888 N.W.2d 673
Iowa Ct. App.2016Background
- Mike and Cori Jones hired Standard Water Control Systems to waterproof their basement; work began July 15, 2013.
- During initial work Standard Water struck an unusually placed water and sewer line embedded in concrete, causing property damage.
- Standard Water worked only that one day (job ~95% complete); the Joneses thereafter denied access and refused to pay the $5,400 balance, alleging incomplete work and damage.
- Sixteen days after performing the work Standard Water filed a notice of commencement and a mechanic’s lien; it then sued to foreclose the lien and for breach of contract.
- The district court entered in personam judgment for Standard Water ($5,400 plus interest) and allowed in rem foreclosure of the mechanic’s lien; it awarded $43,835.25 in attorney fees.
- On appeal the Joneses challenged (1) the lien’s validity under Iowa Code §572.13A(1), (2) enforceability of a contract clause disclaiming liability for hidden damage, and (3) the reasonableness of the fee award.
Issues
| Issue | Plaintiff's Argument (Jones) | Defendant's Argument (Standard Water) | Held |
|---|---|---|---|
| 1. Whether §572.13A(1) required Standard Water to post a notice of commencement within 10 days to preserve a lien | The statute’s qualifying phrase modifies only "owner-builder" under the last-antecedent rule, so all general contractors (including Standard Water) had to post within 10 days; failing to do so invalidates the lien | The qualifying phrase modifies both "general contractor" and "owner-builder," so only general contractors who hire subcontractors must post; Standard Water did not hire subcontractors and therefore need not have posted | Court: statute ambiguous; interpreted in light of purpose and related provisions to hold posting required only for contractors who hire subcontractors — Standard Water’s lien valid |
| 2. Whether contract §7 (disclaiming responsibility for hidden/unknown installations and repair) is void as an unlawful indemnity under Iowa Code §537A.5(2) | Clause is an impermissible indemnity that attempts to shift liability for negligent acts and thus is void | Clause is not an indemnity provision because it does not require one party to indemnify the other against third-party claims; it addresses allocation of responsibility between the contracting parties | Court: clause is not an indemnity clause under §537A.5(2) and is enforceable |
| 3. Whether the attorney-fee award was reasonable | Fee award is excessive relative to small underlying judgment and limited issues; appellate court should reduce it | District court reasonably exercised discretion in setting fees using Schaffer factors, but fee may be justified by results and counsel work | Court: remanded fee award for additional fact-finding; reduced award was not clearly supported—must reassess using Schaffer factors (award vacated in part) |
| 4. Whether deference is owed to administrative rule requiring all general contractors to post within 10 days | Agency rule makes posting mandatory for all general contractors and should be afforded deference | Legislature did not vest the Secretary of State with interpretive authority that would override statutory construction; rule not controlling here | Court: no deference to rule on interpretive question; statute controls |
Key Cases Cited
- Flynn Builders, L.C. v. Lande, 814 N.W.2d 542 (Iowa 2012) (mechanic’s-lien enforcement is equitable)
- Bank of Am., N.A. v. Schulte, 843 N.W.2d 876 (Iowa 2014) (standard of review for statutory interpretation)
- Estate of Ryan v. Heritage Trails Assocs., Inc., 745 N.W.2d 724 (Iowa 2008) (interpretation starts with plain language)
- In re Estate of Bockwoldt, 814 N.W.2d 215 (Iowa 2012) (statutory ambiguity and interpretive approach)
- Schaefer v. Putnam, 841 N.W.2d 68 (Iowa 2013) (seek legislative intent in statutory interpretation)
- Hardin County Drainage Dist. 55 v. Union Pac. R.R. Co., 826 N.W.2d 507 (Iowa 2013) (assess statute as whole)
- State v. Romer, 832 N.W.2d 169 (Iowa 2013) (use legislative history and prior versions in interpretation)
- Fjords N., Inc. v. Hahn, 710 N.W.2d 731 (Iowa 2006) (last-antecedent rule not inflexible; consider legislative intent)
- NextEra Energy Res. LLC v. Iowa Utils. Bd., 815 N.W.2d 30 (Iowa 2012) (agency rulemaking authority does not automatically confer interpretive deference)
- Renda v. Iowa Civil Rights Comm’n, 784 N.W.2d 8 (Iowa 2010) (limitations on agency interpretive authority)
- FNBC Iowa, Inc. v. Jennessey Grp., L.L.C., 759 N.W.2d 808 (Iowa Ct. App. 2008) (indemnity clauses apply to third-party claims, not disputes between contracting parties)
- Schaffer v. Frank Moyer Constr., Inc., 628 N.W.2d 11 (Iowa 2001) (factors for awarding attorney fees in mechanic’s-lien cases)
- Baumhoefener Nursery, Inc. v. A & D P’ship, II, 618 N.W.2d 363 (Iowa 2000) (district court’s discretion in fee awards)
- Landals v. George A. Rolfes Co., 454 N.W.2d 891 (Iowa 1990) (court must use independent judgment to set total fee appropriate for case)