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Dakota Craft, Inc. v. Severson

July 8, 2009

DAKOTA CRAFT, INC., PLAINTIFF AND APPELLEE,
v.
GARY SEVERSON D/B/A SEVERSON & SONS, DEFENDANT AND APPELLANT, AND STATE BANK FINANCIAL, MAD DOG ENTERPRISES, INC., CROELL REDI-MIX, INC., WOLFF'S PLUMBING & HEATING, INC., J.H. LARSON COMPANY D/B/A J.H. LARSON ELECTRICAL COMPANY, A.A. HANSON ELECTRIC, INC., DEFENDANTS AND APPELLEES. AND JAMES L. JUNKER, DEBORAH G. JUNKER, WHITEWOOD INVESTORS, LLC., DAVID R. GRANT, ROCKINGTREE LANDSCAPE, INC., SACRISON PAVING, INC., JBS BACKHOE SERVICE, INC., DUST CONTROL CONTRACTORS, LEE GEIGER D/B/A GEIGER ARCHITECTURAL, BIERSCHBACH EQUIPMENT & SUPPLY, INC., CRESCENT ELECTRIC SUPPLY, DEFENDANTS.



APPEAL FROM THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT LAWRENCE COUNTY, SOUTH DAKOTA HONORABLE RANDALL L. MACY Judge.

The opinion of the court was delivered by: Severson, Justice.

CONSIDERED ON BRIEFS ON APRIL 27, 2009

[¶1.] Gary Severson, d/b/a Severson and Sons, (collectively "Severson") appeals the circuit court's summary judgment ruling that his mechanic's lien was not sufficiently itemized, and therefore invalid. We affirm in part and reverse in part.

FACTS

[¶2.] James and Debra Junker of Hudson, Wisconsin, formed Whitewood Investors, LLC (collectively "Whitewood Investors"). Whitewood Investors purchased property in Whitewood, South Dakota, with the intention of establishing a concert venue and saloon called Boneyard Saloon ("Saloon"). In April 2007, Whitewood Investors contracted with Severson to construct the Saloon. Accordingly, Severson provided materials and labor for the project, and served as the general contractor. After a storm destroyed one of the buildings under construction, Severson rebuilt it at the direction of Whitewood Investors, and ultimately finished construction of the Saloon in time for the 2007 Sturgis Motorcycle Rally, as required by the contract.

[¶3.] Severson determined that Whitewood Investors owed him $512,287.44 for materials provided and services rendered between May 22, 2007 and July 31, 2007. He prepared and filed a mechanic's lien for this amount, plus interest, with the Lawrence County Register of Deeds on August 3, 2007. Twelve other materialmen, including Dakota Craft, Inc. ("Dakota Craft"), and two mortgagees filed mechanic's liens and mortgages against the Saloon. Whitewood Investors made no effort to pay the amounts claimed on any of the mechanic's liens.

[¶4.] Dakota Craft filed a complaint against numerous defendants seeking to foreclose its mechanic's lien against Whitewood Investors. Severson answered and filed a counterclaim and cross-claim. In response, Dakota Craft moved for summary judgment, arguing, in part, that Severson's lien was insufficient and invalid because it was not sufficiently itemized. The circuit court agreed, and entered an order invalidating Severson's lien.*fn1 Severson appeals.

STANDARD OF REVIEW

[¶5.] "In reviewing the circuit court's summary judgment, we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and established entitlement to judgment on the merits as a matter of law." Bertelsen v. Allstate Ins. Co., 2009 SD 21, ¶11, 764 NW2d 495, 498 (citation omitted). Furthermore, "[t]he evidence must be viewed most favorably to the nonmoving party and reasonable doubts should be resolved against the moving party. The nonmoving party, however, must present specific facts showing that a genuine, material issue for trial exists. Our task on appeal is to determine only whether a genuine issue of material fact exists and whether the law was correctly applied. If there exists any basis which supports the ruling of the [circuit] court, affirmance of a summary judgment is proper." Pellegrino v. Loen, 2007 SD 129, ¶13, 743 NW2d 140, 143 (citations omitted).

[¶6.] Whether the circuit court erred as a matter of law in determining that Severson's lien was invalid pursuant to SDCL 44-9-16(7).

[¶7.] Severson contends that the circuit court erred by invalidating his lien upon concluding it failed to meet the itemization requirement of SDCL 44-9-16(7). Severson submits his lien is sufficient under the Ringgenberg exception, or alternatively, it meets the "ordinarily intelligent and careful person" standard set forth in our caselaw. Dakota Craft refutes these arguments.

[¶8.] SDCL 44-9-16(7) requires that the lien statement filed by a party shall set forth "[a]n itemized statement of the account upon which the lien is claimed." "While this statutory language is construed liberally, the lien claimant must substantially comply with its requirements." W.J. Bachman Mech. Sheetmetal Co., Inc. v. Wal-Mart Real Estate Bus. Trust, et al., 2009 SD 25, ¶26, 764 NW2d 722, 731 (citing Crescent Elec. Supply Co. v. Nerison, 89 SD 203, 232 NW2d 76 (1975)). "Substantial compliance is required to protect others with an interest in the property from fraud and imposition." Id. (citing Ringgenberg v. Wilmsmeyer, 253 NW2d 197 (SD 1977)). "'Failure to sufficiently itemize the account renders the lien invalid.'" Id. (quoting R & L Supply, Ltd. v. Evangelical Lutheran Good Samaritan Soc'y, 462 NW2d 515, 519 (SD 1990)). The test is whether the itemization provided sufficient detail "to notify an ordinarily intelligent and careful person what work was actually accomplished on the property in question." H & R Plumbing & Heating, Inc. v. Fed. Deposit Ins. Corp., 406 NW2d 151, 153 (SD 1987).

[¶9.] Our caselaw provides guidance. We recently concluded that a lien specifying work performed on certain dates, fees associated with the work, cost of material, and hours and cost of labor met the statutory requirement. W.J. Bachman, 2009 SD 25, ¶27, 764 NW2d at 732. Similarly, in R & L Supply, we concluded that "a lien statement which list[s] the destination of the materials, quantity of each item, together with a description of the item and its price" constitutes sufficient itemization. 462 NW2d at 519; see also McLaughlin Elec. Supply v. Am. Empire Ins. Co., 269 NW2d 766, 770 (SD 1978) (holding same).

[ΒΆ10.] Conversely, in Crescent Electric Supply Co., 89 SD at 211, 232 NW2d at 81, we held that a statement which merely listed the dates, amounts, and folio numbers, with no reference to what type of material was supplied, how much material was involved, or for what purpose the goods were sold, was not an itemized account. Along the same lines, the following type of itemization has also been deemed insufficient: "Brick, mortar, sand and freight, $1252.06; Lumber-siding and flooring, plumbing, electrical, etc., $7784.23." Builders Supply Co., Inc. v. Carr, 276 NW2d 252, 255 (SD 1979). Similarly, the mechanic's lien at issue in H & R Plumbing was ...


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