Opinion
No. C2-01-161.
Filed November 20, 2001
Appeal from the District Court, Scott County, File No. 9914204.
Thomas B. Olson, Olson, Usset Weingarden, P.L.L.P., (for respondent)
John M. Koneck, Joseph G. Springer, Fredrikson Byron, P.A., (for appellants)
Considered and decided by Toussaint, Chief Judge, Randall, Judge, and Kalitowski, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant Eagle Creek Townhomes challenges the district court's judgment enforcing a mechanic's lien and awarding attorney fees to respondent West Metro Lumber, Inc. It disputes the court's assessment of the reasonable value of the lien and argues that the amount of the attorney fees award should be reduced. Because the district court's findings are not clearly erroneous and the district court did not abuse its discretion in the attorney fees award, we affirm.
FACTS
Appellant Eagle Creek Townhomes planned to develop a 152-unit townhome project and contracted with J.F. Johnson General Development Corporation to construct the project. J.F. Johnson subcontracted with respondent West Metro Lumber to supply lumber and other construction materials, and work on the project began. Before it was completed, Eagle Creek became dissatisfied with J.F. Johnson, terminated its contract, and paid off most of the subcontractors.
Eagle Creek was unable to reach an agreement with West Metro as to the amount due, and West Metro filed a mechanic's lien. West Metro then sued J.F. Johnson for the balance due on the subcontract and sought to enforce the mechanic's lien against Eagle Creek. At trial, Eagle Creek disputed the amount due and asserted that West Metro's prices were exorbitant and that West Metro had aided J.F. Johnson in defrauding Eagle Creek. The district court ordered judgment against J.F. Johnson, which defaulted, and ruled in favor of West Metro on the mechanic's lien in the amount of $158,672. It awarded attorney fees and denied Eagle Creek's motion for a new trial. This appeal followed.
DECISION I.
Findings of fact will not be reversed unless clearly erroneous. Minn.R.Civ.P. 52.01. Questions of law are reviewed de novo. Home Lumber Co. v. Kopfmann Homes, Inc., 535 N.W.2d 302, 304 (Minn. 1995). Once the court determines that a lien has properly attached, the law will be liberally construed. Enviro-Fab, Inc. v. Blandin Paper Co., 349 N.W.2d 842, 848 (Minn.App. 1984), review denied (Minn. Sept. 12, 1984).
West Metro, the subcontractor, sought enforcement of the lien against Eagle Creek, the landowner, with whom it did not have a contract. When a party makes an improvement on property but does not have a contract with the landowner, the lien will be "for the reasonable value of the work done, and of the skill, material, and machinery furnished." Minn. Stat. § 514.03, subd. 2(b) (2000). The contract price of the work as agreed to by the lien claimant and the party ordering the work is "prima facie evidence of its value as against the owner." Enviro-Fab, 349 N.W.2d at 848 (citation and emphasis omitted). The party against whom the lien is sought may rebut the contract price upon a showing that it is "so exorbitant and unreasonable as to indicate fraud, mistake or the like." Id. (citation and quotation omitted).
The district court found that West Metro and J.F. Johnson had an oral contract in which West Metro shipped construction material at market rate. Eagle Creek challenges this finding on several grounds. First, it contends that based on West Metro's written estimate, the parties had agreed to a fixed price and argues that the court erred by disregarding the provision.
Courts must interpret a contract as a whole and attempt to harmonize all parts. Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522, 525 (Minn. 1990). The interpretation of an ambiguous contract is a factual question. City of Virginia v. Northland Office Properties Ltd. P'ship, 465 N.W.2d 424, 427 (Minn.App. 1991), review denied (Minn. Apr. 18, 1991). Here, the court did interpret the contract as a whole and was not clearly erroneous in its determination.
Next, Eagle Creek contends that the court improperly relied on "non-responsive hearsay" in determining that West Metro and J.F. Johnson had an oral contract in which they agreed that market-rate prices would apply. A district court's decision as to the admissibility of evidence will not be reversed absent an abuse of discretion or error of law. Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990). Eagle Creek asked the question that elicited the hearsay and then unsuccessfully objected to the answer as hearsay. An error in the admissibility of evidence may be waived if the objecting party introduces the evidence. Jones v. Fleischhaker, 325 N.W.2d 633, 639 (Minn. 1982). Further, the evidence elicited was cumulative on the issue of whether the contract was at a market rate. The court did not abuse its discretion in its ruling.
