Court Opinion

ID: 4386888
Source: CourtListenerOpinion
Date Created: 2019-04-12 14:04:48.187487+00
Date Added: 2024-06-11T14:50:37.681480
License: Public Domain

IN THE SUPREME COURT OF IOWA
                             No. 17–1169

                          Filed April 12, 2019

WINGER CONTRACTING COMPANY,

      Appellant,

vs.

CARGILL, INCORPORATED,

      Appellee.

----------------------------------

TRACER CONSTRUCTION, LLC,

      Plaintiff,

vs.

CARGILL, INCORPORATED,

      Appellee,

and

WINGER CONTRACTING COMPANY, PETERSON CONTRACTORS, INC.,
AMERICAN PIPING GROUP, INC., TRI-CITY ELECTRIC COMPANY OF
IOWA, and TAI SPECIALTY CONSTRUCTION, INC.,

      Appellants.

      Appeal from the Iowa District Court for Monroe County, John D.

Telleen, Business Specialty Court Judge.

      Interlocutory appeal from a grant of partial summary judgment.

AFFIRMED.
                                       2

      Nick Critelli and Lylea D. Critelli of CritelliLaw, P.C., Des Moines,

and Patrick Curran of Harrison, Moreland, Webber & Simplot, P.C.,

Ottumwa, for appellant Winger Contracting Company.

      Abby S. Wessel of Rickert & Wessel Law Office, P.C., Reinbeck, for

appellant Peterson Contractors, Inc.

      Benjamin J. Patterson and Timothy B. Gulbranson of Lane &

Waterman LLP, Davenport, for appellants American Piping Group, Inc.;

Tri-City Electric Company of Iowa; and TAI Specialty Construction, Inc.

      John F. Fatino and Erik S. Fisk of Whitfield & Eddy, P.L.C., Des

Moines, for appellant Tracer Construction, LLC (until withdrawal).

      Dana L. Oxley, Samuel E. Jones, and Jared S. Adam of Shuttleworth

& Ingersoll, PLC, Cedar Rapids, for appellee.
                                      3

APPEL, Justice.

      In this case, we are called upon to decide whether mechanic’s liens

arising from the provision of materials and labor to a lessee attach to the

property of the lessor under the facts and circumstances of this case. The

case also presents the question of whether a construction mortgage lien

ultimately obtained by the owner of the land on the leasehold and property

of the lessee has priority over later-filed mechanic’s liens.

      The proceedings below were heard in the Iowa Business Specialty

Court, a district court.    A number of businesses sought to foreclose

mechanic’s liens against the property of a lessor for work authorized by a

lessee. They also asked the court to declare their liens superior to the

construction mortgage lien held by the property owner. Pursuant to a case

management order, the parties filed competing motions for partial

summary judgment to resolve the key underlying issues related to priority

of the liens.

      The district court ruled that the mechanic’s liens did not attach to

the property of the lessor and that the construction mortgage lien on the

lessee’s property had priority over the mechanic’s liens. As a result, the

district court denied the mechanic’s lien claimants’ motions for summary

judgment and granted the lessor’s motion for summary judgment. The

mechanic’s lien claimants filed a motion for expanded findings and

conclusions under Iowa Rule of Civil Procedure 1.904(2).         Except for

refining the question of the scope of the land subject to the court’s ruling,

the district court denied the motion.

      The mechanic’s lien claimants appealed. We granted interlocutory

review.   For the reasons expressed below, we affirm the ruling of the

district court.
                                      4

      I. Factual and Procedural Background.

      A. The Lease Between Cargill and HFCA for Construction of

Chlor-Alkali Facility.

      1. General overview. Cargill, Incorporated entered into a fifty-year

lease with HF Chlor-Alkali, LLC (HFCA) to allow HFCA to construct a chlor-

alkali manufacturing facility and other improvements on land owned by

Cargill in Eddyville, Iowa. The lease required HFCA to pay $12,000 annual

rent along with other consideration, including payment of property taxes,

reimbursement for security services, and under some circumstances,

insurance. In the lease, HFCA covenanted to Cargill that it would not use

the land for anything other than a chlor-alkali facility without Cargill’s

approval.

      The lease provided that Cargill would continue to own the land,

while HFCA would own the chlor-alkali facility. The lease stated,

      All additions, alterations and improvements to the Land made
      from time to time over the Term, including, without limitation,
      the Facility, the Improvements and all of Lessee’s Property
      located therein, shall be the property of Lessee and Lessee
      shall have title to all such additions, alterations and
      improvements, subject to the provisions of Article XIX herein.

      Article XIX, in turn, required HFCA to remove the facility from the

land after the lease ends unless different arrangements are made between

the parties. Specifically, Article XIX stated, in part,

      Unless otherwise approved by Cargill in writing, Lessee shall
      have the obligation, as soon as commercially practicable after
      the expiration or earlier termination of this Lease, to remove
      any and all Improvements and Lessee’s Property or other
      improvements of any nature and kind from the Land, and
      provided that the portion of the Land to which such items may
      have been affixed shall be restored by Lessee to substantially
      the condition existing on the Effective Date.

      2. Powers and limitations on HFCA.        The lease allowed HFCA to

encumber, assign, or mortgage to a secured creditor either its leasehold
                                       5

estate in the land or its fee estate in the facility. Notably, however, the

lease contained a provision limiting the nature of the Cargill–HFCA

relationship. Specifically, section 22.14 of the lease provided that nothing

in the lease should be construed “as creating a partnership, joint venture,

or association” between Cargill and HFCA or “cause either party to be

responsible in any way for the debts or obligations of the other party.”

Further, section 22.14 provided that neither the method of computing

rent, nor any provision of the lease, nor any acts of the parties “shall be

deemed to create any relationship” between Cargill and HFCA “other than

the relationship of landlord and tenant.”

      Section 23.05 of the lease related to liens. This provision stated that

“Lessee shall keep the Premises free from any and all liens arising out of

any work performed, materials furnished or obligations incurred due to

Lessee or its Affiliates.”

      3. Conditions precedent.        The lease contained a number of

conditions precedent. The lease declared that as a condition precedent,

HFCA “will receive Cargill’s approval of the plans and specifications for the

Improvements . . . which approval Cargill shall not unreasonably

withhold.” Under the lease, the term “Improvements” meant “all buildings,

fixtures, structures and other improvements built by Lessee on the Land.”

      Another condition precedent to the lease provided that the parties

would enter into six “ancillary agreements.”           In the first ancillary

agreement, Cargill agreed to purchase and HFCA agreed to supply a “long-

term stable supply of [chemicals] for use at [Cargill’s] processing facilities.”

The second ancillary agreement provided that HFCA’s affiliate would

purchase from Cargill the chemicals produced by HFCA that exceeded

Cargill’s requirements.      Like the first ancillary agreement, the second

ancillary agreement included a price and an initial term of ten years. In
                                      6

the third and fourth ancillary agreements, Cargill agreed to process, treat,

and sell water to HFCA, an essential input to HFCA’s production of chlor-

alkali. The fifth ancillary agreement related to security services, and the

sixth ancillary agreement allowed HFCA additional access to Cargill’s

property. The lease agreement between Cargill and HFCA provided for

termination in the event of a breach of any obligation under the ancillary

agreements.

