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Brentwood Glass Co., Inc. v. Pal's Glass Service, Inc.

Supreme Court of Missouri, En Banc

August 23, 2016

BRENTWOOD GLASS COMPANY, INC., Appellant,
v.
PAL'S GLASS SERVICE, INC., Defendant, CLAYCO, INC., CORNERSTONE VI, LLC, ST. LOUIS COUNTY, NATIONAL CITY BANK of the MIDWEST, N.A., PAUL M. MACON, UMB BANK, N.A., and VICTOR ZARILLI, Respondents.

         APPEAL FROM THE CIRCUIT COURT OF ST. LOUIS COUNTY The Honorable Richard C. Bresnahan, Judge

          PER CURIAM

         Brentwood Glass Company, Inc., appeals the circuit court's judgment in favor of defendants on two claims: its mechanic's lien claim for unpaid work on a construction project and its claim that St. Louis County failed to require a public works construction bond mandated by section 107.170.[1] This Court granted transfer after opinion by the court of appeals. Mo. Const. art. V, sec. 10.

         The defendants were not entitled to summary judgment on Brentwood Glass's mechanic's lien claim against Cornerstone VI, LLC. While a mechanic's lien may not attach to a building, land, or improvements owned by a public entity, Brentwood Glass may bring its mechanic's lien claim against Cornerstone's leasehold interest. Additionally, genuine issues of material fact exist regarding whether the lien notice was timely and whether the lien statement provided a just and true account of the demand due. As to Brentwood Glass's bond claim against the County, judgment was proper because Cornerstone was not a "contractor" under section 107.170.1(1). Furthermore, Brentwood Glass did not name a party against whom it could recover on its bond claim.

         Accordingly, judgment on Brentwood Glass's mechanic's lien claim is reversed as to Cornerstone. In all other respects, the judgment is affirmed. The cause is remanded.

         Factual and Procedural Background

         The St. Louis County council adopted a resolution expressing its intent to issue industrial revenue bonds to finance the County's purchase and development of a property known as Six City Place Drive. The County planned to develop the property for the headquarters of Smurfit-Stone Container Enterprises, Inc. The resolution authorized two companies, Smurfit-Stone and Cornerstone, to proceed with the "purchase, construction and equipping" of the development, "including the entering into of contracts, " and expressed the County's intent to lease the property to Smurfit-Stone and Cornerstone.

         The County ultimately passed an ordinance finalizing the comprehensive plan to finance and develop the property. As part of the plan, the County was to issue industrial revenue bonds to finance the project, upon which only Cornerstone could draw. Cornerstone and the County also executed a "Lease Agreement." The agreement provided for more than a lease and, therefore, will be referred to as a "contract."

         The contract required Cornerstone to construct the project "on behalf of the County" and authorized Cornerstone to act "as the agent of the County." As the County's agent, the contract required Cornerstone to "promptly notify the County of the imposition of [a mechanic's] lien of which the Company is aware[.]" Cornerstone deeded the property to St. Louis County; on the same day, the County issued the industrial revenue bonds to finance the project.

         Clayco, Inc., the general contractor for the project, subsequently entered into a subcontract with Pal's Glass to supply glass and glazing work. Pal's Glass, in turn, entered into a sub-sub-contract with Brentwood Glass for some of this work. Neither Cornerstone nor any contractor working on the project obtained a bond that would comply with section 107.170.2.

         Pal's Glass initially agreed to pay Brentwood Glass a firm, fixed price for the labor and material. Any changes to the sub-subcontract were required to be made by a change order in writing by the subcontractor. Pal's Glass and Brentwood Glass revised the contract via change order once. Other change orders, however, were proposed but not executed. Brentwood Glass performed extra work not reflected in the sub-subcontract price or a change order.

         Brentwood Glass was not paid for any work done after January 12, 2007, but presented evidence that it continued to work on the project after this date. On July 27, 2007, Brentwood Glass served notice of its intent to file a mechanic's lien. The notice was served on Cornerstone, not the County. Having still not received payment, Brentwood Glass filed its mechanic's lien. The lien listed Cornerstone as the owner of the property and claimed $1, 061, 464.08 in unpaid work.

