Lane Myers Construction, LLC v. National City Bank

This opinion is subject to revision before final
publication in the Pacific Reporter
2014 UT 58IN THE
SUPREME COURT OF THE STATE OF UTAH
LANE MYERS CONSTRUCTION, LLC,
Respondent,
U.
NATIONAL CITY BANK, NATIONAL CITY BANK OF INDIANA,
Petitioners.
No. 20121004
Filed December 19, 2014
On Certiorari to the Utah Court of Appeals
Third District, Silver Summit Dep’t
The Honorable Bruce C. Lubeck
No. 070500707
Attorneys:
Rick L. Sorensen, Salt Lake City, for respondent
Lincoln Harris, Zachary E. Peterson, Paul P. Burghardt,
Salt Lake City, for petitioners
JUSTICE LEE authored the opinion of the Court, in which JUSTICE
PARRISH joined and in which CHIEF JUSTICE DURRANT and JUSTICE
DURHAM each joined in part.
CHIEF JUSTICE DURRANT filed a concurring opinion, in which
ASSOCIATE CHIEF JUSTICE NEHRING joined in part.
JUSTICE DURHAM filed a concurring opinion, in Which ASSOCIATE
CHIEF JUSTICE NEHRING joined in part.
ASSOCIATE CHIEF JUSTICE NEHRING filed a concurring opinion.
LANE MYERS CONSTR. U. NAT’L CITY BANK
Opinion of the Court
JUSTICE LEE, opinion of the Court:
1H Dick and Kim Kyker hired Lane Myers Construction to
build two separate homes. The Kykers secured a construction
loan through National City Bank, and the bank periodically paid
Lane Myers on draw request forms that included language
stating that Lane Myers had no lien on the property. The
question presented is whether the draw request forms effected an
enforceable lien waiver under the Utah Mechanics’ Lien Act.1
112 The district court entered summary judgment for the
Kykers and National City, holding that the draw requests were in
substantial compliance with the Act and thus effected a waiver
foreclosing Lane Myers’s lien claim. The court of appeals
reversed. It held that the forms were not in substantial
compliance with the Act because they failed to incorporate the
essential elements of the "forms" included in the Act. UTAH CODE
§ 38-1-39(4)(b) (2010).
113 We reverse and remand. In the circumstances of this case,
we interpret the Act to require only "a waiver and release that is
signed by the lien claimant or the lien claimant’s authorized
agent.” I (1. § 38-1-39(2)(a)(i). And we interpret that requirement to
incorporate the established, term-of-art understanding of the
elements of a "waiver." Thus, we view the forms set forth in the
statute as only a safe harbor, and not a requirement. Under the
standard as clarified below, however, we decline to affirm entry
of summary judgment for the Kykers and National City. Instead,
finding genuine issues of material fact on the current record, we
remand to the district court for further proceedings.
I
1% In 2006, Lane Myers agreed to build two homes for Kim
and Dick Kyker, one in Park City and the other in Oakley.
Although Lane Myers also asserted a lien against the Oakley
1 UTAH CODE §§ 38-1-1 to -40 (2010). The 2010 version of the
Act is identical to the version that was in place at the time of the
events in question here, Lane Myers Constr., LLC v. Countrywide
Home Loans, Inc., 2012 UT App 269, 1l 1 n.2, 287 P.3d 479, and the
court of appeals elected to cite to that version in its opinion. To
remain consistent with the court of appeals and for ease of
reference we also cite to the 2010 version of the Act in this
opinion.
Cite as: 2014 UT 58Opinion of the Court
in circular terms to incorporate "any other act of lewdness,” to
embrace a "’widely shared meaning” of the term).3
1131 We accordingly interpret the statute to incorporate the
elements of a "waiver" as defined in our settled caselaw. Under
that caselaw "[a] waiver is the intentional relinquishment of a
known right.” Soter’s, Inc. v. Deseret Fed. Sav. 8 Loan Ass’n, 857
P.2d 935, 942 (Utah 1993). Thus, ”[t]o constitute waiver, there
must be an existing right, benefit or advantage, a knowledge of
its existence, and an intention to relinquish it.” Id.
1132 This is not to say, as Chief Justice Durrant’s concurrence
suggests, that the statutory forms are "irrelevant," infra 11 42, or
should be "ignore[d]” by the courts in applying the statutory
standard. Infra 11 45. The value of the forms as a safe harbor—to
be used by contracting parties that wish to be certain of their
position without engaging in litigation—is considerable. And,
While the focus of the analysis should be on the term-of-art
understanding of waiver, the forms may still be helpful—in
providing illustrations and contextual background for the
assessment of whether the parties intended to execute such a
waiver.4
3 Although the statute speaks in terms of "waiver and release,”
UTAH CODE § 38-1-39(2)(a), the term release appears to be a lesser-
included concept that adds nothing to the notion of waiver. Thus, a
release is a I’relinquishment or concession of a right, title, or
Claim,” BLACK’s LAW DICITONARY 1403 (9th ed. 2009), whereas
waiver requires that the relinquishment be of a known right. Soter’s
Inc. v. Deseret Fed. Sun. 6’ Loan Ass’n, 857 P.2d 935, 942 (Utah 1993).
Because any release would also qualify as a waiver, we define the
statutory requirement in terms of the more stringent standard of
waiver— of voluntary relinquishment of a known right.