      4. Recording of memorandum of lease with county recorder.             A

memorandum of lease was filed with the Monroe County recorder. The

memorandum of lease identified the lease agreement as related to the

Cargill property by legal description, identified the parties, stated that the

lease was for a term of fifty years, and declared that it incorporated by

reference all the terms and conditions of the lease. While the public record

revealed the description of the land and the incorporation of the lease by

reference, the specific terms of the lease were not recorded.

      B. Financing the Construction of the Chlor-Alkali Facility. In

order to finance construction of the chlor-alkali facility, Cargill assisted

HFCA in obtaining $80 million in bond financing through the Iowa Finance

Authority. As part of the financing arrangements, U.S. Bank issued a

letter of credit guaranteeing payment to the bond trustee and HFCA agreed

to reimburse U.S. Bank for payments made under the letter of credit.

Under the agreement, HFCA covenanted to U.S. Bank that it would execute

and deliver a leasehold mortgage and assignment of rents and leases.

Pursuant to the leasehold mortgage, HFCA granted a first priority

leasehold mortgage lien and security interest to U.S. Bank that

encumbered all of HFCA’s rights in the leasehold estate and the chlor-

alkali facility. As a condition precedent to U.S. Bank’s issuing the letter of

credit guaranteeing payment to the bond trustee, Cargill agreed to
                                      7

purchase the rights and obligations of U.S. Bank in the event HFCA

defaulted.    The parties refer to this condition precedent as a “put

agreement.” HFCA also obtained at least $40 million in financing from a

Cargill subsidiary. U.S. Bank recorded the mortgage on August 29, 2013.

      C. Mechanic’s Liens, Enforcement Action, Loan Default, and

Exercise of the Put.      HFCA entered into contracts with two general

contractors to construct the facilities.      Either HFCA or the general

contractors entered into contracts with a number of subcontractors,

including Winger Contracting Company, Peterson Contractors, Inc., Tri-

City Electric Company of Iowa, TAI Specialty Construction, Inc., and

American Piping Group, Inc.        Neither Winger nor any of the general

contractors or other subcontractors entered into any contracts with Cargill

regarding the construction of the facility or any improvements to Cargill’s

land. Unfortunately, the project fell apart, and the contractors were not

paid in full for their work on the project.

      The contractors filed mechanic’s liens based upon their work on the

facility in 2015 and early 2016. They sought to foreclose their mechanic’s

liens against Cargill’s fee interest in the real property on which the facility

is located.   Two foreclosure actions were filed in district court, one in

September 2015 and another in May 2016.

      In July 2016, U.S. Bank declared a default after HFCA failed to

reimburse U.S. Bank for a bond interest payment and failed to pay

quarterly fees to U.S. Bank. The default caused the bond trustee to declare

the total amount of about $80 million under the bond financing due

immediately. U.S. Bank paid off the bond pursuant to the letter of credit.

U.S. Bank then exercised its put, leading Cargill to pay U.S. Bank

approximately $80 million. Pursuant to the put, U.S. Bank assigned and
                                             8

transferred to Cargill all of its right, title, and interest in and to, among

other things, its construction mortgage related to HFCA’s property.

       D. Proceedings in District Court.                  After the mechanic’s lien

claimants filed actions to foreclose mechanic’s liens against Cargill, the

district court entered a case management order.                     The district court

recognized that the mechanic’s lienholders’ priority in relation to any

claimed mortgage or security interest held by Cargill was a core issue in

the litigation. As a result, the district court directed Winger and another

contractor to move for partial summary judgment on the question of

priority of the mechanic’s liens in relation to the collateral held by Cargill.

       Winger filed a motion for partial summary judgment. 1                       Winger

advanced what amounted to a joint venture theory. Winger claimed that

Cargill and HFCA did not have a simple lessor–lessee relationship but were

engaged in an ongoing and continuing business relationship combining

their property, effort, money, skill, and knowledge for their mutual benefit.

This relationship, according to Winger, resulted in a business enterprise,

joint venture, and/or a joint adventure under Brewer v. Central

Construction Co., 241 Iowa 799, 806, 43 N.W.2d 131, 136 (1950), and

Denniston & Partridge Co. v. Romp, 244 Iowa 204, 208–09, 56 N.W.2d 601,
604 (1953).

       Winger also advanced an agency theory. Winger claimed that the

Cargill–HFCA lease conferred benefits on Cargill that could only arise from

constructing the facility. Winger noted that the parties recognized that a

substantial amount of the money guaranteed by Cargill would be used to

construct the facility. As a result, Winger claimed that HFCA was Cargill’s

agent when contracting for the services of the contractors, subjecting

       1Winger’s    motion was joined by Peterson, Tri-City, TAI, American Piping, and other
parties to the litigation.
                                     9

Cargill’s property to the asserted mechanic’s liens. In support of its agency

theory, Winger cited Stroh Corp. v. K & S Development Corp., 247 N.W.2d
750, 752 (Iowa 1976).

      Additionally, Winger asserted that finding that Cargill could avoid

liability on the mechanic’s liens would result in “the ultimate in unjust

enrichment.” According to Winger, allowing Cargill to purchase the lease

mortgage on its own property ten months after the filing of mechanic’s

liens and claim that its newly acquired rights in the property are superior

to the mechanic’s liens would be “the ultimate in absurdity and artifice for

fraud.” Winger argued that equity requires substance and intent, rather

than form, should govern to prevent injustice. See Veale Lumber Co. v.

Brown, 197 Iowa 240, 244, 195 N.W. 248, 250 (1923).

      Winger also asserted the mechanic’s liens that unquestionably did

attach to the property of HFCA were superior to the construction mortgage

lien asserted by Cargill.   Winger contended the mortgage in this case

amounted to an artifice to deprive the mechanic’s lienholders of their just

compensation. In support of its argument, Winger cited Veale, 197 Iowa

at 244, 195 N.W. at 250.

      Cargill resisted and filed a cross-motion for partial summary

judgment.    Cargill asserted that amendments to the mechanic’s lien

statute enacted in 2007 make it clear that a mechanic’s lien arises only

out of a contract with the owner and not a contract with the owner’s agent.

2007 Iowa Acts ch. 83, § 3 (codified at Iowa Code § 572.2 (Supp. 2007)).

Thus, according to Cargill, the mechanic’s liens in this case attached only

to a building, improvement, or land belonging to HFCA, the owner with

whom the mechanic’s lien claimants entered into contract.           Further,

Cargill argued that in 2012, the legislature narrowed the definition of

owner in the mechanic’s lien statute by eliminating from the definition
                                         10

“every person for whose use or benefit any building, erection, or other

improvement is made.” 2012 Iowa Acts ch. 1105, § 2 (codified at Iowa

Code § 572.1(8) (2013)). As a result of the 2012 deletion, Cargill noted,

the term “owner” is now limited to “the legal or equitable titleholder of

record.” Iowa Code § 572.1(8) (2015). 2 Cargill argued that it was not the

legal or equitable titleholder of the improvements. According to Cargill,

HFCA owned the property.

