Ronnisch Construction Group, Inc v. Lofts on the Nine, LLC
499 Mich. 544
| Mich. | 2016Background
- Ronnisch Construction Group (RCG) contracted to build condominiums for Lofts on the Nine (LOTN); RCG recorded a construction lien after LOTN withheld payment.
- RCG sued seeking foreclosure of the lien, breach of contract, unjust enrichment, and attorney fees under the Construction Lien Act (CLA), but the parties stayed the suit for mandatory arbitration on contract claims.
- The arbitrator awarded RCG a net recovery on the contract claims but reserved the CLA attorney-fees issue for the court; LOTN then paid the arbitration award in full.
- RCG moved to lift the stay, confirm the award, and obtain attorney fees under MCL 570.1118(2); the trial court denied fees, holding RCG’s lien claim was neither adjudicated nor surviving full payment.
- The Court of Appeals reversed in part, and the Michigan Supreme Court granted leave to decide whether a lien claimant who prevailed on a related contract claim (by arbitration) but did not obtain a judgment on the lien foreclosure can be a prevailing party entitled to discretionary CLA attorney fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RCG was a "lien claimant" under MCL 570.1105(2) when it obtained the arbitration award | RCG: had a right to a construction lien when it obtained the arbitration award because LOTN had not paid the contract in full before the award | LOTN: payment/satisfaction extinguished any present right to a lien; RCG was not a lien claimant when seeking fees | Held: RCG was a lien claimant at the time of the arbitration award (its lien had attached and the contract remained unpaid) |
| Whether an "action to enforce a construction lien through foreclosure" (MCL 570.1118(2)) refers to the entire judicial action (including related contract claims) or only to adjudication of the lien claim itself | RCG: the CLA contemplates that foreclosure actions may include related claims; prevailing in the action (including contract claim) suffices | LOTN: statute requires prevailing on the lien foreclosure claim itself to recover CLA fees | Held: §1118(2) applies to the entire action; a lien claimant may prevail in the action by prevailing on an integrally related contract claim |
| Whether RCG was the "prevailing party" for purposes of MCL 570.1118(2) despite no judicial judgment confirming the award before LOTN paid | RCG: the arbitration award was a final, binding, enforceable determination that altered parties’ rights and made RCG the prevailing party as of the award date | LOTN: without a judicial adjudication of the lien, and with payment extinguishing the lien, RCG cannot be a prevailing lien claimant entitled to CLA fees | Held: RCG was the prevailing party because the binding arbitration award conclusively determined the parties’ rights on the core dispute; payment by LOTN did not negate prevailing-party status as of the award date |
| Whether acceptance of payment before judicial confirmation of the award precludes seeking CLA fees | RCG: acceptance should not bar fees; defendants could not thwart fee awards by tendering payment | LOTN: acceptance extinguished any lien and thus any entitlement to CLA fees | Held: acceptance of the arbitration award by LOTN did not preclude RCG from being the prevailing party as of the award, nor from seeking fees; trial court retains discretion to award fees and must consider lien validity if contested |
Key Cases Cited
- H A Smith Lumber & Hardware Co v Decina, 480 Mich 987 (Mich. 2007) (CLA fees require prevailing on lien foreclosure action; losing on lien precludes CLA fees)
- Ronnisch Constr Group, Inc v Lofts on the Nine, LLC, 306 Mich App 203 (Mich. Ct. App. 2014) (Court of Appeals reversed trial court denial and remanded for consideration of CLA fees)
- Vugterveen Sys, Inc v Olde Millpond Corp, 454 Mich 119 (Mich. 1990) (discusses CLA purpose and remedial construction)
- CAM Constr v Lake Edgewood Condo Ass’n, 465 Mich 549 (Mich. 2002) (discusses relation of contract claims to lien enforcement remedies)
- Buckhannon Bd & Care Home, Inc v West Virginia Dep’t of Health & Human Resources, 532 US 598 (U.S. 2001) (defining prevailing party in fee-shifting contexts; used for analogous prevailing-party analysis)