4Our recent holding in America West Bank Members, LC. 0.
State, 2014 UT 49, P.3d __, is not to the contrary. See infia 11 39 n2.
In that case, we turned to the forms in the Utah Rules of Civil
Procedure to illustrate the detail necessary to assert the "short and
plain statement" required to state a claim under rule 8(a),
concluding that the complaint at hand was materially deficient.
Am. West Bank, 2014 UT 49, 11 17. But we did not use the forms to
glean hard-and-fast requirements that all complaints must meet to
be viable. Instead we invoked the forms as illustrative of a floor
for the pleading standard set forth in the rules. See id. And in any
event, the terms of rule 8(a) are substantially different from those
11
LANE MYERS CONSTR. v. NAT’L Cm BANK
Opinion of the Court
1133 We reverse and remand under this standard, as there are
genuine issues of material fact precluding summary judgment on
this record. The terms of the release in the Lane Myers draw
requests are insufficient by themselves to establish an enforceable
waiver.5 To be entitled to judgment as a matter of law, the Kykers
and National City would also have to establish knowledge of a
right to a lien and intentional relinquishment of such right.
1134 The element of intent is the "central focus in most waiver
cases,” as it is the element most often in dispute. Soter’s, 857 P.2d
at 940. And the intent question is "intensely fact dependent,”
turning on "whether the totality of the circumstances warrants
the inference of relinquishment.” Id. at 940, 942 (internal
quotation marks omitted). Because the draw requests in question
do not take advantage of the safe harbor provided by the
statutory forms or bear any other clear indication of an intent to
waive, we cannot conclusively determine as a matter of law that
a waiver was intended. And we reverse and remand on that
basis.
1135 There are genuine issues of fact as to Lane Myers’s intent
in executing the National City draw requests. As Lane Myers has
indicated, the text of the draw requests failed to make direct
reference to any existing lien right, and Lane Myers plausibly
asserted that it did not intend to relinquish any such right. For
example, Lane Myers provided parole evidence to "support the
conclusion that the draw requests were nothing more than
progress payments," alleged that the draw requests did not
constitute a "final expression” of the bargain, and asserted that
the draw requests were signed as a result of a mutual or
unilateral mistake. These genuine disputes go to whether Lane
of the Mechanic’s Lien Act. The latter employs an established term
of art from the common law; the former states a vague standard of
pleading that calls for a resort to forms to illustrate its content.
5 Summary judgment is appropriate where it is clear from the
document itself that it is a waiver or release. See Zions First Nat’l
Bank v. Saxton, 493 P.2d 602, 603 (Utah 1972) (where the document
on its face stated that "the payee upon endorsement hereby
waives and releases all lien or right of lien,” no genuine issues of
fact precluded summary judgment); Holbrook v. Webster’s Inc., 320
P.2d 661, 663 (Utah 1958) (summary judgment appropriate where
a document was ”unambiguous[ly]” styled as a "Lien Release”).
That is not the case here.
12
Cite as: 2014 UT 58Opinion of the Court
Myers intended to waive and release its lien rights when signing
the draw requests. In light of genuine disputes on these issues,
we reverse the entry of summary judgment and remand for
further proceedings.
1136 Unlike Justice Durham, we see nothing in the parties’
arguments in the district court that forecloses a remand for
further proceedings on the question of the parties’ intent in
executing the documents at issue. See infra 11 50 (noting that
National City’s and the Kykers’ motions were based solely on the
terms of the draw requests and "disclaimed any reliance on
extrinsic evidence,” and therefore concluding that "the legal
question presented on appeal is whether the language of the
draw request, in fact, waives Lane Myers’[s] lien rights”). It is
true that both National City and the Kykers moved for summary
judgment, and that both, in so moving, asserted a lack of
ambiguity in the draw requests and a right to judgment in their
favor as a matter of law. But we consider the propriety of
summary judgment de novo, without any deference to the lower
court. The question before us is accordingly whether there are
any genuine issues as to material fact and Whether the movant
was entitled to judgment as a matter of law. See UTAH R. CIV. P.
56. A party’s mere contention that there are no issues of material
fact—a contention made every time a party moves for summary
judgment—is beside the point. See Plateau Mining Co. 7). Utah Div.
of State Lands 5’ Forestry, 802 P.2d 720, 725-26 (Utah 1990)
(explaining that the "filing of cross-motions for summary
judgment does not necessarily mean that material issues of fact
do not exist” and holding that court may deny both motions,
conclude that both sides are wrong and that a contract is
ambiguous on its face and requires further proceedings)
1137 Thus, in considering this question, we must make our
own independent assessment of the parties’ intentions as set
forth on the face of the relevant documents. If we find the
governing documents unambiguous we may determine that
summary judgment should have been entered. But if we find
ambiguity we may also determine that summary judgment was
not called for, and that further proceedings are necessary. See id.
at 725 (” [A] motion for summary judgment may not be granted if
a legal conclusion is reached that an ambiguity exists in the
contract and there is a factual issue as to What the parties
intended.” (alteration in original) (internal quotation marks
omitted)). That is the basis of our decision here. Because we find
ambiguity as to the parties’ intentions on the face of the draw
13
LANE MYERS CONSTR. v. NAT’ L Cm BANK
CJ. DURRANT, concurring
requests, we hold that there are genuine issues of material fact
foreclosing summary judgment. And we accordingly remand for
further proceedings.
