SWMO, LLC v. Eagle Rigid Spans Inc.

Filed 7/31/19 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2019 ND 207
SWMO LLC, a North Dakota
Limited Liability Company, Plaintiff and Appellant
v.
Eagle Rigid Spans Inc., the General Contractor;
Mon-Dak Plumbing and Heating, Inc.;
Ronald J. Koch d/b/a RK Electric, Defendants and Appellees
Creative Image Concrete, Inc.; and all other
persons unknown, claiming any estate or interest
in, or lien or encumbrance upon, the real estate
described in the complaint, Defendants
No. 20180407
Appeal from the District Court of Williams County, Northwest Judicial
District, the Honorable Paul W. Jacobson, Judge.
AFFIRMED IN PART, REVERSED IN PART AND REMANDED.
Opinion of the Court by Crothers, Justice.
Daniel J. Frisk, West Fargo, ND, for plaintiff and appellant.
Christopher J. Nyhus, Bismarck, ND, for Eagle Rigid Spans, Inc., defendant
and appellee.
Charles L. Neff, Williston, ND, for Mon-Dak Plumbing and Heating, Inc.,
defendant and appellee.
Samuel G. Larson, Bismarck, ND, for Ronald J. Koch d/b/a RK Electric,
defendant and appellee.
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SWMO, LLC v. Eagle Rigid Spans Inc.
No. 20180407
Crothers, Justice.
[¶1] SWMO, LLC appeals district court orders granting partial summary judgment
to Mon-Dak Plumbing and Heating, Inc. and RK Electric relating to their work
performed on a building owned by SWMO. The court awarded Mon-Dak $125,600
and RK Electric $114,242 from funds deposited into court by SWMO. SWMO claims
disputed issues of fact precluded summary judgment. We affirm in part, reverse in
part and remand.
I
[¶2] SWMO contracted with Eagle Rigid Spans for the construction of a
commercial building in Williston. Eagle was the general contractor and Mon-Dak and
RK Electric were subcontractors for the project. Mon-Dak and RK Electric
contracted with Eagle to provide HVAC, plumbing, and electrical work on the
building. During construction, SWMO noticed defects in the materials and
workmanship and believed the building was not properly constructed.
[¶3] After completing their work and not receiving full payment from Eagle,
Mon-Dak recorded a $136,300 construction lien against SWMO’s property and RK
Electric recorded a $114,242.32 lien. In June 2015, SWMO sued Eagle, Mon-Dak,
and RK Electric, alleging breach of contract and negligence related to the building’s
construction. After filing suit, SWMO applied for a release of Mon-Dak’s and RK
Electric’s construction liens by undertaking as allowed under N.D.C.C. ch. 35-21.
SWMO claimed the amount of the liens were in dispute. SWMO deposited
$276,862.32 to cover the amount of the liens and interest.
[¶4] RK Electric and Mon-Dak both moved for partial summary judgment, claiming
they were entitled to their respective portions of deposited funds. They argued they
performed the work as requested with no objections from SWMO or Eagle, and the
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liens they recorded against SWMO’s property entitled them to payment. Mon-Dak
also asserted it was entitled to payment because SWMO was unjustly enriched by
Mon-Dak’s work on the building. In response, SWMO disputed the amounts claimed
by Mon-Dak and RK Electric. The district court granted partial summary judgment
to RK Electric and Mon-Dak, concluding they performed “the work on the project and
[were] entitled to be paid for that work.” The court awarded RK Electric $114,242
and Mon-Dak $125,600 from the funds deposited by SWMO.
[¶5] After a bench trial, the district court found Eagle breached the contract with
SWMO, and materially misrepresented the amounts paid to subcontractors. The court
entered a judgment against Eagle awarding SWMO $262,154.21 in damages. SWMO
appealed the partial summary judgment orders after entry of final judgment. See
Brunsoman v. Scarlett, 465 N.W.2d 162, 164 (N.D. 1991) (treating an appeal from an
interlocutory partial summary judgment order as an appeal from the final judgment).
II
[¶6] SWMO argues the district court erred in granting partial summary judgment
to Mon-Dak and RK Electric. SWMO claims summary judgment was not appropriate
because disputes existed about the amounts due on their construction liens with
Mon-Dak and RK Electric.
