No. 83-506
IN THE SUPREME COURT OF THE STATE OF XONTANA
1984
KENNETH D. COLLINS AGENCY,
a Montana corp.,
Plaintiff and Respondent,
LEON R. HAGEROTT, Architect,
a professional corp.,
Defendant and Appellant.
APPEAL PROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Bonorable William J. Speare, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Lynaugh, Fitzgerald & Hingle; Thomas Lynaugh argued,
Billings, Montana
For Respondent :
Ralph Herriott argued, Billings, Montana
Filed:
- - -
Clerk
Mr. Justice L.C. Gulbrandson delivered the Opinion of the
Court.
This case comes on appeal from an order of the
District Court, Thirteenth Judicial District, Yellowstone
County, granting the appellant, Leon Hagerott, $10,000 in
architectural fees and holding Hagerott's lien on certain
real estate invalid. The District Court also awarded the
respondent, Kenneth D. Collins Agency, attorney's fees in
the amount of $3,851.25. We affirm in part, vacate in pa.rt
and remand.
The appellant is a North Dakota professional
corporation (hereinafter referred to as Hagerott) with Leon
Hagerott being the principal officer and stockholder.
Hagerott is an architect licensed in the State of Montana.
Respondent is a Montana corporation (hereinafter referred to
as Collins) with Kenneth Collins being the principal officer
and stockholder.
Collins is the owner of certain real property located
in Custer County. During February, 1978, Collins and
Hagerott contemplated application to the Farmers Home
Administration (FHA) for authority to receive a loan to
build twenty-four low-cost housing units. The cost of the
units was to be subsidized by the FHA and the units were to
be located on Collins' property in Custer County.
On July 27, 1978, Collins and Hagerott entered into a
contract which provided that Hagerott would draw plans and
specifications and perform other architectural services for
construction of the twenty-four units. Section 5 of the
architectural contract provided that Hagerott, as architect,
would receive five percent of the construction cost of the
project. H a g e r o t t p r e p a r e d p l a n s and s p e c i f i c a t i o n s which
w e r e a p p r o v e d b y C o l l i n s a n d t h e FHA.
Costs of the project were prepared by Collins in
c o n j u n c t i o n w i t h H a g e r o t t and t h e t o t a l c o s t of c o n s t r u c t i o n
was d e t e r m i n e d t o b e a p p r o x i m a t e l y $630,500. These c o s t s
were set forth in the basic loan application which was
signed by Hagerott. The FHA approved the Collins' loan
a p p l i c a t i o n i n t h e amount o f $ 5 7 0 , 0 0 0 .
A f t e r f u r t h e r n e g o t i a t i o n s between t h e p a r t i e s and a n
unsuccessful bid letting, n o f u r t h e r p r o g r e s s w a s made o n
t h e p r o j e c t u n t i l March o f 1 9 8 0 a t w h i c h t i m e H a g e r o t t w i t h
Collins' approval, procured a new b i d o n t h e p r o j e c t . On
April 3, 1 9 8 0 C o l l i n s p r e p a r e d a n d s u b m i t t e d a new c o s t o f
the project t o H a g e r o t t a n d t h e FHA t h a t r a i s e d t h e t o t a l
c o s t o f t h e p r o j e c t t o $740,000.
On May 2 3 , 1980 H a g e r o t t w r o t e a letter to Collins
reiterating his desire to continue with the project and
s t a t i n g h i s w i l l i n g n e s s t o keep t h e p r o j e c t going. However,
late that same month Collins decided to terminate the
p r o j e c t a n d c o n t a c t e d J o h n Ramage a n d Tom F i e l d s i n Miles
City for the purpose of turning the project and loan
a p p l i c a t i o n over t o them. I n l a t e May, 1980, Ramage and
F i e l d s m e t w i t h H a g e r o t t a n d t o l d him t h e y were n o l o n g e r
interested and his s e r v i c e s were terminated. Ramage and
F i e l d s n e v e r took o v e r t h e p r o j e c t and abandoned t h e p l a n s
i n t h e f a l l o f 1980.
When Hagerott was notified his services were
terminated he f i l e d a lien against t h e r e a l e s t a t e of the
original project site. Eventually, t h e p r o j e c t was r e d u c e d
i n s i z e and c o n s t r u c t e d on a d i f f e r e n t s i t e .