III
1138 We reverse and remand on grounds set forth above. In so
doing, we also reject Lane Myers’s request for attorney fees
under Utah Code section 38-1-38, as Lane Myers has not (or at
least not yet) prevailed in an action to enforce a lien. If and when
either side prevails below, the question of an award of attorney
fees may then be ripe for consideration, but it is not properly
presented here.
CHIEF JUSTICE DURRANT, concurring in the result:
{[39 We are asked to determine what elements must be
included in a document in order for it to qualify as a valid
"waiver and release” under the Mechanicis; Lien Act. In
answering this question, the majority looks outside the Act to the
common-law "term-of-art understanding of the elements of a
’waiver."’1 I would instead look to the Act itself, specifically to
those elements the legislature has identified through examples
set forth in the Act as meeting the requirements of a valid waiver
and release.2
1 Supra 1] 3.
2 This is the approach we recently took in America West Bank
Members, LC. 0. State when, "for guidance," we turned to the
model forms contained in the Utah Rules of Civil Procedure to
interpret the “short and plain statement” requirement for breach
of contract claims. 2014 UT 49, 1] 17 (internal quotation marks
omitted). And we took that approach despite the introductory
statement in the model forms, which states that "[t]he following
forms are intended for illustration only.” UTAH R. CIV. P.,
Appendix of Forms, Introductory Statement. Here the case for
using the forms as guidance is much stronger because there is no
such qualifier and the forms are in the text of the statute itself.
While it is true that our role in interpreting our own rules is
somewhat different than our role in interpreting a statute, I think
that in either case there is wisdom in using model forms ”[a]s
exemplars” to guide the court in understanding the scope of an
otherwise unclear legal standard. See Am. West Bank Members,
LC, 2014 UT 49, 11 17.
14
Cite as: 2014 UT 58CJ. DURRANT, concurring
{[40 The majority rests its adoption of the term-of-art meaning
of “waiver” on the ground that the legislature’s definition of the
term is circular: "In circularly conditioning the effectiveness of a
’Waiver’ on the execution of a ’waiver,’ the legislature appears to
have embraced a ’term of art with a widely shared meaning."’3
But the definition is circular only if it is assumed that the
exclusive guidance provided by the legislature as to its intended
meaning of "waiver and release” is found in subsection (2) of
section 38-1-39. That is not the case, however. In fact, in
subsection (4)(a) the legislature has set forth in some detail those
elements that meet the requirements of section 38-1-39: "A
waiver and release given by a lien claimant meets the
requirements of this section if it is in substantially the form
provided in this Subsection (4) for the circumstance provided in
this Subsection (4).” The circumstances provided are a "waiver
and release upon progress payment,” a "waiver and release upon
final payment,” and a "restrictive endorsement placed on a
check.”
fl41 The majority concludes that the example set forth in
subsection (4)(d) (restrictive endorsement on a check) is
mandatory, but designates the examples set forth in subsections
(4)(b) (conditional waiver and release upon progress payments)
and 4(c) as mere safe harbors. I agree that the language in
subsection (2) supports this distinction. But the fact that the 4(b)
and (c) examples qualify as safe harbors should not make them
altogether irrelevant to our analysis of what elements the
legislature intended a waiver and release should include in order
to qualify as valid in the unique context of the Mechanicis; Lien
Act. After all, the legislature did explicitly designate each of the
three examples (or documents in substantially the same form) as
a waiver and release that "meets the requirements of this
section/’4
1142 I would not, as does the majority, effectively deem the
4(b) and (c) examples irrelevant and simply default to the garden
variety definition of waiver. At minimum, it seems to me, these
examples suggest that the legislature intended more in the
unique mechanic's lien context. This is consistent with the
3 Supra 1[ 30.
4 UTAH CODE § 38-1-39(4)(a) (2010).
15
LANE MYERS CONSTR. v. NAT' L CITY BANK
CJ. DURRANT, concurring
historical fact that a mechanic’s lien could not be waived at all
until the Act was amended in 2007.5
1I43 In justifying its decision to look outside the statute for the
definition of l’waiver and release," the majority relies on our
recent decision in Hughes General Contractors, Incé 0. Utah Labor
Commission.6 In that case, we were called upon to interpret the
term "employer," which was essentially defined as "one who
engages employees.”7 And because the term "employee" was in
turn defined as "any person suffered or permitted to work by an
employer, "8 we concluded that the statute was circular and looked
to the "legal term-of-art understanding” of the term "employer/’9
But that approach was appropriate only because the statute
provided no other indication of What the legislature meant by the
term llemployer.”
1]44 This point is well illustrated by the United States
Supreme Court opinion, Nationwide Mutual Insurance Co. v.
Darden,1° which we relied upon in Hughes. At issue in Darden was
a circumstance almost identical to the one presented in Hughes.
The Employee Retirement Income Security Act defined
"employee" in a circular manner, and the Court was asked to
interpret the term. As we did in Hughes, the Darden Court
resorted to a definition that relied upon the common law.11 But it
did so only because "[the respondent] [did] not cite, and [the
Court] [did] not find, any provision either giving specific
guidance to the term’s meaning or suggesting that construing it
to incorporate traditional agency law principles would thwart the
congressional design.”12
5 Before the amendment, a contractor’s lien rights could not in
any way be l’varied by agreement.” Id. § 38-1-29 (2006).
