Keith A. SIMS, dba Kasco of Idaho, LLC, an Idaho limited liability company, Plaintiff, v. ACI NORTHWEST, INC., Defendant-Third Party Plaintiff-Appellant, and Monument Heights, LLC, an Idaho limited license company; Dan S. Jacobson, an individual; Sage Holdings, LLC, an Idaho limited license company; Steven G. Lazar, an individual; The Mitchell A. Martin and Karen C. Martin Family Trust Dated August 9, 2005; Devon Chapman, an individual, Defendants-Respondents, and Charles R. Dean, Successor Trustee; and John and Jane Does 1-100, owners, being all persons claiming an interest in the [subject] property, Defendants, and Anthony St Louis, a single person; Andrea Stephens, a single person; Lilly Properties, Inc., a Nevada corporation; and HLT Real Estate, LLC, an Idaho limited liability company, Third-Party Defendants-Respondents.
No. 41269
Supreme Court of Idaho, Boise
Jan. 21, 2015
342 P.3d 618
December 2014 Term.
Lukins & Annis, P.S., Coeur d‘Alene, attorneys for respondents. Jonathon D. Hallin argued.
WALTERS, Justice pro tem.
Appellant ACI Northwest Inc. (ACI) challenges this holding from ParkWest II after the district court determined that ACI lost its mechanic‘s liens for failing to name the trustees in its foreclosure action against Respondents Monument Heights LLC (Monument Heights), Dan Jacobson, Sage Holdings LLC, Steven Lazar, the Mitchell A. Martin and Karen C. Martin Family Trust dated August 9, 2005, Devon Chapman, HLT Real Estate LLC, Anthony St. Louis, Andrea Stevens, and Lilly Properties Inc. (collectively “the Monuments Heights group“). Due to this determination, the district court granted summary judgment in favor of the Monuments Heights group. ACI appeals to this Court. We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
On May 27, 2008, ACI began furnishing labor to Monument Heights on certain real property owned by Monument Heights. On August 1, 2008, Monument Heights executed and delivered a deed of trust (hereinafter “Monument Heights Deed of Trust“) conveying three separate parcels of real property to Pioneer Title Company (Pioneer), the trustee, as security for payment of indebtedness owed by Monument Heights to Dan Jacobson, Sage Holdings LLC, Steven Lazar, the Mitchell A. Martin and Karen C. Martin Family Trust dated August 9, 2005, and Devon Chapman (collectively “the Jacobson group“), the beneficiaries. On August 6, 2008, the Monument Heights Deed of Trust was recorded with the Kootenai County Recorder.
On January 29, 2009, ACI recorded a mechanic‘s lien with the Kootenai County Recorder in the amount of $53,437.10 on the property owned by Monument Heights upon which ACI had furnished labor. On July 28, 2009, ACI recorded an Endorsement to Claim of Lien for Payment on Account. The endorsement stated that ACI received a payment of $25,000 from Monument Heights on February 11, 2009. On August 10, 2009, ACI initiated proceedings for judicial foreclosure of its mechanic‘s lien.
On January 20, 2010, Charles R. Dean, Jr., was appointed as the successor trustee under the Monument Heights Deed of Trust. An Appointment of Successor Trustee was recorded with the Kootenai County Recorder on February 5, 2010.
On March 11, 2011, Monument Heights sold a portion of its real property encumbered by the Monument Heights Deed of Trust to Anthony St. Louis and Andrea Stevens. St. Louis and Stevens conveyed a deed of trust (hereinafter “St. Louis & Stevens Deed of Trust“) to Pioneer as security for payment of indebtedness owed to Monument Heights, recorded with the Kootenai County Recorder. On March 15, 2011, Monument Heights assigned its interest under the St. Louis & Stevens Deed of Trust to Lilly Properties. Monument Heights recorded its assignment with the Kootenai County Recorder.
On June 1, 2011, Lazar (part of the Jacobson group) recorded an assignment of his interest under the Monument Heights Deed of Trust to HLT Real Estate LLC.
On June 14, 2011, ACI recommenced furnishing labor, materials, and services in the improvement of the Monument Heights property. On July 26, 2011, ACI recorded a second mechanic‘s lien with the Kootenai County Recorder, securing the principal sum of $462,780.46.
