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Sims v. ACI Northwest, Inc.

Supreme Court of Idaho

January 21, 2015

KEITH A. SIMS, dba KASCO OF IDAHO, LLC, an Idaho limited liability company, Plaintiff,
v.
ACI NORTHWEST, INC., Defendant-Third Party Plaintiff-Appellant, and MONUMENT HEIGHTS, LLC, an Idaho limited license company; DAN S. JACOBSON, an individual; SAGE HOLDINGS, LLC, an Idaho limited license company; STEVEN G. LAZAR, an individual; THE MITCHELL A. MARTIN AND KAREN C. MARTIN FAMILY TRUST DATED AUGUST 9, 2005; DEVON CHAPMAN, an individual, Defendants-Respondents, and CHARLES R. DEAN, Successor Trustee; and JOHN AND JANE DOES 1-100, owners, being all persons claiming an interest in the [subject] property, Defendants, and ANTHONY ST LOUIS, a single person; ANDREA STEPHENS, a single person; LILLY PROPERTIES, INC., a Nevada corporation; and HLT REAL ESTATE, LLC, an Idaho limited liability company, Third-Party Defendants-Respondents

Page 619

2015 Opinion No. 2

Appeal from the District Court of the First Judicial District of the State of Idaho, Kootenai County. Hon. Benjamin R. Simpson, District Judge.

Judgment for defendants in action to foreclose mechanic's liens affirmed. Costs on appeal are awarded to respondents.

James, Vernon & Weeks, PA, Coeur d'Alene, attorneys for appellant. Cynthia K.C. Meyer argued.

Lukins & Annis, P.S., Coeur d'Alene, attorneys for respondents. Jonathon D. Hallin argued.

WALTERS, Justice pro tem. Chief Justice BURDICK, Justices EISMANN and HORTON, CONCUR. J. JONES, Justice, specially concurring.

OPINION

Page 620

WALTERS, Justice pro tem

This appeal involves the attempted foreclosure of two mechanic's liens on property encumbered by deeds of trust. In ParkWest Homes, LLC v. Barnson (ParkWest II ), 154 Idaho 678, 302 P.3d 18 (2013), this Court held that an action to foreclose a mechanic's lien on property encumbered by a deed of trust must " name the trustee who holds legal title to the property" within the six-month statutory limitation to lien enforcement. Id. at 685, 302 P.3d at 25. Without the trustee named in the action, the mechanic's lien is lost as to the trustee's interest and " a subsequent holder of legal title to property encumbered by a deed of trust and a mechanic's lien, takes the property free and clear of the mechanic's lien." Id.

Appellant ACI Northwest Inc. (ACI) challenges this holding from ParkWest II after the district court determined that ACI lost its mechanic's liens for failing to name the trustees in its foreclosure action against Respondents Monument Heights LLC (Monument Heights), Dan Jacobson, Sage Holdings LLC, Steven Lazar, the Mitchell A. Martin and Karen C. Martin Family Trust dated August 9, 2005, Devon Chapman, HLT Real Estate LLC, Anthony St. Louis, Andrea Stevens, and Lilly Properties Inc. (collectively " the Monuments Heights group" ). Due to this determination, the district court granted summary judgment in favor of the Monuments Heights group. ACI appeals to this Court. We affirm.

I. Factual and Procedural Background

On May 27, 2008, ACI began furnishing labor to Monument Heights on certain real property owned by Monument Heights. On August 1, 2008, Monument Heights executed and delivered a deed of trust (hereinafter " Monument Heights Deed of Trust" ) conveying three separate parcels of real property to Pioneer Title Company (Pioneer), the trustee, as security for payment of indebtedness owed by Monument Heights to Dan Jacobson, Sage Holdings LLC, Steven Lazar, the Mitchell A. Martin and Karen C. Martin Family Trust dated August 9, 2005, and Devon Chapman (collectively " the Jacobson group" ), the beneficiaries. On August 6, 2008, the Monument Heights Deed of Trust was recorded with the Kootenai County Recorder.

On January 29, 2009, ACI recorded a mechanic's lien with the Kootenai County Recorder in the amount of $53,437.10 on the property owned by Monument Heights upon which ACI had furnished labor. On July 28, 2009, ACI recorded an Endorsement to Claim of Lien for Payment on Account. The endorsement stated that ACI received a payment of $25,000 from Monument Heights on February 11, 2009. On August 10, 2009, ACI initiated proceedings for judicial foreclosure of its mechanic's lien.

On January 20, 2010, Charles R. Dean, Jr., was appointed as the successor trustee under the Monument Heights Deed of Trust. An Appointment of Successor Trustee was recorded with the Kootenai County Recorder on February 5, 2010.

On March 11, 2011, Monument Heights sold a portion of its real property encumbered by the Monument Heights Deed of Trust to Anthony St. Louis and Andrea Stevens. St. Louis and Stevens conveyed a deed of trust (hereinafter " St. Louis & Stevens Deed of Trust" ) to Pioneer as security for payment of indebtedness owed to Monument Heights, recorded with the Kootenai County Recorder. On March 15, 2011, Monument Heights assigned its interest under the St. Louis & Stevens Deed of Trust to Lilly Properties. Monument Heights recorded its assignment with the Kootenai County Recorder.

On June 1, 2011, Lazar (part of the Jacobson group) recorded an assignment of his interest under the Monument Heights Deed of Trust to HLT Real Estate LLC.

On June 14, 2011, ACI recommenced furnishing labor, materials, and services in the improvement of the Monument Heights property. On July 26, 2011, ACI recorded a second mechanic's lien with the Kootenai County Recorder, securing the principal sum of $462,780.46.

On January 12, 2012, ACI filed an amended complaint seeking to judicially foreclose its mechanic's liens. ACI had not named or sought to join to its action Dean, the trustee

Page 621

of the Monument Heights Deed of Trust, or Pioneer, the trustee of the St. Louis & Stevens Deed of Trust.

On February 26, 2013, the Monument Heights group moved for summary judgment against ACI. The district court determined that ACI was required to join the trustees Dean and Pioneer to its action to judicially foreclose its mechanic's liens pursuant to Idaho Code section 45-510 and this Court's holding in ParkWest II.[1] ACI had failed to do so within the statutory six-month period in Idaho Code section 45-510, and therefore the Monument Heights group was entitled to summary judgment as a matter of law. On April 17, 2013, the district court issued a partial summary judgment against ACI. The partial summary judgment stated that ACI's two mechanic's liens were " lost and unenforceable" against the legal title held by trustees Dean and Pioneer.

On May 17, 2013, the district court entered a restated judgment in favor of the Monument Heights group against ACI. On June 7, 2013, ACI filed a notice of appeal. The district court subsequently entered an amended judgment.

II. Issues on Appeal

1. Whether the district court erred in granting summary judgment to the Monument Heights group based on this ...


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