6 2014 UT 3, 1] 1] 12—15, 322 P.3d 712.
7 Id. 1| 13.
3 Id. (internal quotation marks omitted).
9Id. 1] 15.
10 503 US. 318, 323 (1992).
11 Idaho
12 Id.
16
Cite as: 2014 UT 58JUSTICE DURHAM, concurring
1145 Here, we need look no further than subsection (4) to find
specific guidance on the meaning of the terms "waiver and
release.” In my view, that the examples in subsections (4)(b) and
(c) qualify as safe harbors does not give us license to wholly
ignore them in assessing the legislature’s intended meaning of
the terms "waiver and release” as used in the Act. We should
look to the full text of a statute for guidance as to the legislature’s
intended meaning before defaulting to a common-law term of
art.
1146 Accordingly, I believe an analysis of the legislature's
intended definition of "waiver and release” in the unique context
of the Mechanics’ Lien Act should be guided by the detailed
examples the Legislature has provided of documents that meet
the requirements of the waiver section of the Act. I would
therefore look to all of the section and, in a way similar to what
the court of appeals did below, tailor a definition of "waiver and
release” that gives deference to these examples.
fj47 Finally, whether we were to apply the common-law
meaning of waiver as proposed by the majority or the meaning of
waiver and release as I believe it to be augmented by the
legislative examples, it is clear that there are factual issues that
preclude summary judgment. Accordingly, I concur in the result.
JUSTICE DURHAM, concurring in the result:
1148 I agree With the majority’s interpretation of Utah Code
section 38-1-39 (2010). I also agree that the district court erred
when it granted summary judgment in favor of the Kykers and
National City (collectively, National City). But I disagree with the
majority’s holding that a dispute of material fact precludes
summary judgment. Instead, I would hold that the summary
judgment motion at issue in this case squarely presented the legal
question of whether the language of the draw request constituted
a waiver of Lane Myers’s statutory right to a mechanics’ lien. In
my view, the draw request does not waive Lane Myers’s right to
file a lien, and I would reverse the district court's order granting
summary judgment on this legal ground.
I. WAIVER IS A QUESTION OF LAW IN THIS CASE
1149 Depending on the arguments made by the party asserting
the doctrine, waiver may be either a question of law or a mixed
question of law and fact. If a party asserts that a known right has
been implicitly waived through a course of conduct, waiver is a
17
LANE MYERS CONSTR. v. N AT'L CITY BANK
JUSTICE DURHAM, concurring
fact-intensive mixed question. United Park City Mines Co. v.
Stichting Mayflower Mountain Fonds, 2006 UT 35, 1M 21, 25, 140
P.3d 1200; Chen 0. Stewart, 2004 UT 82, {MI 20, 23, 100 P.3d 1177.
However, if a waiver claim is based upon a writing, and no
extrinsic evidence of the meaning of ambiguous terms is
presented, waiver is a question of law that may be resolved on
summary judgment. See Zions First Nat’l Bank v. Saxton, 493 P.2d
602, 603 (Utah 1972); Holbrook v. Webster’s Inc., 320 P.2d 661, 663
(Utah 1958); see also Kimball 7). Campbell, 699 P.2d 714, 716 (Utah
1985) (absent extrinsic evidence, the interpretation of a contract is
a question of law).
1150 Although it may be theoretically possible for a party to
assert that both a written document and a course of conduct
contributed to the waiver of a right, that is not the case here.
National City’s motion for summary judgment was based solely
upon its assertion that the language in the draw request waived
Lane Myerisg right to a lien. National City also disclaimed any
reliance on extrinsic evidence, and argued that Lane Myers’s
waiver was "clear from the terms contained within [the draw
request’s] four corners." Consistent with this argument, the
district court ruled that the draw request constituted a waiver.
Because National City understandably chose to assert a purely
legal ground for summary judgment, and because the district
court granted summary judgment based upon its interpretation
of the draw request, the legal question presented on appeal is
whether the language of the draw request, in fact, waives Lane
Myers’s lien rights.
1151 Indeed, in the context of mechanics’ liens, all waivers of
lien rights must be written. The mechanics’ lien statutes in effect
at the time Lane Myers signed the last draw request stated: "The
applicability of the provisions of this chapter, including the
waiver for g rights or privileges granted under this chapter, may
not be varied by agreement.” UTAH CODE § 38-1-29 (2007).1 In
other words, the specific waiver provision of the mechanics’ lien
statute provided the exclusive means of waiving lien rights, and
the parties could not agree to modify these requirements. This
waiver provision stated that "[n]otwithstanding Section 38-1-29,
a written consent given by a lien claimant that waives or limits
the lien claimant’s lien rights is enforceable.” UTAH CODE § 38-1-
1 The current version of this statute may be found at Utah Code
section 38-1a-105.
18
Cite as: 2014 UT 58JUSTICE DURHAM, concurring
39(2) (2007) (emphasis added).2 By statute, therefore, it was not
possible to waive the right to a mechanics’ lien through conduct
or verbal statements— only a written waiver would suffice.
1[52 Therefore, I disagree with the majority’s conclusion that
the issue of waiver may not be disposed of as a matter of law.