Collins commenced this action to remove Hagerott's
lien filed against Collins' real property at the original
project site and for damages, attorney's fees and costs.
Hagerott counterclaimed for the amount of architectural fees
due under the contract or on the basis of quantum meruit.
On April 1 , 1983, the District Court held that
Hagerott was entitled to $10,000 on the basis of quantum
meruit but concluded that the lien filed by Hagerott against
the real property of Collins was invalid because Hagerott
failed to show that he furnished materials for the
enhancement of Collins' property. The District Court stated
that, "[tlhe burden of proof is on a lien claimant to
establish his lien and support his burden; he must show not
only that he furnished the materials, but also that they
were used for the enhancement of the property to which he
claims a right to resort as security for the debt thus
created. In the abscence of this showing, his equity does
not arise.'' The District Court ordered Hagerott's lien
expunged from the record and awarded Collins attorney's fees
for time spent on litigating removal of the lien but awarded
Hagerott $10,000 on the basis of quantum meriut. Hagerott
appealed and a cross-appeal was filed by Collins.
Hagerott raises three issues on appeal:
(1) Did the District Court err in awarding Hagerott
only $10,000 in architectural fees based upon quantum
meruit?
(2) Did the District Court err in holding Hagerott's
lien agains Collins' real property invalid and expunging it
from the record?
(3) Did the District Court err in the amount of
attorney's fees awarded to Collins?
Initially, Hagerott asserts the District Court erred
in awarding him only a $10,000 fee based upon quantum
meruit. Collins contends the contract between the parties
did not entitle Hagerott to any fee.
The District Court correctly held that Hagerott was
entitled to an architectural fee based upon quantum meruit.
However, the amount of the architectural fee found by the
District Court to be appropriate is not supported by the
record. In its finding of fact the District Court stated at
Finding number 38: "[alt the time his services were
terminated, [Hagerott] had approximately 600 hours of time
in the project. The hourly charge for his time in 1978
through 1980 was $30 per hour. However, even though
[Hagerott] spent this number of hours, he is only entitled
to a lesser amount [$10,000] due to the value of his
services to the project." In Robertus v. Candee (Mont.
1983), 670 P.2d 540, 40 St.Rep. 1391, this Court defined
quantum meruit as the market value for the work done by the
plaintiff. In this case, the quantum meruit amount would be
the market value of the services rendered based upon the
number of hours spent on the project. The evidence
established the reasonable amount per hour and the number of
hours expended. The evidence was incorporated into Finding
number 38 by the District Court. There was no evidence to
show any lesser value. In reviewing the District Court's
order, this Court may not substitute its judgment for that
of the District Court, but must determine if there was
substantial evidence to support the District Court's
findings. Bagnell v. Lemery (Mont. 1983), 657 P.2d 608, 40
St.Rep. 58. Substantial evidence is evidence which:
". . . will convince reasonable men and
on which such men may not reasonably
differ as to whether it establishes the
Plaintiff's case and if all reasonable
men must conclude that the evidence does
not establish such case then it is not
substantial evidence. The evidence may
be inherently weak and still be deemed
substantial." Olson v. Westfork
Properties, Inc. (1976), 171 Mont. 154,
557 P.2d 821.
The value of Hagerott's services could be measured
only by the number of hours and the reasonable value of
those hours as indicated by the evidence. The District
Court's award of $10,000 in quantum meruit was not supported
by substantial evidence. Since the District Court found $30
per hour for 600 hours to be appellant's fee and there was
no evidence to the contrary, that portion of the District
Court's order awarding Hagerott $10,000 is vacated, and the
cause is remanded to the District Court for the purpose of
entering judgment for Hagerott in the amount of $18,000.
Next, Hagerott argues that the District Court erred in
holding that the lien filed against the property of Collins
was invalid. The District Court stated that the lien was
invalid because the services Hagerott provided did not
enhance the value of the property. The pertinent statute to
this issue is Section 71-3-501 MCA, which provides:
"Who may have lien. Every mechanic,
miner, machinist, architect, foreman,
engineer, builder, lumberman, artisan,
workman, laborer, and any other person
performing any work and labor upon, or
furnishing any material, machinery, or
fixture for, any building, structure,
bridge, flume, canal, ditch, aqueduct,
mining claim, coal mine, quartz lode,
tunnel, city or town lot, farm, ranch,
fence, railroad, telegraph, telephone,
electric light, gas, or waterworks or
plant or any improvements, upon complying
with the provisions of this part, for his
work or labor done or material,
machinery, or fixtures has a lien upon
the property upon which the work or labor
is done or material is furnished."
