Gaston Engineering & Surveying, P.C. v. Oakwood Properties, LLC
2011 MT 44
| Mont. | 2011Background
- Gaston Engineering & Surveying, P.C. (Gaston) recorded a construction lien on Oakwood Property after performing water monitoring and perc tests beginning June 12, 2006.
- Oakwood Properties, LLC planned a residential subdivision and executed a buy-sell agreement for the Property on June 12, 2006; Oakwood later owned the Property on September 20, 2006.
- Yellowstone Bank financed Oakwood up to $6,000,000 and recorded a Mortgage on September 20, 2006 to secure the loan; approximately $1.5 million remained available on that line.
- Gaston’s invoices were paid via advances requested by Oakwood and approved by Yellowstone; Yellowstone amended its Mortgage to cover these advances and other work on the Property.
- Gaston recorded a lien for about $79,000 on October 12, 2007; lawsuit sought to foreclose the lien and determine its priority over Yellowstone’s Mortgage; the District Court granted Yellowstone summary judgment, holding the Mortgage was a purchase-money mortgage with priority over the lien and that Gaston could not have commenced work before September 20, 2006.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gaston’s lien attached before Yellowstone’s Mortgage. | Gaston argues the lien attached on June 12, 2006 when work commenced. | Yellowstone contends the lien could not attach until Oakwood owned the Property (Sept. 20, 2006). | Lien attached before Mortgage; Gaston has priority. |
| Whether Yellowstone’s Mortgage is a purchase-money mortgage with priority over Gaston’s lien. | Gaston argues the lien’s attachment preempts the Mortgage’s priority. | Yellowstone relies on § 71-3-114 MCA to claim priority as a purchase-money mortgage. | Purchase-money mortgage does not defeat a pre-attached construction lien; Gaston has priority. |
| Whether the district court properly denied Gaston’s Rule 59(g) motion. | Gaston sought reconsideration of the summary-judgment ruling. | Yellowstone contends no error in the denial. | Not dispositive; the priority issue dominates; remand for entry of judgment on attachment. |
Key Cases Cited
- Swain v. Battershell, 294 Mont. 282, 983 P.2d 873 (1999 MT 101) (construction lien priority when owner status exists)
- In re Estate of Wooten, 643 P.2d 1196 (1982 MT) (equitable transfer of property interest upon contract for sale)
- Kern v. Robertson, 12 P.2d 565 (1932 MT) (ownership interest can transfer without fee simple title)
- Federal Land Bank of Spokane v. Green, 90 P.2d 489 (1939 MT) (liberal construction of lien statutes after compliance)
- Thornton v. Flathead County, 220 P.3d 395 (2009 MT 367) (standard of review for summary judgment)