Opinion
No. 1-1007 / 00-1937.
Filed July 19, 2002.
Appeal from the Iowa District Court for Fayette County, JAMES BEEGHLEY, Judge.
IVA appeals from adverse jury verdict in a breach of construction contract action and related decree foreclosing Voltmer, Inc.'s mechanic's lien. AFFIRMED AND REMANDED.
Michael Bovee of Montgomery, Barry Bovee, Spencer, and Curtis Smith of Moss Barnett, P.A., Minneapolis, Minnesota, for appellant.
James Burns of Miller, Pearson, Gloe, Burns, Beatty Cowie, P.C., Decorah, for appellee.
H. Dale Huffman, Omaha, Nebraska, for defendant.
Heard by SACKETT, C.J., and HUITINK and HECHT, JJ.
IVA, Inc. and IVA Cooperative Association (collectively IVA) appeal from adverse jury verdicts in a breach of construction contract claim and related decree foreclosing Voltmer, Inc.'s mechanic's lien.
I. Background Facts and Proceedings .
The contract dispute underlying this mechanic's lien foreclosure action concerns liability for electrical labor and material Voltmer, Inc. furnished during construction of IVA's poultry egg facility in West Union. In its petition Voltmer named IVA, Inc. a/k/a IVA Cooperative a/k/a Cooperative Association as the defendant and alleged IVA was the owner of the land and improvements against which Voltmer sought to foreclose its mechanic's lien. Voltmer also alleged substantial performance of its contractual obligations and resulting entitlement to payment of a $131,337.10 contract balance from IVA. Voltmer accordingly requested judgment against IVA in that amount plus attorney fees and court costs.
IVA and IVA Coop, referring to themselves collectively as IVA, filed an answer denying liability for the amounts claimed, citing Voltmer's failure to perform and material breach of its contractual obligations. IVA, Inc. also denied any lienable interest in the land or improvements described in Voltmer's petition. IVA affirmatively alleged that IVA Coop rather than IVA, Inc., was the owner of the land and improvements at issue. IVA's answer included several counterclaims including breach of contract, breach of implied warranty, negligence, and fraud for which IVA sought unspecified damages.
Prior to trial the parties stipulated:
1. That after construction was commenced by Plaintiff on the improvements covered by the Building Agreement, the Defendant, Iva, Inc. executed and delivered to Farm Credit Services of America, FLCA, a mortgage securing repayment of a loan to finance construction of a building to be located on the subject premises.
2. That should a judgment foreclosing Plaintiff's mechanic's lien be entered herein, the mortgage of Farm Credit Services of America, FLCA, should be confirmed as a lien on the subject premises subordinate and inferior only to the mechanic's lien filed by the Plaintiff herein.
3. Should execution issue herein for the sale of the subject premises, Farm Credit Services of America, FLCA, should be entitled to satisfy their lien from the proceeds of said sale after satisfaction of the lien of the Plaintiff herein.
The legal issues raised by the parties' pleadings were tried as ordinary proceedings to a jury. The equitable issues concerning the validity and foreclosure of Voltmer's mechanic's lien were simultaneously tried to the court.
The record indicates that the parties entered into two contracts. Under the first contract, Voltmer agreed to wire two buildings at a cost of $47,800 each. The second contract provided for wiring three additional buildings and related underground electrical service on a time and material basis. Both contracts required Voltmer's compliance with applicable provisions of the National Electrical Code (NEC).
At trial the fighting issues included the integrity of Voltmer's billings, workmanship, and NEC compliance. Voltmer's evidence supporting its substantial performance under both contracts included testimony and exhibits substantiating its claims for labor and material.
IVA's defense and counterclaims were primarily based on Voltmer's failure to comply with NEC requirements. IVA also offered expert testimony indicating Voltmer's work was substandard, resulting in numerous violations of the NEC. IVA also offered evidence documenting the expenses incurred to complete the project after Voltmer's contracts were terminated.
Over IVA's objection, Voltmer's expert witness offered multiple opinions contradicting those made by IVA's expert and that the NEC violations cited by IVA's experts were insignificant. Additionally, Voltmer's rebuttal evidence indicated that, despite IVA's complaints, all of the facilities included in the contracts were operational at the time its contracts were terminated.
