TSM Development, Inc., Appellant, vs. Tappe Construction Co., et al, Defendants, Acoustical Floors, Inc., intervening additional defendant, Respondent.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-1059

 

TSM Development, Inc.,
Appellant,
 
vs.
 
Tappe Construction Co., et al,
Defendants,
 
Acoustical Floors, Inc.,
intervening additional defendant,
Respondent.

 

Filed May 25, 2004

Affirmed

Wright, Judge

 

Anoka County District Court

File No. C3-01-9690

 

 

Thomas G. Wallrich, Peter L. Crema, Jr., Mansfield, Tanick & Cohen, P.A., 1700 Pillsbury Center South, 220 South Sixth Street, Minneapolis, MN  55402-4511 (for appellant)

 

Malcom D. MacGregor, Nolan, MacGregor, Thompson & Leighton, 710 Lawson Commons, 380 St. Peter Street, St. Paul, MN  55102 (for respondent)

 

 

            Considered and decided by Wright, Presiding Judge; Schumacher, Judge; and Willis, Judge.

 

U N P U B L I S H E D  O P I N I O N

 

WRIGHT, Judge

 

In this appeal from a judgment for respondent, appellant argues that the district court erred in concluding that (1) respondent timely filed its mechanic's lien; and (2) respondent did not breach the subcontract agreement.  Appellant also argues that the district court abused its discretion in awarding attorney fees.  We affirm.

FACTS

Appellant TSM Development, Inc. (TSM) hired Ed Sheehy Construction, Co. (Sheehy) as the general contractor for construction of a condominium project in Coon Rapids.  Sheehy hired respondent Acoustical Floors, Inc. (AFI) and entered into a standard subcontract agreement with AFI to furnish and install gypsum floor underlayment using a product called Gypcrete. 

AFI completed pouring the Gypcrete in four days, ending on August 24, 2001.  After finding significant defects with the floor underlayment, Sheehy contacted AFI to perform repair and warranty work.  Sheehy identified as defects several instances of warping and failure to level the floor in certain locations.  AFI returned to the work site at the request of Sheehy to perform curative work on the flooring.  A sales manager for AFI testified that the curative work was completed on November 1, 2001. 

AFI billed Sheehy in four invoices totaling $54,600 but received no payment.  On February 1, 2002, AFI filed a mechanic's lien against the condominium project.  TSM initiated litigation against Tappe Construction, a carpentry subcontractor, alleging breach of contract.  Tappe then filed a cross-claim against AFI.  AFI commenced foreclosure of its mechanic's lien against the condominium project and intervened in the lawsuit as an additional defendant.[1]  Following a trial, the district court entered judgment for AFI and awarded attorney fees.  This appeal followed. 

D E C I S I O N   I.

 

            A mechanic's lien arises automatically upon the provision of labor or materials.  Minn. Stat. § 514.01 (2002).  The lien attaches when the lien claimant furnishes the first item of material or labor for the project.  Minn. Stat. § 514.05, subd. 1 (2002).  But the lien ceases 120 days after the last work is performed or the last item of skill, material, or machinery is furnished, unless a statement of the claim is filed and recorded.  Minn. Stat. § 514.08, subd. 1 (2002).  The time limits of section 514.08 are strictly construed such that failure to file the lien statement within 120 days after completion of the work defeats the lien.  David-Thomas Cos. v. Voss, 517 N.W.2d 341, 343 (Minn. App. 1994).

            The date that the last work was performed is a question of fact, which we review for clear error.  See Eischen Cabinet Co. v. Hildebrandt, 671 N.W.2d 609, 612 (Minn. App. 2003).  A district court's findings of fact will not be set aside as clearly erroneous, unless they are not reasonably supported by the record as a whole.  Minn. R. Civ. P. 52.01; Hubbard v. United Press Int'l, Inc., 330 N.W.2d 428, 441 (Minn. 1983).   

"Revival of the lien is clearly disallowed when de minimus operations are performed for the sole purpose of extending the time for the lien and the work is otherwise substantially completed."  Kahle v. McClary, 255 Minn. 239, 242, 96 N.W.2d 243, 246 (1959).  The district court found that AFI's February 1, 2002, lien statement was timely because November 1, 2001, was the last day that AFI performed work under the subcontract agreement for the condominium project.  TSM contends that AFI's lien was untimely because AFI's work was completed on August 24, 2001, the last day the Gypcrete was poured.  The additional work AFI performed in September through November, TSM maintains, was performed in an effort to extend AFI's lien rights.   

In determining whether the ongoing floor repair was part of the initial agreement or a separate contract, we consider the following factors: (1) the lapse of time following the last major work; (2) whether the amount of subsequent work was minimal; and (3) the general circumstances under which the work was done.  Id. at 241-42, 96 N.W.2d at 246. 

The date of the last Gypcrete pour, which arguably is the last major work, was August 24, 2001.  AFI contends that the curative work continued at the request of Sheehy until November 1, 2001, with no time lapse following the major work.  The record establishes that, on six separate occasions between August 24 and November 1, 2001, AFI workers performed a considerable amount of work on the project.  Testimony and documentary evidence found credible by the district court establish that the work performed during this period was either necessary to finish the job or to respond to Sheehy's requests under the warranty. 

In light of the entire record, TSM's argument that the work was performed only in an attempt to extend the time for filing a lien must fail.  Accordingly, the district court did not err in determining that the mechanic's lien was timely filed.

