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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Lakloey, Inc. v. Ballek (07/10/2009) sp-6386
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| LAKLOEY, INC., | ) |
| ) Supreme Court No. S- 12961 | |
| Appellant, | ) |
| ) Superior Court No. 4FA-07- 0932 CI | |
| v. | ) |
| ) O P I N I O N | |
| JEFFERY BALLEK, WHITE EAGLE | ) |
| CONSTRUCTION, and WHITE EAGLE, | ) No. 6386 - July 10, 2009 |
| INC., | ) |
| ) | |
| Appellees. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Fourth Judicial District,
Fairbanks, the Honorable Winston S. Burbank,
Judge pro tem.
Appearances: John J. Connors, Law Office of
John J. Connors, P.C., Fairbanks, for
Appellant. John J. Burns, Borgeson & Burns,
P.C., Fairbanks, for Appellee.
Before: Fabe, Chief Justice, Eastaugh,
Carpeneti, and Winfree, Justices. [Matthews,
Justice, not participating.]
WINFREE, Justice.
I. INTRODUCTION
Alaskas mechanics lien statutes allow a lessor of
construction equipment to lien real property if its equipment is
used under agreement with the property owner or the owners agent
for the construction, alteration, or repair of a building or
improvement on the property.1 In this case a landscaper
purchased fill dirt from a construction company and rented heavy
machinery from an equipment lessor to remove and transport the
dirt from the construction companys property. The landscaper did
not pay for the equipment rental, and the lessor recorded a lien
against the property on which the fill dirt had been located.
The construction company sued to expunge the lien. The superior
court found in favor of the construction company, declaring the
lien void and awarding the construction company full reasonable
attorneys fees under the mechanics lien statutes. The lessor
appeals. We affirm the rulings because the lessors equipment was
not used to perform lienable work on the property and because the
court did not abuse its discretion in determining the amount of
attorneys fees awarded under the statutes.
II. FACTS AND PROCEEDINGS
A. Facts
White Eagle, Inc. owned property in North Pole on which
it intended to build condominiums. Three pits were excavated for
foundations, and the dirt removed from the pits was piled up on
White Eagles property. The dirt pile extended onto an adjacent
state right-of-way, but the state never contacted White Eagle
about this encroachment.
In September 2006 Charles Yingst, the owner of a
landscaping business, contacted Jeffrey Ballek, the president of
White Eagle, about purchasing some of the dirt for his
landscaping projects. Yingsts landscaping projects did not
involve Ballek or White Eagle. Ballek and Yingst agreed that
Yingst would purchase dirt at one dollar per yard and would use
his own equipment and personnel to load and move the dirt.
Yingst rented a loader from Lakloey, Inc. The rental
agreement did not mention Ballek, White Eagle, or White Eagles
property; it specified only that the loader would be used in the
North Pole area. Yingst testified that he used the loader to
remove some dirt from White Eagles property, which then was used
for Yingsts landscaping projects.
Yingst later was arrested and convicted of felony theft
unrelated to this case. Yingsts employees returned the loader to
Lakloeys equipment yard in damaged condition. Fearing Yingst
would be unable to pay the rental charges and the cost to repair
the loader, Lakloey recorded a lien against White Eagles property
on October 27, 2006, for $9,663 plus costs, fees, and twelve
percent interest. Ballek learned of the lien and asked Lakloey
to release it. Although Lakloey indicated a willingness to
negotiate, the lien remained in place.
B. Proceedings
White Eagle filed suit requesting that the court
declare Lakloeys lien invalid and award actual and consequential
damages caused by the lien. Lakloey answered and counterclaimed
to foreclose its lien.
During discovery Lakloey submitted an interrogatory
asking White Eagle to identify any actual or consequential
damages caused by the lien. White Eagle responded by asserting
damages from [i]nterest lost due to the delay in closing sales of
real property and in [l]ost tax advantage for delay of a planned
IRS 1031 exchange during the 2006 tax year, but provided no
supporting evidence.
