Opinion ID: 2023552
Heading Depth: 1
Heading Rank: 8

Heading: construction lien amount

Text: Star City next assigns that the trial court erred in awarding Tilt-Up a construction lien in an amount greater than the reasonable value of services performed and materials supplied on the INS Project. Section 52-136(1)(a) provides that [t]he lien of a prime contractor is for the unpaid part of his or her contract price.... Contract price means the amount agreed upon by the contracting parties for performing services and furnishing materials covered by the contract, increased or diminished by the price of change orders or extras, amounts attributable to altered specifications, or breach of contract.... § 52-127(2). Star City asserts that because the contract was not substantially performed, Tilt-Up is limited to a recovery for the reasonable value of the services performed and materials furnished on the INS Project. Tilt-Up, however, contends that according to the language of § 52-136(1)(a), it is entitled to recover the unpaid portion of the contract price, which includes an amount attributable to breach of contract, notwithstanding the fact that it did not substantially perform the contract. Therefore, the issue we must determine is whether Tilt-Up is limited to a recovery for the reasonable value of services performed and materials furnished when it failed to substantially perform the contract. While the language of § 52-136(1)(a), taken out of context, could be read to indicate that Tilt-Up is entitled to a lien for the unpaid part of its contract price even though it did not substantially perform the contract, we must bear in mind that in determining the meaning of a statute, we may conjunctively consider and construe a collection of statutes which pertain to a certain subject matter (i.e., the NCLA) to determine the intent of the Legislature, so that different provisions of the act are consistent, harmonious, and sensible. See State ex rel. Wood v. Fisher Foods, 254 Neb. 982, 581 N.W.2d 409 (1998). We note, as we undertake our statutory analysis, that it has long been the rule in Nebraska that when an owner has wrongfully interrupted a contractor and prevented the contractor from completing his or her work on a project, the contractor is entitled to a lien for the reasonable value of the labor he or she has performed and the material he or she has furnished, but the contractor cannot have a lien for the damages sustained from the breach of the contract. See Pardue v. Missouri P. R. Co., 52 Neb. 201, 71 N.W. 1022 (1897) (interpreting former version of NCLA). A review of several provisions of the NCLA reveals that the rule announced in Pardue v. Missouri P. R. Co., supra, has not been statutorily altered by the revisions to the act in 1981. First, according to § 52-126, the purpose behind the NCLA is to create ... a lien against real estate in favor of a person furnishing services or materials under a real estate improvement contract. (Emphasis supplied.) Second, § 52-131(1) provides that [a] person who furnishes services or materials pursuant to a real estate improvement contract has a construction lien.... (Emphasis supplied.) Finally, contract price is defined to mean the amount agreed upon by the contracting parties for performing services and furnishing materials covered by the contract.... (Emphasis supplied.) § 52-127(2). The above provisions speak clearly as to the right to a construction lien only with respect to services performed or materials furnished, not with respect to services intended to be performed or materials intended to be furnished. Thus, because lost profits as a result of a breach of contract compensate a contractor for services not yet performed and materials not yet furnished, several provisions of the NCLA continue to preclude a lien for damages for the unpaid balance of a construction contract unless the contractor has substantially performed the contract. A number of other jurisdictions, interpreting similar provisions of their construction lien statutes, have likewise concluded that a statutory construction lien is not an appropriate vehicle for collecting damages for breach of contract because of the unique nature of the statutory remedy. See, Gallo v. Sphere Const. Corp., 293 N.J.Super. 558, 681 A.2d 1237 (1996) (denying lien for lost profits because statutory right to such lien exists only with respect to services and materials actually furnished); Fortune v. Superior Court, 159 Ariz. 549, 552, 768 P.2d 1194, 1197 (Ariz.App.1989) (denying lien for lost profits because Arizona's statutory scheme gives lien rights only for `work done and materials furnished,' overhead and profits [are] not within the purview of the act); CSR Contractors v. Kendall Constr., 45 Wash.App. 648, 726 P.2d 1018 (1986) (denying lien for lost profits because they compensate party for work not yet performed and standard for lien under Washington's statutory scheme is work performed); Texas Bank & Trust Co. v. Campbell Bros., Inc., 569 S.W.2d 35, 42 (Tex.Civ.App.1978) (denying lien for lost profits on work not performed because a profit is secured by a statutory lien only to the extent that it may be considered compensation for services actually