On January 12, 2012, ACI filed an amended complaint seeking to judicially foreclose its mechanic‘s liens. ACI had not named or sought to join to its action Dean, the trustee
On February 26, 2013, the Monument Heights group moved for summary judgment against ACI. The district court determined that ACI was required to join the trustees Dean and Pioneer to its action to judicially foreclose its mechanic‘s liens pursuant to
On May 17, 2013, the district court entered a restated judgment in favor of the Monument Heights group against ACI. On June 7, 2013, ACI filed a notice of appeal. The district court subsequently entered an amended judgment.
II. ISSUES ON APPEAL
- Whether the district court erred in granting summary judgment to the Monument Heights group based on this Court‘s holding in ParkWest II.
- Whether either party is entitled to an award of attorney‘s fees on appeal.
III. STANDARD OF REVIEW
“On appeal from the grant of a motion for summary judgment, this Court utilizes the same standard of review used by the district court originally ruling on the motion.” Arregui v. Gallegos-Main, 153 Idaho 801, 804, 291 P.3d 1000, 1003 (2012). Summary judgment is proper “if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”
IV. ANALYSIS
A. The six-month limitation in Idaho Code section 45-510 to enforce a mechanic‘s lien operates as a limit of not only the remedy, but also liability and the right to enforce the lien.
“‘The right of a materialman to assert a lien against a structure for which materials have been furnished is a right granted and therefore determined by statute.’ In Idaho, the right exists in
“The mechanic‘s lien statutes are liberally construed in favor of those to whom the lien is granted....” ParkWest Homes LLC v. Barnson (ParkWest I), 149 Idaho 603, 605, 238 P.3d 203, 205 (2010). “This rule, however, ‘does not permit the court to create a lien where none exists or was intended by the legislature.‘” L & W Supply Corp. v. Chartrand Family Trust, 136 Idaho 738, 743, 40 P.3d 96, 101 (2002) (quoting Great Plains Equip., Inc. v. Nw. Pipeline Corp., 132 Idaho 754, 760, 979 P.2d 627, 633 (1999)). “Therefore, while ‘this section will be liberally construed,’ ‘the statutory requirements must be substantially complied with in order to perfect a valid mechanic‘s lien.‘” Id. (quoting Pierson v. Sewell, 97 Idaho 38, 41, 539 P.2d 590, 593 (1975)).
A claim of lien must be filed within ninety days “after the completion of the labor or services, or furnishing of materials.”
No lien provided for in this chapter binds any building, mining claim, improvement or structure for a longer period than six (6) months after the claim has been filed, unless proceedings be commenced in a proper court within that time to enforce such lien....
The limitation prescribed by statute of the time within which an action must be brought in a proper court for the foreclosure of a mechanic‘s lien is not the ordinary statute of limitation, which is waived, if not pleaded. “The time within which the suit must be brought operates as a limitation of the liability itself as created, and not of the remedy alone. It is a condition attached to the right to sue at all.” The Harrisburg, 119 U.S. 199, 214 [7 S.Ct. 140, 147, 30 L.Ed. 358, 362] (1886).
Id. at 501, 185 P. at 555. Due to the operation of
B. ParkWest II held that the trustee is a necessary party to an action to foreclose a mechanic‘s lien and, if the trustee is not made a party within the six-month limitation in Idaho Code section 45-510 , the mechanic‘s lien is lost as to the trustee‘s interest: legal title to the property.
ParkWest II presented the following issue on appeal: “whether a lienor seeking to en-
To reach this decision, this Court examined two legal concepts: the deed of trust and this Court‘s interpretation of
Idaho is a title theory state, whereby a deed of trust is a title-passing procedure. This Court extensively discussed this procedure in Long v. Williams, 105 Idaho 585, 587, 671 P.2d 1048, 1050 (1983). We noted that a deed of trust is effectively a mortgage with a power of sale, but as security for that mortgage, legal title passes to the trustee. Id. at 587-88, 671 P.2d at 1050-51. When a deed of trust is executed and delivered, the legal title of the property passes to the trustee.
I.C. § 45-1502(4) ; Defendant A. v. Idaho State Bar, 132 Idaho 662, 665, 978 P.2d 222, 225 (1999).
ParkWest II, 154 Idaho at 684, 302 P.3d at 24.
