IN THE COURT OF APPEALS OF IOWA
No. 14-0817
Filed March 25, 2015
REILLY CONSTRUCTION CO., INC.,
Plaintiff-Appellee/Cross-Appellant,
vs.
BACHELDER, INC.,
Defendant-Appellant/Cross-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Winneshiek County, John J.
Bauercamper, Judge.
A property owner appeals the district court’s determination his oral
contract with a construction company to build a pond did not carry express or
implied warranties. The construction company cross-appeals the court’s refusal
to foreclose its mechanic’s lien. REVERSED AND REMANDED ON APPEAL;
AFFIRMED ON CROSS-APPEAL.
Dale L. Putnam of Putnam Law Office, Decorah, for appellant.
Richard D. Zahasky, Decorah, and Douglas A. Boese and John C. Beatty
of Dunlap & Seeger, P.A., Rochester, Minnesota, for appellee.
Heard by Vaitheswaran, P.J., and Tabor and Mullins, JJ.
2
TABOR, J.
This appeal concerns a pond that does not hold water. At issue is how the
landowner and the builder apportioned that risk in their oral contract for the
project. The landowner, Bachelder, Inc., paid for the initial dam construction but
not for remedial digging. The builder, Reilly Construction Co., Inc., filed a
mechanic’s lien. The district court declined to foreclose the mechanic’s lien but
also rejected Bachelder’s counterclaims for breach of either express or implied
warranties. Both sides appeal. Because the district court erred in finding no
breach of an express warranty the pond would hold water or an implied warranty
of workmanlike construction or fitness for a particular purpose, we reverse and
remand for a hearing on Bachelder’s damages. Finding no implied contract to
perform additional work on the pond, we affirm on Reilly’s cross-appeal.
I. Background Facts and Proceedings
Leon and Sherry Bachelder wanted to add a recreational pond to their
Winneshiek County acreage.1 They hoped to use it with family and friends to
“swim, fish, and take the boat out on it.” As part-owner of the Decorah Auto
Center, Leon Bachelder had sold pickup trucks to Christopher Reilly, owner of
Reilly Construction Co., Inc. Because he knew him as a customer, Bachelder
approached Reilly about building the pond, the first time in 2008. When
Bachelder did not hear back, he called Reilly again in 2009.
Reilly sent workers out to survey the area and reported back to Bachelder
that it looked like they could build a pond for him. Then Bachelder, Reilly, and
1
The title holder of the property was Bachelder, Inc.; that entity is the defendant-
appellant in this action.
3
Reilly’s employee, Charles Sender, met at the site. Sender had “staked out” the
location where the pond would be. Bachelder recalled Sender telling him the
maximum depth of the pond would be twenty to twenty-one feet. Reilly saw the
location was a natural waterway with a small stream running through it, about
three to four hundred feet across, fairly sloping to the bottom. Reilly agreed to
build a dam across the valley to capture the water.
Reilly started construction of the pond in fall 2009 and finished in spring
2010. His construction company did not have any licensed engineers on staff
and did not consult any before beginning the project. Reilly testified the first step
in his process was to dig a core trench where the center of the dike would be
located. Reilly explained: “You dig down, depending on soil conditions, but until
you find a clay material.” He said, in this case, they ran into a little bit of top soil,
and then “were into clay material” and “dug approximately ten feet, and through
the ravine or waterway, through the bottom, up into the slope,” and then “started
to fill that with on-site material that was available on the property.” During the
construction, Reilly’s crew dug up two natural springs on the property, ostensibly
to make them flow better and keep the pond filled. Reilly understood the
Bachelders wanted the top of the dam to be wide enough to drive across. When
finished the following spring, the dike was about twenty-five feet high, transected
by a twenty-four-inch drainage pipe to allow the water to reach of a maximum
depth of twenty-one feet.
4
Reilly billed Bachelder for his work, and Bachelder wrote Reilly checks in
the amounts of $57,110.63 in December 2009 and $30,000 in April 2010.2 The
pond held water during the summer of 2010—when the precipitation was well
above average. But that autumn the water level dropped dramatically. So
dramatically, the Bachelders could see the tires Reilly’s crew placed at the
bottom of the pond to serve as a habitat for fish. Bachelder called Reilly to tell
him the pond was not holding water.
