Case Title: Vision 2007, LLC v. Lexstar Dev. and Const. Co., LLC

Citation: 

Docket Number: S-10-0020

State: wyoming

Court: Wyoming Supreme Court

Date: 2011-05-25T00:00:00Z

Document:
VISION 2007, LLC, V. LEXSTAR DEVELOPMENT AND CONSTRUCTION COMPANY, LLC2011 WY 84Case Number: S-10-0020Decided: 05/25/2011NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so correction may be made before final publication in the permanent volume.
APRIL 
TERM, A.D. 2011

                                                                                    

VISION 
2007, LLC,Appellant (Petitioner),v.LEXSTAR DEVELOPMENT 
AND CONSTRUCTION COMPANY, LLC,Appellee 
(Respondent).

 
 
Appeal 
from the District Court of Campbell County

  
 
 

Representing 
Appellant:

Douglas Fowler of Fowler Associates, 
Cheyenne, Wyoming*; Stephen H. Kline of Kline Law Office, P.C., Cheyenne, 
Wyoming; and John W. Burke of Thomas Braun Bernard & Burke, LLP, Rapid City, 
South Dakota.  Argument by Mr. 
Burke.

 
 

Representing 
Appellee:

Ryan Schwartz of Williams, Porter, Day 
& Neville, P.C., Casper, Wyoming 

 
 

GOLDEN, 
Justice.

 
 
[¶1]      Vision 2007, LLC 
(Vision) entered into a contract with Lexstar Development and Construction 
Company, LLC (Lexstar) for the construction of a hotel.  After seventeen months of work on the 
project, Vision terminated the contract with Lexstar, and Lexstar subsequently 
filed a lien against the hotel property for amounts it claimed remained 
owing.  Vision filed a petition to 
strike the lien pursuant to Wyo. Stat. Ann. § 29-1-311(b), which the district 
court denied on the ground that Vision failed to prove Lexstar knew, when it 
filed its claim of lien, that the lien was groundless or contained a material 
misstatement or false claim.  Vision 
appeals, claiming the district court improperly placed the burden of proof on 
Vision and that the district court's factual findings were clearly 
erroneous.

            

[¶2]      Although we agree 
the burden of proof under Wyo. Stat. Ann. § 29-1-311(b) is on the lien claimant, 
not on the project owner, we find the district 
court's ruling was properly based on the evidence presented by the lien 
claimant, Lexstar, and on the failure of Vision to allege proper grounds for 
relief under Wyo. Stat. Ann. § 29-1-311(b). We thus 
affirm.

 
 
ISSUES

 
 
[¶3]      Vision presents 
the following issues on appeal:

 
 
I.          
Did the district court err in refusing to strike the corrected lien 
statement filed after the 120-day statutory limit?

 
 
II.         
Did the district court err in refusing to strike the lien statement and 
corrected lien statement which did not include an itemized list setting forth 
and describing materials delivered or work performed, as required by Wyo. Stat. 
Ann. § 29-1-301?

 
 
III.        Did 
the district court err in refusing to strike [the] lien statement which was 
untimely on its face?

 
 
IV.       Did the 
district court err in placing the burden of proof under Wyo. Stat. Ann. § 
29-1-311 upon the Petitioner?

 
 
FACTS

 
 
[¶4]      On October 2, 
2007, Vision contracted with Lexstar for the construction of a hotel in Campbell 
County, Wyoming.  Seventeen months 
later, on March 5, 2009, Vision served Lexstar with a "Notice of Termination of 
Contract by Owner for Cause."  On 
July 9, 2009, Lexstar filed a "Lien Statement" with the Campbell County Clerk, 
claiming a lien in the amount of $430,337.78 against the hotel property.  The lien stated, "This amount represents 
the unpaid balance for goods, material and services furnished in the design, 
approval, construction oversight and materials on the above-described real 
property." 

 
 
[¶5]      On August 17, 
2009, counsel for Vision contacted counsel for Lexstar and advised that "the 
lien was filed on the 121st day after March 10, 2009."  The following day, August 18, 2009, 
Lexstar filed a "Corrected Lien Statement." The "Corrected Lien Statement" 
changed the date when materials were last furnished by the lien claimant from 
March 10, 2009, to March 19, 2009.  
An affidavit attached to the "Corrected Lien Statement" and signed by 
Patrick Davidson, counsel for Lexstar, stated the change to the "Lien Statement" 
was the correction of a typographical error.  The affidavit incorporated an e-mail 
communication from Lexstar to its counsel, dated prior to the filing of the 
original "Lien Statement," that indicated the last day work was performed by 
Lexstar was March 19, 2009.  