After this discussion of a deed of trust, this Court turned to the law in Idaho regarding enforcement of a mechanic‘s lien. This Court explained:
Idaho Code § 45-510 provides a court with jurisdiction to enforce a lien when a lien is filed and an action commenced within six months. Palmer v. Bradford, 86 Idaho 395, 401, 388 P.2d 96, 99 (1963). However, even if an action is brought to enforce a lien within a six month period, it is lost against the interests of persons not named. Willes, 78 Idaho at 108, 298 P.2d at 975. Thus, in a foreclosure action, the action (1) must be timely brought under statute; and (2) must timely name the proper interested parties.
ParkWest II, 154 Idaho at 684, 302 P.3d at 24. This Court then reviewed two cases, Palmer, 86 Idaho 395, 388 P.2d 96, and Willes, 78 Idaho 104, 298 P.2d 972, in which the Court held that the failure to comply with
Finally, the Court applied
In light of this authority, because a mechanic‘s lien is lost as to any interest in property not named in a foreclosure action, we hold that a subsequent holder of legal title to property encumbered by a deed of trust and a mechanic‘s lien, takes the property free and clear of the mechanic‘s lien, where the lienor fails to name the trustee of the deed of trust in an action to enforce the mechanic‘s lien within the period of time required by statute.
Id. at 685, 302 P.3d at 25. “In other words,” the Court held, “it is necessary to name the trustee who holds legal title to the property” when a lien claimant seeks to foreclose a lien on property encumbered by a deed of trust. Id. The Court then recognized that the claimant in ParkWest II failed to name the trustee
C. We reaffirm our holding in ParkWest II.
ACI requests that the Court modify or overrule ParkWest II. ACI asserts that ParkWest II is out-of-touch with the practical reality of the use of deeds of trust and creates confusion, uncertainty, and increased expense in the real estate industry. ACI makes two primary arguments in support of its position. First, ACI argues that for the past thirty years the Court has incorrectly equated a deed of trust with a mortgage with a power of sale. Second, ACI argues that the legal title conveyed to the trustee is not a conveyance of real property to the trustee as a true owner. Rather, ACI submits that the trustee‘s role is limited and the minimal legal title represents only the right to sell in the event of foreclosure. Along these same lines, ACI asserts that a broad understanding of the trustee‘s legal title renders the trustee an indispensable party to all real property litigation and will open the floodgates to litigation concerning breach of the trustee‘s duties. Further, ACI submits that this flux of litigation will increase the cost of deeds of trust and decrease the number of individuals and entities willing to act as trustees.
The Idaho Land Title Association (ILTA) filed a brief in support of ACI‘s position and, among other arguments, raises similar policy concerns. Specifically, ILTA argues that ParkWest II‘s holding creates uncertainty, chills the climate for those considering trustee work, and increases the expense and risk of such work. However, in that regard,
When there is controlling precedent on questions of Idaho law the rule of stare decisis dictates that we follow it, unless it is manifestly wrong, unless it has proven over time to be unjust or unwise, or unless overruling it is necessary to vindicate plain, obvious principles of law and remedy continued injustice.
W. Home Transp., Inc. v. Idaho Dep‘t of Labor, 155 Idaho 950, 953, 318 P.3d 940, 943 (2014) (quoting Greenough v. Farm Bureau Mut. Ins. Co. of Idaho, 142 Idaho 589, 592, 130 P.3d 1127, 1130 (2006)) (internal quotation marks omitted).
While the practical concerns put forth by ACI and ILTA may be somewhat valid, we hold that ParkWest II is not manifestly wrong, unjust or unwise, or contrary to plain, obvious principles of law. Rather, the holding from ParkWest II is in line with the general rules recognized in treatises and has full support from relevant precedent. See 53 AM.JUR. 2d Mechanics’ Liens §§ 367, 369, 374; 56 C.J.S. Mechanics’ Liens § 412. Our review of the case law shows that, to determine the necessary parties to an action to foreclose a mechanic‘s lien, the focus is not on whether the state follows title or lien theory or whether the deed of trust conveys a “true ownership” interest or a minimal interest of a power of sale. Rather, the focus is on the interpretation of
Although the rule from ParkWest II may cause harsh results in some circumstances, those concerns have been rejected in the past due to the fact that the right to a mechanic‘s lien “is wholly the creature of statute.” Utah Implement-Vehicle Co., 209 F. at 944. The Ninth Circuit Court of Appeals recognized that the rule “results in harshness and injustice to the lien claimants,” but declined to reconsider it. D.W. Standrod & Co., 223 F. at 519. This Court also was unpersuaded by the apparent harshness of our statutory interpretation in a related issue of mechanic‘s lien attachment and priority:
[I]t is suggested that ... injustice will in some way be done to the holder of the subsequent [mechanic‘s] liens. It is sufficient to say that such lienholders have no rights other than such as the statute gives, and, if the liens as given are rendered less valuable because of [the Court‘s ruling], they cannot complain, because they took their liens subject to such contingencies, and subject to those provisions of said law.
