Court Opinion

ID: 890280
Source: CourtListenerOpinion
Date Created: 2013-06-05 06:34:43.582606+00
Date Added: 2024-06-11T15:06:39.775008
License: Public Domain

April 16 2013

                                     DA 12-0281

             IN THE SUPREME COURT OF THE STATE OF MONTANA

                                     2013 MT 99

MOUNTAIN WEST BANK, N.A.,

         Plaintiff and Appellee,

    v.

CHERRAD, LLC, MERRITT & MARIE,
LLC, MAX & V, LLC, CONRAD M.
HALE, CHERYL HALE, MARK OLSON,
THE ESTATE OF CRAIG KINNAMAN,
and John Does 1 through 10,

         Defendants and Appellees.

CHERRAD, LLC, MERRITT & MARIE,
LLC, MAX & V, LLC, CONRAD M.
HALE, and CHERYL M. HALE,

         Cross-Claimants and Appellees,

    v.

ESTATE OF CRAIG KINNAMAN,

         Cross-Claimant and Appellant.

APPEAL FROM:       District Court of the First Judicial District,
                   In and For the County of Lewis and Clark, Cause No. CDV-2008-48
                   Hon. Kathy Seeley, Hon. Thomas C. Honzel, Presiding Judges

COUNSEL OF RECORD:

           For Appellant:

                   James Kommers, Kommers Law Firm, Bozeman, Montana

           For Appellee Mountain West Bank:
               Amy Randall, Mountain West Bank, N.A.; Helena, Montana

         For Appellees Cherrad, LLC, Merritt & Marie, LLC, Max & V, LLC, Conrad and
         Cheryl Hale:

               Candace Payne, Luxan & Murfitt; Helena, Montana

                                          Submitted on Briefs: February 20, 2013

                                                     Decided: April 16, 2013

Filed:

               __________________________________________
                                 Clerk

                                      2
Justice Michael E Wheat delivered the Opinion of the Court.

¶1     The Estate of Craig Kinnaman (the Estate) appeals from an order of the First Judicial

District Court, Lewis and Clark County, granting summary judgment to Cherrad, LLC

(Cherrad), Merritt & Marie, LLC (Merritt & Marie), Max & V, LLC (Max & V), and Conrad

and Cheryl Hale (the Hales) (collectively “the Hale interests”) and Mountain West Bank

(MWB) and declaring the Estate’s construction lien invalid. The Estate also appeals from

the final judgment of the First Judicial District Court, Lewis and Clark County, determining

Cherrad owes the Estate the sum of $76,278 for work that Craig Kinnaman (Kinnaman), dba

CK Design and Construction (CK Design), performed on a condominium construction

project. We affirm.

¶2     We review the following issues on appeal:

¶3     Issue One: Did the District Court err when it granted summary judgment to the Hale

interests and MWB, determining that the Estate’s construction lien was invalid due to its

failure to comply with § 71-3-535, MCA?

¶4     Issue Two: Did the District Court err when it calculated the amount of money

Cherrad owed the Estate for costs related to the condominium construction project?

                  FACTUAL AND PROCEDURAL BACKGROUND

¶5     This case arises out of several business transactions entered into by parties involved in

the development of condominiums at Lakeside Village on Hauser Lake, Lewis and Clark

County, Montana. Cherrad, Merritt & Marie, and Max & V are Montana limited liability

companies owned by the Hales. Kinnaman was sole proprietor of a business called CK
                                               3
Design. In 2003, Merritt & Marie purchased the Hauser Lake property. The following year,

the Hales and Kinnaman discussed plans to develop a portion of the property. The plans

involved construction of twelve condominiums—the Lakeside Village Condominiums—in

six buildings, a full-service marina, a road and sewer system. Cherrad was to be the

developer.

¶6    MWB was Cherrad’s lender for purposes of developing the condominium project.

MWB made three loans to Cherrad. The first loan was made on April 20, 2006 in the

principal amount of $1,385,215. The second loan, a letter of credit, was made on July 26,

2006 for the maximum principal amount of $78,602.22. The third loan was made on May

18, 2007 in the principal amount of $152,319. All three loans were secured by the Hauser

Lake property and guaranteed by Merritt & Marie, Max & V, and the Hales.