II.

 

            A party breaches a contract when it totally or partially fails to perform its obligations under the contract.  Associated Cinemas of Am. v. World Amusement Co., 201 Minn. 94, 99, 276 N.W. 7, 10 (1937).  Whether a contractor properly performed its contract is a question of fact, which we review for clear error.  Julian Johnson Constr. Corp. v. Parranto, 352 N.W.2d 808, 810 (Minn. App. 1984). 

The district court found that AFI furnished and installed the Gypcrete floor underlayment in accordance with the subcontract agreement, which required installation at a depth of three-quarter inches, but did not require the surface of the floor to be level.  TSM argues that AFI breached its subcontract agreement by failing to install the Gypcrete underlayment according to industry standards requiring installation.

By its terms, the subcontract agreement provided that AFI would

(1) Furnish all labor, material, skill and equipment necessary or required and to perform all the work necessary for: (Here describe work covered by this Subcontract).  Furnish and Install: Gypcrete Complete in accordance with plans and sections of the specifications: 3500-Gypcrete.

 

It is clear from the trial testimony that "3500-Gypcrete" is a term of art that refers to a section of an architect's specification book that relates to flooring.  But it is undisputed that the condominium project did not have an architect's specification book, and "3500-Gypcrete" does not prescribe application resulting in a level surface.  Our review of the plans for the condominium project referenced in the contract establishes that, although AFI was required to install the floor underlayment at a depth of three-quarter inch, the plans make no reference to requiring a level surface.

Contrary to TSM's argument, the district court did not err in concluding that the evidence does not establish an industry standard requiring installation of gypsum floor underlayment to produce a level surface that can be read into the contract.  AFI's sales manager testified that no industry standard exists for determining whether a gypsum floor underlayment is level.  On cross-examination, the sales manager conceded that, if he "had to make [up] something and say it," he would guess that a variation of one-quarter inch or less every ten feet would be considered a level floor.  The sales manager's speculation, however, does not establish evidence of an industry standard that can be implied as a term of the contract.   

The record supports the district court's finding that AFI was able to repair any defects under the contract.  While the contract does not contain a provision requiring a level surface for the floor, there are provisions requiring AFI to guarantee its work.  And the record refutes any claim of clear error in the district court's finding that, in response to requests to perform curative work, AFI met its contractual obligation to correct any defects in its material or workmanship.  Accordingly, we conclude that the district court did not err in entering judgment against TSM.

III.

 

In a mechanic's lien foreclosure action, a prevailing lienholder is entitled to "costs and disbursements to be fixed by the court."  Minn. Stat. § 514.14 (2002).  Reasonable attorney fees may be awarded as part of the lienholder's costs and disbursements.  Obraske v. Woody, 294 Minn. 105, 108, 199 N.W.2d 429, 431 (1972) (stating that costs and disbursements include an award for attorney fees).  

A district court's award of attorney fees will not be reversed absent an abuse of discretion.  Becker v. Alloy Hardfacing & Eng'g Co., 401 N.W.2d 655, 661 (Minn. 1987).  In awarding attorney fees, the district court considers several factors, including the time and effort required, novelty or difficulty of the issues, value of the interest involved, results secured at trial, loss of opportunity for other employment, and customary charges for similar services.  Jadwin v. Kasal, 318 N.W.2d 844, 848 (Minn. 1982).  Attorney fee awards should be in proportion to the mechanic's lien judgment.  Asp v. O'Brien, 277 N.W.2d 382, 385 (Minn. 1979).  But fees are not disproportionate merely because they exceed the amount of the mechanic's lien.  Kirkwold Constr. Co. v. M.G.A. Constr., Inc., 498 N.W.2d 465, 470 (Minn. App. 1993), aff'd, 513 N.W.2d 241 (Minn. Mar. 11, 1994).  "Limiting fees in such a manner would discourage small lienholders from pursuing valid claims through the legal system."  Id.

Here, the district court awarded AFI a mechanic's lien of $57,982.36 and attorney fees and costs of $27,645.14.  TSM argues that the district court abused its discretion in doing so because (1) the district court order did not enumerate the factors considered; and (2) the attorney fees award was excessive, given the amount of the mechanic's lien.  

The district court considered the amount of attorney time necessary to prepare and defend a lien case through trial along with the hourly rate of the attorneys and determined that, with two exceptions, "the hourly rate was reasonable and the work was all reasonably necessary to the litigation of the mechanics lien claims."  The district court excluded from the award fees two entries unrelated to the litigation.  The record contains detailed time reports and an explanatory affidavit on which the fee award is based.  From the record as a whole, we conclude that the district court did not abuse its discretion in awarding reasonable attorney fees.  See Automated Bldg. Components, Inc. v. New Horizon Homes, Inc., 514 N.W.2d 826, 831 (Minn. App. 1994) (affirming attorney fees award because, even in absence of specific findings relating to award, record contained detailed time reports and explanatory affidavit which supported amount of award), review denied (Minn. June 15, 1994).  Cf. Richard Knutson, Inc. v. Westchester, Inc., 374 N.W.2d 485, 490 (Minn. App. 1985) (reversing award for lack of findings where reviewing court was unable to determine whether appropriate factors had been considered). 

            Affirmed.

[1] All other parties have settled their claims against TSM.