Ferguson Enterprises, Inc. v. Keybuild Solutions, Inc.
2011 WL 6425573
Colo. Ct. App.2011Background
- Zion Development owned the property in 2002 and planned a multi-unit project; a Flatiron Bank loan in 2005 secured by a deed of trust; a master plan for the project filed in 2007; Flatiron foreclosed in 2007 and conveyed to Water Tower; Water Tower obtained $3M+ construction financing from CCB secured by a June 5, 2008 deed of trust; lien claimants provided work and materials 2008–2009; in 2010 CCB foreclosed and obtained a public trustee’s deed; the lien claimants filed mechanies’ liens totaling $164,049.91; the trial court granted lien claimants’ summary judgment seeking priority over CCB’s deed of trust based on the master plan filing and relation back, while CCB sought priority under construction loan doctrine.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether mechanics’ liens have priority over the deed of trust under construction-loan doctrine | Ferguson argues liens relate back to Oct 23, 2007 | CCB relies on Joralman/Ist Choice to establish superiority | Remand needed; unresolved fact-dispute on superiority over improvements |
| Whether lien relation back to architects’ work for Zion applies given an intervening foreclosure | Lien claimants contend liens relate back to architects’ master plan | CCB argues current-owner focus invalid | Remand needed; requires additional facts on whether architects’ lien superior to the deed of trust applies after foreclosure |
| Whether foreclosure extinguishes junior liens and affects relation-back analysis | Foreclosure should extinguish junior liens absent superior lien | Public trustee’s sale can extinguish junior liens but superior liens survive | Remand needed; depends on whether architects’ lien was superior to FlatIron’s lien and on subsequent facts |
Key Cases Cited
- Joralman v. McPhee, 31 Colo. 26 (1903) (construction-loan priority exception for actual construction funds used)
- Ist Choice Bank v. Fisher Mechanical Contractors, Inc., 15 P.3d 1100 (Colo.App.2000) (construction-loan priority and improvements exception)
- Lew Hammer, Inc. v. Dash, Inc., 42 Colo.App. 414, 599 P.2d 948 (1979) (mechanics’ liens for new improvements may have priority over prior liens on land)
- Powder Mountain Painting v. Peregrine Joint Venture, 899 P.2d 279 (Colo.App.1994) (strict construction of mechanics’ lien priority; relation to improvements)
- Bankers Trust Co. v. El Paso Pre-Cast Co., 192 Colo. 468, 560 P.2d 457 (1977) (origin of relation-back for commenced work under lien statute)
- Printz Servs. Corp. v. Main Elec., Ltd., 949 P.2d 77 (Colo.App.1997) (relation-back concepts for mechanics’ liens on owners/agents)
- Ragsdale Bros. Roofing, Inc. v. United Bank, 744 P.2d 750 (Colo.App.1987) (extension of lien rights under foreclosures and extinguishment of subordinate liens)
- First Interstate Bank v. Tanktech, Inc., 864 P.2d 116 (Colo.1993) (section 38-38-501 extinguishes subordinate liens on foreclosure; title transfer implications)
- City of Lakewood v. Mavromatis, 817 P.2d 90 (Colo.1991) (reliance on record title and notice principles in real-property transfers)