        Aside from its statutory argument, Cargill argued that the

undisputed facts did not provide a basis for attachment of mechanic’s liens

to Cargill’s land. According to Cargill, the relationship with Cargill and

HFCA did not establish an agency. Cargill argued applicable caselaw holds

that whether a lessee became an agent of the lessor depended upon three

factors: (1) whether the buildings or improvements become property of the

lessor within a comparatively short period of time, (2) whether the

additions were permanent and beneficial to the real property and so

contemplated by the parties at the time of the lease, and (3) whether the

lease    payments     reflected    the   additional     value    created    by    the

improvements.       See Ringland-Johnson-Crowley Co. v. First Cent. Serv.

Corp., 255 N.W.2d 149, 151 (Iowa 1977).              According to Cargill, these

criteria for an implied agency were not met here because the lease term

was for fifty years, the facility and improvements remained the property of

HFCA during that term and afterwards, HFCA had the obligation to

maintain the premises excepted for ordinary wear and tear, HFCA had the

obligation at the end of the term to remove the facility, and the fixed fifty-

year annual rent for the leasehold interest was $12,000. Further, the lease

        2All
           statutory references herein are to the 2015 version of the Iowa Code unless
otherwise stated.
                                     11

agreement itself, Cargill noted, expressly stated that the relationship

between Cargill and HFCA was limited to a landlord–tenant relationship.

      Cargill also resisted the claim that it was a joint venturer with HFCA.

Cargill emphasized that under the lease, there was no “right to share in

the profits” or “duty to share the losses.” Brewer, 241 Iowa at 806, 43

N.W.2d at 136. Further, under the lease agreement, HFCA owned the

facility, and as a result, there was no “joint proprietary interest.”

      On the issue of lien superiority, Cargill argued that it was the

assignee of a construction mortgage lien originally filed by U.S. Bank on

August 29, 2013. Cargill asserted that a construction mortgage lien takes

priority over “all mechanics’ liens of claimants who commenced their

particular work or improvement subsequent to the date of the recording of

the construction mortgage lien.” Iowa Code § 572.18(2).

      The district court denied Winger’s motion for partial summary

judgment and granted Cargill’s cross-motion for partial summary

judgment.     The district court observed that, ordinarily, lienholders

contracting with lessees cannot acquire greater interest in real estate than

the interests owned by the lessees. See Queal Lumber Co. v. Lipman, 200
Iowa 1376, 1378, 206 N.W. 627, 628 (1925).           The district court then

determined that, in light of the recent legislative changes to Iowa Code

chapter 572, a mechanic’s lienholder could no longer reach the property

of a lessor by claiming a contract with a lessee as agent of the owner. See

2012 Iowa Acts ch. 1105, § 2 (codified at Iowa Code § 572.1(8) (2013));

2007 Iowa Acts ch. 83, § 3 (codified at Iowa Code § 572.2 (Supp. 2007)).

As a result, the district court concluded that Romp, 244 Iowa at 208–09,

56 N.W.2d at 604, and Stroh, 247 N.W.2d at 752, were no longer good law.

      In the alternative, the district court held that Romp and Stroh were

distinguishable from the present case. The district court stated that this
                                         12

case is unlike Stroh because the lease agreement here, which expressly

disavowed partnership or joint venture and disavowed HFCA authority to

permit mechanic’s liens, was recorded. 3 Further, the district court noted

that the improvements on the land became property of the landlord at the

end of the lease term in both Romp and Stroh.

       Finally, the district court also held that while Winger could place a

mechanic’s lien on HFCA’s property (the facility and its leasehold interest),

Cargill’s mortgage lien had priority because U.S. Bank recorded its

mortgage before the mechanic’s liens were filed. The district court found

that on this issue, the provisions of Iowa Code section 572.18(2) were

controlling.

       Winger filed a motion to reconsider under Iowa Rule of Civil

Procedure 1.904(2).       In the motion, Winger rehashed issues already

presented to the district court. Winger also, however, pointed to language

in Iowa Code section 572.2(1) which provides that

       those engaged in grading, sodding, installing nursery stock,
       landscaping, sidewalk building, fencing on any land or lot, by
       virtue of any contract with the owner, owner-builder, general
       contractor, or subcontractor shall have a lien upon such
       building or improvement, and land belonging to the owner on
       which the same is situated or upon the land or lot so graded,
       landscaped, fenced, or otherwise improved, altered, or
       repaired, to secure payment for the material or labor
       furnished or labor performed.

Iowa Code § 572.2(1) (emphasis added).            Pursuant to that emphasized

language, according to Winger, its lien attached not simply to land

“belonging to the owner,” but also to land upon which the improvements

were made.

        3The entire lease agreement between HFCA and Cargill was not recorded. What

was recorded was a memorandum of lease that identified the property and the fact that
a lease existed between the parties. The memorandum of lease incorporated the terms of
the lease by reference but did not disclose the actual terms of the lease.
                                     13

      Peterson joined Winger’s motion to reconsider but also filed a

separate 1.904(2) motion. Peterson argued that it had performed work

“directly to the land” which entitled it to a lien on Cargill’s fee interest.

Peterson claimed that it “was hired, among other things, to move dirt,

provide concrete paving and erosion control, strip, salvage and spread

topsoil, clear and grub the land, and install storm sewers and fencing.”

Accordingly, Peterson asserted it was separately entitled to a lien “upon

the land or lot so graded, landscaped, fenced, or otherwise improved,

altered, or repaired.” Id.

      In addition, Peterson challenged the district court’s ruling as

overbroad.    Specifically, Peterson claimed the district court judgment

extended to Cargill property outside the scope of the property interests

involved in the lease transaction and thus should not have been affected

by the motions for summary judgment.

      Other mechanic’s lien claimants also joined Winger’s motion to

reconsider.   In their joinders, Tri-City, TAI, and American Piping each

asserted that they “provided labor and materials that improved the land,”

and “[f]or the same reasons set forth in . . . Winger’s Motion,” each “has an

enforceable lien on both the HFCA plant facility as well as the underlying

Cargill land that was ‘otherwise improved.’ ”

      On rehearing, the district court first addressed the meaning of the

recent amendment to rule 1.904(2), which permits the district court to

“reconsider” its findings and conclusions previously made. The district

court rejected Winger’s assertion that new issues and new evidence may

be introduced in support of a motion to reconsider under the amended

language.     The district court reasoned that the sole purpose of the

amendment was to permit an appeal within thirty days of a ruling on a

1.904(2) motion without the necessity of examining the propriety of the
                                       14

motion. The district court concluded that a 1.904(2) motion was not a

vehicle for advancing a wholly new legal theory in support of a claim. The

district court refused to consider facts not originally presented to the

district court in the summary judgment motions.

      Applying the 1.904(2) framework, the district court declined to

amend its prior ruling based upon the mechanic’s lienholders’ citation to

the “otherwise improved” language in Iowa Code section 572.2(1). The

district court stated that “the Mechanics Lienholders have neither alleged

the specific work they provided that allegedly ‘otherwise improved’ Cargill’s

land nor provided record evidence of the specific improvements they

made.” The district court also stated that to the extent Peterson did not

join Winger’s summary judgment motion, Peterson “failed to present any

evidence, even in the form of an affidavit, to support it ‘otherwise improved’

the collateral held by Cargill” even though the district court’s case

management      order   specifically    invited   the   parties   to   proceed

independently. The district court denied the motion to reconsider based

on the “otherwise improved” language relied upon by the mechanic’s

lienholders for the first time in the 1.904(2) motions.

