Opinion ID: 2759931
Heading Depth: 2
Heading Rank: 2

Heading: Discussion of Errors

Text: ¶35. Trinity argued, and the trial court agreed, that the ruling of Valverde held that a lien could not be created against the vessel or the owner by an independent contractor. After a thorough review of the Valverde record, it is clear that Valverde is so markedly distinguishable from the present case that it provides no support to Trinity’s argument that Mike & Jerry’s should not be allowed to pursue its claim for the marine finishes demanded by the purchasers/owners and builder/owner, which were supplied to and applied to the yachts at Trinity’s behest. Valverde does not require a separate contract or privity with the owner to perfect a lien. The word “privity” is not found in the text of the Valverde opinion. 18 The trial court’s use of the term “security” is misplaced. Mike & Jerry’s agreed with Trinity’s substitution of the money in the stead of the liens on the vessels and gave up its right to pursue “any, claim, right, action, or lien” against the vessels in exchange for the right to proceed on its claims against the substituted property, i.e., the money. 19 The trial court did properly grant Mike & Jerry’s motion to amend its complaint to add West Coast as a defendant. 23 ¶36. In Valverde, the owner of the vessel (Spottswood) contracted with George Smith (contractor) to repair his steamer. Valverde, 28 So. at 721. Smith, in turn, hired several laborers to perform repair work on the vessel and asked Valverde to supply groceries to the vessel during the time the workers repaired the steamer. Spottswood (owner) and Smith (contractor) agreed upon a price for such repairs. Spottswood already had paid Smith the agreed-upon price in full, absent knowledge of the disputed claims. Id. Smith, however, did not pay Valverde the entire amounts owed for the victuals or the laborers. At the time of Spottswood’s payment to Smith, Spottswood was wholly unaware of Valverde’s claim for supplies and the laborers’ claim for work performed, as those claims were made subsequent to Spottswood’s payment to Smith. Id. ¶37. Valverde filed a declaration on March 17, 1898, asserting that, from March 23, 1897, until May 1, 1897, he had sold Smith various and sundry groceries, for which he had not received full payment.20 Valverde also asserted in his declaration that he had been assigned seven separate claims by laborers who had performed work on the vessel but were not paid in full for their labor. The total amount unpaid was approximately $210.21 On the same day, 20 The case did not address that Valverde’s declaration was untimely filed, as it was more than six months after the payment was due. See Miss. Code Ann. § 85-7-7. 21 There is a discrepancy in the record as to whether the amount owed was $209.50 or $210.15. 24 a writ of seizure was filed against the vessel, authorizing the sheriff to seize the vessel.22 The vessel was returned after Spottswood paid a bond in the amount of $419.50. ¶38. On April 25, 1898, Spottswood filed a “Special Plea,” stating that (1) he had contracted with Smith to repair his vessel, (2) the agreed-upon sum of $1,051 was paid in full (unlike today’s case), (3) Smith had no interest in his vessel (unlike builder/owner Trinity), and (4) the contract price was paid long before he knew Smith was incurring debts without his knowledge or approval (unlike today’s case). On April 28, 1898, Valverde demurred Spottswood’s Special Plea, stating that Spottswood presented no defense and Spottswood’s payment to Smith did not operate to discharge the lien. The court overruled the demurrer, and, after Valverde declined to reply or plead further, dismissed the case. Valverde timely appealed. ¶39. On appeal, the Court held that Smith was not the agent or owner of the steamer (as was builder owner Trinity) and Smith’s contracts could not bind the owner. Valverde, 28 So. at 721. Valverde and “his assignors knew, or ought to have known, that they were not dealing with the owner of the steamer, or with his agent, and they had no reason to believe that Smith carried with him authority to contract for the owner; (neither of which applies to today’s case, for Mike & Jerry’s and DuPont knew Trinity was the owner, and that either Trinity or its paint contractor had authority to procure paint to fulfill Trinity’s contractual obligation, see FSC Sec. Corp. v. McCormack, 630 So. 2d 979, 988 (Miss. 1994) (holding that an agent is one 22 Although the record is unclear about certain dates, it is clear that the vessel was seized only after (1) all the work had been performed, (2) groceries had been delivered by Valverde, and (3) the ship had left and later returned to Mississippi. In the present case, the lien was filed while the yachts were still under construction at the builder/owner’s (Trinity’s) yard. 25 who acts under either the express or apparent authority of a principal) and the consequences of their negligence must be borne by them (no issue of negligence was alleged in today’s case)).” Id. The Court affirmed the judgment of the circuit court. Id. The Valverde Court held that, as the facts were presented in that particular case and in the absence of other relevant factors, no lien could be had by the grocer on that particular vessel. The facts of the present case are so dissimilar as to make Valverde inapplicable. ¶40. Spottswood exercised no control over the labor or materials used in the ship’s repair. Trinity did as builder/owner. The Valverde Court noted that the owner did not order the specific material that was used to repair his steamer. Valverde, 28 So. at 721. Conversely, in the present case, both the builder/owner (Trinity) and the purchasers/owners specifically required that DuPont marine finishes be acquired from Mike & Jerry’s and used on the yachts. Trinity was contractually obligated to paint the yachts using DuPont paint distributed by Mike & Jerry’s. Spottswood already had paid Smith the full amount owed for the repairs, without the knowledge that his contractor, Smith, had not yet paid his grocer for supplies or laborers for their work. There was no other “debt due and owing from the owner” to perfect a lien against the vessel. See Miss. Code Ann. § 85-7-7. In today’s case, there was money “due and owing from the owner [Trinity],” as Trinity had not paid, and still has not paid, West Coast or Mike & Jerry’s the amount owed and withheld by Trinity for the marine finishes. Trinity was aware of Mike & Jerry’s claim while West Coast was still applying the finishes to the yachts and withheld money it owed to West Coast equal to the claimed amount. In the present case, Mike & Jerry’s timely asserted a claim against the vessels, pursuant to Section 85-7-7. 