The trial court submitted the contract dispute underlying Voltmer's mechanic's lien foreclosure to the jury through a series of special verdict forms. The jury was instructed to specifically and separately determine whether Voltmer substantially performed its contracts with IVA and the amount of damages, if any, to which Voltmer was entitled under each contract. IVA's counterclaims were similarly submitted.
The jury returned four special verdicts finding Voltmer substantially performed both contracts and awarding damages totaling $131,337.10. The jury also returned a special verdict in Voltmer's favor on IVA's counterclaims. Judgment was entered in conformity with the jury's verdicts. The trial court subsequently entered a decree foreclosing Voltmer's mechanic's lien against the real property and improvements described in the petition. The trial court also awarded Voltmer $21,237.04 for attorneys fees incurred as of the date judgment was entered. IVA's posttrial motions were denied, resulting in this appeal.
On appeal, IVA argues that Voltmer failed in its burden to prove IVA, Inc. had a lienable interest in the real property and improvements at issue, and as a result, Voltmer's mechanic's lien was invalid and unenforceable. IVA also challenges the admissibility of opinion testimony by Voltmer's expert citing the absence of adequate factual foundation for those opinions. Lastly, IVA argues the jury's special verdicts are not supported by substantial evidence.
II. Validity of Voltmer's Mechanic's Lien .
An action to enforce a mechanic's lien is in equity. Schumacher Elec., Inc. v. DeBruyn, 604 N.W.2d 39, 41 (Iowa 1999). While we give weight to the findings of the trial court, especially where credibility of witnesses is involved, we are not bound by them. Iowa R. App. P. 6.14(6)(g); Moore's Builder Contractor, Inc. v. Hoffman, 409 N.W.2d 191, 192 (Iowa Ct.App. 1987).
Iowa Code section 572.2(1) (1999) provides:
Every person who shall furnish any material or labor for, or perform any labor upon, any building or land for improvement, alteration, or repair thereof, . . . by virtue of any contract with the owner, the owner's agent, trustee, contractor, or subcontractor shall have a lien upon such building or improvement, and land belonging to the owner on which the same is situated . . . to secure payment for the material or labor furnished or labor performed.
The term "owner" is defined in section 572.1(3) as "every person for whose use or benefit any building, erection, or other improvement is made, having the capacity to contract, including guardians." It is fundamental to the establishment of a mechanic's lien to prove an express or implied contractual agreement binding the entity possessing an ownership interest. Clemens Graf Droste Zu Vischering v. Kading, 368 N.W.2d 702, 709 (Iowa 1985). An owner for purposes of this statute does not refer solely to the titleholder of real property, but may also include the owner of the improvement. See, e.g., Lane-Moore Lumber Co. v. Kloppenburg, 204 Iowa 613, 618, 215 N.W. 637, 639 (1927); Royal Lumber Co. v. Hoelzner, 199 Iowa 24, 37, 201 N.W. 53, 57-58 (1924); Webster City Steel Radiator Co. v. Chamberlin, 137 Iowa 717, 719, 115 N.W. 504, 505 (1908).
IVA's denial of a lienable interest in the land and improvements at issue is premised on the relationship between IVA, Inc. and IVA Coop. Although IVA collectively claims the Coop owned the land and improvements and IVA, Inc. was either a tenant or merely operated the egg facility for the Coop's benefit, the record contains no conclusive evidence supporting either proposition. The most reliable evidence of IVA Inc.'s real interest in either the land or improvements is found in the pretrial stipulation in which IVA, Inc. implicitly, if not expressly, acknowledges a sufficient interest in the land and improvements to mortgage both for purposes of financing the project. We find this evidence sufficient to prove Voltmer's contracts were with an entity possessing an ownership interest in the land and improvements at issue. Accordingly, we, like the trial court, conclude Voltmer's mechanic's lien is valid and affirm on this issue.
III. Expert Testimony .
IVA challenges the trial court's ruling admitting the following opinions by Voltmer's expert witness, John Bass:
A. Whether an electrical engineer "would have been recommended to work on this job."
B. Whether questions of payment or nonpayment cause difficulties in the proper administration of a project.
C. The remedies a contractor has available in the event of nonpayment.
D. The "problems in the management of this project" perceived by Mr. Bass.
E. Mr. Bass's "observations as to the performance-qualifications and performance of Ms. Pam Hein," IVA's project coordinator.
F. The scope of Voltmer's "responsibility" on the project, including the terms of written and oral contracts.
G. Whether the National Electrical Code violations listed on Mr. Isder's reports were "correctable and if so, how substantial a correction is necessary."