Reilly went out to investigate and agreed to pump out the remaining
water—free of charge—to look at the bottom of the pond for signs of leakage.
Reilly sent Bachelder an email on October 12, 2010, detailing the next steps:
The guys are going to pump out the pond and see what we can find
in the coming days. Also when our guys were out there your wife
did not care to [sic] much for the tires as fish habitat so we will
remove those. So we are on the same page we will not charge you
anything to pump out the pond and come up with a plan but if the
solution is to find clay material and line the bottom then we would
need to come up with some kind of compensation for that work.
Pretty much all the good material from the west was used up for the
dam and the clay on the east side was not plentiful so we may need
to look at off site material.
Reilly also brought in an engineer at this point to “do some bore testing” to
determine if the structure his company built was leaking. The dam appeared to
be intact and the bottom of the pond was the same clay material Reilly
discovered when he dug the core trench for the dam. But when he started
exploring further up the slopes of the pond, he found “basically a plus or minus
five foot shale layer that was not exposed to the environment but back in under
2
The Bachelders also wrote Reilly a check for $29,851.50 in March 2011.
5
top soil.” The shale layer was porous and water ran through it like it was sand.
To stem the infiltration, Reilly came up with a plan to dig a trench along the sides
of the pond, remove the shale, and replace it with clay from the bottom of the
pond.3 Reilly’s crew started the remedial work in the fall of 2010, but “got froze
out” and did not complete its digging until May 2011.
Reilly sent Bachelder a bill for the second round of work on the pond,
which Bachelder declined to pay. On July 1, 2011, Reilly filed a mechanic’s lien
on the property, alleging Bachelder owed him $93,600 for work performed from
November 2010 through May 2011. Reilly filed a petition to foreclose the
mechanic’s lien on August 9, 2011. Bachelder filed an answer and counterclaim
on September 12, 2011. The counterclaim alleged Reilly was negligent in the
construction of the pond, failed to comply with the oral contract, and failed to
perform in a workmanlike fashion, causing Bachelder damages.
The district court held a trial without a jury on February 26 and 27, 2014.
Both Reilly and Bachelder testified. Bachelder alleged he incurred numerous
expenses related to the pond beyond the cost of construction, including a pump
to move water from the spring to the pond, grass seed, and a windmill for
aeration. Bachelder also estimated the cost of restoring the pond site to its pre-
contract position would be $98,000.
According to the district court, the evidence indicated:
Since this suit was filed, the water level in the pond has varied
greatly, depending upon the amount of rainfall. Following rainy
3
Reilly also tried to draw more water into the pond by using a “french drain” fashioned
out of PVC pipe to build up pressure at the two natural springs located on the site. Reilly
acknowledged at trial the french-drain method did not work at all.
6
periods, the pond reaches levels that are aesthetically pleasing.
When dry periods occur, the pond nearly dries up. The pond has
been useless for recreational purposes for extended time periods.
The springs do not significantly assist the pond in maintaining a
useable water level. No outside water source has been added.
In addition, both sides presented expert testimony concerning the
problems with the soil at the pond site. Bachelder called engineer Timothy Wiles
as a witness. His study concluded “underlying soils in the pond are permeable
and ineffective in holding water.” Wiles testified the site was not suitable for a
pond.
Reilly offered the opinion of engineer David Morrill. Morrill determined the
work performed by Reilly on the embankment “conforms to typical construction
standards.” Morrill also opined “the lack of plans and an initial site exploration of
the ponding area increases the risk of undesirable outcomes and is not typical for
a structure of this size.” Morrill testified most of the time geotechnical
engineering is outside the regular pond design services; “eventually it’s the
owner that pays it. It can be arranged through the design consultant, but
generally it’s a separate operation in the design of the structures and the earth
work.” Like engineer Wiles, Morrill found the subsurface soil conditions in the
area were “unfavorable for ponding” because the soil types and presence of
limestone at a shallow depth would lead to “a high seepage loss of water” and a
“fluctuating water level.” In Morrill’s opinion, the pond “will not maintain a
permanent pool of water without the addition of a supplemental water source.”