      The district court further declined to reconsider its interpretation of

Iowa Code section 572.2(1) as eliminating contracts with an agent as a

basis for attaching mechanic’s liens to the property of third parties. The

district court also refused to reconsider its alternative determination that

the principles of Romp and Stroh were not applicable. Finally, the district

court declined to reconsider its ruling that the doctrine of merger did not

eliminate Cargill’s lien on HFCA’s property.

      The district court considered Winger’s claim that it did not address

the argument that “the Cargill-HFCA lease and lease-mortgage transaction

resulted in Cargill being insulated from or granted priority status over the
                                          15

mechanics liens constitutes an artifice for fraud.”                By incorporating

Cargill’s argument on the motion to reconsider, the district court

recognized that the mechanic’s lienholders were on notice that HFCA had

only a leasehold interest in the land by virtue of the filings in the Monroe

County recorder’s office.        Citing Clemens Graf Droste Zu Vischering v.

Kading, 368 N.W.2d 702, 709 (Iowa 1985), the district court noted that

contractors have constructive notice of all information in recorded

documents and have a duty of inquiry concerning circumstances disclosed

by the records. The district court adopted the view that Cargill had the

right to enter into a contract with its lessee that provided all improvements

should be made at the expense of the lessee. See Perkins Supply & Fuel

Serv. v. Rosenberg, 226 Iowa 27, 30, 282 N.W. 371, 373 (1938).                      The

district court found the case unlike that presented in Veale, 197 Iowa at

241–44, 195 N.W. at 249–50, noting that the relationship between HFCA

and Cargill involved a recorded lease that expressly denied HFCA the right

to permit mechanic’s liens to attach to the lessor’s premises. 4

       Finally, the district court addressed an issue presented by Peterson.

Peterson claimed that the district court’s ruling that the mechanic’s liens

did not attach to “Cargill’s fee interest in the land identified in the
mechanic’s liens” was overbroad. Peterson claimed that under the district

court’s case management order, the issue to be resolved was limited to

determining whether the mechanic’s lien attached to land “owned by

Cargill and leased to HFCA.”             Specifically, Peterson claimed that it

performed work on Cargill’s land not subject to Cargill’s security interest

or collateral.    The district court ruled that its prior order necessarily

       4We  note again that the district court stated that the lease itself was recorded.
However, the lease itself was not recorded, but a memorandum of lease indicating its
existence was on file at the Monroe County recorder’s office.
                                       16

included priority of liens on “HFCA’s Leasehold Interest” that included not

only the real property upon which the facility was situated but also any

easements on which ingress and egress roads and rail tracks were

constructed.

      Winger, Peterson, Tri-City, TAI, and American Piping filed notices of

appeal. 5

      II. Standard of Review.

      Although an action to enforce a mechanic’s lien is in equity, this

case involves an appeal from a ruling on motions for summary judgment

and is thus reviewed for corrections of errors at law. United Suppliers, Inc.

v. Hanson, 876 N.W.2d 765, 772 (Iowa 2016); A & W Elec. Contractors, Inc.

v. Petry, 576 N.W.2d 112, 113 (Iowa 1998).             Questions of statutory

interpretation that inhere in a motion for summary judgment are reviewed

for errors at law. See Rhoades v. State, 880 N.W.2d 431, 434 (Iowa 2016).

The mechanic’s lien statute is liberally construed to promote restitution,

prevent unjust enrichment, and assist the parties in obtaining justice.

Carson v. Roediger, 513 N.W.2d 713, 715 (Iowa 1994).

      III. Overview of Iowa Mechanic’s Lien Law.

      A. General Purpose.        “A mechanic’s lien is a claim against real

property for the value of labor and materials furnished by the claimant in

improvement of the property.” Roger W. Stone, Mechanic’s Liens in Iowa,

30 Drake L. Rev. 39, 41 (1980) [hereinafter Stone]. The theory and purpose

of a mechanic’s lien is to protect persons who have supplied labor or

material for the improvement of real property by giving the lienholder

security independent of their contractual remedies against the owner of

the land. Id. at 42. The principle underlying the mechanic’s lien statute

      5Other    mechanic’s lien claimants filed notices of appeal but subsequently
voluntarily dismissed their appeals.
                                     17

is that a party who materially increases the value of the owner’s property

is entitled to look to the improved property as security for the effort. Id.

       A mechanic’s lien is purely statutory in nature. Carson, 513 N.W.2d

at 715. Iowa’s territorial government enacted a mechanic’s lien statute in

1838, and in one form or another, a mechanic’s lien statute has been part

of Iowa law up until the present day. See Stone, 30 Drake L. Rev. at 41–

42. Relatively recent legislative changes have tended to curtail or limit the

scope of mechanic’s liens. Roger W. Stone, Mechanic’s Liens in Iowa—

Revisited, 49 Drake L. Rev. 1, 2–3 (2000). At all times, however, Iowa’s

mechanic’s lien statute has required that a party claiming a mechanic’s

lien must point to a contract to recover on a mechanic’s lien. Queal, 200
Iowa at 1379, 206 N.W. at 628; see Giese Constr. Co. v. Randa, 524 N.W.2d
427, 430–31 (Iowa Ct. App. 1994).

       B. Cases Involving Contracts with a Lessee: Romp and Stroh.

Generally, the mere existence of a contract with a lessee does not give rise

to a mechanic’s lien against the property of the lessor. See Thompson

Yards, Inc. v. Haakinson & Beaty Co., 209 Iowa 985, 986–87, 229 N.W.
266, 267 (1930).      There are two Iowa cases, however, that hold a

mechanic’s lien might attach to the property of the lessor when the work

and services were provided under contracts with the lessee.

       The first case is Romp. In this case, the landowner entered into a

lease with Romp and others who intended to enter the mushroom

business. 244 Iowa at 205–06, 56 N.W.2d at 602–03. Romp also borrowed

funds from the landowner to finance construction of buildings on the

property and provided the landowner with a mortgage on the buildings.

Id. at 206–07, 56 N.W.2d at 602–03. Romp contracted with Denniston &

Partridge to furnish materials for the buildings. Id. at 206, 56 N.W.2d at

602.   Romp did not pay Denniston & Partridge for their work, and
                                    18

Denniston & Partridge filed a mechanic’s lien. Id. at 206–07, 56 N.W.2d

at 602–03. The question in the case was whether the mechanic’s lien

attached to the property of the owner of the real estate or only to property

of the lessee who contracted for the services. Id. at 209, 56 N.W.2d at 604.

      The Romp court cited two provisions of the mechanic’s lien statute.

First, the Romp court cited the definition of “owner” under the applicable

mechanic’s lien statute. Id. at 208, 56 N.W.2d at 603. Under the then-

effective version of Iowa Code section 572.1, “ ‘Owner’ shall include every

person for whose use or benefit any building, erection, or other

improvement is made, having the capacity to contract.” Id. Further, the

Romp court cited the then-effective version of Iowa Code section 572.2,

which provided for mechanic’s liens arising out of “any building or land for

improvement, alteration, or repair thereof . . . by virtue of any contract

with the owner, his agent, trustee, contractor, or subcontractor.” Id.