26 ¶41. Trinity argues that Valverde is the only case addressing the application of Section 85- 7-7. However, the case of Kornosky v. Hoyle, 97 Miss. 562, 52 So. 481, 481 (1910), is instructive, as it also involves the owner of the vessel, as does the present case. In Kornosky, Hoyle filed a replevin suit against Kornosky (owner) for the balance owing Hoyle for repairs made to Kornosky’s boat. Id. After Kornosky refused to pay Hoyle the amount owed, Hoyle sued out a writ of replevin for the boat. Id. That Court stated that [t]he court below held that chapter 85, Code of 1906, [now 85-7-7] which gives a lien, and a remedy therefor, on watercraft for work done or materials supplied in building, repairing, and furnishing the same, was appellant’s only remedy for the collection of the amount due him by appellee. In so holding the court erred. At common law the appellant had a possessory lien for work done and materials furnished in repairing the boat, carrying with it the right to hold the same against the owner until his charges were paid. Id. That Court held that there is “a lien at common law for the building of a ship, if the shipwright has not parted with the possession thereof, . . . without paying all that is due for her construction.” Id. (quoting 19 A. & E. Encyc. Law 1090 (2d ed.)). Chapter 85 of the 1906 Code, like its counterpart Section 85-7-7, “does not abrogate the common-law right. On the other hand, its purpose is to enlarge the same, and give a better remedy, though not exclusive.” The Court held that Hoyle was entitled to one of two remedies: (1) he was entitled to judgment against the owner (Kornosky) for the return of the boat (this is not sought in this case), or (2) he was entitled to the amount of his indebtedness (which is exactly what Mike & Jerry’s presently seeks). Applying the Kornosky reasoning, which is more akin to this case than Valverde, this Court should find that Mike & Jerry’s is entitled to pursue its claim with notice to all interested parties.
27 ¶42. Section 85-7-7 of the Mississippi Code reads in pertinent part that “[t]here shall be a lien on all . . . water craft for work done or materials supplied . . . for or concerning the building . . . in preference to all other debts due and owing from the owners. . . .” Miss. Code Ann. § 85-7-7 (Rev. 2011). The statute does not include a privity-of-contract requirement. By its plain language, Section 85-7-7 applies to “any person in” Mississippi who worked on or supplied materials to the vessels. “The lien statutes of Mississippi afford an abundance of protection for mechanics and materialmen. But in all cases such persons must take action as a condition precedent to receiving the benefits thereof, and upon their failure so to do their remedies are those of common creditors.” Wortman & Mann, Inc. v. Frierson Bldg. Supply Co., 184 So. 2d 857, 860 (Miss. 1966) (quoting Jones Supply Company v. Ishee, 249 Miss. 515, 521-22, 163 So. 2d 470, 472 (1964)). Mike & Jerry’s timely asserted liens, pursuant to Section 85-7-7, for the paint it supplied for the two luxury yachts under construction by Trinity. ¶43. While we can agree that there was no contract between Trinity and Mike & Jerry’s, the contract documents provided for Mike & Jerry’s to supply paint for the yachts. Additionally, Section 85-7-7 does not require a direct contract or privity for a lien to be asserted. The trial court noted as such in his bench opinion – “I find that the statute per se does not require the privity of contract between the parties.” However, the trial court misstepped when he held, “[s]eeing no contractual relationship and the . . . nonexistence of an agency relationship, the motion for summary judgment is granted.” ¶44. A lien is an assertion of claims to all interested persons to ensure money is not paid before the claim is resolved and seeks to create a preference to all other debts “due and 28 owing.” The purpose of Section 85-7-7 is to offer protection to laborers, materialmen, and suppliers, a good number of whom would not know whether privy was an outhouse or the sharing of knowledge, nor would they know the difference between privateer and pirate, nor do they have a Philadelphia lawyer (Pennsylvania or Neshoba County practitioner) at their beck and call, nor do they carry around contracts to be signed by owners when delivering materials to a job site. ¶45. No requirement of privity is mentioned in Section 85-7-7, Valverde, or Kornosky, although the majority uses the word “privity” multiple times in its opinion. After adopting such a requirement and amending the statute, why does the majority fail to consider the alternative argument advanced by Trinity and Mike & Jerry’s? Trinity argued that Mike & Jerry’s improperly filed its action asserting Section 85-7-7 when it should have filed pursuant to Section 85-7-181.23 Section 85-7-7 is not the exclusive remedy for Mike & Jerry’s. Mike & Jerry’s can seek relief under either Section 85-7-7 or Section 85-7-181. Although I would find that Mike & Jerry’s was entitled to pursue its claim via Section 85-7-7, in the alternative, Mike & Jerry’s was equally entitled to pursue its claim under Section 85-7-181. The trial court improperly held that Mike & Jerry’s did not provide notice to Trinity in accordance with that section. Filing a lien pursuant to Section 85-7-7 provides more than sufficient notice to Trinity regarding its claim. Sections 85-7-7 and 85-7-181 were designed to protect materialmen and to ensure that they would be paid for products sold. They are for the benefit of materialmen, and every materialman does not have to carry a book of contracts for the owners’ execution 23 This section was repealed on April 11, 2014. However, at the time this litigation commenced, this applicable statute was in effect and its constitutionality is not the subject of the appeal in this case. 29 every time he delivers a two-by-four, can of paint, or plumbing fixture to a project. Mike & Jerry’s is such a materialman.
