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Parkwest Homes LLC v. Barnson

June 25, 2010

PARKWEST HOMES LLC, AN IDAHO LIMITED LIABILITY COMPANY, PLAINTIFF-APPELLANT,
v.
JULIE G. BARNSON, AN UNMARRIED WOMAN; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., A DELAWARE CORPORATION, AS NOMINEE FOR HOMECOMINGS FINANCIAL, LLC (F/K/A HOMECOMINGS FINANCIAL NETWORK, INC.), A DELAWARE LIMITED LIABILITY COMPANY; AND DOES 1-10, DEFENDANTS-RESPONDENTS.



Appeal from the District Court of the Third Judicial District of the State of Idaho, in and for Canyon County. The Hon. Gordon W. Petrie, District Judge.

The opinion of the court was delivered by: Eismann, Chief Justice.

2010 Opinion No. 68

The judgment of the district court is vacated.

This is an appeal from a judgment dismissing an action to foreclose a mechanic‟s lien because: (a) the notice of lien did not substantially comply with the requirements of Idaho Code § 45-507, and (b) the construction contract was void because the contractor had not registered under the Idaho Contractor Registration Act before it negotiated and signed the contract. We hold that the claim of lien substantially complied with Idaho Code § 45-507 and that the lien was valid for labor and materials supplied after the contractor registered. We therefore vacate the judgment of the district court and remand this case for further proceedings.

I. FACTS AND PROCEDURAL HISTORY

On March 27, 2006, ParkWest Homes LLC and Juli Barnson both signed a written contract dated March 15, 2006, under which ParkWest agreed to construct a home on certain real property for $422,000. At the time that the parties negotiated and executed that contract, ParkWest was not registered under the Idaho Contractor Registration Act, Idaho Code §§ 54-5201 to 54-5219 (Contractor Act). On April 7, 2006, Barnson purchased the property upon which the home was to be built.

ParkWest registered under the Contractor Act on May 2, 2006; it commenced construction of the home on May 22, 2006; and it claims to have substantially completed construction on November 1, 2006. ParkWest and Barnson later had a dispute as to whether she had paid all sums due. On November 28, 2006, ParkWest recorded a mechanic‟s lien against the property, claiming that the sum of $189,117.99, plus interest, was due for labor and materials it furnished in constructing the home.

On November 14, 2006, two deeds of trust were recorded against the property. Mortgage Electronic Registration Services, Inc., (MERS) is the beneficiary under both deeds of trust.

On August 7, 2007, ParkWest filed this action to foreclose its lien. On October 2, 2008, MERS filed a motion for summary judgment contending that ParkWest‟s asserted lien was void because: (a) the claim of lien did not substantially comply with Idaho Code § 45-507; (b) ParkWest was not registered under the Contractor Act when it entered into the construction contract; and (c) prior to contracting with Barnson ParkWest had failed to provide her with the disclosures required by Idaho Code § 45-525.

The district court held that ParkWest did not have a mechanic‟s lien because its claim of lien was defective and the construction contract was void. It entered judgment in favor of MERS holding that its deeds of trust were superior to ParkWest‟s mechanic‟s lien. ParkWest then timely appealed.

II. ISSUES ON APPEAL

(1) Did the district court err in holding that ParkWest‟s claim of lien did not substantially comply with Idaho Code § 45-507?

(2) Did the district court err in holding that ParkWest‟s claimed lien was unenforceable because the construction contract was void for failure to comply with the Contractor‟s Act?

(3) Did the district court err in holding that ParkWest did not plead a claim for unjust enrichment?

(4) Is MERS entitled to an award of attorney fees on appeal?

III. ANALYSIS

During oral argument, ParkWest contended that MERS does not have standing in this case based upon a decision in an unrelated bankruptcy case holding that MERS did not have standing to assign a promissory note merely because it was the "nominal beneficiary" under the deed of trust securing that note. That decision has nothing to do with this case. ParkWest has alleged that MERS is the beneficiary under two deeds of trust and that ParkWest‟s mechanic‟s lien has priority over those deeds of trust. There is no contention that MERS attempted to assign any promissory note or to foreclose the deeds of trust.

A. Did the District Court Err in Holding that ParkWest's Claim of Lien Did Not Substantially Comply with Idaho Code § 45-507?

Idaho Code § 45-501 declares that "[e]very person performing labor upon, or furnishing materials to be used in the construction... of any... building... has a lien upon the same for the work or labor done." Any person claiming a lien under that statute must file a claim of lien in the office of the county recorder for the county in which the property or some part of it is situated. I.C. § 45-507. The mechanic‟s lien statutes are liberally construed in favor of those to whom the lien is granted, and to create a valid lien the ...


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