Shortly before trial Lakloey filed a motion in limine
to exclude evidence of White Eagles claim for actual and
consequential damages, arguing that White Eagle had provided no
information relevant to damages during discovery. White Eagle
opposed the motion as untimely. The court granted the motion,
but, noting that White Eagle had also argued an entitlement to
inconvenience and frustration damages, gave White Eagle an
opportunity to provide legal support authorizing such damages in
the mechanics lien context. White Eagle then voluntarily
withdrew its request for inconvenience and frustration damages.
After a bench trial the court determined that (1) the
purchase-and-sale agreement between Yingst and White Eagle did
not give rise to a contractor-subcontractor agreement under the
mechanics lien statutes, and (2) Yingst was not otherwise White
Eagles subcontractor for the condominium project on the property.
The court also determined that Yingst did not have actual or
constructive authority to enter into any agreements that would
obligate or bind White Eagle. For these reasons the court held
that Lakloey was not legally entitled to file a lien on White
Eagles property. The court designated White Eagle the prevailing
party and awarded it costs and reasonable attorneys fees pursuant
to AS 34.35.074(a)(2);2 no damages were awarded because White
Eagle had withdrawn its damages claims.
White Eagle moved for attorneys fees in the amount of
$43,853. Lakloey opposed the motion. The court awarded
attorneys fees totaling $35,000.
Lakloey appeals the courts decision that the lien was
invalid and the courts award of attorneys fees.
III. STANDARD OF REVIEW
The validity of a mechanics lien is a mixed question of
fact and law.3 Interpretation of the statutory requirements for
a valid lien is a question of law to which we apply our
independent judgment;4 whether these requirements are met is a
question of fact.5 We review the trial courts factual findings
for clear error, which exists when this court is left with a
definite and firm conviction, based on the entire record, that a
mistake has been made.6
We review a trial courts award of attorneys fees for
abuse of discretion.7 The interpretation of rules and statutes
governing attorneys fees presents a question of law to which we
apply our independent judgment.8
IV. DISCUSSION
A. Lakloey Was Not Entitled To Record a Lien Against White
Eagles Property.
A. Lakloey contends that the use of its equipment to remove
dirt from White Eagles property entitled Lakloey to record a lien
against the property under both AS 34.35.050(4) and AS 34.35.065.
Alaska Statute 34.35.050(4) allows a mechanics lien for a
claimant who furnishes equipment that is delivered to and used
upon real property under a contract with the owner or the agent
of the owner for the construction, alteration, or repair of a
building or improvement. Alaska Statute 34.35.065 allows a
mechanics lien even when no such contract exists, if the
equipment was used for construction of a building or improvement
and the property owner knew this activity was taking place but
did not disclaim responsibility for it.9
A lien claimant under either provision must show its
equipment was used for the construction, alteration, or repair of
a building or improvement. The definition of construction,
alteration, or repair includes partial construction.10
[B]uilding or other improvement includes a wharf, bridge, ditch,
flume, tunnel, fence, well, land clearing, machinery, aqueduct to
create hydraulic power, or for mining or other purposes, and all
other structures and superstructures.11 The key issue then is
whether Yingsts purchase and removal of dirt from White Eagles
property was, as Lakloey argues, partial construction of an
improvement and therefore lienable work.
The trial court concluded that the agreement for Yingst
to pay White Eagle one dollar per yard of fill dirt removed from
White Eagles property did not give rise to a contractor-
subcontractor agreement for the purposes of AS 34.35.050. It
also concluded that neither Yingst nor his company were sub-
contractors of White Eagle . . . for the building/construction
project on . . . the White Eagle sub-division. Under the
mechanics lien statute, a prime contractor is defined as a person
who enters into a contract directly with an owner to furnish
labor, materials, services, or equipment for the construction,
alteration, or repair of a building or other improvement on the
owners real property.12 A subcontractor is a person who enters
into a contract with a prime contractor to furnish labor,
services, or equipment for the construction, alteration, or
repair of a building or other improvement on the owners real
property.13 In light of these statutory definitions, the courts
conclusions that Yingst was not White Eagles subcontractor and
that their agreement did not create a contractor-subcontractor
agreement for the purposes of AS 34.35.050 must be read as a
finding that Yingst did not engage in construction or alteration
of a building or improvement on White Eagles property by removing
the fill dirt.