      Applying the statutory provisions, the Romp court concluded that

the lessees were agents of the lessor under the facts presented. Id. at 209–

11, 56 N.W.2d at 604–06. The Romp court noted that the rental charged

by the lessor contemplated improvement of the land. Id. at 210–11, 56

N.W.2d at 605. The lease was for a short-term period of five years with

one five-year term of renewal with no provision at the end for removal of

the improvements. Id. at 211, 56 N.W.2d at 605. The lessor loaned the

lessee money with the expectation that a substantial part of the money

would be used to construct a building or buildings. Id.

      The Romp court also considered whether the mortgage lien of the

lessor was superior to the mechanic’s lien. Id. at 213, 56 N.W.2d at 606.

The Romp court concluded that it was not. Id. The Romp court stated that

such a result, under the facts of the case, “would permit something very

like a fraud upon the suppliers of materials or labor.” Id. The Romp court
                                     19

declared, “The rule that one who advances money to another for the

erection of improvements on land acquires a lien superior to those of

materialmen or laborers has no application” under the facts where the

lessor was the “owner” and the improvements “were made for her

‘benefit.’ ”   Id.   According to the Romp court, she cannot evade her

responsibility by taking a mortgage. Id.

       A second case is Stroh. In Stroh, an unrecorded lease required the

lessee to construct a car-wash/gasoline facility on the premises. 247
N.W.2d at 751–52. Under the lease, the lessor approved plans for the

facility.   Id. at 751.   Upon completion of the construction, the lease

provided that the lessor pay the lessee $50,000, the estimated cost of the

project. Id. The lease provided for annual rent of $16,250 for a fifteen-

year term with an option for two consecutive five-year terms of renewal.

Id. at 751–52. Title in the property vested with the lessor upon completion

of the lease. Id. at 752.

       Upon completion of the project, the lessor paid the $50,000 to the

lessee for construction. Id. The general contractor hired by the lessee gave

Stroh a check for construction services, but the check was dishonored. Id.

Stroh went unpaid. Id. As a result, Stroh filed a mechanic’s lien and

sought to foreclose the mechanic’s lien against the real property of the

lessor. Id.

       The question in the case was whether Stroh’s mechanic’s lien

attached to the real property of the owner or solely on the property of the

lessee. Id. The Stroh court cited Iowa Code section 572.2, which at the

time provided that a mechanic’s lien may arise by virtue of a contract with

the owner or his agent. See id.

       The Stroh court recognized that, ordinarily, mere knowledge or

consent to the making of improvements did not subject the interest of the
                                     20

owner to a mechanic’s lien. Id. But according to Stroh, if the lessor has

by express or implied agreement contracted for the improvement of his real

property, the mechanic’s lien attaches to the property of the owner. Id.

The Stroh court stated that such express or implied agreement particularly

arose in situations where the building or improvements became the

property of the lessor after a comparatively short term.        Id.   In such

situations, according to Stroh, “the lessee is considered to be the agent of

the lessor within the meaning of [Iowa Code section] 572.2.” Id.

      The Stroh court held that the mechanic’s lien under the facts of the

case attached to the lessor’s real property. Id. The Stroh court noted that

the construction of the car wash materially added to the value of the land,

with the assessed value increasing from $22,491 to $79,060 after

construction of the project. Id. The improvements immediately became

the property of the lessor. Id. Finally, the facility was the primary reason

for the rent of $16,250. Id.; see also A & W Elec. Contractors, 576 N.W.2d

at 114 (“[A] tenant’s authority to bind the land arises only when the

improvement is in some way demanded by the lease.”).

      C. Statutory Changes in 2007 and 2012. Iowa’s mechanic’s lien

statute was amended in 2007 and 2012. The 2007 amendments removed

contracts with “the owner’s agent” as giving rise to mechanic’s liens on the

property of the owner under Iowa Code section 572.2(1). See 2007 Iowa

Acts ch. 83, § 3 (codified at Iowa Code § 572.2(1) (Supp. 2007)). The 2007

amendments also eliminated the term “owner’s agent” from other

provisions of the mechanic’s lien statute. See id. §§ 2, 4, 6, 17 (codified at

Iowa Code §§ 572.1(6), .8(1)(c), .10, .28(1) (Supp. 2007)).

      The 2012 amendment, among other things, limited the scope of the

term “owner.” See 2012 Iowa Acts ch. 1105, § 2 (codified at Iowa Code

§ 572.1(8) (2013)). As amended in 2007, the term “owner” generally meant
                                     21

“the record titleholder” in the property. 2007 Iowa Acts ch. 83, § 2 (codified

at Iowa Code § 527.1(4) (Supp. 2007)). But the 2007 version additionally

provided that owner included “every person for whose use or benefit

any . . . improvement is made.” Id. In 2012, the legislature eliminated the

additional language. 2012 Iowa Acts ch. 1105, § 2 (codified at Iowa Code

§ 527.1(8) (2013)). Thus, at all times relevant to this proceeding, the term

“owner” in the mechanic’s lien statute was narrowly defined as “the legal

or equitable titleholder of record.” Iowa Code § 572.1(8).

      IV. Positions of the Parties.

      A. Winger.

      1. Proper interpretation of Iowa Code section 572.2(1). On appeal,

Winger first asserts that the district court erred in determining that, under

Iowa Code section 572.2(1), “a contract with the owner’s agent” is no longer

sufficient to provide a basis for a mechanic’s lien. According to Winger,

nothing in Iowa Code section 572.2(1) prevents a mechanic’s lien from

attaching to land where the landowner’s agent contracts for improvements.

      According to Winger, the legislative amendment in 2007 was not

designed to eliminate the law of agency in the field of mechanic’s liens.

Winger cites the following explanation attached to the 2007 amendment,

which stated, “The bill eliminates owner agents and trustees from the list

of persons against whom a mechanic’s lien may be filed.” H.F. 774, 82d

G.A., explanation (Iowa 2007) (emphasis added). According to Winger, the

technical correction was not designed to alter the substantive law of

mechanic’s liens, but only related to the manner of filing the liens on the

public record.

      2. Notice of lease provisions. In setting up the argument that its

work for HFCA was sufficient to provide a basis for a mechanic’s lien to

attach to Cargill’s property, Winger preliminarily asserts that the potential
                                     22

lienholders in this case did not have actual or constructive notice of section

22.14 of the lease between Cargill and HFCA. That provision states that

nothing in the lease should be deemed as creating a partnership, joint

venture, or any relationship other than the relationship of landlord and

tenant. The provision also states nothing in the lease should be construed

as causing either party to be responsible for the debts or obligations of the

other party.

      Winger notes that the lease itself was not filed in the Monroe County

recorder’s office, but only a memorandum of lease. Thus, from the public

record, Winger argues it was not on constructive notice of the specific

terms of the unfiled lease, including section 22.14 or any other provision.

Further, Winger asserts the record is devoid of any evidence that it had

actual notice of the terms of the lease.