[¶7] This Court’s standard of review for summary judgments is well-established:
“Summary judgment is a procedural device for the prompt resolution
of a controversy on the merits without a trial if there are no genuine
issues of material fact or inferences that can reasonably be drawn from
undisputed facts, or if the only issues to be resolved are questions of
law. A party moving for summary judgment has the burden of showing
there are no genuine issues of material fact and the moving party is
entitled to judgment as a matter of law. In determining whether
summary judgment was appropriately granted, we must view the
evidence in the light most favorable to the party opposing the motion,
and that party will be given the benefit of all favorable inferences
which can reasonably be drawn from the record. On appeal, this Court
decides whether the information available to the district court precluded
the existence of a genuine issue of material fact and entitled the moving
party to judgment as a matter of law. Whether the district court
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properly granted summary judgment is a question of law which we
review de novo on the entire record.”
Baker Boyer Nat’l Bank v. JPF Enterprises, LLC, 2019 ND 76, ¶ 9, 924 N.W.2d 381
(quoting Wenco v. EOG Res., Inc., 2012 ND 219, ¶ 8, 822 N.W.2d 701).
[¶8] The party resisting summary judgment must present competent admissible
evidence that raises an issue of material fact, and if appropriate, must draw the court’s
attention to relevant documents in the record containing evidence raising an issue of
material fact. Mr. G’s Turtle Mountain Lodge v. Roland Twp., 2002 ND 140, ¶ 22,
651 N.W.2d 625. A district court may not weigh the evidence, determine credibility
or attempt to discern the truth of the matter when ruling on a summary judgment
motion. Martin v. Marquee Pacific, LLC, 2018 ND 28, ¶ 10, 906 N.W.2d 65.
Deciding an issue on summary judgment is improper if the court must draw inferences
or make findings on disputed facts. Id.
A
[¶9] Construction liens are governed by N.D.C.C. ch. 35-27. Under N.D.C.C. §
35-27-02, “[a]ny person that improves real estate, whether under contract with the
owner of such real estate or under contract with any agent, trustee, contractor, or
subcontractor of the owner, has a lien upon the improvement and upon the land on
which the improvement is situated.” The amount of the lien is for the difference
between the price paid by the owner or agent and the price or value of the
contribution. Id. “If the owner or agent has paid the full price or value of the
contribution, no lien is allowed.” Id. The holder of a construction lien may bring an
action in district court to enforce the lien. N.D.C.C. § 35-27-24.
[¶10] A property owner burdened by a construction lien may apply for release of the
lien under N.D.C.C. § 35-21-02:
“The owner of the property to be released by undertaking, or of
a substantial interest in the property, shall file the following with the
clerk of the district court for the county in which the lien is filed:
1. An application for the release of the lien by
undertaking;
2. An affidavit describing the owner’s interest in the
property and stating that the owner has a defense against
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the collection of the lien, or a part of the lien, and that
there exists a disagreement between the parties as to the
amount or validity of the lien, and that the owner desires
a discharge of the lien from the records; and
3. An undertaking, in an amount not less than the lien,
with two sureties, to the effect that the owner will pay
any amount that may be recovered by the lien claimant,
together with all costs.”
Under the statute, “[t]he undertaking is the substitute for the security provided by the
lien.” Narveson v. Schmid, 77 N.D. 814, 822, 46 N.W.2d 288, 292 (1951).
[¶11] Here, Mon-Dak and RK Electric recorded construction liens against SWMO’s
property, claiming Eagle did not pay them the full value of their services. After suing
Eagle, Mon-Dak and RK Electric, SWMO applied for a release of the liens. SWMO
alleged in its application that the lien amounts were in dispute. In lieu of an
undertaking with two sureties, SWMO deposited funds into court to cover the liens
plus interest. Upon release of the liens, Mon-Dak and RK Electric had a security
interest in the funds deposited by SWMO. See Narveson, 77 N.D. at 821, 46 N.W.2d
at 292.
[¶12] Mon-Dak and RK Electric sought to collect the amounts covered by their
released liens through summary judgment. They claimed the work provided and the
amounts claimed were undisputed. In support of the summary judgment motions,
Mon-Dak and RK Electric submitted evidence showing what Eagle paid them under
the subcontracts and the balance due. The district court held Mon-Dak and RK
Electric were entitled to payment from the funds deposited into court in the amounts
due from Eagle.
[¶13] SWMO does not dispute that Mon-Dak and RK Electric provided HVAC,
plumbing and electrical work on the building. SWMO argues that because Mon-Dak
and RK Electric had subcontracts with Eagle, they should have brought breach of
contract actions against Eagle to collect the unpaid balances on the contracts. SWMO
also claims they could not recover from SWMO under the equitable doctrine of unjust
enrichment because an action against Eagle was an adequate remedy at law.