IVA argues the record does not include a sufficient factual basis for Bass's opinions because Bass was not licensed as an electrical engineer in Iowa, and he had never designed a project similar to this egg-laying facility. We disagree.
In Iowa, we are committed to a liberal rule view on the admissibility of expert testimony. Leaf v. Goodyear Tire Rubber Co., 590 N.W.2d 525, 531 (Iowa 1999). The decision to admit or exclude opinion evidence rests within the sound discretion of the district court and will not be disturbed on appeal absent manifest abuse of that discretion to the prejudice of the complaining party. State v. Myers, 382 N.W.2d 91, 93 (Iowa 1986).
We find no abuse of discretion in the present case. The record reveals Bass reviewed Voltmer's file, the parties' contract, the report of IVA's expert, trial exhibits and depositions. We find it sufficient to note that IVA's complaints go to the weight of Bass's testimony, not its admissibility. Hunter v. Bd. of Trustees, 481 N.W.2d 510, 520 (Iowa 1992); Mercy Hosp. v. Hansen, Lind Meyer, P.C., 456 N.W.2d 666, 671-72 (Iowa 1990). We also affirm on this issue.
IV. Jury Verdicts .
Our scope of review on this issue is determined by the nature of the trial proceedings. Nepsted Custom Homes Co. v. Krull, 527 N.W.2d 402, 408 (Iowa Ct.App. 1994). Here the district court ruled on evidentiary objections indicating the parties' breach of contract claims and related issues were tried as ordinary proceedings. See Ernst v. Johnson County, 522 N.W.2d 599, 602 (Iowa 1994). Contrary to IVA's assertion, our scope of review of the remaining issues is limited to errors of law. Iowa R. App. P. 6.4. If supported by substantial evidence and justified as a matter of law, the jury's verdicts and resulting judgments will not be disturbed on appeal. Moore's Builder, 409 N.W.2d at 194.
A contractor is entitled to recover the contract price, with deductions for any defects or incompletions, when it has substantially complied with the contract. Bidwell v. Midwest Solariums, Inc., 543 N.W.2d 293, 295 (Iowa Ct.App. 1995). The contractor has the burden of proof to show substantial performance of the contract. Nepstad, 527 N.W.2d at 406. Substantial performance allows only those omissions or deviations from the contract that are inadvertent or unintentional, not the result of bad faith, do not impair the structure as a whole, are remedial without doing material damage to other portions of a building, and may be compensated for through deductions from the contract price." Bidwell, 543 N.W.2d at 296; Moore's Builder, 409 N.W.2d at 193.
IVA contends the jury's special verdicts were not supported by substantial evidence. It asserts there was insufficient evidence to show Voltmer substantially performed the contract and there was insufficient evidence to show it owed Voltmer $131,337.10 for work which Voltmer completed.
The resolution of these issues is determined by our limited scope of review. As noted earlier, the record includes evidence disputing the extent and significance of the NEC violations at the heart of IVA's claim that Voltmer failed to substantially perform the relevant contracts. In addition, the record includes testimony and exhibits substantiating the necessity and costs of the labor and material Voltmer furnished in the course of performance of both contracts. There is also evidence indicating that any omissions in Voltmer's performance did not impair the structures as a whole and were easily corrected. The jury's special verdict forms indicate any conflicts in this evidence were resolved entirely in Voltmer's favor. Because we find this evidence sufficient to support each special verdict, we affirm on this issue.
V. Attorney Fees .
Voltmer seeks appellate attorney fees of $4,227.77 under section 572.32(1), which provides for the award of attorney fees in actions to enforce a mechanic's lien. The award of attorney fees under this provision is mandatory. Schaffer v. Frank Moyer Constr., Inc., 628 N.W.2d 11, 22 (Iowa 2001). In addition to trial attorney fees, the section permits the award of appellate attorney fees. Id. at 23. Although there is no discretion in determining whether to award attorney fees, the amount awarded is vested in the court's broad, but not unlimited, discretion. Baumhoefener Nursery, Inc. v. A D P'ship II, 618 N.W.2d 363, 368 (Iowa 2000).
Because Voltmer was the successful party on appeal, we award Voltmer appellate attorney fees in the amount of $4,227.77. This matter is remanded to the district court for entry of judgment in conformity with our opinion.
We affirm the decision of the district court.
AFFIRMED AND REMANDED.