355 P.3d 724
Mont.2015Background
- Dick Construction (predecessor to Worldwide) contracted with Spanish Peaks on a cost-plus basis: 5% contractor’s fee on total project, with project cap producing a $6,915,195 fee.
- Spanish Peaks suspended work in 2008, stopped payments, and later filed Chapter 7; Dick had invoiced ≈$21M and received only $1,438,968 of the fee, leaving ~$5,476,277 unpaid.
- Dick filed a construction lien including the unpaid contractor’s fee and $661,767 owed to subcontractor Allied Steel; Allied Steel also filed its own lien.
- Allied Steel settled with Spanish Peaks and Dick, accepted payment, released claims, and assigned any remaining claims to Dick; Allied Steel was dismissed.
- Worldwide purchased Dick’s assets and lien; CHSP (successor to Citigroup) held the mortgage. After partial settlements, the district court granted summary judgment that Worldwide’s lien included the unpaid contractor’s fee and Allied Steel’s subcontractor amount. The Supreme Court reversed and remanded for judgment for CHSP.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the unpaid portion of the contractor’s fee is lienable | Worldwide: the statute entitles a contractor to a lien for the unpaid contract price; the contract price controls, so the unpaid fee is lienable | CHSP: the unpaid fee compensates for work not performed; lien statutes cover only services/materials actually furnished (profit on unperformed work not lienable) | Not lienable: unpaid fee was calculated to include work "not actually completed," and lien statutes secure only amounts for services/materials actually furnished, so the contractor cannot lien for unperformed work |
| Whether Allied Steel’s subcontractor amount remained lienable / includable in Worldwide’s lien after settlement/assignment | Worldwide: as assignee and general contractor it can claim subcontractor’s amount in its lien | CHSP: Allied Steel settled and released its lien; assignment gives no greater rights than assignor; a contractor’s lien must be reduced by liens of persons claiming through it | Not lienable/includable: Allied Steel’s settlement extinguished its lien so there was nothing to assign; Worldwide’s lien must be reduced by subcontractor liens, so it cannot include the settled amount |
Key Cases Cited
- Matos v. Rohrer, 661 P.2d 443 (Mont. 1983) (mechanic’s lien is statutory, remedial, founded in equity)
- Beck v. Hanson, 589 P.2d 141 (Mont. 1979) (characterizing lien’s remedial nature)
- Smith v. Gunniss, 144 P.2d 186 (Mont. 1944) (lien arises from materials furnished and labor expended)
- Van Stone v. Stillwell & Bierce Mfg. Co., 142 U.S. 128 (U.S. 1891) (lien depends on use of materials and labor that become part of the freehold)
- Davis v. Alvord, 94 U.S. 545 (U.S. 1877) (mechanics’ liens secure payment to those who add value by labor/materials)
- Watts v. HSBC Bank United States Tr., 308 P.3d 57 (Mont. 2013) (assignee stands in assignor’s shoes; assignment does not create a new lien)
- Credit Serv. Co. v. Crasco, 264 P.3d 1061 (Mont. 2011) (assignee obtains no greater rights against debtor than assignor)