In arguing that the statute allowed Hagerott to file a
valid lien, Hagerott relies on the language of this Court's
decision in Caird Engineering Works v. Seven-up Gold Mine
Co. (1941), 111 Mont. 471, 111 P.2d 267. In Caird, this
Court said that when the legislature used the term
"architect" in the lien statute it did not mean that the
architect's actual labor must be done upon the premises and
structure being erected for a lien to arise. Rather, this
Court in Caird said the term "architect" as used in the lien
statute means architectural services as they are usually
performed. Caird, supra, 111 Mont.498. However, the
situation in Caird is distinguishable from the facts in this
case. In Caird, the architect provided services that
contributed to structural improvement and, thus, enhancement
of the property. In the present case, no enhancement
occurred and therefore a lienable interest did not arise.
Several other jurisdictions have also held that a lien does
not arise absent some tangible improvement of the property.
See, e.g., Construction Engineering Co. v. Village Shopping
Center, Inc. (La.App. 1964), 168 So.2d 826; Clark v. Smith
(Wisc. 1940), 290 N.W. 592.
Hagerott argues the situation in the present case is
analogous to the facts in O'Hara v. Architects Hartung and
Association (Ind. 1974), 326 N.E.2d 283, in which the court
agreed with the general proposition that there must be the
erection of a building for an architect's lien to arise, but
qualified the proposition by stating that "[i] t is not
always necessary to show that the material went into the
building. Circumstances in a given case may be such that
the owner of the building is estopped from invoking the
general rule. "
Estoppel is a principle of equity. Cremer v. Cremer
Rodeo Land and Livestock Co, (1979), 181 Mont, 87, 592 P.2d
485. Equity will grant relief sought when in view of all
the circumstances to deny it would permit one of the parties
to suffer a gross wrong at the hands of the other party who
brought about the condition. Hostetter v. Inland
Development Corp. of Montana (1977), 172 Mont. 167, 561 P.2d
1323. Estoppel is not favored and will only be sustained
upon clear and convincing evidence. Tribble v. Reely
(1976), 171 Mont. 201, 557 P.2d 813. In the case at bar,
there were insufficient findings to create an estoppel
situation based upon clear and convincing evidence.
Finally, Hagerott argues the District Court erred in
the amount of attorney's fees awarded Collins. The District
Court ordered Hagerott to pay those attorney's fees that
related to removal of the lien. We find from the agreed
statement of proceedings stipulated to by both parties on
September 15, 1983, and the time and expense sheet submitted
by Collins' counsel, that the District Court awarded
$3,851.25 in attorney's fees for the removal of the invalid
lien under Section 71-3-124, MCA. No award of attorney's
fees was made for trial time, post trial briefs or costs.
The fixing of attorney's fees is largely within the
discretion of the District Court and will not be disturbed
absent a clear abuse of that discretion. Carkeek v. Aver
(Mont. 1980), 613 P.2d 1013, 1015, 37 St.Rep. 1274, 1276.
We find there was substantial evidence to support the award
of attorney's fees.
Affirmed in part, vacated in part, and remanded to the
District Court for entry of amended judgment in accordance
with this opinion. /
We concur:
Chief Justice
Justices
tr
q . Chief Justice Frank I. Haswell, concurring and
dissenting:
I concur with the discussion and holding on Issues 2
and 3. I dissent from the discussion and holding on Issue 1.
The vice in holding that the architect is entitled to
an award of $18,000 for his services based on quantum meruit
is that there is no evidence that this is the market value of
his services. The figure of $18,000 is simply a mechanical
calculation of the number of hours he spent multiplied by the
rate he charged per hour. This does not necessarily equal
market value. The District Court recognized this and awarded
only $10,000 which itself is an arbitrary figure not support-
ed by substantial credible evidence.
I would vacate the $18,000 award and remand for further
proceedings to establish the market value of the architect's
services.
7Chief~J, 4
Justice
a.&t..ubtq
Mr. Justice Frank l. Morrison, Jr., dissents and will file a
3
written dissent later.