Opinion
No. 87-1166.
November 3, 1989.
John R. Byrd, Tarvin Byrd, Hamburg, Ark., for plaintiff.
Thomas S. Streetman, Arnold, Hamilton Streetman, Crossett, Ark., for defendants.
Hani W. Hashem, Gibson Hashem, Monticello, Ark., for intervenor.
MEMORANDUM OPINION
This diversity suit was removed from the Circuit Court of Ashley County, Arkansas. It arises out of a 1987 construction project of a chip thickness screening facility (the Project) by Georgia-Pacific Corporation at its Crossett paper operation. The project involved the construction of two steel structures, a wood chip thickness screening process and a conveyor system. On April 19, 1987 Georgia-Pacific Corporation (Georgia-Pacific) contracted with Southeastern Conveyor Fabricators (Southeastern) to purchase galvanized steel and stainless steel for the project for a total price of $201,131. Georgia-Pacific then contracted with Southeastern for an additional $31,350 for fabrication of additional steel products. The contract required Southeastern to fabricate and deliver the steel to the project site in Crossett.
Southeastern hired AAA Steel Detailing (AAA Steel) to prepare detailed drawings which would enable Southeastern to fabricate the steel in accordance with the drawings and specifications for the project. Southeastern also entered into an agreement with Westside Galvanizing Services (Westside) for Westside to galvanize the fabricated steel. All work by AAA Steel was performed at its offices in Birmingham, and Westside performed all of its galvanizing services at its plant in Baton Rouge.
In early September, 1987, Southeastern defaulted under the terms of its contract with Georgia-Pacific. Southeastern also defaulted on its contract with Westside and AAA Steel and failed to pay them for the work they had performed. Westside seeks to foreclose a materialman's lien on property owned by Georgia-Pacific located at Crossett, Arkansas, and to recover judgment against Georgia-Pacific based upon the equitable doctrine of unjust enrichment. On November 8, 1988, AAA Steel was granted permission to intervene and it filed a complaint against Georgia-Pacific to foreclose an engineer's lien, a materialman's lien and for judgment based upon unjust enrichment and quantum meruit. Westside seeks judgment in the amount of $28,201.50. AAA Steel seeks judgment in the amount of $14,225.42. Arkansas law is applicable in this case.
I. WESTSIDE'S AND AAA STEEL'S LIEN CLAIMS.
Georgia-Pacific argues that the liens of both Westside and AAA Steel contain inadequate property descriptions. The Court disagrees. The well established test in Arkansas is that the property description be "sufficient to enable any one familiar with the locality to identify the premises intended to be described with reasonable certainty, to the exclusion of others." Arkansas Foundry Company v. American Portland Cement Company, 189 Ark. 779, 784, 75 S.W.2d 387 (1934). Even an inaccurate description will be allowed if it is not misleading. Ferguson Lumber Company v. Scriber, 162 Ark. 349, 353, 258 S.W. 353 (1924). In In re Horton Vaults, Inc., No. LR-87-371, AP No. 88-446, slip op., (Bkrtcy.E.D.Ark., August 31, 1989), the court determined that the property description "metal buildings constructed at Route 1, Box 55, Romance, Arkansas 72136, for Horton Vaults" was sufficient even though the property was actually located in Floyd, Arkansas. Slip op. at 2. The facts that the description directed one to a mailbox which was located within eyesight of the improvement, the improvement was the largest metal building in the locality, it was the only property owned by the debtor, and that Floyd, Arkansas, is a community of less than 40 residents, were all considered important by the court. The Georgia-Pacific paper plant location is of common knowledge to people in the community. The property descriptions of both Westside and AAA Steel are sufficient to constitute substantial compliance with Ark. Code Ann. § 18-44-117.
Georgia-Pacific also contends that Westside and AAA Steel are too remote and lack privity to be entitled to liens. Georgia-Pacific cites Valley Metal Works v. A.O. Smith-Inland, 264 Ark. 341, 572 S.W.2d 138 (1978) for this contention. In Valley Metal Works the court held that a supplier of a materialman is not entitled to assert a lien against property improved with the material furnished. Westside and AAA Steel were both subcontractors, not suppliers to materialmen. Westside's and AAA Steel's positions are not the same as Valley Works, and the Valley Works case is inapplicable to the case at hand.
