idaho 403, 420, 55 P.2d 152, 160
(1936)). “Idaho Code § 45-506 governs the priority between a mechanic[’]s lien and a mortgage”
or other encumbrances. Id. In general, “the liens of mortgages, deeds of trust, judgment, and
other encumbrances, including attachments, created subsequent to the time when the labor lien
attaches, or subsequently to the time to which the labor lien relates, are subordinate to the liens
of claimants for work or labor performed.” White, 56 Idaho at 419–20, 55 P.2d at 159.
Idaho Code section 45-510 provides the court with jurisdiction to enforce a mechanic’s
lien “when a lien is filed and an action commenced within six months.” ParkWest II, 154 Idaho
at 684, 302 P.3d at 24. Idaho Code section 45-510 states in relevant part:
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No lien provided for in this chapter binds any building, mining claim,
improvement or structure for a longer period than six (6) months after the claim
has been filed, unless proceedings be commenced in a proper court within that
time to enforce such lien . . . .
I.C. § 45-510. “The Idaho statute [45-510] does not, in terms, prescribe who shall be made
parties to the action thereby required to be brought,” Continental & Commercial Trust & Savings
Bank v. Pacific Coast Pipe Co., 222 F. 781, 788 (9th Cir. 1915), but this Court has construed the
time limitation in Idaho Code section 45-510 as a limit on liability and the right to enforce. This
Court explained in Western Loan & Building Co. v. Gem State Lumber Co., 32 Idaho 497, 185 P.
554 (1919):
The limitation prescribed by statute of the time within which an action
must be brought in a proper court for the foreclosure of a mechanic’s lien is not
the ordinary statute of limitation, which is waived, if not pleaded. “The time
within which the suit must be brought operates as a limitation of the liability itself
as created, and not of the remedy alone. It is a condition attached to the right to
sue at all.” The Harrisburg, 119 U.S. 199, 214 (1886).
Id. at 501, 185 P. at 555. Due to the operation of Idaho Code section 45-510 as limitation on
liability, this Court held that a mechanic’s lien “is lost as against the interest of any person not
made a party to an action to enforce it within the six month period.” Willes v. Palmer, 78 Idaho
104, 108, 298 P.2d 972, 974 (1956). See also W. Loan & Bldg. Co., 32 Idaho at 500, 185 P. at
555 (“[T]he section should be construed as though it provided that the lien should not continue,
unless proceedings were commenced in the proper court ‘against the person or persons against
whose interest the lien is asserted . . . .’” (quoting Utah Implement-Vehicle Co. v. Bowman, 209
F. 942, 946 (D. Idaho 1913))); see Platts v. Pac. First Fed. Sav. & Loan Ass’n of Tacoma, 62
Idaho 340, 347–48, 111 P.2d 1093, 1095 (1941) (same); Boise Payette Lumber Co. v. Weaver, 40
Idaho 516, 519, 234 P. 150, 151 (1925) (same). The issue in this case is whether the interest held
by a trustee is such that the trustee is a necessary party to an action to foreclose a mechanic’s
lien. ParkWest II resolves this issue.
B. ParkWest II held that the trustee is a necessary party to an action to foreclose a
mechanic’s lien and, if the trustee is not made a party within the six-month
limitation in Idaho Code section 45-510, the mechanic’s lien is lost as to the trustee’s
interest: legal title to the property.
ParkWest II presented the following issue on appeal: “whether a lienor seeking to enforce
a mechanic’s lien against property encumbered by a deed of trust must name the trustee of the
deed of trust within the period of time required by statute to give effect to the mechanic’s lien
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against subsequent holders of legal title.” 154 Idaho at 683, 302 P.3d at 23. This Court held that
“the lienor must.” Id.
To reach this decision, this Court examined two legal concepts: the deed of trust and this
Court’s interpretation of Idaho Code section 45-510. This Court first examined a deed of trust.