Pac. States Sav., Loan & Bldg. Co. v. Dubois, 11 Idaho 319, 330, 83 P. 513, 516 (1905). Therefore, considering that ParkWest II is consistent with the long-standing rule, any alleged harshness or injustice is unconvincing.
ACI‘s and ILTA‘s arguments in support of overruling or modifying ParkWest II are likewise unpersuasive. ParkWest II issued a narrow holding grounded in
Moreover, any change to the statutory procedure for mechanic‘s lien enforcement is best suited for the legislature. “The wisdom, justice, policy, or expediency of a statute are questions for the legislature alone.” Berry v. Koehler, 84 Idaho 170, 177, 369 P.2d 1010, 1013 (1962). “If the statute as written is socially or otherwise unsound, the power to correct it is legislative, not judicial.” Verska v. Saint Alphonsus Reg‘l Med. Ctr., 151 Idaho 889, 893, 265 P.3d 502, 506 (2011) (quoting In re Estate of Miller, 143 Idaho 565, 567, 149 P.3d 840, 842 (2006)). “The public policy of legislative enactments cannot be questioned by the courts and avoided simply because the courts might not agree with the public policy so announced.” Id. at 896, 265 P.3d at 509 (quoting State v. Village of Garden City, 74 Idaho 513, 525, 265 P.2d 328, 334 (1953)). Here, ACI‘s and ILTA‘S issue with the rule that a trustee is a necessary party is exclusively attributable to
The district court correctly recognized that ParkWest II controlled the issue at hand. ACI failed to join the holders of legal title, the trustees, in its action to foreclose its liens within the six-month statutory period in
To avoid the application of ParkWest II, ACI submits three arguments. First, ACI argues that the facts here are distinguishable from ParkWest II. ACI submits that, unlike ParkWest II, a trustee‘s sale of the property has not occurred and a subsequent purchaser is not seeking to clear the property of ACI‘s mechanic‘s liens. This argument, however, ignores the holding from ParkWest II that
Second, ACI argues that, construing the mechanic‘s lien statutes in its favor, ACI‘s failure the name the trustees should be excusable for a lienholder who filed in good faith and caused no prejudice. This argument is misplaced because it is based on an inapplicable statute,
Third, ACI argues that the Court should reverse the district court‘s decision because it is inconsistent with ParkWest II and will result in shifting lien priority for ACI. This argument centers on ACI‘s assertion that there is a discrepancy between the district court‘s memorandum decision and order and its partial summary judgment. This argument mischaracterizes the district court‘s decisions and misconstrues ParkWest II. The district court clearly ruled that ParkWest II controlled and ACI‘s liens were unenforceable as to the interest possessed by the trustee through the deed of trust: legal title. Therefore, ACI lost its liens against the property by failing to comply with
ACI seeks an award of attorney‘s fees pursuant to
The Monument Heights group requests an award of attorney‘s fees pursuant to
(a) “that to the best of the signer‘s knowledge, information, and belief after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law,” and (b) “that it [the document] is not interposed for any improper purpose.”
I.R.C.P. 11(a)(1) .
Id. at 453, 328 P.3d at 433 (alterations in original). To comply with
V. CONCLUSION
The judgment of the district court is affirmed. Costs on appeal to respondents.
Chief Justice BURDICK, Justices EISMANN and HORTON concur.
J. JONES, Justice, specially concurring.
I concur in the Court‘s opinion based on the fact that “Idaho is a title theory state, whereby a deed of trust is a title-passing procedure.” ParkWest Homes, LLC v. Barnson, 154 Idaho 678, 684, 302 P.3d 18, 24 (2013). This status is dictated by