 
 
[¶6]      On August 26, 
2009, Vision filed a "Petition for Order Striking Lien Statements Pursuant to 
Wyo. Stat. § 29-1-311."  On 
September 2, 2009, the district court issued an "Order to Show Cause Why Lien 
Statement and Corrected Lien Statement Should Not Be Stricken Pursuant to Wyo. 
Stat. § 29-1-311."  On September 22, 
2009, a hearing was held on the district court's order to show cause, and on 
October 28, 2009, the district court issued an "Order Denying Petitioner's 
Motion to Strike Lien Pursuant to Wyo. Stat. Ann. § 29-1-311."  In so ordering, the district court 
reasoned:

 
 
Wyo. Stat. Ann. § 29-1-311 
contemplates an abbreviated procedure because the described relief is warranted 
only under very limited circumstances.  
Pursuant to the statute, Vision 2007 must demonstrate that Lexstar's Lien 
Statement and Corrected Lien Statement were either forged or that Lexstar knew 
at the time it filed the lien it was groundless, contained a material 
misstatement, or was false.

 
 
            
Patrick Davidson, counsel for Lexstar who prepared and filed the 
statements, testified at the hearing.  
The Court finds that there is no question that the documents were not 
forged.  Therefore, Vision 2007 must 
demonstrate that Lexstar knew at the time it filed the statements that they were 
groundless, contained a material misstatement, or were 
false.

 
 
            
Vision 2007 argues the Lien Statement was invalid because either 1) the 
Lien Statement mistakenly identified the date work was last performed as March 
10, 2009 instead of March 19, 2009; and/or 2) the lien statements failed to set 
forth an itemization list setting forth and describing the materials delivered 
or work performed.  Vision 2007 has 
not provided any evidence that these alleged defects were committed with the 
specific knowledge of Lexstar, let alone with Lexstar's specific knowledge that 
the lien statements were groundless, contained a material misstatement, or were 
false.  To the contrary, Patrick 
Davidson testified that at the time of filing he had a reasonable belief that 
Lexstar's claim to a lien was valid, and that any errors in the lien statements 
were either typographical or not errors at all.  In either case, it argues Vision 2007 is 
not entitled to relief under Wyo. Stat. Ann. § 29-1-311.  The Court agrees with 
Lexstar.

 
 
            
The evidence presented to the Court does not show that Lexstar filed the 
lien statements with specific knowledge that they were groundless, contained 
material misstatements, or were false.  
Wyo. Stat. Ann. § 29-1-311 is not the proper avenue for these issues or 
contentions, and, for the very limited purpose of these proceedings, the Court 
finds it should declare the lien valid pursuant to Wyo. Stat. Ann. § 
29-1-311(b)(v).

 
 
[¶7]      After Vision 
filed its notice of appeal, and the parties were unable to agree on a statement 
of the record, the district court, on January 15, 2010, issued the "Court's 
Settlement of Record."  The district 
court settled the record as follows:

 
 
1.         
Petitioner Vision 2007, LLC ("Vision 2007") is a limited liability 
company duly organized and existing under the laws of the state of South 
Dakota.  Petitioner is the owner of 
a motel construction project in Campbell County, Wyoming, commonly known as the 
Settle Inn, situated near Cam-Plex (the project).

 
 
2.         
Respondent Lexstar Development and Construction Company, LLC ("Lexstar") 
is a limited liability company duly organized and existing under the laws of the 
state of North Dakota.  Over the 
course of many months, Respondent has supplied materials for the motel 
project.

 
 
3.         
On July 9, 2009, Lexstar filed a verified Lien Statement against Vision 2007 with 
the Campbell County Clerk and Register of Deeds in the amount of 
$430,337.78.  The verified Lien Statement stated that "[t]he date 
when materials were last furnished by the Lien Claimant was March 10, 
2009."

 
 
4.         
At the hearing, counsel for Lexstar, Patrick G. Davidson testified that, 
at the time the Lien Statement was 
filed, his staff was in possession of documentation indicating that the last 
date when materials were furnished was, in fact, March 19, 2009, rather than 
March 10, 2009.  Mr. Davidson 
testified that the reference to March 10, 2009 in the Lien Statement as "[t]he date when 
materials were last furnished" was simply a typographical error, that he had 
"made a mistake" and that, in fact, the correct date was March 19, 
2009.

 
 
5.         
Mr. Davidson testified that he was familiar with Wyoming Statute § 
29-1-301(b) and its requirement that a lien statement include "[a]n itemized 
list setting forth and describing materials delivered or work performed."  He further testified that he included in 
the Lien Statement the verbiage 
"[t]his amount represents the unpaid balance for goods, material and services 
furnished in the design, approval, construction oversight and materials on the 
above-described real property," so as to satisfy the requirements of Wyoming 
Statute § 29-1-301.

 
 
6.         
Mr. Davidson also testified that the project was of an extensive nature, 
that weekly draw requests were sent from Lexstar to Vision 2007 during the 
entire course of the project, and the weekly draw requests detailed the basis 
for the charges.  Mr. Davidson also 
testified that given the nature and scope of the work, the entirety of the 
documentation would be too voluminous to file with the County 
Clerk.