This Court explained:
Idaho is a title theory state, whereby a deed of trust is a title-passing
procedure. This Court extensively discussed this procedure in Long v. Williams,
105 Idaho 585, 587, 671 P.2d 1048, 1050 (1983). We noted that a deed of trust is
effectively a mortgage with a power of sale, but as security for that mortgage,
legal title passes to the trustee. Id. at 587–88, 671 P.2d at 1050–51. When a deed
of trust is executed and delivered, the legal title of the property passes to the
trustee. I.C. § 45-1502(4); Defendant A. v. Idaho State Bar, 132 Idaho 662, 665,
978 P.2d 222, 225 (1999).
ParkWest II, 154 Idaho at 684, 302 P.3d at 24.
After this discussion of a deed of trust, this Court turned to the law in Idaho regarding
enforcement of a mechanic’s lien. This Court explained:
Idaho Code § 45-510 provides a court with jurisdiction to enforce a lien when a
lien is filed and an action commenced within six months. Palmer v. Bradford, 86
Idaho 395, 401, 388 P.2d 96, 99 (1963). However, even if an action is brought to
enforce a lien within a six month period, it is lost against the interests of persons
not named. Willes, 78 Idaho at 108, 298 P.2d at 975. Thus, in a foreclosure action,
the action (1) must be timely brought under statute; and (2) must timely name the
proper interested parties.
ParkWest II, 154 Idaho at 684, 302 P.3d at 24. This Court then reviewed two cases, Palmer, 86
Idaho 395, 388 P.2d 96, and Willes, 78 Idaho 104, 298 P.2d 972, in which the Court held that the
failure to comply with Idaho Code section 45-510 resulted in the lien being “lost.” ParkWest II,
154 Idaho at 684–85, 302 P.3d at 24–25. In Palmer, the Court held that the claimant’s
materialman’s lien normally would be entitled to priority over a subsequently executed
mortgage, but the claimant’s failure to timely file proceedings to enforce his lien rendered his
lien “unenforceable and . . . not entitled to priority.” 86 Idaho at 400–01, 388 P.2d at 99–100.
This Court summarized the holding from Palmer as: “a party must timely seek to enforce their
lien, or it is lost.” ParkWest II, 154 Idaho at 684, 302 P.3d at 24. In Willes, the Court held that
the claimant’s failure to timely join the wife in a foreclosure action against property jointly held
by the husband and wife caused his lien against the wife’s and husband’s interests in the property
to be “wholly lost.” 78 Idaho at 108–09, 298 P.2d at 974–75. The Court therefore denied the
claimant the right to foreclose his lien against the property. Id. This Court summarized the
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holding from Willes as: “a party must timely name proper parties in a foreclosure action, or the
lien is lost against the unnamed parties.” ParkWest II, 154 Idaho at 684, 302 P.3d at 24.
Finally, the Court applied Idaho Code section 45-510 and the prior case law to the issue
in ParkWest II: an action to foreclose a mechanic’s lien encumbered by a deed of trust in which
the claimant failed to join the trustee within the statutory six-month period. The Court held:
In light of this authority, because a mechanic’s lien is lost as to any
interest in property not named in a foreclosure action, we hold that a subsequent
holder of legal title to property encumbered by a deed of trust and a mechanic’s
lien, takes the property free and clear of the mechanic’s lien, where the lienor fails
to name the trustee of the deed of trust in an action to enforce the mechanic’s lien
within the period of time required by statute.
Id. at 685, 302 P.3d at 25. “In other words,” the Court held, “it is necessary to name the trustee
who holds legal title to the property” when a lien claimant seeks to foreclose a lien on property
encumbered by a deed of trust. Id. The Court then recognized that the claimant in ParkWest II
failed to name the trustee who “held legal title to the property” in its foreclosure action against
property encumbered by a deed of trust. Id. Due to this error, the claimant “lost” his lien against
the subsequent purchaser, who was conveyed the property through a trustee’s deed following the
foreclosure of the deed of trust. Id. Therefore, the Court concluded that the subsequent purchaser
“took the property free and clear” of the claimant’s mechanic’s lien. Id.