         Brentwood Glass then filed a nine-count petition against Pal's Glass, Clayco, Cornerstone, the County, UMB Bank, National City Bank of the Midwest, Paul M. Macon, and Victor Zarilli.[2] In Count I, Brentwood Glass asserted a breach of contract claim against Pal's Glass. In count VIII, Brentwood Glass asserted a mechanic's lien claim against all defendants. In count IX, Brentwood Glass asserted an action against the County for allegedly failing to require a payment bond pursuant to section 107.170. Pal's Glass admitted to owing $593, 261.47 and consented to a judgment against it for that amount and costs.

         The defendants filed a motion for summary judgment on the mechanic's lien claim. The County also asserted it was entitled to summary judgment on the bond claim because section 107.170 did not apply. The circuit court entered judgment in favor of the defendants. Brentwood Glass appeals.[3]

         Standard of Review

         On appeal, an appellate court reviews summary judgment de novo. ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). Summary judgment is proper when the movant "show[s] a right to judgment flowing from facts about which there is no genuine dispute." Id. at 378. A genuine dispute exists when "the issue, or dispute, [is] a real and substantial one - one consisting not merely of conjecture, theory and possibilities." Id. Evidence in the record is viewed "in the light most favorable to the party against whom judgment was entered" with "the benefit of all reasonable inferences from the record." Id. at 376.

         Analysis

         I

         A mechanic's lien is an equitable remedy with "the purpose of giving security to mechanics and material[men] for labor and materials furnished in improving the owner's property." Bob DeGeorge Assocs., Inc. v. Hawthorn Bank, 377 S.W.3d 592, 598 (Mo. banc 2012) (internal quotations omitted). As such, "the provisions of the mechanics' lien law should be interpreted so as to carry out the object ... [of] the security of the classes of persons named in the act, upon its provisions being in good faith substantially complied with on their part." Putnam v. Ross, 46 Mo. 337, 338 (Mo. 1870). "As a general rule, statutes relating to mechanic's liens should be liberally construed in favor of lien enforceability." State ex rel. Springfield Underground, Inc. v. Sweeney, 102 S.W.3d 7, 9 (Mo. banc 2003).

         The mechanic's lien filed by Brentwood Glass does not specify whether it is seeking a lien against the County's freehold property interest or against Cornerstone's leasehold interest. But the mechanic's lien statutes do not require such designation.

         A

         Under section 429.010, RSMo Supp. 2005, a mechanic's lien may be brought against an owner's freehold interest in property:

[a]ny person who shall do or perform any work or labor ... or furnish any material, fixtures, engine, boiler or machinery for any building, erection or improvements upon land ... under or by virtue of any contract with the owner or proprietor thereof, or his or her agent, trustee, contractor or subcontractor ... upon complying with the provisions of sections 429.010 to 429.340, shall have for his or her work or labor done ... a lien upon such building, erection or improvements, and upon the land belonging to such owner or proprietor on which the same are situated[.]

Public policy, however, prohibits the attachment of a mechanic's lien on the buildings, land, or improvements owned by a public entity. Redbird Eng'g Sales, Inc. v. Bi-State Dev. Agency of Missouri-Illinois Metro. Dist., 806 S.W.2d 695, 697 (Mo. App. 1991).

         The County owned the property at the time that Brentwood Glass began working on the building, and the contract between the County and Cornerstone provided that any improvements installed in the building immediately became the property of the County. As such, the County is protected by "the general rule that property owned by a county or other municipal corporation, and used for public purposes cannot be sold on execution." Sec. State Bank v. Dent Cnty., 137 S.W.2d 960, 961 (Mo. 1940) (internal quotations omitted). Brentwood Glass may not, therefore, perfect its mechanic's lien against the County.

         B

         Section 429.070.2 also establishes a right to a mechanic's lien against a leasehold interest:

Every mechanic, person or corporation who shall erect or construct any building, plant, improvement, or erection, or who shall furnish any material, ... or other personal property upon either licensed or leased lots or lands under or by virtue of any contract or account with the owner or proprietor of the license or lease or with his or its agent, ..., upon complying with the provisions of sections 429.010 to 429.340, shall have a lien upon such building, plant, improvement, erection, and also upon such materials, fixtures, ... and such other personal property and also ...

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