Opinion
No. A06-1276.
Filed May 15, 2007.
Appeal from the District Court, Hennepin County, File No. 27-CV-05-013983.
Julian C. Janes, Gislason, Martin Varpness, P.A., 7600 Parklawn Avenue South, Suite 444, Edina, MN 55435; and.
Lawrence A. Wilford, Wilford Geske, 7650 Currell Boulevard, Suite 300, Woodbury, MN 55125 (for appellants).
William M. Hart, Karl J. Yeager, Melissa Dosick Reithof, Meagher Geer, P.L.L.P., 33 South Sixth Street, Suite 4400, Minneapolis, MN 55402 (for respondent).
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2006).
UNPUBLISHED OPINION
On appeal in this mechanics'-lien attorney-fee dispute, appellants argue that the district court abused its discretion by awarding respondent attorney fees significantly in excess of the lien amount. We reverse and remand.
FACTS
In June 2004, appellant Chris Plourde (Plourde) purchased real property. Plourde hired a general contractor who hired respondent Southside Plumbing Heating, Inc. On September 28, 2004, respondent sent Plourde a pre-lien notice by certified mail notifying him that if the general contractor did not pay respondent, it would file a claim against the property. Plourde received the notice and signed for its receipt.
Respondent did not receive full payment from the general contractor and served Plourde with a mechanics'-lien statement by certified mail on December 21, 2004. Plourde did not respond; thus, on September 21, 2005, respondent filed a complaint seeking a judgment that respondent is entitled to a mechanics' lien on Plourde's property in the amount of $1,251.33 plus interest, costs, disbursements, and attorney fees. Plourde failed to file an answer; instead, he wrote to respondent alleging that respondent failed to provide him with a pre-lien notice.
In November 2005, appellant Lehman Brothers Bank (Lehman Brothers), who recorded a mortgage against Plourde's property on October 4, 2004, agreed to pay respondent $3,159.99, which included the lien amount and expenses. On December 6, 2005, Lehman Brothers issued a check to respondent, but revoked its settlement offer and stopped payment on the check two days later after Plourde objected to the payment.
On December 9, 2005, Plourde requested a copy of the pre-lien notice from respondent. Plourde also indicated that he would satisfy the lien in the amount of $1,251.33 pending proof of its validity. Respondent provided Plourde with a copy of the notice. On January 5, 2006, respondent rejected Plourde's settlement offer, but indicated that it would settle for $4,000.
The next day, Plourde filed an answer admitting that respondent was entitled to recover $1,251.33 and indicating that the remaining issue was attorney fees. Respondent moved for summary judgment. On March 3, 2006, the district court held a hearing. The district court granted respondent's motion and concluded that respondent's attorney fees were incurred as a direct result of Plourde's failure to act and Lehman Brothers' breach of the settlement agreement. The district court ordered that respondent was entitled to a mechanics' lien on Plourde's property in the amount of $9,312.25 — $1,251.33 for the lien amount, costs, $918.42 in disbursements, and $7,142.50 in attorney fees. This appeal follows.
DECISION
Appellants argue that the district court abused its discretion in awarding attorney fees. In a mechanics' lien foreclosure action, a prevailing lienor is entitled to "costs and disbursements to be fixed by the court." Minn. Stat. § 514.14 (2006). As part of the lienor's costs and disbursements, the court may award reasonable attorney fees. See Obraske v. Woody, 294 Minn. 105, 108, 199 N.W.2d 429, 431 (1972) (stating costs include attorney fees). "On review, this court will not reverse a [district] court's award or denial of attorney fees absent an abuse of discretion." Becker v. Alloy Hardfacing Eng'g Co., 401 N.W.2d 655, 661 (Minn. 1987); see also Automated Bldg. Components, Inc. v. New Horizon Homes, Inc., 514 N.W.2d 826, 831 (Minn.App. 1994) (affirming attorney-fees award because, even in absence of specific findings relating to award, record contained detailed time reports and explanatory affidavit which supported amount of award), review denied (Minn. June 15, 1994).