C. We reaffirm our holding in ParkWest II.
ACI requests that the Court modify or overrule ParkWest II. ACI asserts that ParkWest II
is out-of-touch with the practical reality of the use of deeds of trust and creates confusion,
uncertainty, and increased expense in the real estate industry. ACI makes two primary arguments
in support of its position. First, ACI argues that for the past thirty years the Court has incorrectly
equated a deed of trust with a mortgage with a power of sale. Second, ACI argues that the legal
title conveyed to the trustee is not a conveyance of real property to the trustee as a true owner.
Rather, ACI submits that the trustee’s role is limited and the minimal legal title represents only
the right to sell in the event of foreclosure. Along these same lines, ACI asserts that a broad
understanding of the trustee’s legal title renders the trustee an indispensable party to all real
property litigation and will open the floodgates to litigation concerning breach of the trustee’s
duties. Further, ACI submits that this flux of litigation will increase the cost of deeds of trust and
decrease the number of individuals and entities willing to act as trustees.
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The Idaho Land Title Association (ILTA) filed a brief in support of ACI’s position and,
among other arguments, raises similar policy concerns. Specifically, ILTA argues that ParkWest
II’s holding creates uncertainty, chills the climate for those considering trustee work, and
increases the expense and risk of such work. However, in that regard,
When there is controlling precedent on questions of Idaho law the rule of
stare decisis dictates that we follow it, unless it is manifestly wrong, unless it has
proven over time to be unjust or unwise, or unless overruling it is necessary to
vindicate plain, obvious principles of law and remedy continued injustice.
W. Home Transp., Inc. v. Idaho Dep’t of Labor, 155 Idaho 950, 953, 318 P.3d 940, 943 (2014)
(quoting Greenough v. Farm Bureau Mut. Ins. Co. of Idaho, 142 Idaho 589, 592, 130 P.3d 1127,
1130 (2006)) (internal quotation marks omitted).
While the practical concerns put forth by ACI and ITLA may be somewhat valid, we hold
that ParkWest II is not manifestly wrong, unjust or unwise, or contrary to plain, obvious
principles of law. Rather, the holding from ParkWest II is in line with the general rules
recognized in treatises and has full support from relevant precedent. See 53 AM. JUR. 2d
Mechanics’ Liens §§ 367, 369, 374; 56 C.J.S. Mechanics’ Liens § 412. Our review of the case
law shows that, to determine the necessary parties to an action to foreclose a mechanic’s lien, the
focus is not on whether the state follows title or lien theory or whether the deed of trust conveys
a “true ownership” interest or a minimal interest of a power of sale. Rather, the focus is on the
interpretation of Idaho Code section 45-510, or its equivalent, and the most efficient way to
resolve competing interests in property subject to a mechanic’s lien. With this focus in mind,
Idaho Code section 45-510, or its equivalent, has been interpreted by this Court, the federal
district court for Idaho, the Ninth Circuit Court of Appeals, and the California state courts to
place certain, specific limitations on lien enforcement and require compliance to maintain the
lien against all interested parties, including trustees. See W. Loan & Bldg. Co., 32 Idaho at 500–
01, 185 P. at 555; see also Cont’l & Commercial Trust & Sav. Bank, 222 F. at 785–89; D.W.
Standrod & Co. v. Utah Implement-Vehicle, Co., 223 F. 517, 518–19 (9th Cir. 1915); Utah
Implement-Vehicle Co., 209 F. at 944–47; Monterey S.P. P’ship v. W.L. Bangham, Inc., 261 Cal.
Rptr. 587, 590 (Cal. 1989); Whitney v. Higgins, 10 Cal. 547, 551, 1858 WL 1012, at *4 (Cal.
