Title: OPPORTUNITY KNOCKS, LLC. V. SHANNON ELECTRIC, INC.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

OPPORTUNITY KNOCKS, LLC. V. SHANNON ELECTRIC, INC.2010 WY 99236 P.3d 255Case Number: No. S-09-0079Decided: 07/14/2010
APRIL TERM, A.D. 
2010

 
OPPORTUNITY 
KNOCKS ENTERPRISES, LLC., Appellant (Plaintiff),v.SHANNON 
ELECTRIC, INC., Appellee (Defendant).

 

 
Appeal from the 
District Court of Albany County
The Honorable Jeffrey 
A. Donnell, Judge 

 
Representing 
Appellant:
Alan G. Harding and 
Galen B. Woelk of Aron and Hennig, LLP, Laramie, Wyoming.  Argument by Mr. 
Harding.

 
Representing 
Appellee:
Peggy A. Trent and 
Kristin S. Wilkerson of Trent &Wilkerson Law Office, LLC, Laramie, 
Wyoming.  Argument by Ms. Wilkerson.

 
Before KITE, C.J., 
and GOLDEN, HILL, VOIGT*, and BURKE, JJ.

 
*Chief Justice at 
time of oral argument.
*This case was 
re-assigned to Justice Voigt on April 15, 2010.

 

VOIGT, 
Justice.

 
[¶1]      
Opportunity Knocks Enterprises, LLC (Opportunity Knocks) appeals a district 
court's determination that Opportunity Knocks failed to prove that Shannon 
Electric, Inc. (Shannon Electric) knew, at the time it filed a claim of lien, 
that the lien was groundless, or that the lien contained a material misstatement 
or false claim.   We affirm, although upon somewhat different grounds 
than those relied upon by the district court.

 
ISSUES

 
[¶2]      
1.   Did the district court err in determining, pursuant to Wyo. Stat. 
Ann. § 29-1-311(b) (LexisNexis 2009), that Opportunity Knocks failed to prove 
that Shannon Electric knew, at the time it filed a claim of lien, that the lien 
was groundless, or that the lien contained a material misstatement or false 
claim?

 
2.   Does 
Wyo. Stat. Ann. § 29-1-311(b) require a petitioner to prove intentional fraud 
when challenging a lien as groundless, containing a material misstatement or 
false claim?

 
3.   Does a 
lien claim that does not comply with Wyo. Stat. Ann. § 29-1-301(b)(iv) 
(LexisNexis 2009) contain a material misstatement as a matter of law?

 
FACTS

 
[¶3]      
Opportunity Knocks contracted with Shannon Electric on July 17, 2008, to perform 
electrical work on an apartment building in Laramie, Wyoming.  Shannon 
Electric agreed to install all the electrical systems in an eighteen unit 
apartment complex for a contract price of $92,736.00.  As required by the 
contract, Opportunity Knocks made a twenty percent down payment prior to Shannon 
Electric beginning the project.  After working on the property for over a 
month, Shannon Electric stopped work after witnessing another electrical 
contractor "correcting and rehanging the electrical service meter."  The 
following day, Opportunity Knocks requested an itemized list of charges for 
materials and labor that Shannon Electric had expended on the property, and 
requested a refund of any remaining amount of the down payment.  Shannon 
Electric provided the requested itemization which included charges for labor and 
materials and also included a twenty-five percent markup on the materials, a 
sixteen-percent profit margin, and a twelve-percent overhead charge for the 
services performed.  According to the itemization provided by Shannon 
Electric, Opportunity Knocks owed $20,401.12, in addition to the down payment.1  A few weeks 
later, Shannon Electric notified Opportunity Knocks of its intent to file a 
mechanic's lien, alleging that an amount of $10,471.33 remained outstanding.2  Shannon 
Electric eventually filed a Statement of Lien in the amount of $9,316.26.3

 
[¶4]      
Opportunity Knocks filed in the district court a Verified Petition to Invalidate 
Lien and Application for Ex Parte Order to Show Cause, pursuant to Wyo. Stat. 
Ann. § 29-1-311(b).  In its petition, Opportunity Knocks contended 
that Shannon Electric improperly included profit, overhead, and markups in its 
lien statement and that the labor portion of the lien statement did not 
specifically state the dates, times, and hours worked.  The district court 
denied the petition.  Specifically, the district court concluded that 
Opportunity Knocks failed to carry its burden of proving that Shannon Electric 
knew at the time of filing its lien statement that it was groundless, or that it 
contained a material misstatement, or that it was a false claim.  The 
district court also concluded that it was the "better policy" to allow a party 
to assert a lien for profits, overhead, and markups.  Finally, the district 
court held that the lien amount and description of labor and materials supplied 
was not a material misstatement because the lien statutes did not require 
Shannon Electric to provide specific details relating to the dates, times, and 
individuals who performed the labor, and although there were minor misstatements 
in the lien statement, none of those misstatements were material, nor did any of 
them mislead or prejudice Opportunity Knocks.  This appeal by Opportunity 
Knocks timely followed.

 
WYO. STAT. ANN. § 
29-1-311(b)

 
[¶5]      
Wyo. Stat. Ann. § 29-1-311(b) provides in pertinent part as follows:

 
(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. . . .

 
  

 
STANDARD OF 
REVIEW

 
[¶6]                  
            We review the 
district court's decision following 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.

 

Mullinnix LLC v. HKB 
Royalty Trust, 2006 WY 14, ¶ 12, 
126 P.3d 909, 916 (Wyo. 2006) (citations omitted).  See also, 
Addison v. Dallarosa-Handrich, 2007 WY 110, ¶ 8, 161 P.3d 1089, 1091 
(Wyo. 2007).  With regard to the trial 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.