Appellants contend that attorney fees were not appropriate because Plourde had no recollection of receiving the pre-lien notice and was well within his rights to ask for a copy of the notice. "Whoever . . . contributes to the improvement of real estate by performing labor, or furnishing skill, material or machinery . . . shall have a lien upon the improvement, and upon the land on which it is situated or to which it may be removed[.]" Minn. Stat. § 514.01 (2006). But before a subcontractor is entitled to a valid lien, written notice must be given to the property owner "either by personal delivery or by certified mail, not later than 45 days after the lien claimant has first furnished labor, skill or materials for the improvement." Minn. Stat. § 514.011, subd. 2 (2006).
Respondent sent Plourde the pre-lien notice by certified mail on September 28, 2004. Plourde signed for receipt of the notice. Plourde also admitted in his answer that respondent complied with the pre-lien notice filing provisions and was entitled to recoup the lien amount. Additionally, appellants acknowledge in their brief to this court that "[respondent] did serve upon Plourde a pre-lien notice in September 2004." Although appellants argue that respondent should have provided Plourde with a copy of the pre-lien notice, respondent is not required to provide a copy of the notice. Because respondent complied with the requirement of providing Plourde with a pre-lien notice, the district court did not abuse its discretion in awarding respondent attorney fees.
Appellants argue that the district court's attorney-fees award was excessive. Although the award of attorney fees is discretionary, the district court should review (1) time and effort required, (2) novelty or difficulty of the issues, (3) skill and standing of the attorney, (4) value of the interest involved, (5) results secured at trial, (6) loss of opportunity for other employment, (7) taxed party's ability to pay, (8) customary charges for similar services, and (9) certainty of payment. Jadwin v. Kasal, 318 N.W.2d 844, 848 (Minn. 1982). Attorney fees awarded should be in proportion to the mechanics' lien judgment. Asp v. O'Brien, 277 N.W.2d 382, 385 (Minn. 1979). Yet fees are not disproportionate merely because they exceed the mechanics' lien amount. Kirkwold Constr. Co. v. M.G.A. Constr. Inc., 498 N.W.2d 465, 470 (Minn.App. 1993), aff'd, 513 N.W.2d 241 (Minn. Mar. 11, 1994). "Limiting fees in such a manner would discourage small lienholders from pursuing valid claims through the legal system." Id.
Here, the district court ordered that respondent had a mechanics' lien in the amount of $9,312.25, with the sum of $7,142.50 constituting attorney fees. The district court determined that respondent's requested attorney fees were reasonable because Plourde's memory loss regarding receipt of the notice did not mitigate the award of attorney fees; Plourde refused to pay attorney fees incurred even after he received a copy of the notice in December 2005; and Lehman Brothers breached their settlement agreement. The district court failed, however, to weigh the Jadwin factors. See 318 N.W.2d at 848. Most importantly, the district court failed to consider the legal work performed as it related to respondent's motion for summary judgment.
In December 2005, Lehman Brothers agreed to pay respondent $3,159.99. One month later, after that offer was revoked, respondent demanded $4,000 for full settlement. Two months after that, the district court heard the summary-judgment motion. Thus, between the filing of the complaint on September 21, 2005, to the date of the settlement offer, respondent incurred less than $2,000 in attorney fees. And between the revocation of the settlement offer in December, to respondent's demand one month later, respondent requested less than an additional $1,000 in attorney fees. Yet, between respondent's demand for $4,000 and the summary-judgment hearing, held approximately two months later, respondent's attorney fees increased to $7,142.50. The district court concluded that respondent requested attorney fees for: (1) preparing and filing the complaint, (2) serving appellants, (3) research and briefing issues, (4) appearing in court, and (5) communicating with appellants' attorneys. Researching and briefing the issues and appearing in court were additional duties that respondent's attorneys performed between the demand and the hearing date. The award for attorney fees is disproportionate to the interest being protected and is, therefore, unreasonable.