In its ruling, the district court discussed the relative roles of the parties and
determined they were “both sufficiently sophisticated in business and technical
7
matters to recognize that professional planning and design services are available
in connection with the construction of a recreational pond.” The court noted the
parties “chose to go ahead with this project without engaging those additional
services.” The court further concluded the parties “agreed upon the location,
design, and essential features of the proposed pond before construction began.”
The court declined to foreclose Reilly’s mechanic’s lien, reasoning: “After
the work was completed and paid for, the pond failed to hold water and the
plaintiff made repairs. The court concludes that this work was voluntarily done as
part of the original compensation, without any agreement for further payment.”
The court also rejected Bachelder’s counterclaim for damages, explaining:
“the oral contract included no express or implied warranties or guarantees.”
According to the court, Reilly alerted Bachelder to the “potential problem of the
lack of a sufficient water supply and the possible need for a supplemental water
source, when Reilly took Bachelder to his father’s home and explained the
operation of that pond.” The court decided Bachelder “assumed the risk of this
potential problem by going ahead with the design of the project without further
professional assistance.” The court ruled “the failure of the pond to perform as
desired [was] not the result of a breach of contract” by Reilly.
Bachelder appeals, and Reilly cross-appeals.
II. Scope and Standards of Review
Both parties contend our review of the contract terms is for errors at law.
But actions to enforce mechanic’s liens are in equity. See Flynn Builders, L.C. v.
Lande, 814 N.W.2d 542, 545 (Iowa 2012). Accordingly, our review is de novo.
8
Id. In our de novo review, we give the district court’s fact findings weight, but we
are not bound by them. Id. Our supreme court has noted mechanic’s lien cases
often involve “numerous charges and counter charges which depend entirely on
the credibility of the parties,” and appellate courts must recognize the trial court is
“in a more advantageous position than we to put credence where it belongs.” Id.
III. Contract Analysis
The existence of an oral contract for Reilly to build a pond on Bachelder’s
property is not in dispute. The clashing point is whether their contract included
an express or implied warranty the pond would hold water.
A. Express Warranty
We first consider Bachelder’s contention that Reilly expressly warranted
the pond would hold water, in fact as much as twenty feet of water, given the
location of the stakes and the placement of the overflow pipe in the dam. In
reply, Reilly contends the theory of express warranty may not serve as the basis
of recovery under Iowa law in a construction contract. Reilly further argues even
assuming the theory was available, substantial evidence supported the district
court’s conclusion Reilly made no express warranty concerning the pond. We
disagree with Reilly on both points.
The Iowa Supreme Court has recognized an express warranty may form
the basis for recovery in a construction contract, even an oral construction
contract. See Busker v. Sokolowski, 203 N.W.2d 301, 303 (Iowa 1972). Further,
an express warranty can be created without using the words “warranty” or
“guaranty.” Flom v. Stahly, 569 N.W.2d 135, 140 (Iowa 1997). The party
9
alleging an express warranty must show the promisor “made some distinct
assertion of quality” that would be relied on by the promisee, as opposed to a
mere statement of opinion. Id. As in contracts for the sale of goods, an express
warranty is created by “[a]ny affirmation of fact or promise made by the seller to
the buyer which relates to the goods and becomes part of the basis of the
bargain.” See Moore v. Vanderloo, 386 N.W.2d 108, 112 (Iowa 1986) (applying
by analogy Iowa Code section 554.2313 (2013) to the sale of services). For
instance, the promise to build a “first-class house” was an express warranty to
engage in quality construction. Busker, 203 N.W.2d at 303; see also Nationwide
Agribusiness Ins. Co. v. SMA Elevator Const. Inc., 816 F. Supp. 2d 631, 680
(N.D. Iowa 2011) (accepting plaintiff’s position that phrase, “state of the art,” in
the context of construction projects was not too nebulous to support an express
warranty claim).