¶46. As stated above, Mike & Jerry’s properly filed its petition pursuant to Mississippi Code Section 85-7-7, asserting liens in preference of any other interested party. See Miss. Code Ann. § 85-7-31. The central issue was whether Mike & Jerry’s, or any other interested party, was entitled to the remedies provided under Mississippi Code Section 85-7-49. ¶47. At the conclusion of the hearing on Trinity’s motion for summary judgment and Mike & Jerry’s motion to amend its complaint, there were no liens on either vessel, for Mike & Jerry’s had released those liens and the trial court had dismissed the liens against the vessels with prejudice. Trinity should have been judicially estopped from being heard on a motion concerning liens that already had been released and dismissed. The trial court conflated the issues of validity of a lien vel non with whether Mike & Jerry’s demand for monetary judgment was valid. Perhaps this explains the flawed reasoning behind the trial court’s Order and Final Judgment entered on June 11, 2013, when the trial court denied Mike & Jerry’s motion to add Trinity as a defendant. ¶48. The liens against the vessels were released by agreement of the parties and order of the court. Upon release of the liens, neither the constitutionality of the water craft seizure statute nor the validity of the liens was to be adjudicated.24 The actions against the vessels were 24 Therefore, it is not necessary to address the constitutionality of the Water Craft Seizure Act. 30 dismissed with prejudice.25 The “subject-matter of the suit” had changed from asserting liens and obtaining a monetary judgment, to only obtaining a remedy, i.e., a monetary judgment. 26 Mike & Jerry’s remaining claim was against the money Trinity withheld from West Coast and paid into the court. ¶49. In one fell swoop, the trial court dismissed Trinity, an interested party, and gave Trinity the money deposited into the court, contrary to its earlier order which allowed for Mike & Jerry’s to proceed on its claims against the money after releasing its liens and claims against the vessels. The trial court’s order foreclosed Mike & Jerry’s opportunity, and that of another interested party (West Coast), to present their claims and/or defenses to the money in the registry of the court. Although the liens were dismissed with prejudice, the money substituted therefore was still at issue and was improperly released by the trial court.27 Again, the trial court conflated two issues. Whether there is a right to assert a lien does not control whether there is a valid claim.
25 Trinity concedes as much, for when it made an appearance as an interested party, it responded to Mike & Jerry’s petition “pursuant to Section 85-7-49 of the Mississippi Code, and contested the demand of . . . Mike & Jerry’s. . . .” 26 The majority states that the disposition of the money was “entirely contingent” on the merits of the lien and seizure. Maj. Op. at ¶14. However, once the liens were released and dismissed, the disposition of the money was contingent on the merits of Mike & Jerry’s claim for a monetary judgment. 27 Trinity understood that it might have continued exposure based on the outcome of a trial and submitted a letter of undertaking in favor of Mike & Jerry’s pending the outcome of this litigation. 31 ¶50. Finally, Mike & Jerry’s argued that Trinity had a contractual obligation to pay West Coast per their agreement. Trinity, in fact, withheld money it owed to West Coast for the very paint at issue. Trinity never paid West Coast the total amount it owed it, and Trinity refused to pay Mike & Jerry’s the money withheld. In fact, Trinity failed to disclose that fact to Mike & Jerry’s or the court until late in the proceedings. ¶51. Pursuant to the MSA prepared and signed by Trinity, Trinity assumed the obligation to pay Mike & Jerry’s when it withheld the money it owed to West Coast once it learned that Mike & Jerry’s had not been paid the full amount for the finishing products. The MSA specifically provided Trinity with “the right to set off against any amounts” owing to West Coast if “any liens or other claims are filed” based on West Coast not paying Mike & Jerry’s or any other contractor. This contractual right of set-off was exercised by Trinity for Mike & Jerry’s benefit.