Lakloey contends that when considering its arguments,
the trial court erred by failing to apply the remedial intent and
effect of the mechanics lien statutes. We have previously
observed that there is a significant distinction between those
portions of Alaska mechanics liens statutes which are remedial in
nature, and those portions which articulate mandatory conditions
precedent to the very creation and existence of the lien.14 These
mandatory conditions precedent, such as the determination of who
qualifies as a lienholder are to be strictly construed.15
Lakloey substantively argues that [t]he foundations for
White Eagles buildings . . . qualify as an other improvement and
that the removal of the [dirt] was a necessary component of . . .
White Eagles condominium construction. Although foundations
would be improvements, the evidence fails to show, and Lakloey
does not explain, how Yingsts purchase and removal of dirt from
standing piles on White Eagles property was partial construction
of these foundations or any other improvement.
The trial court found that Yingst contacted White Eagle
and asked to purchase dirt, which had already been excavated and
placed in piles, for use on Yingsts own projects. Yingst and
White Eagle reached an agreement for Yingst to purchase dirt at
one dollar per yard and that [Yingst] would use his equipment and
personnel to load and move the fill dirt. The agreement did not
require Yingst to take any, all, or some specific amount of dirt
from the property. The contract was solely for the sale of dirt,
and Yingsts removal of that dirt was not partial construction of
the condominium foundations or any other improvement on White
Eagles property.16
Lakloey also argues that removing dirt from the piles
was lienable activity because it benefitted White Eagle. Lakloey
relies on testimony suggesting that there was more dirt than
could be used as backfill on the property and that the dirt was
of poor quality.17 It also asserts that the removal of dirt
sitting on the states right-of-way potentially saved White Eagle
from incurring fees and fines.
The trial court found that [t]he agreement between
Yingst and White Eagle to remove dirt was of primary benefit to
Yingst and a secondary or ancillary benefit to White Eagle.
Yingst may well have benefitted White Eagle in paying cash for
dirt, saving White Eagle potential fines by the state, and
freeing up space for construction. But beneficial activity alone
does not give rise to a lien right unless it is part of the
process of constructing, altering, or repairing some structure on
the land,18 and the sale of an unfixed quantity of dirt from a
standing pile, without more, does not satisfy that element of the
mechanics lien statutes.
The trial courts finding that Yingst did not construct
any improvement by removing fill dirt from White Eagles property
is not clearly erroneous. It was not error to conclude that
Yingst did not perform lienable activity on White Eagles land
with Lakloeys equipment and that Lakloeys lien therefore was
invalid. We affirm the trial courts decision in favor of White
Eagle.
B. It Was Not Error To Award White Eagle $35,000 in
Attorneys Fees.
Alaska Statute 34.35.074(a) provides full reasonable
attorneys fees for successfully enjoining a mechanics lien or for
recovering damages caused by an invalid lien, which White Eagle
sought in this litigation. The trial court determined that White
Eagle was the prevailing party because it successfully challenged
Lakloeys lien and Lakloey was unable to foreclose that lien. The
trial court then applied the statutory attorneys fee provisions
instead of Rule 82.19 White Eagle requested an award of $43,853,
representing all of its attorneys fees in the litigation, and the
court awarded $35,000.
Lakloey argues the attorneys fee award should be set
aside because it was not limited to fees White Eagle incurred on
its successful injunctive claim. But the success of both the
injunctive and damages claims depended on the legal validity of
the lien, and the bulk of the litigation focused on that issue.