Reilly does not quibble with Bachelder’s testimony that Reilly told him he
could “do a pond” at the staked location on Bachelder’s property. In his
testimony, Reilly agreed he intended the pond would hold at least enough water
so that the tires placed on the bottom for fish habitat would be covered up. By
definition, a pond is “a body of water.”4 See American Heritage College
Dictionary 1062 (3d ed. 1993); see also Iowa Code §§ 455B.171(39) (defining
“water of the state” as including ponds), 462A.2(15) (defining farm pond as “a
body of water”). When Reilly agreed to construct a pond on Bachelder’s
property, he was expressly warranting the pond would hold water. Otherwise,
4
Without objection, Bachelder offered an exhibit at trial with this definition of pond: “a
body of water, naturally or artificially confined, and usually less extent than a lake.”
10
Reilly would have simply been constructing a dam, without any anticipation it
would capture water to form a pond.
Reilly’s promise to build a pond—that is a body of water—was supported
by the record. Reilly acknowledged at trial he discussed building the pond with
Bachelder, who said: “Let’s get it done, but I don’t want an empty pond like the
one on the Middle Clamar Road that has never had water in it.” Bachelder
reasonably understood Reilly’s agreement to move forward with the pond project
as incorporating an affirmation that the finished product would indeed hold water.
Where a warranty is made, “what the promisee is being led to expect on the part
of the promisor is indemnification against loss in case the facts turn out not as
represented.” See Joseph M. Perillo, Corbin on Contracts § 1.14 at 38 (rev. ed.
1993). The fact that the designated location on Bachelder’s land was not a
suitable place for a pond constituted a breach of Reilly’s warranty that he could
build a pond at that site.
The district court focused on Reilly having “alerted” Bachelder to the
“possible need for a supplemental water source” by taking Bachelder to see the
pond Reilly built for his own father. This focus was misplaced. The key question
was not the source of the water for the pond, but the structure’s ability to retain
water. Reilly acknowledged in October 2010 that the pond was leaking. We
respectfully conclude the district court erred in finding no express warranty in the
oral contract between Reilly and Bachelder. But even if the district court was
correct in finding no express warranty in the oral contract at issue, we are
persuaded by Bachelder’s arguments concerning implied warranties.
11
B. Implied Warranties
As our supreme court recently reiterated, Iowa courts have embraced the
judicial doctrine of implied warranties when reviewing agreements between a
builder and a consumer:
Iowa has long recognized in construction contracts an implied
warranty that a building “‘will be erected in a reasonably good and
workmanlike manner’” and that it “‘will be reasonably fit for the
intended purpose.’” See Busker v. Sokolowski, 203 N.W.2d 301,
303 (Iowa 1972) (quoting Markman v. Hoefer, 252 Iowa 118, 123,
106 N.W.2d 59, 62 (1960) (discussing the implied warranty found in
construction contracts)); see also Smith & Nelson v. Bristol, 33
Iowa 24, 25 (1871) (stating the rule that in a construction contract
that did not express a specific manner in which work was to be
done, the work “was to be done in a workmanlike manner”).
Rosauer Corp. v. Sapp Dev., 856 N.W.2d 906, 908 (Iowa 2014).
In seeking to foreclose the mechanic’s lien under Iowa code chapter 572,
Reilly acknowledged entering a contract to construct a pond for Bachelder. In his
cross-claim, Bachelder alleges Reilly breached the implied duty to construct the
pond with due care and the implied warranty that the finished product would be fit
for its particular purpose, specifically for use as a recreational pond.
1. Workmanlike Construction
When a construction contract does not specify the manner in which the
work is to be done, Iowa courts will imply the builder has agreed to perform in a
workmanlike manner. Markman, 106 N.W.2d at 62 (considering building contract
for warehouses and tunnels for storing and drying onions); Smith, 33 Iowa at 24.5
5
Our supreme court has applied the doctrine of implied warranty of workmanlike
construction to the sale of a home by the builder to the first owner, Kirk v. Ridgway, 373
N.W.2d 491, 496 (Iowa 1985), and to subsequent purchasers. Speight v. Walters Dev.
