Court Opinion

ID: 9488574
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:49:11.809146+00
Date Added: 2024-06-11T17:52:58.041498
License: Public Domain

SAFFELS, Senior District Judge,
Dissenting.
Because I find the district court’s reasoning persuasive and its result correct, I cannot support the majority’s decision to reverse. I, therefore, dissent.
The facts have been well-stated and will not be repeated here. Suffice it to say that the crux of the matter is whether Christian-sen, the general contractor, had the right under Utah law to pay Diehl, the lien claimant, the amount claiming to be owed to release the lien, and by doing so create a defense to Christiansen’s obligation to pay Davidson, the bankrupt subcontractor.
The district court found that under Utah law Christiansen had no legal duty to the supplier, Diehl, and had no legal right to pay Diehl directly. The court further found that such payment did not release Christiansen from its obligation to pay Davidson.
Diehl, of course, had every right to protect itself by filing a mechanic’s lien against the project owner. The mere filing of this lien in no way legally obligated Christiansen. Christiansen’s decision to bypass payment to Davidson and pay Diehl was merely to protect itself from the project owner with whom Christiansen had contracted to deliver a lien-free project.
As the district court noted:
the mechanic’s lien statute is to protect those who have added directly to the value of real property by performing labor or furnishing material. This statute was intended and designed to prevent the owner of land from taking benefit of improvements placed on his property without paying for the labor or material that went into them. In Re Davidson Lumber Sales, Inc., 167 [164] B.R. 773, 776 (D.Utah, C.D.1993).
The statute applies to the owner because it is the owner’s real property to which the lien attaches. Nothing in the statute indicates it *1572applies to the general contractor in the same way. Id. The project owner wisely had protected itself through the contract with Christiansen. Christiansen, once Diehl filed the lien, faced the dilemma of whether to: (1) satisfy its contractual obligation to the project owner by paying Diehl to insure the release of the lien; (2) pay Davidson and satisfy that contractual obligation; or (3) pay both Diehl and Davidson at a substantial monetary loss. Christiansen chose option 2 and thereby fulfilled its contractual obligation to the project owner.
The district court provided a succinct and accurate synopsis of the protective actions of the parties in this matter:
Christiansen voluntarily contracted with the owner to keep the property clear of any mechanic’s lien and Christiansen could have imposed the obligation on Davidson, but it did not. Diehl protected itself by filing a mechanic’s lien; Zions protected itself with its super-priority post-petition hen on Davidson’s inventory and accounts receivable; and the owner protected itself with its contract with Christiansen.
Davidson, 164 B.R. at 778.
It is clear to me that ah parties except Christiansen protected their interests in this project. Christiansen, presumably a seasoned general contractor, failed to adequately protect its interests when it could easily have done so. It should not now be rewarded and allowed to breach its contractual obligations to Davidson. The result of such an action is that Zions, a party which did protect itself, suffers a unjustifiable loss.
The district court correctly concluded that there was nothing under Utah law which gave Christiansen the right to pay Diehl and not pay Davidson as required under the contract.
Because I would affirm the district court’s decision, I, respectfully, dissent.