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[¶14] In Erickson v. Russ, 21 N.D. 208, 210, 129 N.W. 1025, 1026 (1911), this Court
held a mechanic’s lien claimant is under no “obligation to exhaust his remedy at law
before resorting to the security of his lien.” In Erickson, 21 N.D. at 210, 129 N.W.
at 1026, this Court construed section 6245, R. C. 1905, a predecessor to N.D.C.C. §
35-27-24, which provided a statutory remedy to enforce a construction lien. Thus,
while Mon-Dak and RK Electric could have pursued a breach of contract action
against Eagle, they also had the option to enforce their construction liens against
SWMO under N.D.C.C. § 35-27-24. When SWMO deposited funds into court to
release the liens, the funds became a substitute for the security of the liens. Mon-Dak
and RK Electric were not required to sue Eagle before enforcing their claim against
SWMO. The district court did not err in ruling Mon-Dak and RK Electric could
recover from the funds deposited by SWMO.
B
[¶15] SWMO argues the district court erred in awarding Mon-Dak $125,600 and RK
Electric $114,242 from the deposited funds. SWMO claims the amounts due to Mon-
Dak and RK Electric were in dispute.
[¶16] Mon-Dak supported its motion for summary judgment with an invoice
describing its work on the building. The invoice showed Eagle paid Mon-Dak
$85,000 and an unpaid balance of $125,600. Similarly, RK submitted an invoice
showing an unpaid balance of $114,242 after receiving $102,500 from Eagle. Eagle
responded to Mon-Dak’s and RK Electric’s motions and did not dispute the amounts
it owed Mon-Dak and RK Electric under the subcontracts.
[¶17] SWMO disputed the amounts owed to Mon-Dak and RK Electric. SWMO
submitted a “Contractors Application for Payment” and “Project Activity Breakdown
Sheet” dated August 12, 2014, prepared and certified by Eagle. The documents show
$219,319 of work was done to complete the building and request a final payment from
SWMO in that amount. The activity breakdown sheet shows that of the $219,319 of
work done, a portion of the work was HVAC, plumbing and electrical. The
application for payment, signed by Eagle’s president, indicates SWMO paid
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$1,216,568 toward the project and states “The undersigned Contractor certifies that
to the best of his knowledge, the Work covered by this Application for Payment has
been completed and all amounts have been paid, by the Contractor, for work
performed for previous pay requests and that current payment shown, is now due.”
[¶18] The district court’s orders granting Mon-Dak and RK Electric summary
judgment do not discuss the documents submitted by the parties relating to the
motions. The orders simply state “it appears there is no just reason to deny Mon-
Dak’s [and RK Electric’s] motion at this time, at least insofar as the principal amount
due.”
[¶19] The documents submitted by SWMO demonstrate an inconsistency in the
amounts Eagle paid to Mon-Dak and RK Electric. Mon-Dak’s and RK Electric’s
invoices show Eagle owed them a combined amount of $239,842, an amount Eagle
did not dispute. However, Eagle’s application for payment and activity breakdown
sheets submitted by SWMO indicate that Eagle paid the subcontractors for all of their
earlier work, and that, of the $219,319 of work done to complete the building, only
a portion was for HVAC, plumbing and electric. Mon-Dak and RK Electric claim the
documents submitted by SWMO are not relevant and do not create a factual dispute
because they do not show Mon-Dak’s or RK Electric’s invoices were inaccurate.
[¶20] The district court provided no analysis of the documents in its summary
judgment orders. By not addressing the evidence submitted by SWMO, the district
court in effect found Mon-Dak’s and RK Electric’s evidence was more persuasive.
See Martin, 2018 ND 28, ¶ 10, 906 N.W.2d 65 (explaining a court may not weigh the
evidence or make findings on disputed facts when deciding a summary judgment
motion). In viewing the evidence in a light most favorable to SWMO at the time of
the motions, SWMO raised a genuine issue of material fact, and Mon-Dak and RK
Electric were not entitled to judgment as a matter of law. Although the court later
found at trial that Eagle materially misrepresented the true amounts paid to its
subcontractors, the court did not make findings on whether Eagle misrepresented the
payments made to Mon-Dak and RK Electric.
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[¶21] The district court erred in granting Mon-Dak and RK Electric summary
judgment. We reverse and remand for further findings relating to the amounts Mon-
Dak and RK Electric were entitled to recover from the funds SWMO deposited into
court.
III
[¶22] The parties’ remaining arguments are without merit or not necessary to our
decision. The orders are affirmed in part, reversed in part, and remanded for further
proceedings.
[¶23] Daniel J. Crothers
Jon J. Jensen
Lisa Fair McEvers
Gail Hagerty, D.J.
Gerald W. VandeWalle, C.J.
[¶24] The Honorable Gail Hagerty, D.J., sitting in place of Tufte, J., disqualified.
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