Georgia-Pacific contends that Westside did not supply a "material," and therefore is not entitled to a materialman's lien. Westside galvanized the steel that Southeastern provided to Georgia-Pacific. In the galvanizing process, the steel is coated with zinc. "Materials enter into and become a part of the structure." Allstate Insurance Company v. Martens, 5 Ark. App. 157, 633 S.W.2d 715, 716 (1982) (quoting Black's Law Dictionary (4th ed. 1968)). The zinc entered into and became part of the project, thus falling within the definition of "material."
Notice must be given to a landowner before there is a delivery of materials in order for a materialman's lien to be perfected against the land. Ark. Code Ann. § 18-44-115 (1987); Ellison v. Tubb, 295 Ark. 312, 749 S.W.2d 650 (1988). Neither Westside nor AAA Steel provided this requisite notice to Georgia-Pacific.
Westside contends it transacted a direct sale with Georgia-Pacific. § 18-44-117 provides that the notice requirement does not apply if the transaction is a direct sale to the property owner. A direct sale is defined in the statute as one where "the owner or his authorized agent personally orders such materials from the lien claimant." The Arkansas Supreme Court considers whether the material was "charged to, shipped to, and received by" the property owner and whether an invoice and monthly statement were sent to the owner. National Lumber Company v. Advance Development Co., 293 Ark. 1, 732 S.W.2d 840, 846 (1987); Duncan v. Davis Earnest, Inc., 285 Ark. 143, 685 S.W.2d 509 (1985). The evidence shows that galvanized steel was shipped to and received by Georgia-Pacific, but all Westside invoices were charged to Southeastern. These shipments did not amount to a direct sale since Georgia-Pacific was not the party being charged.
Georgia-Pacific's Dan Robinson did request Westside to deliver the remaining shipments to the project on September 21, 1987. Although that shipment's invoice was addressed to Southeastern, Westside detrimentally relied upon Mr. Robinson's representations that Westside would be paid. Westside acted to its detriment with the September 24, 1987 shipment totaling $1,264.50 and must be compensated by Georgia-Pacific.
AAA Steel has filed a materialman's lien against Georgia-Pacific. AAA Steel now contends it did not provide materials to Georgia-Pacific, but rather provided labor services pursuant to Ark. Code Ann. § 18-44-101 or engineering services pursuant to Ark. Code Ann. § 18-44-105.
It is generally held that a laborer is an individual who performs unskilled manual work with his hands for fixed wages, while a mechanic performs skilled work with tools. 53 Am.Jur.2d, Mechanics' Liens, § 74. Arkansas has generally adopted these definitions and has held that to qualify as a laborer or mechanic a person must perform manual labor either with his hands or with tools. Pasvogel, Construction Mechanics and Materialman's Liens, 4-2. AAA Steel provided detailed drawings to Southeastern in the manner of engineering services. AAA Steel's drawings require skill and are not the type services contemplated by a laborer's lien.
AAA Steel alternatively claims an engineering lien pursuant to § 18-44-105. Georgia-Pacific objects arguing that AAA Steel has filed a materialman's lien, not an engineering lien. Georgia-Pacific also contends that AAA Steel is not entitled to an engineering lien since AAA Steel's drawings where not done by a licensed engineer. This lien requires notice to the owner pursuant to § 18-44-115. AAA Steel admits that this notice wasn't given before the drawings were submitted to Georgia-Pacific. Even if AAA Steel is entitled to claim a lien under this statute, it did not perfect the lien by giving the requisite notice.