Co., 744 N.W.2d 108, 114 (Iowa 2008). But the court has declined to apply the doctrine
12
Our case law does not include a specific definition of workmanlike manner. Pike
v. Kennedy, No. 06-0184, 2007 WL 601538, at *3 n.3 (Iowa Ct. App. Feb. 28,
2007). But an agreement to do work in “a good and workmanlike manner” has
been interpreted to mean undertaking “to produce definite and certain results.”
Ideal Heating Co. v. Kramer, 102 N.W. 840, 840–41 (Iowa 1905).
The Kramer court explained that a plumber who contracted to install
radiation for steam heating in a house undertook not simply to do a good job of
pipefitting but to have the installed apparatus operate with reasonable success in
warming the house:
The stipulation means something more than a promise to do a job
which shall look well—something more than a good example of
pipe fitting. A gristmill which will not grind, a reaper that will not cut
grain, a locomotive that will not move when the proper power is
applied, can hardly be said to have been constructed in a good and
workmanlike manner. Even so, a heating apparatus that will heat
nothing but the owner’s temper must be said not to fill that
condition. If a professional ditcher undertakes to drain a swamp in
a good and workmanlike manner, but by a miscalculation makes
the outlet of his ditch higher than the surface of the swamp, it will
not avail him to say that the trench was evenly dug, and the tile laid
with perfect regularity. A good and workmanlike job is one that is
done as a skilled workman should do it.
Id. These century old sentiments are apropos to Reilly’s promise to build a pond
for Bachelder. Reilly’s lack of due care was not in the construction of the dam
but in the approval of the site selected for the pond. Reilly testified he and
Bachelder “mutually agreed upon” the site for the dam and pond. But
Bachelder’s own expert opined the subsurface conditions at the site were
to the sale of a lot with no dwelling to a housing developer Rosauer Corp., 856 N.W.2d
at 907, or to a foreclosing lender who acquired apartment buildings by deed in lieu of
foreclosure. Luana Sav. Bank v. Pro-Build Holdings, Inc., 856 N.W.2d 892, 902 (Iowa
2014).
13
“unfavorable for ponding”—specifically, “the undesirable condition is a high
seepage loss of water due to the soil types and presence of limestone at a
shallow depth.” A skilled workman with Reilly’s experience in digging ponds may
not avoid the implied warranty of workmanlike construction by pointing to the
soundness of the dam. Reilly’s miscalculation in not checking the soil conditions
before digging, and thereby being unable to achieve the result of a pond that
would hold water, constituted a breach of the implied warranty of workmanlike
construction.
2. Fitness for a Particular Purpose
Bachelder relies on Semler v. Knowling, 325 N.W.2d 395, 397 (Iowa 1982)
for the proposition that when “a contractor agrees to build a structure to be used
for a particular purpose, there is an implied agreement on his part that the
structure when completed will be serviceable for the purpose intended.” The
contractor bears the risk of accomplishing that purpose, unless waived by the
consumer. Semler, 325 N.W.2d at 397–98. A contractor has not substantially
complied with the contract unless the work is sufficient for the purpose or
accomplishes such a result. Id.
Semler identified three elements of recovery under the theory of implied
warranty of fitness for a particular purpose: (1) the builder must have reason to
know the consumer’s particular purpose; (2) the builder must have reason to
know the consumer is relying on his skill or judgment to furnish appropriate
services; and (3) the consumer must, in fact, rely upon the builder’s skill or
judgment. Id. at 399. In Semler, the court found the elements satisfied because
14
the property owner relied on the sewer contractor to install a sewer line to hook
up with the main line without cutting through a newly paved street. Id.
a. Builder had reason to know consumer’s particular purpose.
On the first element, Bachelder asserts Reilly knew he wanted a
“recreational pond” to be used for fishing, boating, and swimming. Reilly
counters Bachelder never communicated his “need” for the pond to be a certain
depth for those activities and denied he was “commissioned to build the pond for
this ‘particular need.’”