Supra 11 29. Although a claim of implicit waiver through a course
of conduct, as well as the use of extrinsic evidence to determine
the meaning of a written document, involve fact-intensive
inquiries that may very well lead to disputes of material fact
precluding summary judgment, these types of claims are not
relevant here. The dispositive issue in this case is whether the
language of the draw request constitutes a valid written waiver
of Lane Myers’s lien rights as required by statute. Because this is
a purely legal question, this court should resolve it.
II. THE DRAW REQUEST LANGUAGE DOES NOT WAIVE
LANE MYERS’S LIEN RIGHTS
1153 The draw request National City required Lane Myers to
sign before the final disbursement of funds contained a
declaration that “no liens or claims that may result in liens exist
against the above-described property” at issue in this appeal.
This is not a waiver of Lane Myers’s lien rights. Unlike language
we have previously held adequate to waive mechanics’ lien
rights,3 the draw request does not proclaim Lane Myers’s
statutory right to file a mechanics’ lien had been waived or
2 This waiver statute has been renumbered as Utah Code
section 38-1a-802.
3 See Zions First Nat’l Bank v. Sexton, 493 P.2d 602, 603 (Utah
1972) ("the payee upon endorsement hereby waives and releases
all lien [sic] or right of lien now existing or that may hereafter
arise for work or labor performed or materials furnished”
(internal quotation marks omitted)); Brimwood Homes, Inc. v.
Knudsen Builders Supply Co., 385 P.2d 982, 983 (Utah 1963) ("the
undersigned hereby waives, releases and discharges any lien or
right to lien the undersigned has or may hereafter acquire against
said real property” (internal quotation marks omitted)); Holbrook
v. Webster’s Inc., 320 P.2d 661, 663 (Utah 1958) (same); see also
Neiderhauser Builders 8 Dev. Corp. 7). Campbell, 824 P.2d 1193, 1194
(Utah Ct. App. 1992) ("the payee . . . waives[,] releases and
relinquishes all right of lein [sic] or claims payee now has to date
upon the premises” (second and third alterations in original)
(internal quotation marks omitted».
19
LANE MYERS CONSTR. v. NAT’L CITY BANK
A.C.J. NEHRING, concurring
relinquished. Instead, this language makes an assertion of fact:
that Lane Myers had no liens or claims that could result in liens
against the property when the draw request was signed.
Regardless of whether this declaration of fact is deemed true or
false, it does not purport to waive Lane Myers’s lien rights.
1154 Therefore, I agree with the majority’s conclusion that the
draw request is insufficient to establish an enforceable waiver.
Supra 11 33. But I would reverse summary judgment on this legal
ground as it was the only theory of waiver presented to the
district court—and, indeed, the only theory permitted in the
context of mechanics’ liens.
ASSOCIATE CHIEF JUSTICE NEHRING, concurring in the result:
1155 I concur in the result reached by all of my colleagues:
summary judgment must be reversed. However, I agree with
Chief Justice Durrant’s reasoning concerning the relevance of the
forms contained in Utah Code section 38-1-39(4). Like the Chief
Justice, I would not "effectively deem the 4(b) and (c) examples
irrelevant and simply default to the garden variety definition of
waiver.”1 Thus, I concur with the Chief Justice’s reasoning.
However, like Justice Durham, I believe that there is no need for
further development of the facts concerning the existence of a
valid waiver. I agree with Justice Durham that the grant of
summary judgment on behalf of the Kykers should be reversed
and the summary judgment motion denied on the basis that the
draw request does not establish an enforceable waiver.
1 Supra 1[ 42.
20
Cite as: 2014 UT 58Opinion of the Court
property, only the facts concerning the Park City home are
relevant to this appeal.
flS The Kykers obtained a construction loan from National
City in order to pay Lane Myers for the construction of the Park
City home. Lane Myers commenced construction that year, and
between June 14, 2006, and August 22, 2008, it submitted a total
of sixteen draw requests to National City. Although Lane Myers
submitted these draw requests directly to National City, it alleges
that it did not know the total amount of the construction loan.
But despite this fact, when it signed each of these draw requests
Lane Myers certified that the "available proceeds of the loan are
sufficient to finally and fully complete and pay for completion of
improvements” and that "no suppliers, subcontractors, laborers,
or other persons are claiming or are entitled to claim a lien
against the property securing the loan.”
116 Although Lane Myers submitted sixteen draw requests,
National City fully funded only five of them. Lane Myers
repeatedly asked National City why its requests were being only
partially funded, and each time National City responded by
stating that there were either unauthorized cost overages in the
requests or that, based on an inspection of the property, a full
disbursement was not warranted. Lane Myers also informed the
Kykers of the shortages, and the Kykers repeatedly assured Lane
Myers that they would "take care of it.” In fact, at one point the
Kykers even sent Lane Myers funds from a different account to
cover the shortages, but then requested that those funds be
applied to the Oakley property.
117 At the time, Lane Myers submitted its fifteenth draw
request it was owed a balance of $357,560.98. When it received a
disbursement of just $21,140.60 from National City, it again
called National City to inquire about the discrepancy. This time,
National City informed Lane Myers that the only funds left in the
account were "retainage that National City was holding until a
certificate of occupancy was issued by the city.” According to
Lane Myers, this was the first time it realized that the Kykers’
construction loan would not cover all of the construction costs for
the Park City home.
