Ronnisch Construction Group, Inc. v. Lofts on the Nine, LLC
306 Mich. App. 203
| Mich. Ct. App. | 2014Background
- Plaintiff (general contractor) and defendant Lofts on the Nine entered a construction contract; plaintiff claimed unpaid balance of $626,163.73 and filed a construction lien and circuit-court complaint asserting breach of contract, lien foreclosure, and unjust enrichment.
- Parties stayed the circuit action and proceeded to arbitration per the contract’s arbitration clause.
- Arbitrator awarded plaintiff $636,058.72 on its claims and awarded defendant $185,238.36 on counterclaims, resulting in a net award paid by defendant to plaintiff.
- The arbitrator expressly reserved ruling on plaintiff’s request for attorney fees under the Construction Lien Act, MCL 570.1118(2).
- Plaintiff moved in circuit court to confirm the award and obtain attorney fees under MCL 570.1118(2); the circuit court denied fees reasoning plaintiff was not a "prevailing lien claimant" because the lien-foreclosure claim was not adjudicated before the court or arbitrator and defendant had paid the award.
- The court of appeals vacated the fee denial and remanded, holding plaintiff could be a prevailing lien claimant despite the lien being resolved by arbitration/payment and that awarding fees is discretionary, not mandatory.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff is a "prevailing lien claimant" entitled to consideration for attorney fees under MCL 570.1118(2) when the lien amount was determined by arbitration and defendant paid before lien-foreclosure proceedings in court | Plaintiff argued the arbitration award established the amount owed on the contract/lien and made it the prevailing lien claimant entitled to fees under the Construction Lien Act | Defendant argued payment of the arbitration award and lack of a court foreclosure adjudication meant plaintiff did not "prevail" on a lien foreclosure action and thus cannot recover fees | Court held plaintiff may be a prevailing lien claimant even though the lien amount was fixed by arbitration and paid before foreclosure; circuit court erred in concluding it lacked discretion to award fees |
| Whether attorney fees must be awarded if plaintiff is a prevailing lien claimant | Plaintiff sought mandatory recovery of its requested fees | Defendant argued no entitlement given circumstances; court noted permissive language of statute | Court clarified fees are discretionary under MCL 570.1118(2) ("may allow" means permissive); remanded for circuit court to exercise discretion |
Key Cases Cited
- Bosch v. Altman Constr. Corp., 100 Mich. App. 289 (affirming award of attorney fees under mechanics’ lien act where lien amount was established separately and defendant paid before foreclosure)
- Solution Source, Inc. v. LPR Assoc. Ltd. P’ship, 252 Mich. App. 368 (holding Construction Lien Act should be construed liberally and that satisfaction/payment before foreclosure does not preclude fee recovery)
- H.A. Smith Lumber & Hardware Co. v. Decina, 258 Mich. App. 419 (distinguishable; liens never attached so plaintiffs could not prevail on lien claims)
- C D Barnes Assocs., Inc. v. Star Heaven, LLC, 300 Mich. App. 389 (discussing standard of appellate review and statutory interpretation in Construction Lien Act context)