The only fees attributable specifically to the damages claim, but
not to the validity claim, were incurred in limited interrogatory
responses, opposing the motion in limine, and preparing proposed
jury instructions. Totaling the value of every time entry
mentioning these activities results in legal fees of about
$11,800, and because the work in drafting jury instructions and
responding to interrogatories also involved issues unrelated to
damages, this figure overstates the amount of fees attributable
to the damages claim alone. The trial court reduced White Eagles
request for attorneys fees from $43,853 to $35,000, a difference
of $8,853. Because this reduction is consistent with a
determination that not all of White Eagles legal fees were spent
on the claim on which it prevailed, the ultimate award was not an
abuse of discretion.20
Lakloey also argues the attorneys fee award should be
set aside because the superior court did not offset fees awarded
to White Eagle by the amount of fees Lakloey incurred in
successfully defending White Eagles damages claim, citing Brand
v. First Federal Savings & Loan.21 Brand involved a plaintiff
seeking to foreclose liens on four separate properties owned by a
bank.22 The plaintiff successfully foreclosed on one lien; the
bank successfully enjoined the three other liens.23 The trial
court did not award attorneys fees to either party.24 The
plaintiff appealed, arguing he was entitled to attorneys fees on
his single successful foreclosure under AS 34.35.005(b), which
provided that [i]n an action to foreclose a lien, the court shall
allow . . . a reasonable attorney fee for the foreclosure of the
lien.25 We affirmed the trial court in that case, stating it was
reasonable to assume that the trial court had taken the attorneys
fees due the plaintiff for successfully foreclosing one lien,
then offset those by the attorneys fees that would have been due
the defendant for successfully defending against the other three
liens.26
Lakloey cites Brand for its argument that a trial court
is justified in setting off fees for the successful claim against
costs incurred on the successful defense of other claims. But we
have long held that the determination of the prevailing party is
within the province of the trial courts broad discretion.27 And
we have often stated that the prevailing party generally is the
one who prevails on the main issue in the case.28 In this case
that party was White Eagle, and the trial court did not abuse its
discretion in concluding that Lakloey was not entitled to an
award of attorneys fees.
V. CONCLUSION
The decision of the trial court is AFFIRMED.
_______________________________
1 AS 34.35.050(4).
2 AS 34.35.074 provides in part:
(a) A person injured by a violation of AS
34.35.050 34.35.120 may bring a civil
action
(1) except as provided in AS 34.35.062, for
actual and consequential damages that are
proximately caused by the violation plus
costs, including reasonable attorney fees;
(2) to enjoin the violation, and if the
person prevails, the person shall be awarded
costs, including reasonable attorney fees.
3 See, e.g., Vaara v. Ketchikan Spruce Mills, 432 P.2d
618, 621-22 (Alaska 1967) (noting that compliance with the
mechanics lien statutes involves factual and legal questions).
4 D.H. Blattner & Sons, Inc. v. N.M. Rothschild & Sons,
Ltd., 55 P.3d 37, 41 (Alaska 2002).
5 See Vaara, 432 P.2d at 621-22.
6 Nerox Power Sys., Inc. v. M-B Contracting Co., 54 P.3d
791, 794 (Alaska 2002).
7 Braun v. Denali Borough, 193 P.3d 719, 726 (Alaska
2008).
8 See Grimes v. Kinney Shoe Corp., 938 P.2d 997, 1000 n.7
(Alaska 1997) (holding prior version of Alaska Wage and Hour Act
did not provide for attorneys fee award to prevailing
defendants).
9 AS 34.35.065 provides in relevant part:
(a) A building or improvement mentioned in AS
34.35.050 constructed with the knowledge of
the owner of the land or the person having or
claiming an interest in the land is
considered to be constructed at the instance
of the owner or person having or claiming the
interest.
(b) The interest owned or claimed is subject
to a lien recorded under AS 34.35.050 -
34.35.120, unless
(1) the owner or person having or claiming an
interest in the land gives notice within
three days after the owner or other person
obtains knowledge of the construction . . .
that the owner or other person will not be
responsible for it, by posting a notice to
that effect in writing in some conspicuous
place . . . .