II. WESTSIDE'S AND AAA STEEL'S UNJUST ENRICHMENT CLAIMS.
Westside was only partially paid for its services by Southeastern, and AAA Steel has received no payment to date. Westside and AAA Steel both contend that Georgia-Pacific has been unjustly enriched by Westside's galvanizing and AAA Steel's detailed drawings. Georgia-Pacific argues it is not unjustly enriched since it has paid Southeastern the total contract price less the $43,625.60 holdback. To find unjust enrichment, a party must have received something of value, to which he was not entitled and which he must restore. Dews v. Halliburton Industries, Inc., 288 Ark. 532, 708 S.W.2d 67 (1986). Georgia-Pacific cannot be held to be unjustly enriched merely because it has chosen to exercise a legal or contract right. Whitley v. Irwin, 250 Ark. 543, 465 S.W.2d 906 (1971). Georgia-Pacific has paid 81% of the Southeastern contract. Georgia-Pacific is legally entitled to a setoff of its losses sustained due to Southeastern's default and misfabrication. In re Hagan, 41 B.R. 122 (Bkrtcy.R.I. 1984). Georgia-Pacific would be unjustly enriched to the amount of the holdback that exceeded its losses, but Georgia-Pacific agrees that this excess should be divided between Westside and AAA Steel. The court finds that Georgia-Pacific has received no unjust enrichment.
III. THE AMOUNT OF GEORGIA-PACIFIC'S SETOFF.
Georgia-Pacific contends that Southeastern had not delivered approximately 478 linear feet of stainless steel handrail and toe plates at the time of Southeastern's breach. Georgia-Pacific contracted with G T Contractors to supply the stainless steel handrail and toe plates at a higher cost than the Southeastern contract. G T Contractors also charged Georgia-Pacific for additional expenses incurred as a result of misfabrication of steel by Southeastern. Georgia-Pacific has withheld $43,625.60 that is due to Southeastern. Georgia-Pacific argues it is entitled to setoff its losses against this holdback.
Georgia-Pacific contends that Southeastern failed to produce an additional 478 linear feet of handrail. However, Georgia-Pacific never contracted with Southeastern to provide this additional amount. Georgia-Pacific argues since the original contract provides that Southeastern will furnish "all materials" to the project, the additional order of 478 feet was reasonably anticipated by the original contract.
The original agreement specifically states that Southeastern would provide 295 linear ft. of handrail for a total contract price. A later agreement was entered into by Georgia-Pacific and Southeastern for an additional 222 ft. at an additional price. By Georgia-Pacific's argument it could demand additional linear feet with no additional payment to Southeastern. However, Georgia-Pacific's additional purchase order and payment to Southeastern proves that that was not the intention behind the original purchase order contract. Georgia-Pacific contracted for and received 295 and 222 linear feet of handrail from Southeastern.
After Southeastern's delivery of the 295 and 222 linear feet of handrail, Georgia-Pacific discovered it needed 478 ft. more. Southeastern had defaulted by this time, and Georgia-Pacific contracted with G T Contractors for the additional feet at a higher price than Southeastern. G T Contractors also charged Georgia-Pacific for correcting misfabrication by Southeastern. Georgia-Pacific can recover the difference between Southeastern's contract price and the market price (G T Contractors's price) it was forced to pay after Southeastern's default. Georgia-Pacific is also entitled to the cost of Southeastern's misfabrication. However, Georgia-Pacific cannot recover the whole G T Contractors contract price. It is obvious that this additional 478 ft. was not contemplated by the two purchase orders (which specifically state 295 and 222 ft.) from which Georgia-Pacific is withholding funds.
Georgia-Pacific paid $11,068.03 more for G T Contractors's handrail and $2,825.65 for correction of Southeastern's misfabrication. The total of these sums, $13,893.68, is the amount of Georgia-Pacific's allowable cover. This cover amount subtracted from the holdback amount equals $29,731.92. Since Southeastern has relinquished all claims to this sum, it is to be divided between Westside and AAA Steel.
$29,731.92 enables Westside and AAA Steel to obtain approximately 70%, of their requested judgments; $19,757.59 to Westside, and $9,974.33 to AAA Steel. Westside is also entitled to $1,264.50 for its detrimental reliance, which totals its judgment to $21,022.09. No prejudgment interest will be awarded in this matter.
A separate judgment will be entered with this opinion. The Court also incorporates into this memorandum opinion its findings and conclusions pursuant to Rule 52 of the Federal Rules of Civil Procedure.