Oct. Term 1858); Grinnell Fire Prot. Sys. Co. v. Am. Sav. & Loan Ass’n, 228 Cal. Rptr. 292, 296
(Cal. Ct. App. 1986); Riley v. Peters, 15 Cal. Rptr. 41, 41–42 (Cal. Dist. Ct. App. 1961);
Paramount Sec. Co. v. Daze, 17 P.2d 1049, 1050–52 (Cal. Dist. Ct. App. 1933); Barr Lumber
9
Co. v. Old Ivy Homebuilders, Inc., 40 Cal. Rptr. 2d 717, 720 (Cal. App. Dep’t Super. Ct. 1995).
ParkWest II does not venture into new legal territory or unreasonably expand the Court’s
interpretation of Idaho Code section 45-510. Rather, ParkWest II is entirely consistent with
relevant case law.
Although the rule from ParkWest II may cause harsh results in some circumstances, those
concerns have been rejected in the past due to the fact that the right to a mechanic’s lien “is
wholly the creature of statute.” Utah Implement-Vehicle Co., 209 F. at 944. The Ninth Circuit
Court of Appeals recognized that the rule “results in harshness and injustice to the lien
claimants,” but declined to reconsider it. D.W. Standrod & Co., 223 F. at 519. This Court also
was unpersuaded by the apparent harshness of our statutory interpretation in a related issue of
mechanic’s lien attachment and priority:
[I]t is suggested that . . . injustice will in some way be done to the holder of the
subsequent [mechanic’s] liens. It is sufficient to say that such lienholders have no
rights other than such as the statute gives, and, if the liens as given are rendered
less valuable because of [the Court’s ruling], they cannot complain, because they
took their liens subject to such contingencies, and subject to those provisions of
said law.
Pac. States Sav., Loan & Bldg. Co. v. Dubois, 11 Idaho 319, 330, 83 P. 513, 516 (1905).
Therefore, considering that ParkWest II is consistent with the long-standing rule, any alleged
harshness or injustice is unconvincing.
ACI’s and ITLA’s arguments in support of overruling or modifying ParkWest II are
likewise unpersuasive. ParkWest II issued a narrow holding grounded in Idaho Code section 45-
510. Contrary to ACI’s and ITLA’s concerns, ParkWest II does not categorically expand the
duties of a trustee or the nature of a deed of trust. The opinion focuses on the lien enforcement
procedure provided by Idaho Code section 45-510 and the Court’s interpretation of that statute.
The discussion of deeds of trust recites only the well-established law. The opinion does not
support the proposition that a trustee is a necessary party to all real property litigation nor does it
authorize an expansion of the law on actions against a trustee for breach of the trustee’s duties.
Although cases cannot be read in a vacuum, this Court in ParkWest II plainly limited its holding
to actions to foreclose a mechanic’s lien.
Moreover, any change to the statutory procedure for mechanic’s lien enforcement is best
suited for the legislature. “The wisdom, justice, policy, or expediency of a statute are questions
for the legislature alone.” Berry v. Koehler, 84 Idaho 170, 177, 369 P.2d 1010, 1013 (1962). “If
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the statute as written is socially or otherwise unsound, the power to correct it is legislative, not
judicial.” Verska v. Saint Alphonsus Reg’l Med. Ctr., 151 Idaho 889, 893, 265 P.3d 502, 506
(2011) (quoting In re Estate of Miller, 143 Idaho 565, 567, 149 P.3d 840, 842 (2006)). “The
public policy of legislative enactments cannot be questioned by the courts and avoided simply
because the courts might not agree with the public policy so announced.” Id. at 896, 265 P.3d at
509 (quoting State v. Village of Garden City, 74 Idaho 513, 525, 265 P.2d 328, 334 (1953)).
Here, ACI’s and ITLA’s issue with the rule that a trustee is a necessary party is exclusively
attributable to Idaho Code section 45-510 and the Court’s interpretation of that statute, which
relies on precedent established almost one hundred years ago. Moreover, the legislature brought
about the transition from a lien to title theory state with the enactment of the Trust Deeds Act in
1957. Long, 105 Idaho at 587, 671 P.2d at 1050. The legislature provided that a trust deed
conveys legal title to the property to the trustee. I.C. §§ 45-1502(2)–(3), -1513. Thus, no matter
how our case law characterizes the trustee’s interest or authority, even if minimal, the trustee still
holds legal title under the statutes. Therefore, pursuant to Idaho Code section 45-510 and its
statutory interpretation, the trustee is a necessary party to an action to foreclose a mechanic’s
lien. Any change to this rule is a task for the legislature.