      3. Application of Romp and Stroh. Winger claims Cargill and HFCA

were joint adventurers which subjected Cargill’s property to a mechanic’s

lien under Romp, 244 Iowa at 208–09, 56 N.W.2d at 604. Winger asserts

that while HFCA and Cargill did not share profits and losses, Cargill still

benefitted beyond the payment of rent by obtaining from HFCA a secure

supply of necessary chemicals.

      Winger also claims that HFCA had express or implied authority to

contract for improvements under the teaching of Stroh, 247 N.W.2d at 752.

Winger points out that under the lease, HFCA was required to construct

the improvements giving rise to the mechanic’s liens in this case. While

Winger recognizes that the lease calls upon HFCA to return the property

to Cargill in its original condition after fifty years, it argues that in all

likelihood a large chemical facility is not going to be destroyed at the end

of the lease term. To not allow the mechanic’s liens to attach to Cargill’s

land under the circumstances, according to Winger, would be inequitable.
                                     23

      4. After-acquired mortgage.       Winger launches two arguments

challenging the district court’s conclusion that Cargill as assignee of the

U.S. Bank construction mortgage holds a position superior to the

mechanic’s liens in this case. Winger first asserts that the mortgage held

by Cargill should merge with its fee simple interest in the property. Next,

Winger asserts that equity will not facilitate an artifice for fraud by giving

Cargill’s after-acquired mortgage priority over the mechanic’s liens.

      5. Otherwise improved.      Finally, Winger asserts that the district

court erred in dismissing its argument, raised in its rule 1.904(2) motion,

concerning the “otherwise improved” language in Iowa Code section

572.2(1). Parsing the statutory language, Winger asserts that it has a lien

for construction services rendered pursuant to its contract with HFCA on

“such building or improvement”—namely, HFCA’s facility—and “upon the

land or lot so graded, landscaped, fenced, or otherwise improved”—

namely, Cargill’s land. Winger indicates that the Oxford comma—the third

comma in the phrase “so graded, landscaped, fenced, or otherwise

improved”—means that the term “otherwise improved” is not limited to

activities similar to grading, landscaping, or fencing, but instead, has a

broader meaning that generally includes “improvements.”

      Winger challenges the district court’s conclusion that this claim was

not preserved below. Winger notes that its petition alleges both that its

“labor and services contributed to the improvement, betterment,

alteration, and repair of the EDDYVILLE PROPERTY” and that, as a result,

it “is entitled to . . . a lien on the EDDYVILLE PROPERTY to secure

payment of amounts owed to it for and relating to those services and that

work.” Winger claims that its motion for summary judgment raised “the

betterment issue” by alleging that Cargill received substantial benefit from

the labor furnished and materials provided.
                                     24

      6. Joinder by other parties. Tri-City, TAI, and American Piping join

Winger’s appellate briefing. They “further state that each furnished labor

and materials upon [Cargill’s] buildings and land for the improvement,

alteration, or repair thereof” and “are similarly situated to Winger.”

      B. Peterson. Peterson generally joins the arguments advanced by

Winger. Peterson emphasizes, however, that it provided services to the

real property including moving dirt; providing concrete paving and erosion

control; building culverts and containment basins; excavating; stripping,

salvaging, and spreading topsoil; clearing and grubbing the land; installing

storm sewers and fencing; seeding; mulching; backfilling; and raising the

grade of the land. As a result, Peterson claims that it is entitled to a

mechanic’s lien on Cargill property on the basis that it otherwise improved

the land under Iowa Code section 572.2(1).

      C. Cargill.

      1. Proper interpretation of Iowa Code section 572.2(1). Cargill argues

that Iowa Code chapter 572 is straightforward. Cargill emphasizes the

following language in section 572.2(1):

      Every person who furnishes any material or labor . . . by virtue
      of any contract with the owner, owner-builder, general
      contractor, or subcontractor shall have a lien upon such
      building or improvement, and land belonging to the owner on
      which the same is situated . . . .

Iowa Code § 572.2(1). According to Cargill, the statute plainly states that

a mechanic’s lien arises only on a building, improvement, or land

“belonging to the owner.” Here, HFCA has no land belonging to it. The

land belongs to Cargill. As a result, Cargill concludes, the mechanic’s liens

for work provided to HFCA do not attach to Cargill’s fee simple interest in

the land.
                                    25

      Cargill backs up its interpretation by citing the amendments to

Iowa’s mechanic’s lien statute passed in 2007. Cargill notes that the 2007

amendment expressly removed the words “the owner’s agent, trustee” from

the list of parties who could enter into contracts giving rise to mechanic’s

liens. 2007 Iowa Acts ch. 83, § 3 (codified at Iowa Code § 572.2(1) (Supp.

2007)).

      Further, Cargill notes that the legislative amendments in 2007 and

2012 substantially changed the definition of “owner.” In 2007, the term

“owner” was amended to mean “the record titleholder” but retained the

phrase “every person for whose use or benefit any building, erection, or

other improvement is made.” Id. § 2 (codified at Iowa Code § 572.1(4)

(Supp. 2007)). The definition of owner was again amended in 2012 by

deleting the language about benefitted persons. 2012 Iowa Acts ch. 1105,

§ 2 (codified at Iowa Code § 572.1(8) (2013)).     As a result, after 2012,

“owner” under the statute was defined as “the legal or equitable titleholder

of record.” Iowa Code § 572.1(8).

      Cargill views the explanation accompanying the bill as insignificant.

Cargill observes that the language in the explanation cited by Winger

makes little sense because mechanic’s liens are charged against property,

not persons. In any event, Cargill asserts that the actual action taken by

the legislature must be given effect notwithstanding the less-than-

clarifying explanation accompanying the bill as originally filed.

      According to Cargill, the statutory amendments to the mechanic’s

lien statute plainly undermine the validity of Romp, 244 Iowa at 208–09,

56 N.W.2d at 604, and Stroh, 247 N.W.2d at 752. Under the amended

statute, the fact that a lessor benefits from a lessee’s construction of a

building does not make the lessor an “owner” under the statute. And,
                                     26

mechanic’s liens arise only on property of the “owner” narrowly defined as

the record titleholder.

      Cargill rejects the notion that its interpretation of the statute

eliminates the law of agency. Of course, a corporation, for example, acts

through its agents. Cargill asserts that its interpretation does not prevent

an owner from entering contracts through its agents. But according to

Cargill, a contract with the owner’s agent, where the agent is the party to

the contract, is not sufficient to give rise to a mechanic’s lien on the

owner’s property. Cargill asserts that the amendments make clear that a

mechanic’s lien will not attach to property of an owner where there is a

contract with the owner’s agent, but not with the owner. Here, Cargill

explains, HFCA entered into contracts on its own behalf and not on behalf

of Cargill.

      2. Notice of lease provisions. Cargill notes in passing that Winger

was on notice from the recorded memorandum of lease that Cargill, not

HFCA, owned the fee interest in the land. According to Cargill, Winger did

not have a contract with Cargill and thus its mechanic’s lien does not

extend to Cargill’s fee interest.

      3. Application of Romp and Stroh. Cargill emphasizes that in light

of the 2007 and 2012 statutory amendments, there is no longer any basis

for attaching a mechanic’s lien to Cargill’s fee interest in the real estate.

In the alternative, however, even if the statutory argument is rejected,

Cargill argues that Romp and Stroh have no application under the facts

presented.