The record shows Reilly knew the purpose for the pond. Reilly’s crew
placed tires on the pond floor to serve as fish habitat. The size of the pond and
the Bachelders’ desire to drive across the dam to their property on the other side
placed Reilly on notice that the large pond would be used for recreational
purposes.
b. Builder had reason to know consumer was relying on his skill or
judgment to furnish appropriate services.
On the second element, Bachelder contends Reilly had “every reason to
know” that, as consumers, he and his wife were relying on the skill and expertise
of the construction company’s owner in constructing the pond. Bachelder faults
the district court for setting up a false equivalency concerning the relative levels
of sophistication between Reilly and Bachelder for the purposes of this case.
While it is true Bachelder is a business owner, his business is selling vehicles.
He has no background in construction or civil engineering.
By contrast, Reilly operates a construction company that engages in a
multimillion-dollar business across ten states. Reilly testified to having built a
15
dozen farm ponds and three other recreational ponds in various sizes. He
testified sometimes he works with the U.S. Department of Agriculture’s Natural
Resource and Conservation Services when constructing the ponds. In those
instances, Reilly said: “An engineer has usually drawn a set of plans, and they
have done their prior research . . . .” Reilly acknowledged on cross-examination
he knew engineering companies and government agencies were available if he
had questions about properly building the pond. He also knew county maps
existed showing the soil types, and he was able to read those resources, but he
did not do so before constructing Bachelder’s pond.
In addition, Reilly did engage in soil testing when constructing the dam.
The construction company obtained clay dirt from a seven-acre field on the west
side of Bachelder’s property to use in building the dam. That conduct revealed
Reilly’s knowledge of the importance of using clay soil in pond construction and
suggested he breached an implied warranty in not checking to see if the soil was
too porous to hold water at other points on the pond site. Reilly also called an
engineer for assistance when he found out the pond was leaking. That reaction
also signaled Reilly’s recognition that technical assistance was critical to
ensuring the pond would be fit for Bachelder’s purposes. Because Reilly had
reason to know Bachelder was relying on his expertise, it was not reasonable for
Reilly to expect the consumer to have independently contacted engineering firms
and soil specialists when they jointly selected the pond site and for Reilly to have
moved ahead with the project without verifying that preparation had been done.
16
c. Consumer actually relied upon builder’s skill or judgment.
On the third element, Bachelder did, in fact, rely upon Reilly’s skill and
judgment in building the pond. Charles Sender, Reilly’s employee, staked the
location and dimensions of the pond. Bachelder testified Reilly did not ask him to
provide soil samples or to hire an engineer. Bachelder further testified he
believed because Reilly was in the construction business, Reilly would obtain any
information he needed concerning the soil at the pond site.
Having satisfied all three elements, Bachelder is entitled to recover under
a theory of implied warranty of fitness for a particular purpose.
3. Affirmative defenses
Finally, Bachelder challenges the district court’s determination he
“assumed the risk” of the pond’s failure by going ahead with the project without
seeking assistance from engineers or soil experts. Reilly defends the court’s
determination by arguing Bachelder waived any implied warranty by agreeing to
go forward with pond project after being alerted to “the potential problem of a lack
of a sufficient water supply.” Reilly also endorses the court’s conclusion that
Bachelder “assumed the risk” of constructing the pond without further
professional assistance.
On appeal, Bachelder contends the legal theories of waiver and
assumption of the risk are not available to Reilly because they are affirmative
defenses not included in his pleadings in the district court. Affirmative defenses
normally must be specially pleaded. See Iowa R. Civ. P. 1.419. But Reilly
asserts these matters were “tried by consent” and are properly before us on
17
appeal. We agree the district court permitted introduction of evidence touching
on the issues of waiver and assumption of the risk, without objection by the
parties, which amounted to consent to try those issues even though they were
not included in the pleadings. See Harper v. Cedar Rapids Television Co., 244
N.W.2d 782, 786–87 (Iowa 1976).
