Michigan Supreme Court 

# Order
Lansing, Michigan

December 20, 2007 Clifford W. Taylor, Chief Justice
128560 Michael F. Cavanagh Elizabeth A. Weaver Marilyn Kelly H.A. SMITH LUMBER & HARDWARE CO., Maura D. Corrigan Plaintiff/Counter- Robert P. Young, Jr. Stephen J. Markman, Defendant/Appellee, Justices v SC: 128560 COA: 238521 Oakland CC: 1999-015436-CZ JOHN DECINA, Defendant/Cross- Defendant/Appellant, and

JOHN DECINA DEVELOPMENT CO.,Third Party Defendant/CrossDefendant/Counter-Plaintiff/ Appellant, and

LINAS P. GOBIS and LYDIA K. GOBIS, Defendants/Cross-Plaintiffs/ Cross-Defendants/Counter- Defendants/Appellees, and

WILLIAM GARDELLA d/b/a WILLIAMS GLASS CO., Defendant/Counter-Plaintiff/ Cross/Plaintiff/ Third Party Plaintiff/Appellee.

________________ _______________ __________/

On November 8, 2007, the Court heard or al argument on the application for leave to appeal the March 3, 2005, j udgment of the Court of Appeals. On order of the Court, the application is again considered. MCR 7.302(G)(1). In lieu of granting leave to appeal, we REVERSE the judgment of the Cour t of Appeals. To be awarded attorney fees as a “prevailing party” under MCL 570.1118(2), the part y must prevail on the lien2

foreclosure action. In this case, the unpaid subcontractors filed a lien foreclosure action against the property owners and a breach of c ontract action against the general contractor. The subcontractors lost on their lien claim but pr evailed on the breach of contract claim. While the statute allows a lien claimant to br ing an underlying contract action at the same time as the lien foreclosure ac tion, it does not preclude the option of bringing the two actions separately. MCL 570.1117(5). If the subcontractors had chosen to bring their breach of contract claims against the general contractor as a separate action, they would not have been allowed to rec over attorney fees. The langua ge of MCL 570.1118(2) does not permit recovery of attorney fees on the contract action merely because it was brought together with the lien foreclosure action. Accordingly, we VACATE the portion of the Oakland Circuit Court order granting attorney fees to plaintiff H.A. Smith Lumber & Hardware Company a nd defendant William Gardella d/b/a Williams Glass Company.

C AVANAGH , J., dissents and states as follows:

The majority’s order vacating the award of attorney fees is fl awed because it fails to address the actual language of the Construction Lien Act (CLA), MCL 570.1101 et seq ., and it fails to honor the CL A’s provision that it “shall be liberally construed to secure the beneficial results, intents, and purposes of this act.” MCL 570.1302(1). A purpose of the CLA is to prev ent subcontractors from beari ng the costs of litigation every time their work goes uncompensated. I presum e that subcontractors w ill often be in the position where they must pursue their claims against a genera l contractor who has been paid, as here. To do so, subcontractor s must plead the underlying contract.

The statute appears to include such claims in its attorneys-fee provision. It does not expressly preclude them. It states that “[i]n each action in wh ich enforcement of a construction lien through foreclosure is sou ght, the court shall examine each claim and defense that is presented, and determine th e amount, if any, due to each lien claimant . . . .” MCL 570.1118(2). “Each claim” must include more th an just the lien claim. The statute further provides that “[t]he court ma y allow reasonable attorneys’ fees to a lien claimant who is the prevailing party.” Id. The subcontractors here were “lien claimants.” The trial court found that thei r liens were valid, but simply did not attach because the owners had paid the general contractor. The subcontractors were prev ailing parties: they prevailed on the underlying contract claims against the general contractor. Because the general contractor had been paid, the cont ract claims were the subcontractors’ only recourse for the payment that th e lien was meant to secure.

Guided by the statut e’s aim to relieve unpaid contr actors of the financial burden of litigation, I would deny leave to appeal.

K ELLY , J., joins the statement of C AVANAGH , J._______________________________________ __ 3

W EAVER , J., dissents and states as follows:

I dissent from the majority’s order reversing the judgment of the Court of Appeals. Instead, I would affirm the Court of Appeals affirmance of the trial court’s grant of attorney fees to H. A. Smith Lumber a nd Hardware Company a nd William Gardella, for the reasons stated in the Court of Appeals opinion.

t1213 I, Corbin R. Davis, Clerk of the Mi chigan Supreme Cour t, certify that the foregoing is a true and complete copy of the order entered at the direction of the Court.

December 20, 2007
Clerk