10 AS 34.35.120(3).
11 AS 34.35.120(1).
12 AS 34.35.120(15).
13 AS 34.35.120(17).
14 H.A.M.S. Co. v. Elec. Contractors of Alaska, Inc., 563
P.2d 258, 262 (Alaska 1977).
15 Nerox Power Sys., Inc. , 54 P.3d at 800 (citing
H.A.M.S. Co., 536 P.2d at 262; AS 34.35.930).
16 We observe that Yingsts payment of money to White Eagle
does not, in and of itself, compel the conclusion that his
activity was not for the purpose of constructing an improvement.
A contractor conceivably could be paid in kind (with dirt) for
its work, and if the value of the dirt removed was greater than
the value of construction work, then the contractor might pay
cash to make up the difference. This was not the case here, as
Yingst did not perform any construction work on the property.
17 Testimony to this effect was contradicted by testimony
of other witnesses. One witness, White Eagles foreman, testified
that the sale of dirt to Yingst ultimately required White Eagle
to purchase more dirt to finish grading and to use as backfill
once the foundations were set. Another witness testified that
although some of the dirt was of poor quality, about half of it
was good material and all could be used for fill dirt.
18 Cf. Noble v. Gustafson, 204 F. 69, 71 (9th Cir. 1913).
The Ninth Circuit, interpreting the territorial law of Alaska,
held that miners did not have a valid mining lien for the work of
sluicing a mining dump to extract gold from the soil. The mining
lien statute gave a lien to laborers and other persons
performing labor upon the construction, development, alteration,
or repair of any building, flume, mine, tunnel, aqueduct, or
other structure. The court distinguished the mining work,
namely, the sinking of the shafts, the running of the tunnels and
the development work in general, from the sluicing, which was not
a work incidental to the development of the mine or the
alteration or repair of any building, flume, or tunnel in
connection therewith. Id. As in Noble, the mere fact of
financial benefit in this case does not give rise to a lien if
the activity does not fall within the statutory terms.
19 Alaska R. Civ. P. 82(a) (Except as otherwise provided
by law or agreed to by the parties, the prevailing party in a
civil case shall be awarded attorneys fees calculated under this
rule.).
20 Lakloey also argues that White Eagles motion for
attorneys fees was unreasonable because it failed to identify
which fees White Eagle incurred in pursuit of its successful
claim to enjoin the lien and which fees it incurred in pursuit of
its unsuccessful claim for damages. It is possible to determine
from White Eagles records which entries were attributable
specifically to the damages claim. The trial court did not abuse
its discretion by declining to reject the motion on its face.
21 Brand v. First Fed. Sav. & Loan Assn of Fairbanks, 478
P.2d 829 (Alaska 1970).
22 Id. at 829-30.
23 Id. at 829-30.
24 Id.
25 Id. at 833-34 (quoting AS 34.35.005(b)) (internal
quotation marks omitted).
26 Id. at 834. AS 34.35.074(a)(2), providing a cause of
action to enjoin an invalid lien, did not exist when Brand was
decided. See ch. 102, 6, SLA 1986. The bank therefore was
assumed to be entitled to attorneys fees under Rule 82 for its
successful defense. Brand, 478 P.2d at 834. The 1986 statutory
change eliminated the issue posed in Brand. When a party now
brings a foreclosure action against a property owner but loses
because the lien is invalid, the property owner should be awarded
attorneys fees under AS 34.35.074(a)(2).
27 See, e.g., Bliss v. Bobich, 971 P.2d 141, 148 (Alaska
1998).
28 See, e.g., K & K Recycling, Inc. v. Alaska Gold Co., 80
P.3d 702, 721 (Alaska 2003)); Gwichin Steering Comm. v. State,
Office of the Governor, 10 P.3d 572, 584 (Alaska 2000) (To decide
which party prevails, the court must determine, in an overall
sense, which party the decision favors.) (internal quotation
marks and citations omitted).
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