No. DA 06-0407
IN THE SUPREME COURT OF THE STATE OF MONTANA
2007 MT 123
LHC, INC., a Montana corporation,
Plaintiff and Respondent,
v.
ROBERTO ALVAREZ, as Trustee of the Alvarez
Family Trust u/d/t dated October 10, 1088,
Defendant and Appellant,
and
FIRST NATIONAL BANK OF MONTANA, INC.,
Defendant.
APPEAL FROM: The District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV 04-662C,
Honorable Stewart E. Stadler, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Phillip J. O’Connell, Attorney at Law, Missoula, Montana
For Respondent:
Paul G. Sandry and Scott G. Hilderman, Johnson, Berg,
McEvoy & Bostock, PLLP, Kalispell, Montana
Submitted on Briefs: April 18, 2007
Decided: May 30, 2007
Filed:
__________________________________________
Clerk
Justice W. William Leaphart delivered the Opinion of the Court.
¶1 Plaintiff LHC, Inc., filed a construction lien against defendant Roberto Alvarez
and defendant First National Bank of Montana, Inc. The Bank was later dismissed
pursuant to the stipulation of the parties. LHC, a concrete and gravel supplier, had
supplied concrete to John Young, d/b/a D Bar J Logging, Inc., and D Bar J Asphalt
(Young), a contractor employed by Alvarez to do paving work. Young failed to pay
LHC the total due for the supplied material. LHC then filed a construction lien against
Alvarez’s property. Alvarez admitted that concrete supplied by LHC was used in the
construction of its mini-storage facility, but disputed the dates and amount supplied, as
well as the validity of the construction lien. After a bench trial, the District Court
enforced the construction lien and awarded prejudgment interest as well as attorney fees
and costs. Alvarez appeals from the judgment. We affirm.
¶2 Alvarez raises four issues on appeal:
¶3 I. Did the court err when it considered deliveries outside of the timeline
established in LHC’s construction lien?
¶4 II. Did the court err in finding that LHC’s concrete was delivered to Alvarez’s
mini-storage facility on August 11, 12 and 13?
¶5 III. Did the court err in awarding prejudgment interest?
¶6 IV. Did the court err in awarding attorney fees?
BACKGROUND
¶7 In 2003, Alvarez engaged Young to perform paving services in connection with
the construction of a mini-storage facility. Young purchased concrete and other materials
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from LHC for use at the Alvarez property. At the time, Young had outstanding debts to
LHC from past projects unrelated to the work he was doing for Alvarez.
¶8 LHC delivered concrete to the Alvarez property from August 5 to 8, 2003, as
recorded in invoice 6521 (in the amount of $20,119). Invoice 24470 is for concrete
delivered to the Alvarez property on August 14, 2003 (in the amount of $400.50).
Invoice 6576 is, according to LHC’s records, for delivery on August 11, 12, and 13, 2003
(in the amount of $3356.10). The fourth invoice, 6612, is for flowboys and water trucks
delivered on July 29 and 30 and August 5, 7, and 8, 2003 (in the amount of $4,475).
¶9 LHC did not maintain separate accounts for Young’s different projects. At the
time Young began purchasing materials for use on Alvarez’s property, he had an
outstanding balance of between $28,000 and $29,000 with LHC. When Young made
payments to LHC, LHC applied those payments to Young’s oldest outstanding invoices.
¶10 Alvarez paid Young a total of about $60,000 for his work. On August 25, 2003,
Young paid LHC $30,000. Only about $4,000 of this went to the Alvarez invoices. The
rest went to other job invoices incurred prior to the Alvarez project. On October 9, 2003,
Young paid LHC $10,000. LHC directed portions of this payment to invoices incurred
by Young after the Alvarez project.
¶11 On November 10, 2003, LHC filed a construction lien on Alvarez’s property. The
lien stated that the balance remaining unpaid was $16,568, together with interest and
costs. Additionally, the lien stated that the “materials were first furnished on August 9,
2003, and were last furnished on August 14, 2003.” On September 7, 2004, Alvarez filed
a complaint against LHC. On October 1, 2004, LHC filed a separate claim against
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Alvarez. The two cases were consolidated. After a bench trial, the court found for LHC,
granting judgment on the lien in the amount of $24,241.40, including $5,945 in attorney
fees, $620 in costs, and $3,474.82 in prejudgment interest from the date of the filing of
the lien.
¶12 Alvarez appeals the District Court’s enforcement of the lien as well as its grant of
attorney fees and prejudgment interest.
STANDARD OF REVIEW
¶13 We review conclusions of law, including statutory interpretation, de novo. James
Talcott Const. v. P & D, 2006 MT 188, ¶ 26, 333 Mont. 107, ¶ 26, 141 P.3d 1200, ¶ 26.