118 Nevertheless, despite being owed over $300,000, Lane
Myers submitted its sixteenth and final draw request to National
City on August 22, 2008, for just $105,702.99. National City
instructed Lane Myers to use the same form for the final draw
request as it had for the prior requests, but to handwrite "Final
3
LANE MYERS CONSTR. ’0. N AT'L CITY BANK
Opinion of the Court
Draw” at the top of the form, presumably to make the following
language operative:
IF THIS IS THE FINAL DRAW 1/ WE FURTHER
CERTIFY THAT:
1. The General Contractor has to date been paid in
full for all work performed and for all labor,
materials furnished by the General Contractor
and all sub-contractors, materialmen, suppliers
and laborers and that no such sub-contractors,
suppliers, or materialmen, laborers or other
persons providing goods and services used in the
improvements to the property have unpaid
claims. . ..
2. That no liens or claims that may result in liens
exist against the above-described property other
than as set forth herein.
3. That the General Contractor has received
payments for all stages of
construction/ rehabilitation of the property other
than the final disbursement.
4. That the borrower(s) has/ have requested, from
the Lender, final disbursement of the
construction/ rehab funds in order to make final
payment to the General contractor and that upon
said disbursement by Lender the General
Contractor will be paid in full under the
Construction Contract.
19 Lane Myers alleges that it had reservations about
submitting a "final" draw request that would not cover the total
amount it was owed, but asserts that it did so because (a) the
Kykers had informed it that they would pay any remaining
balance after the final draw personally, (b) the Kykers were
working with a mortgage broker in order to secure the funds to
do so, and (c) National City explained to Lane Myers that the
handwritten words "final draw” only referred to "the ’final
draw’ of the amounts available for reimbursement from the loan
and not to a final payment of any amounts that may still be owed
by the homeowner . . . for costs in excess of the amounts available
for reimbursement from the loan.” Allegedly in reliance on these
assurances, Lane Myers signed the request on August 30, 2007,
and received $105,702.99.
Cite as: 2014 UT 58Opinion of the Court
1110 The Kykers failed to repay Lane Myers as promised,
however, which resulted in Lane Myers recording a mechanic’s
lien against the property on November 15, 2007, for $576,366.93.
Lane Myers then filed suit against the Kykers on December 12,
2007, seeking both to enforce its lien by foreclosing on the Park
City home and to recover over $890,000 in damages. Lane Myers
subsequently amended its complaint to include National City in
order to establish priority over National City’s trust deed.
111 The Kykers moved for summary judgment, arguing that
the draw requests constituted "lien waivers” and that by signing
them and accepting the funds from the construction loan, Lane
Myers had waived its right to file a mechanic’s lien. The motion
was later amended and asserted on behalf of both the Kykers and
National City. In opposition, Lane Myers did not contest that it
had signed the draw requests or that it had received funds from
the loan; instead, it argued that the draw requests were not "lien
waivers” because they did not "substantially comply” with the
portion of the Act governing waivers of the right to file a
mechanic’s lien.
1112 The district court agreed with the Kykers and National
City and granted their motion, concluding that the draw
requests "compl[ied] substantially with Utah law” in "effectively
and clearly, on their face, releas[ing] any claims for work done
prior to the date of execution." Accordingly, the district court
dismissed Lane Myers’s mechanic’s lien claim with prejudice.
Lane Myers filed a timely appeal.
113 On appeal, the court of appeals reversed. It interpreted
the Act to require a lien waiver to be "substantially" in the form
provided in section 38-1-39(4). Lane Myers Constr., LLC v.
Countrywide Home Loans, Inc, 2012 UT App 269, 1111 16-17, 287
P.3d 479. Thus, although the court viewed the statutory form as a
"safe harbor for lenders” and not a hard-and-fast requirement of
the Act, id. 1] 16, it concluded that "the legislature has indicated
its intent that a valid waiver and release at least contain each of
the component parts the form includes, in substance and effect if
not in the identical language.” Id. 1[ 17.
114 Ultimately, the court of appeals identified "four distinct
components” of the statutory form that it deemed "important
. . . to effectively waive and release lien rights for the benefit of a
lender” and "to ensure that the contractor is clearly on notice that
as a consequence of signing the form, he or she is relinquishing
core protections of the mechanics’ lien act in connection with a
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LANE MYERS CONSTR. v. N AT’L CITY BANK
Opinion of the Court
particular project on specific property.” Id. 1111 18, 19. Those
elements were (1) "a statement that the document is intended to
be a waiver and release in accordance with Utah law”; (2)
"specific information pertinent to the particular lien rights
subject to waiver and release, including ’Property Name,’
’Property Location,’ the identity of the ’[Contractor]’s Customer,’
’Invoice/ Payment Application Number,’ and ’Payment
Amount’”; (3) "explicit notice to the contractor of the effect that
signing the release will have on rights otherwise available to it
under the mechanics’ lien act and the conditions upon which the
waiver of those rights becomes effective”; and (4) the contractor
either ”represent[s] that all those who might have subordinate
lien claims have been paid or . . . promise[s] that the funds
received in exchange for the waiver and release will be used to
make such payments.” Id. fij 18 (first alteration in original).
Because the draw requests in this case did not "contain all the
required components of a valid form,” the court of appeals held
that "Lane Myers did not execute a waiver and release that
complies with the statute” and thus that "the trial court erred in
granting surmnary judgment in favor of National City.” Id. 111] 20,
21.