On the merits of these issues, we disagree with the district court. We are
not convinced the evidence concerning the pond Reilly built for his father, and
the fact Bachelder may have learned it was sometimes refilled from a well,
means Bachelder assumed the risk his pond was being built at a location with
unsuitable soil conditions for pooling water. When Bachelder informed Reilly the
pond was not holding water in the fall of 2010, Reilly returned to the site to figure
out the root of the problem. Reilly did not respond that Bachelder needed to
resort to a supplemental water source to refill the leaking pond.
In our de novo review, we conclude Reilly conveyed to Bachelder an
express warranty he could build a pond, which is commonly understood to be a
body of water. Even if the warranty was not express, Bachelder has established
the elements of his claim that the oral contract included implied warranties of
workmanlike construction and fitness for a particular purpose. We reverse the
district court’s ruling and remand for further proceedings to determine the
damages incurred by Bachelder.
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IV. Refusal to Foreclose Mechanic’s Lien
In his cross-appeal, Reilly argues the district court was mistaken in
concluding he undertook extra work on Bachelder’s pond in the fall of 2010 and
spring of 2011 voluntarily, without expectation of payment, as part of the original
agreement. Reilly contends the new work was “unrelated to the construction of
the dam that originally resulted in the pooling of the water into a pond.” He
asserts the remedial work was in a different area and of a different nature. Reilly
argues he should be compensated for his additional services by foreclosing the
mechanic’s lien.
A mechanic’s lien is a creature of statute; its availability is driven by the
doctrines of restitution and prevention of unjust enrichment. Carson v. Roediger,
513 N.W.2d 713, 715 (Iowa 1994).
Every person who furnishes material or labor for, or performs any
labor upon, any building or land for improvement, alteration, or
repair thereof . . ., by virtue of any contract with the owner, . . . shall
have a lien upon such building or improvement, and land belonging
to the owner on which the same is situated . . . to secure payment
for the material or labor furnished or labor performed.
Iowa Code § 572.2(1). We liberally construe this provision to effectuate its
purpose and to assist parties in obtaining justice. Carson, 513 N.W.2d at 715.
Reilly admits he and Bachelder did not have an express contract for the
work he completed to fix the pond but contends an implied contract existed. See
Roger’s Backhoe Serv., Inc. v. Nichols, 681 N.W.2d 647, 652 (Iowa 2004) (listing
elements of implied contract as (1) contractor performed services under
circumstances giving recipient, reason to understand they were performed for
19
him and were not rendered gratuitously, but with expectation of compensation
from recipient and (2) services were beneficial to recipient).
To address the first element of implied contract, Reilly asserts he carried
out his services in the fall of 2010 and spring of 2011 under such circumstances
as to give Bachelder reason to understand that Reilly expected to be
compensated. Reilly asserts that “once it was determined that the leak was no
fault of Reilly, Reilly notified Bachelder that he would have to pay for those
additional services, which at the time was believed to be bringing in clay
materials to the site.” On the second element, Reilly argues his services were
“beneficial to Bachelder in that after the services were performed, the pond did
hold water.”
We are not persuaded by Reilly’s argument on either element. First, Reilly
mischaracterizes the notification in his October 2010 email to Bachelder. Reilly
did not tell Bachelder that he would have to pay for all additional services; the
email said if the solution was bringing in clay material from off site, they would
“need to come up with some kind of compensation for that work.” Because Reilly
did not bring in clay from elsewhere, the email did not address the expectation of
compensation. Second, the record does not support Reilly’s allegation his
additional services benefited Bachelder. As the district court found, even after
2011, the pond did not consistently hold water and its depth varied dramatically
depending upon the amount of rainfall. Bachelder testified that in the summer of
2013, even with above average rainfall, the water level in the pond would drop
three to four inches every two to four days.
20
Because Reilly did not establish he performed additional labor at the pond
site by virtue of a new contract with Bachelder, we conclude the district court was
correct in declining to foreclose the mechanic’s lien.
REVERSED AND REMANDED ON APPEAL; AFFIRMED ON CROSS-
APPEAL.