rendered as distinguished from the amount of the contractor's loss because of the owner's breach of the contract); Sea Pines Co. v. Kiawah Island Co., Inc., 268 S.C. 153, 159, 232 S.E.2d 501, 503 (1977) (holding that statutory mechanic's lien is not vehicle for collecting damages for breach of contract because [t]he statute ... secures a debt [only] `for labor performed or furnished or for materials furnished and actually used'). Accordingly, we hold that a prime contractor is entitled to the unpaid part of his or her contract price under § 52-136(1)(a) when the prime contractor has substantially performed the contract; however, when the prime contractor has not substantially performed the contract or has been prevented from completing his or her work, the contractor is entitled to a lien for the reasonable value of the labor he or she has performed and the material he or she has furnished, but the contractor cannot have a lien for the damages sustained from the breach of the contract. Having so held, the question that remains is whether there is adequate evidence in the record of the reasonable value of the services performed and the materials furnished on the INS Project. In the instant case, exhibit 96 was admitted into evidence, over Star City's foundation objection, as to the amount due Tilt-Up for the reasonable value of the services performed and materials furnished on the INS Project. This amount was calculated as follows: $273,293 Footings 43,330 Floor 20,924 Site work 16,774 Rockfill 7,339 Winter concrete 11,062 Footing rebar 4,758 Engineering 22,222 Special purchase extras 11,187 Finance charges claimed by lien claimants -164,284 Less payments already made -------- $246,600 Total value of work performed On appeal, Star City argues that the exhibit lacked foundation on the basis that Tilt-Up's expert witness simply took the `cost' of the work done by [Tilt-Up], and added a 40 percent gross margin to come up with the `Value'.... The 40 percent gross margin was simply a rounded-off number used by Steve Miers as an estimate of his profit on other jobs.... Brief for appellant at 41. Contrary to Star City's assertion, Tilt-Up's expert witness, William Schwartzkopf, testified that he did not calculate the reasonable value of the services performed and materials furnished by simply taking the cost of Tilt-Up's work and applying a 40-percent markup to it. Rather, Schwartzkopf testified that the $246,605 figure was based on the reasonable value of the services performed and materials furnished in direct proportion to the price stipulated for the whole of the work. Schwartzkopf testified that the profit that Tilt-Up expected to realize on the INS Project was not unreasonable, since [t]his is a contractor doing what is called [t]ilt-[u]p construction in a market where he is the only contractor doing that type of work and he is competing against companies that provide precast concrete that is manufactured off site in a multi-million dollar plant with a high fixed cost and has to be trucked to the site. The end product is very similar to the production method of casting it on site without a big investment and physical plant is considerably cheaper but the competing product is very expensive. So you can obtain a very high margin, a very high profit in that circumstance because your competitors have a much higher cost than you do, and it's not unusual in that circumstance to see a high profit margin. While Schwartzkopf did make reference to three comparable projects in which Tilt-Up had performed for Gendler in the past and in which the average profit margin on the projects was 60 percent, Schwartzkopf testified that this reference was made only to generally test the reasonableness of his opinion as to the reasonable value of the labor Tilt-Up performed and material it had furnished. A contractor is entitled to a reasonable profit on the work performed that is secured by a construction line, even though the profit is limited to the extent that it may be considered compensation for services actually rendered, as distinguished from the amount of the contractor's loss because of an owner's breach of contract. On our de novo review of the record, we acknowledge that the trial court heard and observed the witnesses with respect to the issue of reasonable value of services performed and materials furnished, and accepted one version of the facts rather than another. See Midlands Rental & Mach. v. Christensen Ltd., 252 Neb. 806, 566 N.W.2d 115 (1997). We note that Schwartzkopf's opinion was given significant weight by the trial court and conclude that Schwarzkopf's §opinion of the amount due Tilt-Up for the reasonable value of the services performed and materials furnished is supported by the evidence, with one exception. Tilt-Up is not entitled to recover $11,187 in finance charges that were incurred as a result of Star City's refusal to pay Tilt-Up, since this amount does not compensate Tilt-Up for services performed or materials furnished. Therefore, in deducting that amount from $246,605, we determine that Tilt-Up is entitled to recover $235,418 from Star City as the reasonable value of services performed and materials furnished on the INS Project.