Variety Homes, Inc., Appellant, vs. Nathan J. McGovern, d/b/a McGovern's, Respondent.

Variety Homes, Inc., Appellant, vs. Nathan J. McGovern, d/b/a McGovern's, Respondent. C5-00-1049, Court of Appeals Unpublished, December 26, 2000.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat § 480A.08, subd. 3 (2000).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C5-00-1049

 

 

Variety Homes, Inc.,

Appellant,

 

vs.

 

Nathan J. McGovern,

d/b/a McGovern's,

Respondent.

 

 

Filed December 26, 2000

Reversed and remanded

Lansing, Judge

 

Washington County District Court

File No. C6995146

 

 

Gerald G. Workinger, Jr., 5705 Susan Avenue, Edina, MN 55439 (for appellant)

 

Nathan J. McGovern, 6351 Tahoe Place, Woodbury, MN 55125 (pro se respondent)

 

            Considered and decided by Lansing, Presiding Judge, Stoneburner, Judge, and Mulally, Judge.*

U N P U B L I S H E D   O P I N I O N

LANSING, Judge

In this action to remove a mechanic's lien, the district court granted summary judgment for the contractor, concluding the lien was valid despite the lack of prelien notice.  Because the lien statute requires prelien notice whenever the contractor has contracted or will contract with material suppliers, we reverse and remand with directions to enter judgment for Variety Homes. 

FACTS

            Variety Homes agreed to build a house for Jeffrey and Michelle Rudd.  The written construction contract provided that the Rudds were responsible for all painting and staining work.  The Rudds orally contracted with Nathan McGovern on March 31, 1999, to perform the painting and staining.   It is undisputed that McGovern did not serve prelien notice on either Variety Homes or the Rudds. 

From April 1 to May 4, 1999, McGovern and his employees worked on the house.  During this time, McGovern purchased paint, stain, and painting supplies from Hirschfields and Knox Lumber at least 20 times, expending about $3,000.  The invoices show that McGovern paid for the materials at the time of purchase by three different payment methods:  cash, check, and credit card. The Rudds later reimbursed McGovern for these expenditures. 

McGovern completed the bulk of the painting and staining, but stopped work when a dispute arose over the amount that the Rudds orally agreed to pay McGovern for his labor.  On May 7, 1999, McGovern filed a mechanic's lien against the property for $9,600 for his labor in painting and staining the house.  Because McGovern paid Hirschfields and Knox at the time he purchased the materials, neither supplier filed a materials lien.

On May 11, 1999, Variety Homes and the Rudds closed on the house.  At closing, Variety Homes escrowed money to cover the disputed lien and brought this action to remove the lien under Minn. Stat. § 514.10 (2000).  Variety Homes claimed the lien was unenforceable because McGovern had failed to serve a prelien notice required by Minn. Stat. § 514.011, subd. 1 (2000).

On cross-motions for summary judgment, the district court granted summary judgment in favor of McGovern, finding no prelien notice was necessary because McGovern paid Hirschfields and Knox for the materials at the time of purchase.  Variety Homes appeals. 

D E C I S I O N

            Labor and material liens are created by statute.  See Minn. Stat. § 514.01-.99 (2000).  Variety Homes claims that the district court erred in its interpretation of the mechanic's lien statute governing prelien notices.  The interpretation of a statute and its application to undisputed facts raise issues of law this court reviews de novo.  Wynkoop v. Carpenter, 574 N.W.2d 422, 425 (Minn. 1998).  The purpose of statutory construction is to ascertain and give effect to the legislature's intent.  Minn. Stat. § 645.16 (2000).  When the words of a statute, in their application to undisputed facts, are clear and unambiguous, we must give effect to their plain meaning.  Id.

            A person who contributes to the improvement of real estate through labor or materials acquires a lien on the real estate and the improvement.  Minn. Stat. § 514.01. But the contractor must give prelien notice to the property owner if the contractor "has contracted or will contract with any subcontractors or material suppliers to provide labor, skill or materials for the improvement."  Id., subd. 1 (emphasis added).  This prelien notice warns the owner that anyone supplying labor or materials may file a lien against the property if not paid, and that the owner has the right to pay the suppliers directly.  See id.  Failure to give proper and timely prelien notice will defeat the lien.  Id.; see also Merle's Constr. Co. v. Berg, 442 N.W.2d 300, 302 (Minn. 1989) ("There must be strict compliance with the prelien notice statutory requirements.").   

The statute imposes strict time limits on issuance of the prelien notice.  Minn. Stat. § 514.011, subd. 1.  When a contractor and owner contract in writing for the improvement, prelien notice must be included in the contract itself.  Id.  When the contract is oral, as was the contract between McGovern and the Rudds, the prelien notice "must be prepared separately and delivered personally or by certified mail * * * within ten days" of the agreement.  Id.  (emphasis added).  Because prelien notice is required at the time of contracting or within ten days, the contractor must look into the future to determine whether he or she "will contract" with any subcontractors or material suppliers in connection with completing the improvement.  The statute makes the act of contracting, not the type or timing of payment, the triggering act for requiring that prelien notice be sent.  See id.

Applying the statute's plain language to the undisputed material facts, we conclude that McGovern was required to serve prelien notice on the owners.  At the time McGovern orally agreed to paint and stain the Rudd house, it was contemplated that McGovern would contractand he indeed did contractwith paint suppliers to purchase painting and staining materials for use in the Rudd home.   If McGovern had failed to pay for the painting supplies, the suppliers could have filed a materials lien against the Rudd home for the value of the materials that contributed to the improvement.  See Minn. Stat. § 514.01 ("Whoever * * * contributes to the improvement of real estate by * * * furnishing skill, material or machinery for any of the purposes hereinafter stated * * * at the instance of any agent, contractor, or subcontractor of such owner, shall have a lien upon the improvement * * *.").  Because it is undisputed that McGovern failed to serve the required prelien notice, his lien is invalid and must be removed.

This statutory interpretation comports with the principles Minnesota courts have recognized as the evident purpose of the prelien notice requirement, i.e., "to alert a property owner to the risk of double liability if his contractor failed to pay its subcontractors."  Polivka Logan Designers, Inc. v. Ende, 312 Minn. 171, 173, 251 N.W.2d 851, 852 (1977).  McGovern's obtaining supplies from Hirschfields and Knox presented a potential risk that the supplier would file a lien if McGovern failed to pay them.  The fact that the risk never materialized does not negate McGovern's duty to comply with the prelien requirements under the statute, within ten days of his oral agreement with the Rudds.  See, e.g., Sievert v. LaMarca, 367 N.W.2d 580, 587 (Minn. App. 1985) (contractor who failed to provide prelien notice could not assert lien for his own laboreven though facts indicated that the subcontractors and material suppliers had not asserted a lien), review denied (Minn. July 17, 1985).  The power of a mechanic's lien carries with it the responsibility for strict compliance, and strict compliance may not always achieve equitable results.  We note, however, that the invalidity of the lien does not affect McGovern's right to pursue a direct remedy against the Rudds under the contract.

Prelien notice was necessary to acquire a lien against the property owned by Variety Homes.  Because it is undisputed that McGovern did not furnish prelien notice, we reverse and remand for entry of judgment for Variety Homes.

Reversed and remanded.   

 

* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.