¶14 We review findings of fact to determine whether the findings are clearly erroneous
using a three-part test. First, we review the record to determine if the findings are
supported by substantial evidence; second, if the findings are supported by substantial
evidence, we will determine if the trial court has misapprehended the effect of the
evidence; and third, if substantial evidence exists and the effect of the evidence has not
been misapprehended, the Court may still conclude that a finding is clearly erroneous
when a review of the record leaves the Court with the definite and firm conviction that a
mistake has been made. James Talcott Const., ¶ 26 (citations omitted).
¶15 We review a district court’s award of prejudgment interest de novo. James Talcott
Const., ¶ 28 (citations omitted).
¶16 We review a district court’s order granting or denying attorney fees and costs to
determine whether the court abused its discretion. James Talcott Const., ¶ 27 (citations
omitted).
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DISCUSSION
¶17 I. Did the court err when it considered deliveries outside of the timeline
established in LHC’s construction lien?
¶18 Alvarez contends that the court should not have granted judgment for payments
made outside of the dates listed in LHC’s construction lien. The lien states that it is for
materials furnished between August 9 and August 14, 2003. Section 71-3-535(3)(g)(i)
and (ii), MCA, requires that a lien state the dates materials were furnished. Thus,
according to Alvarez, the claimed lien should not be enforced for the amounts
documented in invoice 6521 (August 5 to 8) and invoice 6612 (July 29 and 30 and
August 5, 7 and 8), because these invoices are for delivery dates not stated in the lien.
¶19 The District Court, however, refused to consider this argument because Alvarez
raised it for the first time in his post-trial findings of fact and conclusions of law. Alvarez
disputes this and asserts that he argued the issue in his pretrial order by stating: “[t]he
LHC Lien was filed without right whatsoever.” Similarly, Alvarez stated in the
complaint that “[t]he LHC lien is without right whatsoever.”
¶20 It is well-established that we will not address issues on appeal that were not
properly raised in the district court. Nason v. Leistiko, 1998 MT 217, ¶ 11, 290 Mont.
460, ¶ 11, 963 P.2d 1279, ¶ 11 (citations omitted). We concluded in Marsh v. Overland,
and reaffirmed in Nason, that where a party fails to raise an issue in the pleadings, does
not present argument on the issue during the hearing on the merits of the case, does not
move to amend the pleadings to conform to any evidence presented and raises the issue
for the first time in a post-hearing memorandum that the district court does not address in
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its order, the issue has not been timely raised and may not be raised on appeal. Nason,
¶ 18 (citing Marsh v. Overland, 274 Mont. 21, 29, 905 P.2d 1088, 1093 (1995)).
¶21 Here, Alvarez’s general assertion, in his complaint and in the pretrial order, that
the lien was filed “without right whatsoever,” failed to specifically raise the argument
that delivery dates not listed in the lien should not be enforced. Other than his general
statement that the lien was without right, Alvarez did not raise the issue in the pleadings,
did not amend the pleadings to include the issue, and did not raise the issue at trial.
Finally, the District Court refused to consider Alvarez’s argument. As Alvarez failed to
timely raise the issue in the district court, we decline to address it on appeal.
¶22 II. Did the court err in finding that LHC’s concrete was delivered to
Alvarez’s mini-storage facility on August 11, 12 and 13?
¶23 Alvarez also argues that LHC failed to prove that concrete was delivered to
Alvarez’s property on August 11, 12 and 13, as claimed in the lien. LHC’s sole evidence
that delivery occurred on these dates was invoice 6576 and the corresponding scale
tickets. Only one employee, Carol Phillips, LHC’s controller, testified regarding invoice
6576. She testified that she did not know who provided the information on the invoice
and scale tickets, in particular the dates and the location. She further testified that the
material was not hauled by an LHC truck, that she did not know who hauled the material
and that she had no independent knowledge of where the material was delivered, other
than what was written on the invoice and scale tickets. Finally, Alvarez testified that no
materials were delivered after August 8.
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¶24 Alvarez is correct that § 71-3-524, MCA, requires that materials be supplied with
the intent that they be incorporated into an improvement on the property to which the lien
attaches and that the materials actually are incorporated into the improvement. Further,
the delivery of materials to the site of the improvement, whether by the lien claimant or
another, creates a presumption that the materials were incorporated. Section 71-3-524(2),
MCA.
¶25 Here, based on invoice 6576 and the corresponding scale tickets, which were
submitted without objection and explained by Phillips, the District Court determined that
materials were delivered, on August 11, 12 and 13, to Alvarez’s property and
subsequently used in the construction of the mini-storage facility. Despite Alvarez’s
contention otherwise, the evidence presented to the court was substantial. Once a proper
foundation has been laid, a court may rely on business records as evidence that an event
took place. Here, Alvarez did not object to the admission of the invoice or scale tickets
and admitted that the proper foundation was laid. Both the invoice and scale tickets state
that on August 11, 12 and 13, asphalt was delivered to “ASHRD STG.” As Alvarez’s
mini-storage facility is located on Ash Road, these documents indicate that materials
were delivered to Alvarez’s property on August 11, 12 and 13. The District Court’s
corresponding determination was thus not clearly erroneous.