      4. After-acquired mortgage. Cargill argues that no merger occurs as

a result of U.S. Bank’s assignment of its construction mortgage lien to

Cargill. Cargill admits that it received an assignment of the construction

mortgage lien. But, Cargill notes, HFCA still holds title to the leasehold
                                     27

interest. According to Cargill, Winger seeks merger of HFCA’s leasehold

interest with Cargill’s fee simple interest in the land. Cargill argues that

the fact that Cargill has the right to foreclose on the mortgage lien does

not address the separate issue of whether the leasehold interest has

merged with the dominant estate.

      In any event, Cargill points to our precedent stating,

      It is a well-settled rule of equity jurisprudence that a purchase
      by a mortgagee of the mortgaged premises does not merge the
      mortgage in the legal title, when it is the interest of the
      mortgagee that it should be kept alive, if the rights of third
      persons are not thereby prejudiced.

Kilmer v. Hannifan, 113 Iowa 281, 282, 85 N.W. 16, 16 (1901). Here, prior

to U.S. Bank assigning the mortgage to Cargill, Winger had a mechanic’s

lien in the HFCA facility and in HFCA’s leasehold interest in the land. The

assignment did not affect that interest.      According to Cargill, Winger

impermissibly seeks to use the assignment as a sword to advance its

position.

      5. Otherwise improved.      Cargill asserts that under Iowa Code

section 572.2(1), there are two methods of establishing a mechanic’s lien.

Under the first method, a lien arises on the “building or improvement, and
land belonging to the owner on which the same is situated.” Iowa Code

§ 572.2(1). Under the second method, according to Cargill, “those engaged

in grading, sodding, installing nursery stock, landscaping, sidewalk

building, fencing on any land or lot” are entitled to a lien on “the land or

lot so graded, landscaped, fenced, or otherwise improved, altered, or

repaired.” Id.

      Cargill asserts that Winger did not raise the issue of whether it was

entitled to a mechanic’s lien against Cargill’s fee interest under the second

approach in the district court. Cargill recognizes that Winger raised the
                                    28

issue in its 1.904(2) motion after the district court ruled on the motions

for summary judgment, but Cargill argues that new issues not presented

to the district court cannot be raised in a 1.904(2) motion. According to

Cargill, 1.904(2) motions, even under our amended rule, are not a vehicle

to advance a new legal theory.

      In any event, Cargill asserts that Winger is not entitled to relief

under the otherwise improved theory. According to Cargill, because the

phrase “otherwise improved” follows a specified list relating to grading,

landscaping, and fencing, the language applies only to similar activity and

does not generally apply to providing material or labor to construct a

building. Cargill argues that Winger’s interpretation of the statute would

render superfluous prior language in the statute providing that provision

of materials and construction services provide a lien on the building and

“land belonging to the owner on which the same is situated.” Iowa Code

§ 572.2(1).

      V. Discussion.

      A. Proper Interpretation of Iowa Code Section 572.2.               A

threshold issue is whether a mechanic’s lien on the underlying fee interest

may arise under the current version of Iowa Code section 572.2(1) where

the contract is with the lessee and not the owner of the property. If the

answer to this question is no, there is no need to consider whether the

mechanic’s liens attach under Romp, 244 Iowa at 208–09, 56 N.W.2d at

604, and Stroh, 247 N.W.2d at 752.

      Based on our review of the statute, we conclude that Cargill has the

better argument. A mechanic’s lien is a creature of statute. Carson, 513
N.W.2d at 715. The amendments of 2007 and 2012 narrow the definition

of owner and eliminate contracts with agents as a basis for a mechanic’s

lien against property of an owner.    See 2012 Iowa Acts ch. 1105, § 2
                                     29

(codified at Iowa Code § 572.1(8) (2013)); 2007 Iowa Acts ch. 83, § 3

(codified at Iowa Code § 572.2 (Supp. 2007)). We conclude the language

used by the legislature should be given its natural effect.

      We do not view the legislative amendments in 2007 and 2012 as

working a profound change in the law of agency. As pointed out by Cargill,

an agent can still enter into a contract on behalf of a principal. When an

agent acts within the scope of authority on behalf of a principal, a contract

arises with the principal.

      Under our interpretation of legislative action, Romp and Stroh are no

longer good law. Both of these cases involved contracts with lessees who

were determined to be, in essence, agents of fee owners because of the

beneficial relationship between the lessors and the owners that extended

well beyond the ordinary landlord–tenant relationship.        It may be that

under these cases, Winger would have an argument for the attachment of

mechanic’s liens to Cargill’s fee simple interest. But by reworking the

statute to limit mechanic’s liens to property belonging to a narrowly

defined owner, the legislature has adopted an approach in conflict with

Romp and Stroh.      Because we find that the language of the statute

precludes the attachment of mechanic’s liens to the fee simple interest of

Cargill, there is no occasion to consider application of our now superseded

precedent.

      B. Otherwise Improved. In its summary judgment motion below,

Winger did not assert that it had otherwise improved Cargill’s property

under Iowa Code section 572.2(1). Winger’s statement of undisputed facts

did not include a factual claim that it had furnished seeding, sodding,

excavating, or similar services to Cargill’s land. Its motion for summary

judgment generally asserted that “Cargill received substantial benefit from

the labor furnished and materials provided by the lienholders.”
                                     30

      Winger’s memorandum in support of its motion for summary

judgment asserted in a heading that “the land owner is subject to

mechanic liens filed against its property when it benefits from the work

performed and materials provided thereon by its lessee.”                 The

argumentation under the heading focused on the agency principles

articulated in Romp and Stroh. Under these cases, Winger asserted that

HFCA was an agent for, or in a joint venture with, Cargill and that the

mechanic’s liens in this case could attach to Cargill’s property as a result.

In its reply brief to Cargill’s resistance, Winger defended its claim that

HFCA was Cargill’s agent but did not raise the otherwise improved

language of the statute.

      Nowhere in the summary judgment proceedings did Winger make

the factual claim to have provided landscaping-type work on Cargill’s land,

and Winger did not make the legal argument that it was entitled to a

mechanic’s lien by virtue of the otherwise improved language under Iowa

Code section 572.2.     Once the district court ruled on the summary

judgment motions, Winger raised the otherwise improved theory in its rule

1.904(2) motion. In that motion, Winger generally asserted that it provided

labor which improved the Cargill land and specifically raised the

alternative statutory theory that it provided materials and services that

otherwise improved Cargill’s land.

      Peterson is in a slightly different position. Peterson on appeal notes

that, in its “Answer and Counterclaim and Cross-Claim to Foreclose

Mechanic’s Lien,” it alleged that it provided services to Cargill’s land and

provided an affidavit supporting the claim. But the district court’s case

management order required the parties to determine lien priority in a

summary judgment proceeding. With respect to the summary judgment

motions that were filed pursuant to the case management order, Peterson
                                    31

joined Winger’s summary judgment motion and brief. It did not make any

independent filing of its own related to the otherwise improved issue. The

same is true for Tri-City, TAI, and American Piping.      For all purposes

relevant to the “otherwise improved” issue, Peterson, Tri-City, TAI, and

American Piping were hitchhikers of Winger.      Thus, like Winger, these

parties raised the issue in a 1.904(2) motion.