 

Mullinnix, ¶ 12, 126 P.3d  at 
916 (citations omitted).  The district court's conclusions of law, however, 
are subject to our de novo standard of review.  
Id.

 

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

 
Did the district 
court err in determining, pursuant to Wyo. Stat. Ann. § 29-1-311(b) (LexisNexis 
2009), that Opportunity Knocks failed to prove that Shannon Electric knew, at 
the time it filed a claim of lien, that the lien was groundless, or that the 
lien contained a material misstatement or false claim?

 

 
[¶7]      
Opportunity Knocks argues that the district court erred in upholding the 
validity of Shannon Electric's lien because the lien included amounts not 
authorized by Wyo. Stat. Ann. § 29-2-101 (LexisNexis 2009).  Specifically, 
Opportunity Knocks argues that Wyo. Stat. Ann. § 29-2-101 permits a lien only to 
the extent of the actual cost of labor and materials supplied and not additional 
amounts for profit, overhead, and markups, as were included in Shannon 
Electric's lien claim.  Wyo. Stat. Ann. § 29-2-101 provides in pertinent 
part:

 

(a)    
Except as provided in W.S. 
29-2-111, every person performing any work on or 
furnishing any materials or plans for any building or any improvement upon land 
shall have for his work done or plans or materials furnished a lien upon the 
building or improvements . . . .

 

(b)    
To have a lien the work or materials shall be furnished under a 
contract.

 
[¶8]      
We will affirm the district court's determination that Opportunity Knocks' proof 
that Shannon Electric included amounts for profit, overhead, and markups in its 
lien claim does not amount to proof that the lien claim was groundless, or that 
it contained a material misstatement or a false claim.  We note, however, 
that Wyo. Stat. Ann. § 29-1-311(b)(i) places the burden of proof upon the lien 
claimant, in this case Shannon Electric, not upon the property owner, in this 
case Opportunity Knocks, to show cause why the petition should not be 
granted.  We conclude that, even if Shannon Electric eventually does not 
prevail on the question of whether profit, overhead, and markups may be included 
in the statutory lien, Shannon Electric showed that the lien claim was not 
groundless or false under the meaning of this statute.  The statute does 
not, on its face, forbid the inclusion of such amounts, and this Court has never 
ruled to that effect.  Further, as pointed out by the district court, there 
may be legitimate policy reasons to allow such inclusion.  See 
Richard K. Allen & Stanley A. Martin, Construction Law Handbook 
1219 (2d ed. 2009) (common business practice to include in contract price 
profit, overhead, and markups associated with the work performed).  Such 
amounts as may actually be owed under the contract, and such amounts as may be 
covered by the lien, if any, are matters of proof to be determined in the 
separate lien foreclosure and contract breach action.4  The present case involves only the 
petition filed under Wyo. Stat. Ann. § 29-1-311(b).

 
Does Wyo. Stat. Ann. 
§ 29-1-311(b) require apetitioner to prove intentional fraud when 
challenginga lien as groundless, containing a materialmisstatement or 
false claim?

 
[¶9]      
Opportunity Knocks argues that the district court erred by requiring it to prove 
that Shannon Electric committed an intentional fraud in order to invalidate the 
lien under Wyo. Stat. Ann. § 29-1-311(b).  Opportunity Knocks claims that 
it proved the following and therefore the lien would have been invalidated had 
the district court not erroneously applied a fraud standard:  1) that 
Shannon Electric changed the claimed lienable amounts several times prior to 
filing the lien statement; 2) the district court questioned some of the 
itemizations; 3) the district court found the lien statement to be "slightly 
confusing" and that it contained "several minor misstatements"; and 4) the lien 
statement improperly included amounts for profit, overhead, and markups.  
We find it unnecessary to determine whether the district court applied an 
intentional fraud standard, or erred in doing so, because none of the matters 
raised by Opportunity Knocks would make the lien statement groundless, or would 
constitute material misstatements or false claims.  That conclusion would 
not change had the district court correctly assigned the burden of proof to 
Shannon Electric.

 
Does a lien claim 
that does not comply withWyo. Stat. Ann. § 29-1-301(b)(iv) (LexisNexis 2009) 
contain a material misstatement as a matter of law?

 
[¶10]   
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.

 

 
CONCLUSION

 
[¶11]   The 
district court did not err in concluding that the alleged deficiencies in the 
lien statement in this case did not show that Shannon Electric knew at the time 
of filing that its lien claim was groundless, or that it contained a material 
misstatement or a false claim.  While the district court did err in 
assigning the burden of proof under Wyo. Stat. Ann. § 29-1-311 to 
Opportunity Knocks, that erroneous assignment did not affect the correct result 
reached by the district court.

 
[¶12]   
Affirmed.

 
FOOTNOTES

 

1In the weeks that 
followed, Shannon Electric sent several letters to Opportunity Knocks correcting 
prior itemizations and adjusting the total amount allegedly owed.

 

2The difference 
between the earlier amount of $20,401.12 demanded and the latter $10,471.33 is 
the cost of materials purchased by Shannon Electric for completion of the job, 
but which were never delivered to the job site.  The adjusted amount 
continued to include the original additional percentages for profit, overhead, 
and markups.

 

3The difference 
between the amount stated in the Statement of Lien and notice of intent to file 
a lien resulted from an adjustment for materials actually delivered to 
Opportunity Knocks, as well as a minor adjustment to the labor charge.  
This amount also continued to include the original additional percentages for 
profit, overhead, and markups.

 

4Although the district 
court recognized that it may be "the better practice" to allow claimants to 
include profits, overhead, and markups in the lien, the question of whether Wyo. 
Stat. Ann. § 29-2-101 permits such inclusion was not before the district court, 
nor is that question before this Court.