1115 National City and the Kykers filed a timely petition for
certiorari, which we granted. Our review of the issues before us
is de novo. Torian 0. Craig, 2012 UT 63, {I 13, 289 P.3d 479 ("We
review the district court’s grant of summary judgment for
correctness”); Bahr v. Imus, 2011 UT 19, 11 12, 250 P.3d 56 ("We
have consistently reviewed decisions on summary judgment for
correctness, according no deference to [the] trial court’s
analysis”).
II
1116 The question presented concerns the required content of a
waiver of a mechanic’s lien under Utah Code section 38-1-39(2).
Two distinct views were embraced in the courts below. The
district court held that Lane Myers’s draw requests effected an
enforceable waiver because they "clearly, on their face, released
any claims for work done prior to the date of execution.” The
court of appeals reached a contrary conclusion. It did so on the
ground that the draw requests failed to incorporate the essential
elements of the waiver form provided in Utah Code section 38-1-
39(4).
{[17 We read the statute somewhat differently than the court
of appeals, but also take issue with the breadth of the standard
6
Cite as: 2014 UT 58Opinion of the Court
employed by the district court. In our view, the form set forth in
Utah Code section 38-1-39(4)(b) and (c) is merely a safe harbor,
and not a requirement for execution of an effective lien waiver
under section 38-1-39(2)(a)(i). Thus, we hold that the sole criteria
for the execution of an effective lien waiver are those set forth in
section 38-1-39(2) —the execution of a "waiver and release that is
signed by the lien claimant or the lien claimant’s authorized
agent,” and the receipt of "payment of the amount identified in
the waiver and release.” Id. § 38-1-39(2)(a)(i), (b).
1118 That said, we also stop short of categorically endorsing
the district court’s approach. Specifically, we read the statutory
requirement of a "waiver and release” to incorporate the
established elements of the legal concept of a "waiver." And
because we see unresolved questions of fact of relevance to that
concept, we reverse and remand for further proceedings
consistent with this opinion.
A
1H9 The Utah Mechanic’s Lien Act prescribes two sets of
standards for measuring the sufficiency of a waiver of a statutory
lien right. First, as a general rule a lien waiver is "enforceable
only if the lien claimant . . . . executes a waiver and release that is
signed by the lien claimant or the lien claimant’s authorized
agent.” UTAH CODE § 38-1-39(2)(a)(i). Second, the statute
prescribes a separate standard for a waiver that is effected by a
"restrictive endorsement on a check.” Id. § 38-1-39(2)(a)(ii). For
that type of waiver the statute requires "a restrictive
endorsement on a check that is: (A) signed by the lien claimant or
the lien clairnant’s authorized agent; and (B) in substantially the
same form set forth in Subsection (4)(d).” Id.
1120 The significance of the forms set forth in subsection (4) of
the Act thus depends on whether or not the waiver in question is
one provided on a "restrictive endorsement on a check." For that
sort of waiver, the statute requires that it be "in substantially the
same form set forth in Subsection (4)(d).” But for all other
waivers the statute requires only a "waiver and release that is
signed by the lien claimant or the lien claimant’s authorized
agent.” Thus, conformance with the "form set forth in Subsection
(4)(d)” is not an element of the general rule; this requirement
applies only to waivers on a "restrictive endorsement on a
check.”
1121 Nothing in subsection (4) suggests otherwise. The
language of that subsection is distinctly permissive, not
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LANE MYERS CONSTR. U. NAT'L CITY BANK
Opinion of the Court
prescriptive. It indicates that a "waiver and release given by a
lien claimant meets the requirements of this section if it is in
substantially the form provided in this Subsection (4) for the
circumstances provided in this Subsection (4).” UTAH CODE § 38—
1-39(4)(a); see also id. § 38-1-39(4)(b) (for a waiver and release in
connection with "payment of a progress billing”); id. § 38-1-
39(4)(c) (same language for waiver and release in connection with
"payment of a final billing”). The permissive terms of subsection
(4)—”meets the requirements of this section if it is in
substantially the form provided”—are unmistakably that of a
safe harbor, not a prerequisite.
1122 The court of appeals acknowledged the permissive, safe-
harbor nature of the "precise language” of the forms set forth in
subsection (4). Lane Myers Constr. LLC v. Countrywide Home Loans,
Inc, 2012 UT App 269, 1[ 16, 287 P.3d 479. But it nonetheless
concluded that substantial compliance with the forms was a part
of the "overarching standard for an enforceable waiver and
release.” Id. 1[ 17. And it accordingly identified "four distinct
components” of the forms that it deemed "important . . . to
effectively waive and release lien rights.” Id. 1111 18, 19.
1123 We see no statutory basis for this construct. Subsection (4)
invokes substantial compliance as a prerequisite to the statutory
safe harbor, not an element of the threshold standard for
enforceability of a waiver. And subsection (2) plainly requires
substantial compliance with the forms only for a waiver in a
restrictive endorsement on a check. UTAH CODE § 38-1-
39(2)(a)(ii)(A)-(B). The lack of a parallel requirement in
subsection (2) for lien waivers generally yields a powerful
negative inference: Lien waivers generally need not follow the
forms set forth in subsection (4); substantial compliance with the
forms is a requirement only for waivers effected by a restrictive
endorsement on a check.2
2 See, e.g., Bailey 7). United States, 516 US. 137, 146 (1995)
(contrasting 18 U.S.C. § 924(d)(1), which provided for forfeiture of
a firearm when it was llused” or "intended to be used” in certain
crimes, and § 924(c)(1), which provided for a sentencing
enhancement for a person who "used" a firearm in a drug
trafficking crime; interpreting the § 924(c)(1) provision to be
limited to actual use, while crediting the difference between the
two provisions and inferring that "Congress intended each of
[the] terms” of the statute "to have meaning”).