Third, Eagle Creek argues that the district court was clearly erroneous in considering West Metro's invoices to establish a contract price. These detailed invoices showed lumber items billed at market rates. Eagle Creek contends that this was error because there was no testimony to establish West Metro forwarded these invoices to J.F. Johnson. Finally, it challenges the district court finding that West Metro had billed J.F. Johnson on a market-rate basis for an earlier project. The district court determination is not clearly erroneous because the evidence in the record and inferences from the evidence provide a basis for the court's findings.
Eagle Creek next contends that West Metro failed to establish the reasonable value of the material it supplied, and that because the project was incomplete, the proper measure of West Metro's damages is quantum meruit. See E.C.I. Corp. v. G.G.C. Co., 306 Minn. 433, 437, 237 N.W.2d 627, 630 (1976). Using this theory, Eagle Creek asserts the reasonable value should be calculated by determining the "sum for which similar services and materials could have been purchased from one in plaintiff's position at the time performance was rendered." See Dunkley Surfacing Co. v. George Madsen Constr. Co., 285 Minn. 415, 417, 173 N.W.2d 420, 422-23 (1970).
In E.C.I., the court stated that the legislature intended that when the project is incomplete, "the lien be measured according to ordinary common law principles." E.C.I., 306 Minn. at 436-37, 237 N.W.2d at 630. The measure of the lien in these circumstances
may vary depending on whether the contract was for a specific price, whether the work is substantially complete, whether the plaintiff or the defendant is in breach, and whether the contract is treated as at an end.
Id. at 437, 237 N.W.2d at 630. In E.C.I., the court held quantum meruit was the proper measure where the contract was for an agreed price, the project was not substantially complete, the defendant landowner breached, and the plaintiff treated the contract as ended. Id. In this case, West Metro's contract was not for construction of a project that it only partially completed, rather it was for but delivery of material. Further, the landowner terminated the contract with the contractor and the contract was at an end. Under these circumstances, the court properly calculated the reasonable value of the material West Metro furnished for the project using the contract price. See Enviro-Fab, 349 N.W.2d at 848.
Eagle Creek next contends that the district court was clearly erroneous in finding that there was an insufficient showing of fraud or mistake to allow the contract price to be disregarded. Generally, the contract price can be rebutted only upon a showing that it is "so exorbitant and unreasonable as to indicate fraud, mistake, or the like." Id. (citation omitted). The court rejected Eagle Creek's claims that the price was exorbitant and that West Metro aided J.F. Johnson in perpetrating fraud. It noted Eagle Creek tried to show the unreasonableness of West Metro's prices by comparing them to prices quoted by several other companies. The court found this evidence irrelevant because the prices were from a different time period, the lumber market was in flux, and other considerations explained why West Metro's prices were higher. The court also rejected claims of fraud. There are questions of fact, and the district court's determination is not clearly erroneous. See id. (noting reasonable value may properly include overhead and profit).
II.
Eagle Creek also contends that the district court abused its discretion in awarding attorney fees of $57,622.43 to West Metro. The amount of an award of attorney fees is within the discretion of the district court. Jadwin v. Kasal, 318 N.W.2d 844, 848 (Minn. 1982). Among the factors considered are
time and effort required, novelty or difficulty of the issues, skill and standing of the attorney, value of the interest involved, results secured at trial, loss of opportunity for other employment, taxed party's ability to pay, customary charges for similar services, and certainty of payment.
Id. (citation omitted). The amount should bear a "reasonable relation to the amount of the judgment secured." Northwest Wholesale Lumber, Inc. v. Citadel Co., 457 N.W.2d 244, 251 (Minn.App. 1990).
Eagle Creek contends that the amount of attorney fees should be reduced because West Metro's charges for the material it delivered were not in accordance with its original bid. Further, it contends West Metro attempted to assist in J.F. Johnson's alleged fraud. Finally, it argues that respondent's fees were too high because of counsel's inefficiencies. Eagle Creek's arguments are based, for the most part, on its challenge on the merits, which were rejected by the district court and this court. The award was well within the district court's discretion and there is no showing that the discretion was abused.