D. The district court properly granted summary judgment to the Monument Heights
group.
The district court correctly recognized that ParkWest II controlled the issue at hand. ACI
failed to join the holders of legal title, the trustees, in its action to foreclose its liens within the
six-month statutory period in Idaho Code section 45-510. As such, ACI’s liens were lost and
unenforceable as to the trustees’ interests—legal title of the property. Therefore, the district court
properly granted summary judgment to the Monument Heights group.
To avoid the application of ParkWest II, ACI submits three arguments. First, ACI argues
that the facts here are distinguishable from ParkWest II. ACI submits that, unlike ParkWest II, a
trustee’s sale of the property has not occurred and a subsequent purchaser is not seeking to clear
the property of ACI’s mechanic’s liens. This argument, however, ignores the holding from
ParkWest II that Idaho Code section 45-510 essentially provides a procedural bar to actions to
enforce mechanic’s liens. As discussed above, Idaho Code section 45-510 “operates as a
limitation of the liability itself as created” as well as a limitation on the remedy. W. Loan & Bldg.
Co., 32 Idaho at 501, 185 P. at 555 (quoting The Harrisburg, 119 U.S. at 214). “It is a condition
attached to the right to sue at all.” Id. (quoting The Harrisburg, 119 U.S. at 214). Here, ACI
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failed to comply with the “condition” in Idaho Code section 45-510 to name a “necessary” party
to foreclose its lien. See ParkWest II, 154 Idaho at 685, 302 P.3d at 25. Thus, whether or not a
trustee’s sale occurs in the future, ACI’s liens are lost for failing to comply with Idaho Code
section 45-510 upon enforcement.
Second, ACI argues that, construing the mechanic’s lien statutes in its favor, ACI’s
failure the name the trustees should be excusable for a lienholder who filed in good faith and
caused no prejudice. This argument is misplaced because it is based on an inapplicable statute,
Idaho Code section 45-507. This statute governs the requirements for a claim of lien. At issue
here is the statute regarding the enforcement of a claim of lien, Idaho Code section 45-510. As
ACI correctly explains, the Court has not demanded strict compliance with the requirements in
Idaho Code section 45-507 regarding a claim of lien. See, e.g., Manley v. MacFarland, 80 Idaho
312, 322–23, 327 P.2d 758, 764 (1958). But, as explored above, the case law requires timely
compliance with the procedures in Idaho Code section 45-510 to enforce a lien as those
procedures limit the liability itself. See W. Loan & Bldg. Co., 32 Idaho at 501, 185 P. at 555.
Liberal construction of the mechanic’s lien statutes in the claimant’s favor “does not permit the
court to create a lien where none exists or was intended by the legislature.” L&W Supply Corp.,
136 Idaho at 743, 40 P.3d at 101 (quoting Great Plains Equip., Inc., 132 Idaho at 760, 979 P.2d
at 633). Even a liberal construction of Idaho Code section 45-510 would not permit the omission
of a necessary party to the action to enforce the lien.
Third, ACI argues that the Court should reverse the district court’s decision because it is
inconsistent with ParkWest II and will result in shifting lien priority for ACI. This argument
centers on ACI’s assertion that there is a discrepancy between the district court’s memorandum
decision and order and its partial summary judgment. This argument mischaracterizes the district
court’s decisions and misconstrues ParkWest II. The district court clearly ruled that ParkWest II
controlled and ACI’s liens were unenforceable as to the interest possessed by the trustee through
the deed of trust: legal title. Therefore, ACI lost its liens against the property by failing to
comply with Idaho Code section 45-510. Contrary to ACI’s assertion, there is no change in
ACI’s lien priority before or after the trustee’s sale. Although ACI’s liens may have been senior
to the deed of trust prior to enforcement, ACI lost that priority upon its enforcement action by
failing to join a necessary party within the statutory time limitation. In short, ACI’s liens are now
“without any life.” Cont’l & Commercial Trust & Sav. Bank, 222 F. at 789.