¶26 III. Did the court err in awarding prejudgment interest?
¶27 Alvarez argues that prejudgment interest is not appropriate under § 27-1-211,
MCA, because the court rejected LHC’s accounting and reduced the lien from $16,568 to
$14,201.58. Thus, according to Alvarez, the amount was not certain.
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¶28 Section 27-1-211, MCA, provides:
Every person who is entitled to recover damages certain or capable of being
made certain by calculation and the right to recover [is vested] upon a
particular day is entitled also to recover interest thereon from that day . . . .
¶29 The three criteria which must be satisfied for an award of prejudgment interest are:
(1) an underlying monetary obligation; (2) the amount of recovery must be certain or
capable of being made certain by calculation; and (3) the right to recover must vest on a
particular day. James Talcott Const., ¶ 40. However, “the fact that a claim is disputed
does not make it uncertain,” as long as the damage amount is reduced to certainty on a
particular day. Safeco Ins. Co. v. Lovely Agency, 215 Mont. 420, 425, 697 P.2d 1354,
1357 (1985) (citations omitted). Additionally, the proper accrual date for the calculation
of interest on a construction lien is the date the lien is filed. James Talcott Const., ¶ 39
(citations omitted).
¶30 Here, the underlying monetary obligation was the balance remaining for materials
provided to Alvarez’s property. LHC’s calculations differed from the court’s regarding
the $10,000 payment made by Young on October 9, 2003. LHC credited a portion of the
$10,000 to invoices incurred by Young while working on projects undertaken subsequent
to the Alvarez project. The court, however, found that LHC’s accounting was “contrary
to its stated accounting practice,” and therefore applied the full $10,000 to the Alvarez
account. Consequently, the court determined that the balance remaining for materials
provided to Alvarez’s property was $14,201.58, less than the amount calculated by LHC.
¶31 While the court’s conclusion differed from the original figure listed by LHC in its
lien, the amount was still capable of being made certain by calculation. Further, the right
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to recover vested on November 10, 2003, when the lien was filed. Thus, the court
correctly awarded prejudgment interest pursuant to § 27-1-211, MCA.
¶32 IV. Did the court err in awarding attorney fees?
¶33 Alvarez does not dispute the court’s authority to award attorney fees for the
enforcement of a construction lien. Instead, Alvarez contends that LHC should only
recover attorney fees in proportion to the percentage of its claimed lien that the court
enforced.
¶34 LHC responds that the court properly awarded attorney fees because § 71-3-
124(1), MCA, provides for the award of attorney fees in an action to foreclose a lien.
Additionally, LHC provided the court with an affidavit in support of the reasonableness
of its attorney fees. Alvarez, however, replies that § 71-3-124(1), MCA, only allows
attorney fees for a claimant “whose lien is established.” As the court found that
$14,201.58 was due, as opposed to the $16,568 claimed in LHC’s lien, LHC, according
to Alvarez, should only receive 86 percent of its attorney fees, in proportion to the ratio
of LHC’s success to the amount claimed in the lien.
¶35 “The fact that [the claimant] did not receive the entire amount of his claim does
not alter” the award of attorney fees mandated by § 71-3-124, MCA. Donnes v. Orlando,
221 Mont. 356, 362, 720 P.2d 233, 237 (1986). While § 71-3-124, MCA, does require a
claimant’s lien be established in order for attorney fees to be awarded, and, in fact,
awards attorney fees to a defendant where a lien is not established, the statute does not
require a proportional reduction in attorney fees where judgment is for a lesser amount
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than was claimed in the lien. The District Court thus did not abuse its discretion in
awarding attorney fees.
CONCLUSION
¶36 We uphold the District Court’s enforcement of LHC’s construction lien against
Alvarez’s property as well as its award of prejudgment interest and attorney fees and
costs.
/S/ W. WILLIAM LEAPHART
We concur:
/S/ PATRICIA COTTER
/S/ BRIAN MORRIS
/S/ JIM RICE
Justice James C. Nelson concurs.
¶37 I reluctantly concur in the Court’s decision.
¶38 As the Court notes in ¶ 18 of the Opinion, the lien states that the materials were
furnished between August 9 and August 14, 2003. Two invoices admitted in evidence
indisputably cover materials and services outside the times claimed in the lien.
Specifically, invoice 6521, in the amount of $20,119.00, is for concrete delivered from
August 5 to August 8, and invoice 6612, in the amount of $4,475.00, is for flowboys and
water trucks delivered on July 29 and 30 and August 5, 7, and 8. Facially, these two
invoices are for materials and services delivered prior to the times covered by the lien.
The lien is, therefore, deficient on its face under § 71-3-535(3)(g)(i) and (ii), MCA.
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Unfortunately, because Alvarez did not properly raise this argument in the District Court,
that court was and this now Court is in the position of having to enforce a facially
deficient construction lien.
¶39 For this reason, I would specifically limit our decision to the facts of this case. To
that extent, I concur.
/S/ JAMES C. NELSON
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