      We think Winger, Peterson, Tri-City, TAI, and American Piping did

not raise the otherwise improved issue before the district court when the

motions for summary judgment were considered. Although the otherwise

improved language appears in the same statutory provision relied upon by

Winger and the other four parties, it presents a different legal theory with

a different factual predicate than the issues actually litigated in the

summary judgment proceedings. Winger’s motion for summary judgment,

which the other four parties joined, along with its supporting brief, urged

the court to find that Cargill was either an agent or joint adventurer under

Romp or Stroh. Aside from the agency and joint venture theories, Winger

did not present an alternate theory to support the attachment of

mechanic’s liens to Cargill’s land. Under the circumstances, we think the

claim was not presented to the district court in the cross-motions for

summary judgment, and therefore, it is not surprising that the district

court did not rule upon the unpresented claim. As a result, the alternate

issue was not preserved. Meier v. Senecaut, 641 N.W.2d 532, 538 (Iowa

2002) (explaining that a motion under the precursor to rule 1.904(2) is not

designed as a replacement of the requirement to preserve error).

      Winger asserts, however, that our amendment to rule 1.904(2)

altered our approach to issue preservation. Winger argues that a timely

motion for reconsideration under the new rule not only stays the time to
                                    32

file an appeal in all cases but also involves a different approach to issue

preservation.

      We do not agree. Our amendment to rule 1.904(2) was designed to

eliminate the difficult choice faced by lawyers in determining whether a

1.904(2) motion was a valid request to consider an issue overlooked by the

district court or whether it was a mere rehash and therefore did not

operate to stay the time for filing an appeal. As revealed by our comment

to the rule change, it was not designed to overhaul our preservation

doctrine. Iowa R. Civ. P. 1.904 cmt. (“[T]he rule does not address whether

a rule 1.904(2) motion preserves error for purposes of appeal as to evidence

or arguments raised for the first time in that motion.”).

      C. Merger. No one disputes that Winger and the other four parties

have a lien against HFCA’s facility and its leasehold interest. The question

arises, however, whether Cargill’s construction mortgage lien acquired by

assignment from U.S. Bank is superior to the mechanic’s liens. Winger

seeks to defeat the priority of Cargill’s after-acquired construction

mortgage lien by asserting that Cargill’s interests as reflected in its

construction mortgage lien merges with its fee simple interest in the land.

      We disagree. There is authority for the proposition that, at least

under some circumstances, when an owner of land in fee simple acquires

a leasehold interest in the property, the interests merge. See In re Estate

of Herring, 265 N.W.2d 740, 741 (Iowa 1978).        Here, however, as the

district court found, Cargill has not acquired HFCA’s leasehold interest in

the property or any ownership of the facility and HFCA still owns the

leasehold interest and the facility.   On appeal, Winger maintains that

“[l]andlord Cargill holds the dominate estate in relation to the lessee

HFCA.” What Cargill has acquired by assignment from U.S. Bank is an

interest in a construction mortgage, and resulting lien, against the
                                      33

property interest of HFCA. As a result, the differing interests of Cargill do

not merge.

      In any event, Iowa caselaw declares that in situations where the

mortgagee purchases the equity of redemption from the mortgagor, the

mortgage debt, and the mortgage, is extinguished but “if it is to the interest

of the mortgagee, and it can be done without prejudice to the rights of the

mortgagor or third persons, the doctrine of merger . . . will not apply.”

Vannice v. Bergen, 16 Iowa 555, 562 (1864). Here, Winger and the other

four parties are not prejudiced by lack of merger as their lien position prior

to Cargill obtaining the assignment of the mortgage was inferior to the

construction mortgage lien of U.S. Bank. Thus, the position of Winger and

the other four parties has not been affected by the transfer of the mortgage

interest. Further, as noted in later caselaw,

      [i]f there was no expression of his intention in relation to the
      matter at the time he acquired the equity of redemption, it will
      be presumed, in the absence of circumstances indicating a
      contrary purpose, that he intended to do that which would
      prove most advantageous to himself.

Tom Riley Law Firm, P.C. v. Padzensky, 430 N.W.2d 416, 418 (Iowa 1988)

(quoting Overland-Wolf, Inc. v. Koory, 162 N.W.2d 889, 890–91 (Neb.
1968)).

      In sum, Cargill obtained its construction mortgage interest under

less than desirable circumstances, namely, upon the collapse of the HFCA

project and the satisfaction of debt by U.S. Bank under the financing

arrangements.    When Cargill obtained the interest in the construction

mortgage, it had no possible interest in merging the construction mortgage

estate with its fee simple estate and thereby losing its superior lien position

that arises from the construction mortgage.
                                   34

      D. Fraud or Unjust Enrichment. Winger generally asserts that

Cargill will be unjustly enriched and that its actions amount to a fraud.

We do not agree. A mechanic’s lien is a creature of statute. Carson, 513
N.W.2d at 715. Outside of the statute, there are no substantive rights to

a mechanic’s lien.

      There is nothing in the record to suggest that Winger and the other

four parties were defrauded by Cargill out of their statutory rights. They

were on notice of the legislative changes. Further, there is no suggestion

that Cargill at any time misrepresented that Cargill owned the land but

that the facility and the lease were owned by HFCA.          Moreover, by

examining the public record, Winger and the other four parties would have

known that HFCA did not own the land but was a mere lessee. Winger

and the other four parties did not claim that their contracts were in fact

with Cargill and that HFCA was acting as an agent to bind Cargill as

principal.    They knew that HFCA was the party to their construction

contracts. As a result of the above, Winger and the other four parties

cannot be said to have been defrauded of a statutory right that they no

longer had.

      Winger also argues that it was fraudulent for Cargill to claim a

superior right over their mechanic’s liens through the acquisition of the

construction mortgage lien from U.S. Bank. Prior to the assignment of

U.S. Bank’s interest, however, the liens of Winger and the other four

parties were subject to U.S. Bank’s interest.     The assignment of the

construction mortgage lease to Cargill did not deprive them of anything.

Further, the after-acquired mortgage acquired by Cargill was not on its

own property, as suggested by Winger, but was on the property owned by

HFCA, namely, HFCA’s facility and the leasehold interests.
                                     35

      The case is thus distinguishable from Veale, 197 Iowa at 241–43,

195 N.W. at 249, where the improvements were made on the owner’s land

by a builder, and after the improvements were made, the property was to

be sold to the builder at a price which reflected the improvements. The

Veale court emphasized that the improvements were made on the owner’s

own property. Id. at 244, 195 N.W. at 250. Unlike in Veale, Cargill did

not finance the construction of its own building which it was going to sell

at a profit. The HFCA project was largely financed by U.S. Bank. Cargill

did finance part of the construction, but with respect to the U.S. Bank

financing, agreed to a put in the event of an HFCA default to close the deal.

Cargill was the assignee of a construction mortgage that financed the

building owned by HFCA when the default occurred. We decline to find

fraud under the circumstances presented.

      VI. Conclusion.

      For the above reasons, the rulings of the district court on the

motions for summary judgment are affirmed. The matter is remanded to

the district court for any further proceedings that may be required.

      AFFIRMED.

      All justices concur except Waterman, J., who takes no part.