8
Cite as: 2014 UT 58Opinion of the Court
B
1]24 In reaching the contrary conclusion, the court of appeals
noted that our precedents have long advocated the "broad"
interpretation of the Mechanics’ Lien Act in furtherance of a
perceived purpose of the legislature—”‘to protect, at all hazards,
those who perform the labor and furnish the materials which
enter into the construction of a building or other improvement.”
2012 UT App 269, 1] 15 (quoting Sill 0. Hart, 2007 UT 45, 1] 8, 162
P.3d 1099). Lane Myers advances these same points as grounds
for a ruling in its favor, insisting on a broad construction of the
Act in furtherance of this purported legislative purpose.
1]25 We recently rejected a parallel argument under the
Workers Compensation Act, in Iex '0. Utah Labor Commission, 2013
UT 40, 306 P.3d 799. In that case a plaintiff asserting a right to
workers compensation benefits claimed the benefit of a line of
cases calling for a liberal construction of the Workers
Compensation Act in a manner giving claimants the benefit of
"any doubt” on matters of statutory construction. Id. 1] 52
(quoting Salt Lake City Corp. 1). Utah Labor Comm’n, 2007 UT 4,
1] 16, 153 P.3d 179). We rejected that argument in jex, on terms
that apply by extension here.
1] 26 First, our [ex opinion characterized the "dicta" advocating
resolution of "any doubt” in favor of a claimant as "hyperbole."
Id. 1] 53. Noting that ”[t]he judicial process is premised on
doubt,” we concluded that mere doubt "cannot be enough to
generate a benefit-of-the doubt presumption in favor of
coverage.” Id. 1]1] 53, 54. Thus, in Iex we refined the dicta in our
past cases, adopting a narrow variation on the liberal
interpretation standard under which ”[t]he benefit of the doubt
owing to workers’ compensation claimants comes at the back end
of the litigation—after the judge . . . makes a run at . . . clarifying
gray areas of law.” Id. 1] 56. In other words, we clarified that our
canon of liberal construction was simply a tie-breaker, giving the
benefit of the doubt to the claimant ”[i]n the rare case where [the
judicial] process yields genuine doubt—in a dead heat without
an apparent winner.” Id.
127 We apply and extend that same analysis here. "Our
hyperbole notwithstanding, it cannot literally be true that” the
Mechanics’ Lien Act is intended to protect lien claimants "at all
hazards." Id. 1]53; Lane Myers, 2012 UT App 269, 1] 15.
Realistically, we must acknowledge that this statute, like any
other, ”represent[s] an attempt by the legislature to balance
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LANE MYERS CONSTR. v. NAT’L CITY BANK
Opinion of the Court
competing policy considerations, not to advanc[e] a single
objective at the expense of all others.” McArthur v. State Farm
Mat. Auto. Ins. Co., 2012 UT 22, 1] 14, 274 P.3d 981 (second
alteration in original) (internal quotation marks omitted). As
National City pointed out in its brief, the Act does more than just
protect lien claimants in every conceivable situation; it balances
those lien rights with the right to effectively contract away those
liens in exchange for payment, and the ability of lenders to rely
on those agreements. And accordingly, we must reserve the
notion of broad construction for cases of genuine doubt. Having
resolved that doubt under the language and structure of the
statute, we find no need for a tie-breaker, and thus no relevance
for the principle of liberal construction of the Act.
1]28 We accordingly reverse the court of appeals. Thus, we
interpret subsection (2) of the statute to tie the enforceability of a
general lien waiver to only those elements expressly prescribed
in that subsection—to the execution of a "waiver and release that
is signed by the lien claimant or the lien claimant’s authorized
agent.” UTAH CODE § 138-169(2) (a)(i).
C
1]29 Our construction of the statute, however, also runs
counter to the position embraced by the district court. Unlike the
district court, we do not see a basis for dismissing Lane Myers’s
lien claims as a matter of law. For us, the enforceability of the
waiver in question cannot be resolved on the basis of the "face"
of the draw requests. Lane Myers, 2012 UT App 269, 1] 6. Instead
we see genuine issues of material fact under the principle of
"waiver" incorporated in the Mechanic’s Lien Act.
1]30 The operative terms of the Act make the enforceability of
a lien waiver contingent on the execution of a "waiver and
release that is signed by the lien claimant or the lien claimant’s
authorized agent.” UTAH CODE § 38-1-39(2)(a)(i). In circularly
conditioning the effectiveness of a "waiver" on the execution of a
“waiver,” the legislature appears to have embraced a "term of art
with a widely shared meaning.” Hughes Gen. Contractors, Inc. 0.
Utah Labor Comm’n, 2014 UT 3, 1] 14, 322 P.3d 712 (concluding
that a “circular” statutory definition utilizing a legal term of art—
”employer” — is understood to adopt a "term of art with a widely
shared meaning”); see also State v. Bagnes, 2014 UT 4, 1] 21, 322
P.3d 719 (interpreting statutory definition of "lewdness," defined
10