Opinion ID: 1191964
Heading Depth: 1
Heading Rank: 8

Heading: subcontractors' cross-appeal issues

Text: During various stages of the litigation in this case, the plaintiffs moved to add a claim for punitive damages. The district court denied the motions on the basis that the motions were untimely. On appeal, Racine Subcontractors, B.D. Holt, and K & O argue that the district court abused its discretion in not allowing the punitive damage claims. Because we hold that the subcontractorsexcept for Michettidid not have viable underlying claims of lien, claims for recovery on the Utah bond statute or upon the theory of unjust enrichment, the district court's conclusion with respect to the timeliness of the motions to add punitive damage claims need not be addressed. As to Michettis' claim, we uphold the district court's conclusion. I.C. § 6-1604(2).
CRC-Evans and Courtesy Ford argue that the district court erred in denying their individual claims for repair parts. As with the other plaintiff-subcontractors, these claims were asserted as claims of liens, as claims under the Utah bond statute or as allegations under the theory of unjust enrichment. For the reasons stated in Part IV(C)(1), we uphold the district court's decision that suppliers of repair parts are not entitled to claim liens under I.C. § 45-501. We have already determined the inapplicability of the Utah bond statute and the unavailability of unjust enrichment as a form of recovery to the plaintiffs in this case. Accordingly we affirm the district court's decision to deny CRC-Evans' and Courtesy Ford's claims of lien, Utah bond and unjust enrichment claims without further discussion.
Valley Office Systems and Hartford Insurance assert that the district court erred in denying their claims because of NWP's open account defense. The district court held that the open account defense raised by NWP barred the claims of Valley Office and Hartford both for foreclosure of their claims of lien and for recovery under the Utah bond statute. Because we have held the Utah bond statute inapplicable to this case, we will discuss this issue only with respect to the claims of lien. Valley Office rented equipment to GPPC. The district court held that Valley Office never relied, to any extent, on NWP or its land for the rental payment but relied exclusively on GPPC for payments. On appeal, Valley Office contends that the district court disregarded uncontroverted testimony that Valley Office first relied on GPPC for payment, but also relied on NWP for payment if GPPC did not pay. We need not decide whether the district court erred in applying the open account defense to Valley Office's claim of lien. The lien fails because Valley Office sought recovery, as a subcontractor, for equipment rented to the contractor, GPPC. See Part IV(A)(1)(a), supra. Hartford submits that it is entitled to the full value of its lien claim because the open account defense does not apply to worker's compensation claims. We disagree. In Layrite Products Co. v. Lux, 91 Idaho 110, 416 P.2d 501 (1966), this Court recognized the open account defense to be applicable: in situations when a person furnishing material relies exclusively on the general credit of the purchaser, and does not look to the land, structure or building as additional security for the materials sold on credit, then the supplier is not entitled to a lien. Id. at 115, 416 P.2d at 506. Idaho's lien statutes, specifically I.C. § 45-501, allow a lien for materials furnished to be used in a construction project, but do not allow a lien for furnishing material for general or unknown purposes, or an ordinary sale in the usual course of trade, or on a general open account, or a sale without reference as to what shall be done with the materials sold. Id. at 113, 416 P.2d at 504. Accordingly, the Court summarized the open account doctrine by stating that, it is essential that the materials shall have been sold or furnished for the specific purpose of being used in the particular building on which the lien is claimed. Additionally, the materials must have been furnished on the credit of the building, and not merely on the general and personal credit of the owner, contractor or some other person. Where materials are furnished for use in a particular building, the fact that the materialman looks first or primarily to the contractor for payment and only subsequently to the building for security, would not itself defeat the lien. Id. at 113-14, 416 P.2d at 504-05. As to Hartford's claims, we conclude that sufficient evidence supports the district court's decision. We also affirm the district court's decision to grant NWP's motion for judgment notwithstanding the verdict pursuant to I.R.C.P. 50(b). When determining whether a judgment notwithstanding the verdict should have been granted, we apply the same standard as the trial court, which is to determine whether no substantial competent evidence supports the jury verdict. Quick v. Crane, 111 Idaho at 764, 727 P.2d at 1192; Brand S Corp. v. King, 102 Idaho 731, 639 P.2d 429. Here, the district court concluded that Hartford's recovery on its claim of lien was barred by the open account defense because the evidence demonstrated that, [n]o substantial evidence was presented that Hartford, in providing worker's compensation insurance to the [Spread 2 project], relied to any extent on [NWP] or its land for payment. The evidence presented at trial overwhelmingly demonstrated that Hartford did not know that GPPC was performing work in Idaho until well after the commencement of that work. GPPC's policy with Hartford was not endorsed to include Idaho as a covered state on that policy. Hartford attributed none of GPPC's premium payments, made during the course of [NWP's] job, to GPPC's work in Idaho. Furthermore, Hartford's argument that the open account defense does not apply to claims under I.C. § 45-517, which is a specific statute for insurance claims, is without merit. We conclude that the open account defense applies to those claimants attempting to recover under Idaho's mechanic's lien statutes, even those parties who assert a mechanic's lien in the worker's compensation context. Therefore, we affirm the district court's decision that the open account defense barred Hartford's lien claim.
B.D. Holt asserts that the district court erred in dismissing its mechanic's lien claim. B.D. Holt bought a Caterpillar D8N tractor in 1991 and began leasing it to GPPC in July of 1992 to use on the Spread 2 project. However, due to GPPC's failure to make lease payments, the parties agreed in March of 1993 for GPPC to buy the equipment. B.D. Holt eventually recorded its lien on June 28, 1993. The district court denied B.D. Holt's lien claim pursuant to Idaho Code § 45-507 because it was recorded more than sixty days after B.D. Holt provided the tractor, as equipment, to be used on the Spread 2 project. B.D. Holt contends the district court was in error, because the lien was recorded within sixty days after GPPC stopped using the tractor when GPPC shut down the project in May, 1993. We conclude that we need not decide whether the district court erred in rejecting B.D. Holt's claim of lien for untimeliness. The claim clearly arose either from a rental arrangement, or as a purchase agreement relating to equipment supplied to GPPC by B.D. Holt. B.D. Holt's status as a creditor of GPPC under either arrangement does not entitle it to the benefit of the mechanic's and materialman's lien laws for equipment that was not incorporated into, consumed or destroyed by the project. See Part IV(A)(1) supra.