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E. The Court declines to award attorney’s fees on appeal.
ACI seeks an award of attorney’s fees pursuant to Idaho Code section 12-120(3) and
Idaho Code section 45-513. We decline to award attorney’s fees to ACI. First, Idaho Code
section 12-120(3) is inapplicable. As a general statute, Idaho Code section 12-120(3) does not
apply to an award for attorney’s fees in mechanic’s lien foreclosure proceedings. Intermountain
Real Props., LLC v. Draw, LLC, 155 Idaho 313, 320, 311 P.3d 734, 741 (2013). Second, the
applicable statute, Idaho Code section 45-513, also “does not provide for the award of attorney
fees on appeal, because the legislature deleted that provision from the statute prior to adopting
it.” Id. (quoting ParkWest II, 154 Idaho at 686, 302 P.3d at 26).
The Monument Heights group requests an award of attorney’s fees pursuant to Idaho
Appellate Rules (I.A.R.) 11.2 and 41. The Court construes I.A.R. 11.2 in the same manner as
Idaho Rule of Civil Procedure (I.R.C.P.) 11(a)(1). Flying A Ranch, Inc. v. Bd. of Cnty. Comm’rs
for Fremont Cnty., 156 Idaho 449, 454, 328 P.3d 429, 434 (2014). The attorney’s signature on a
document constitutes two substantive certifications:
(a) “that to the best of the signer’s knowledge, information, and belief after
reasonable inquiry it is well grounded in fact and is warranted by existing law or a
good faith argument for the extension, modification, or reversal of existing law,”
and (b) “that it [the document] is not interposed for any improper purpose.”
I.R.C.P. 11(a)(1).
Id. at 453, 328 P.3d at 433 (alterations in original). To comply with I.A.R. 11.2, both
certifications must be accurate. Id. A document is signed in violation of the rule if either
certification is inaccurate. Id. In this case, ACI’s brief accurately meets both certifications. ACI’s
brief is not interposed for an improper purpose and provides a good faith argument regarding
ParkWest II. Therefore, the Monuments Heights group is not awarded attorney’s fees on appeal.
V. CONCLUSION
The judgment of the district court is affirmed. Costs on appeal to respondents.
Chief Justice BURDICK, Justices EISMANN and HORTON, CONCUR.
J. JONES, Justice, specially concurring.
I concur in the Court’s opinion based on the fact that “Idaho is a title theory state,
whereby a deed of trust is a title-passing procedure.” ParkWest Homes, LLC v. Barnson, 154
Idaho 678, 684, 302 P.3d 18, 24 (2013). This status is dictated by Idaho Code section 45-1502.
The Legislature clearly provided that a trust deed conveys “legal title to real property” to the
trustee. I.C. § 45-1502(3) and (4). The trustee retains legal title until the obligation secured by
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the deed of trust has been performed. I.C. § 45-1514. ACI and ITLA made excellent arguments
for overruling our ParkWest holding that requires a trustee to be named as a party in a lien
foreclosure proceeding. However, this Court is not a legislature and those excellent arguments
must be addressed to the Legislature rather than to this Court. It appears that ACI acted
reasonably here. It could not necessarily have anticipated our holding in ParkWest, which came
after the six-month limitation period provided for in Idaho Code section 45-510 had already
expired. ACI did due diligence by obtaining a litigation guaranty prior to commencing its
foreclosure action and naming as parties those who were listed in the litigation guaranty. The
result here is harsh from ACI’s standpoint but it may have some recourse through its litigation
guaranty. On the broader question of whether trustees of trust deeds against real property
involved in mechanic’s lien foreclosure actions must continue to be named as parties, the
Legislature is the appropriate forum to seek an answer.
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