Opinion
No. 1-1021 / 01-0166.
Filed February 6, 2002.
Appeal from the Iowa District Court for Dubuque County, ALAN L. PEARSON, Judge.
B.E.S.T. Electric, Inc. appeals from the district court's dismissal of its petition for foreclosure of a mechanic's lien, contending the court erred in finding the lessor's interest in the property was not subject to a mechanic's lien for improvements made to the premises by a lessee. AFFIRMED.
Todd Klapatauskas, Dubuque, for appellant.
William Conzett, Dubuque, for appellee R.E. Lewis Refrigeration, Inc.
Douglas Meyer, Cedar Rapids, for appellee Aspermont Company.
Russel Neuwoehner, Dubuque, for appellee Dubuque Brewing and Bottling Co.
James Trannel, Dubuque, for appellee Plastic Center, Inc.
Considered by VOGEL, P.J., and MILLER and EISENHAUER, JJ.
B.E.S.T. Electric, Inc. appeals from the district court's dismissal of its petition for foreclosure of a mechanic's lien, contending the court erred in finding the lessor's interest in the property was not subject to a mechanic's lien for improvements made to the premises by a lessee. We affirm.
This appeal arises out of a petition filed by B.E.S.T. Electric, Inc. (BEST) seeking foreclosure of a mechanic's lien on The Aspermont Company's (Aspermont) interest in certain real estate. The petition was presented to the district court for resolution upon stipulated facts. A summary of the relevant findings of fact and conclusions of law made by the trial court follows.
This petition was tried to the court together with another case seeking foreclosure of another mechanic's lien on the same property and a joint ruling was issued by the court.
Aspermont is the fee titleholder of the property at issue and was so at the time the work at issue was performed. Aspermont leased the property to American Grain and Related Industries (AGRI) in April 1983. AGRI subleased the premises in July 1983 to an entity known as The Brewery. In 1991 AGRI assigned most of its interest in the prime lease to Crompton Knowles Corporation (Crompton). Since this assignment Crompton has acted as the prime lessee of the premises. At some point, the sublease held by The Brewery was assumed by Zele Brewing Company (Zele). It is unclear whether Zele assumed the sublease before or after the assignment by AGRI to Crompton. However, it does appear Crompton had taken assignment of the prime lease prior to Zele's eventual bankruptcy. As part of the bankruptcy proceeding the Dubuque Brewing and Bottling Company (DBB) took assignment of the sublease from the bankruptcy trustee.
In 1997 DBB contracted with Black Hawk Electric to perform electrical work at the brewery. The work included controllers and electrical upgrades that were necessary for a functioning brewery. The job was transferred to BEST when BEST bought out Black Hawk Electric and no written proposal was tendered by BEST. In contracting for the work DBB was not acting on behalf of Crompton, but rather on behalf of DBB's parent company. The work was done without the actual knowledge or actual consent of Aspermont, AGRI or Crompton, and none of the work was authorized, permitted or condoned by Crompton. The work by BEST was completed in July of 1997 at which time BEST was owed the principle sum of $41,548.04 for its work, with interest on the principal at an annual rate of eighteen percent. BEST filed a mechanic's lien in July 1997. DBB had not existed, either administratively or effectively, for many months as of August 2000.
BEST sought to foreclose its mechanic's lien against Aspermont's fee interest in the real estate even though the improvements were performed for the sublessee DBB. BEST argued that Aspermont had by implied agreement with its lessee contracted for the improvements to the real estate.
Aspermont's lease with AGRI provided, in relevant part:
Therefore, Lessor hereby accords and grants to Lessee the full right (a) to use the demised premises in whatever manner it wishes, including the right to make any improvements, and to alter, change, add to or remove in any manner any and all structures presently on the demised premises or which may be erected there by Lessee. . . .
The trial court rejected BEST's argument, concluding that in order to prove an implied agreement the improvements must have been required, rather than merely permitted, by the lease and any relevant surrounding circumstances. See AW Elec. Contractors, Inc. v. Petry, 576 N.W.2d 112, 114 (Iowa 1998) (stating that establishment of an express or implied agreement obligating lessee to improve lessor's property is a prerequisite to successful assertion of a mechanic's lien claim); Ringland-Johnson-Crowley Co. v. First Central Service Corp., 255 N.W.2d 149, 152 (Iowa 1977) (holding that mere option of renovating is not sufficient to prove implied agreement binding lessee to undertake renovations and thus lessor was not subject to mechanic's lien for work done at lessee's request). The trial court concluded the lease's improvement-related provision was merely permissive and not mandatory.
BEST argued that the lease's contemplation of possible improvements made Aspermont impliedly aware improvements might be made and contended the surrounding circumstances therefore created an implied agreement such improvements would be made. The trial court rejected this contention because mere knowledge of or consent to improvements does not subject the lessor's interest to a mechanic's lien. AW Elec., 576 N.W.2d at 114; Ringland, 255 N.W.2d at 151. Furthermore, the trial court found that although the improvements may have been necessary to the running of DBB's business as a brewery, the choice to make the improvements was completely within DBB's discretion because the lease did not require the property be run as a brewery. See Ringland, 255 N.W.2d at 152 (holding that although lease obligated lessor to provide certain sum of money for remodeling if tenant chose to do so, the decision to undertake any renovations was completely within the discretion of the lessee and thus lessor was not subject to mechanic's lien).
Upon our de novo review we fully agree with the district court's findings of fact and adopt them as our own. Furthermore, we find the trial court's statements of the applicable law, as well its application of the law to these facts, to be both thorough and correct. Therefore, we agree with the trial court's determination that BEST failed to establish its right to foreclose its mechanic's lien on the real estate owned by Aspermont and affirm its dismissal of BEST's petition.
AFFIRMED.