 
 
7.         
On August 18, 2009, Mr. Davidson, on behalf of Lexstar, filed a Corrected Lien Statement in the amount 
of $430,337.78 reflecting that the last day materials were supplied was March 
19, 2009.  The Corrected Lien Statement was accompanied 
by an Affidavit executed by Mr. 
Davidson.

 
 
8.         
That Mr. Davidson testified that although he had verified both the Lien Statement and the Corrected Lien Statement, he did not 
have personal knowledge of how the amount claimed of $430,337.78 was arrived 
at.

 
 
9.         
Mark S. Foster testified on behalf of Vision 2007 and in his testimony he 
asserted that Vision 2007 was in the final days of construction and was within 
days of opening the Gillette Settle Inn.  
He further testified that Vision 2007 was in need of converting from 
construction financing to a permanent financing, and that Lexstar's lien was 
inhibiting Vision 2007's ability to secure permanent 
financing.

 
 
STANDARD OF 
REVIEW

 
 
[¶8]      We review the 
district court's decision after a bench trial by applying the following 
standards:

 
 
            
The factual findings of a judge are not entitled to the limited review 
afforded a jury verdict. While the findings are presumptively correct, the 
appellate court may examine all of the properly admissible evidence in the 
record. Due regard is given to the opportunity of the trial judge to assess the 
credibility of the witnesses, and our review does not entail re-weighing 
disputed evidence. Findings of fact will not be set aside unless they are 
clearly erroneous. A finding is clearly erroneous when, although there is 
evidence to support it, the reviewing court on the entire evidence is left with 
the definite and firm conviction that a mistake has been 
committed.

 
 

Opportunity 
Knocks Enterprises, LLC v. Shannon Elec., Inc., 
2010 WY 99, ¶ 6, 236 P.3d 255, 257 (Wyo. 2010) (quoting Mullinnix 
LLC v. HKB Royalty Trust, 
2006 WY 14, ¶ 12, 126 P.3d 909, 916 (Wyo. 2006)). 
With regard to the district court's findings of fact,

 
 
we 
assume that the evidence of the prevailing party below is true and give that 
party every reasonable inference that can fairly and reasonably be drawn from 
it. We do not substitute ourselves for the trial court as a finder of facts; 
instead, we defer to those findings unless they are unsupported by the record or 
erroneous as a matter of law.

 
 

Id. 

 
 

[¶9]      The district 
court's conclusions of law, however, are subject to our de novo standard 
of review.   Cook v. 
Eddy, 2008 WY 
111, ¶ 6, 193 P.3d 705, 708 (Wyo. 2008). 
Statutory construction is a question of law, reviewed de novo. 
Cheyenne 
Newspapers, Inc. v. Bldg. Code Bd. of Appeals of City of 
Cheyenne, 2010 WY 
2, ¶ 9, 222 P.3d 158, 162 (Wyo. 2010).

 
 
DISCUSSION

 
 
[¶10]   Section 29-1-311(b) outlines the 
grounds and process for filing a petition to strike a lien on the ground that 
the lien was forged, knowingly groundless, or contains a material misstatement 
or false claim.  It provides, in 
relevant part:

 
 
(b) Any person whose 
real or personal property is subject to a recorded claim of lien who believes . 
. . that the person claiming the lien knew at the time of filing the lien was 
groundless, contained a material misstatement or false claim, may petition the 
district court of the county in which the claim of lien has been recorded for 
the relief provided in this subsection.

 
 
Wyo. Stat. Ann. § 
29-1-311(b) (LexisNexis 2009).

 
 
A.        
Timeliness of "Lien Statement" and "Corrected Lien 
Statement"

 
 
Original "Lien 
Statement"

 
 
[¶11]   Vision claims that Lexstar's 
original "Lien Statement" was groundless on its face and should have been 
stricken because the date it specified as the last date on which Lexstar 
performed work was clearly outside the 120-day time period for filing the lien 
statement.  This argument ignores 
the plain language of § 29-1-311(b).

 
 
[¶12]   The statute requires more than a 
finding that a lien statement is groundless.  It requires a finding that the lien 
claimant knew at the time of filing that the lien was groundless.  Here, the uncontroverted evidence 
submitted by Lexstar, through the testimony of its attorney, was that a 
typographical error resulted in the mistaken date (March 10) being used in the 
"Lien Statement," and prior to filing the "Lien Statement," Lexstar had provided 
its attorney the later date (March 19) on which it believed it last performed 
work on Vision's hotel project.

