Wagner Interior Supply of Wichita, Inc. v. Dynamic Drywall, Inc.
113037
| Kan. | Feb 24, 2017Background
- Puetz was general contractor for a Wichita hotel; Dynamic Drywall was its drywall subcontractor; Wagner supplied drywall materials to Dynamic and was not paid.
- Wagner filed a mechanic's lien in Sedgwick County for $108,162.97, which clouded title during the owner's refinancing.
- Puetz posted a K.S.A. 60-1110 release-of-lien bond (principal Puetz; surety United) conditioned to pay Wagner's claim; the district court approved and filed the bond, discharging Wagner's recorded lien.
- Wagner sued Dynamic, Puetz, and United seeking payment on its claim and recovery from the bond; Dynamic's claim stayed by bankruptcy.
- The district court granted summary judgment for Puetz/United; the Court of Appeals reversed; the Kansas Supreme Court affirmed the Court of Appeals, directing entry of summary judgment for Wagner.
Issues
| Issue | Plaintiff's Argument (Wagner) | Defendant's Argument (Puetz) | Held |
|---|---|---|---|
| Effect of filing approved K.S.A. 60-1110 bond on lien defects | Bond discharges the lien; claimant may sue bond without proving statutory perfection | Bond discharges lien but owner/contractor may preserve lien defenses and assert them against bond claim | Filing the bond discharges the statutory lien; lien-perfection defenses are irrelevant to recovery on the bond; focus shifts to proving the underlying claim |
| Burden to recover from statutory lien bond | Claimant need only show materials/labor were supplied and used in improvement | Same but Puetz argued claimant should still overcome perfection defects | Claimant must prove the substantive claim elements (supply and use); statutory perfection requirements are waived once bond filed |
| Impact of 2005 amendments to K.S.A. 60-1110 | Amendments do not change Eldridge rule; smaller targeted bonds still discharge liens and shift focus to claim | Amendments permit preserving lien defenses by transferring dispute to bond when lien is "disputed" | Amendments created a less costly bonding option but did not alter the claims-vs-lien relationship established in Eldridge; perfection defenses remain relevant only to asserted statutory liens |
| Interpretation of bond terms | Bond conditions recovery on being "finally adjudged" entitled to claim | Puetz argued bond preserved ability to litigate lien defects | Court relied on bond language and held recovery depends on proof of the underlying claim, not satisfaction of lien-perfection technicalities |
Key Cases Cited
- Haz-Mat Response, Inc. v. Certified Waste Servs. Ltd., 259 Kan. 166 (statutory mechanic's lien must meet statutory requirements strictly)
- Murphree v. Trinity Universal Ins. Co., 176 Kan. 290 (when bond filed claimant may look to bond for recovery; bond does not otherwise change parties' rights)
- Bob Eldridge Constr. Co., Inc. v. Pioneer Materials, Inc., 235 Kan. 599 (once bond filed, claimant need only prove materials/labor were supplied and used; statutory perfection waived)