 
 
[¶13]   Lexstar did not knowingly specify 
March 10 as opposed to March 19 as the last date on which work was performed, 
and it thus did not knowingly file a groundless lien statement.  Questions as to the accuracy or adequacy 
of the information included in a lien statement are properly resolved in a lien 
foreclosure proceeding, not in the expedited and limited proceeding authorized 
by § 29-1-311(b).  Opportunity Knocks, ¶10, 236 P.3d  at 
259.  Therefore, if issues of fact 
remain as to the last date on which work or materials were provided in this 
matter, those issues are questions for the lien foreclosure proceeding.   

 
 
"Corrected Lien 
Statement"

 
 
[¶14]   Vision next contends that because 
the lien statutes provide no procedure for filing a corrected lien statement 
outside the 120-day period for filing the original lien statement, the 
"Corrected Lien Statement" should be stricken as a groundless lien.  Again, the question that may be resolved 
under a subsection 311(b) proceeding is not whether the "Corrected Lien 
Statement" was a legally viable filing, but whether Lexstar knowingly filed a 
groundless lien statement, corrected or otherwise.  We hold that the district court's 
finding that Lexstar did not knowingly file a groundless lien when it filed its 
"Corrected Lien Statement" is not clearly erroneous.

 
 
[¶15]   This Court has recognized that the 
failure to specify the correct dates in a lien statement is not necessarily 
fatal to the lien.  We noted that 27 
Cyc. Of Law & Proc., p. 201, stated:  

 
 
A 
mistake or inaccuracy in the statement as to a date is not necessarily fatal, if 
no one is misled thereby to his prejudice; nor would such mistake preclude the 
claimant, when necessary to sustain his lien, from showing the true 
date.

 
 

Phelan v. Cheyenne Brick 
Co., 26 
Wyo. 493, 506, 188 P. 354, 358 (Wyo. 1920).  Counsel for Lexstar testified the error 
in the original "Lien Statement" was a typographical error, he had a reasonable 
belief that Lexstar's claim to a lien was valid, and weekly draw requests 
detailing the basis for charges were sent to Vision throughout Lexstar's work on 
the project.  In other words, 
Lexstar presented evidence that it had no knowledge its original typographical 
error was misleading or the correction of that error would prejudice 
Vision.  

 
 
[¶16]   Importantly, the district court did 
not find, and we do not hold, that the question whether the date error may be 
corrected, through evidence at the foreclosure proceeding or through the 
"Corrected Lien Statement," has been resolved.  Whether the date error was misleading or 
prejudicial is a question for the lien foreclosure proceeding, not for a 
subsection 311(b) proceeding.

 
 
B.        
Failure to Itemize Charges

 
 
[¶17]   Vision argues as an additional 
basis for striking both the original and corrected lien statements that neither 
contained a sufficiently detailed itemization of the amounts allegedly owed to 
Lexstar.  The district court did not 
expressly address this ground other than to generally deny the relief requested 
and defer the issues raised by Vision to a future lien foreclosure 
proceeding.  We agree that the issue 
of itemization is properly addressed in the foreclosure proceeding, and that 
adequacy of itemization is not a basis for a subsection 311(b) petition.  We previously 
explained:

 
 

      Opportunity 
Knocks argues that Shannon Electric's lien statement contained a material 
misstatement and was therefore invalid as a matter of law because it only 
provided a "skeletal list of the materials delivered" and described the labor 
costs as approximately 100 hours without providing specific details regarding 
the materials delivered or who performed the labor, at what rate, or on what 
date the labor was performed, thereby violating Wyo. 
Stat. Ann. § 29-1-301(b)(iv). We conclude 
that a petition filed pursuant to Wyo. 
Stat. Ann. § 29-1-311(b) is not the 
appropriate method for testing the adequacy of a lien statement under Wyo. 
Stat. Ann. § 29-1-301(b). That issue is 
more appropriately before the district court in the lien foreclosure action. As 
evidenced by its clear language, Wyo. 
Stat. Ann. § 29-1-311(b) provides a remedy 
for challenging certain liens against governmental officials, forged liens, and 
liens known at the time of filing to be groundless or false, or to contain 
material misstatements. The statute is not meant to be used beyond that purpose 
simply to test the adequacy of information supplied in a lien 
statement.

 
 

Opportunity 
Knocks, 
¶ 10, 236 P.3d  at 259.

 
 
C.        
Burden of Proof

 
 
[¶18]   Wyo. Stat. Ann. § 29-1-311(b) 
places the burden of proof on the lien claimant, not on the property owner.  Opportunity Knocks, ¶ 8, 236 P.3d  at 
258.  We therefore find that the 
district court erred in assigning the burden of proof to Vision.  We conclude, however, that the erroneous 
assignment did not affect the outcome of the proceeding below.  The district court's ruling was based on 
the evidence presented by the lien claimant, Lexstar, and on the failure of 
Vision to allege proper grounds for relief under § 
29-1-311(b).

 
 
[¶19]   Affirmed.