¶7    Before making any of these loans to Cherrad, MWB required Cherrad and CK Design

to execute a formal construction contract to secure financing. Accordingly, Cherrad and CK

Design entered into two contracts—“AIA contracts”—in the spring of 2006. The first

contract governed the construction of the condominium buildings. It provided that CK

Design would build two condominium buildings for $650,000 each, for a total of $1.3

million, plus a 10% management fee. The buildings were to be substantially completed

within 180 days of execution of the contract. The second contract governed the construction

of the condominium infrastructure and the marina. It provided that Cherrad would pay CK

Design $1,323,600 plus a 10% management fee.           The contract required substantial

completion of the work within 365 days of the date of the contract.
                                            4
¶8     The AIA contracts provided multiple provisions that were not followed by the parties,

including those describing the method of payment from Cherrad to CK Design. Specifically,

the AIA contracts provided that CK Design would submit bi-weekly invoices to Cherrad,

through the project’s architect, which would detail the costs incurred by CK Design.

Cherrad would then make progress payments to CK Design within a specified period of time.

The contracts also provided that with each invoice CK Design would submit a partial release

of liens.

¶9     CK Design began construction on the infrastructure project in late 2004 and on the

condominiums in late summer 2005. Rather than Cherrad paying CK Design as invoices

were submitted, as agreed to in the AIA contracts, the parties engaged in a practice where

CK Design was paid as the units sold. Unit 1 was sold in October 2006 for $625,000, and

CK Design was paid $350,000 from these proceeds. Unit 4 was sold in March 2007 for

$630,512, and CK Design was paid $300,000 from these proceeds. The reason CK Design

was not paid the $350,000 for unit 4 that it was paid for unit 1 was because CK Design was

behind schedule and the marina was not complete at the time of sale—it was only

approximately two-thirds complete.

¶10    CK Design continued to suffer delays in the project, and several subcontractors and

suppliers began filing liens on the property claiming they had not yet been paid for their

work. As a result, MWB refused to further finance the project unless CK Design and

Cherrad entered into an agreement shielding MWB’s first security position from the liens of

subcontractors and suppliers. Accordingly, on May 18, 2007, MWB, CK Design, Cherrad
                                             5
and the Hales, individually, entered into a “Subordination Agreement” in which CK Design

agreed to subordinate its interest in the condominium project, including its right to file a

construction lien, to MWB.

¶11    Prior to completion of building two, CK Design began construction of building three,

containing units 5 and 6. This work was not covered by a written contract. Not long after,

on July 28, 2007, Conrad Hale told Kinnaman that CK Design could no longer proceed on

the condominium project; CK Design left the project at that time.

¶12    The parties entered into another agreement on September 6, 2007, entitled

“Agreement Regarding Outstanding Debts.” The agreement provided that any construction

liens on unit 2 would either be paid in full before the closing of the sale of unit 2 or paid

from the proceeds of the sale of unit 2 before any funds were dispersed to CK Design or

Cherrad. In the agreement, Kinnaman provided a list of all outstanding debts on the

construction project—not just on unit 2. Kinnaman warranted that the total amount owed to

subcontractors and suppliers was approximately $180,731.

¶13    Unit 2 was sold to a third party in September 2007 for $700,000. Pursuant to the

Agreement Regarding Outstanding Debts, all of the unpaid subcontractors, suppliers, and

creditors were paid first. The amount owed to unpaid subcontractors and suppliers was

actually $223,898, approximately $50,000 more than the figure Kinnaman warranted on the

agreement. Out of the remaining funds, Cherrad was paid $63,739.18 and the Estate was

paid the leftover funds of approximately $57,360.

                                             6
¶14    Unit 5 was sold to a third party “as is” in October 2008 for $225,635. Unit 6 was sold

to a third party “as is” in October 2008 for $212,132. Unit 3 was sold to a third party in

February 2010 for $325,000. CK Design never completed construction on any of these units.

CK Design received nothing from the sale of units 3, 5, and 6.

¶15    Kinnaman committed suicide in September 2007. On November 29, 2007, the Estate

recorded with the Lewis and Clark County Clerk and Recorder a $3.3 million construction

lien on the Lakeside Village Condominiums. This was done through Nancy Kinnaman

(Nancy), Kinnaman’s widow and the personal representative of the Estate. The $3.3 million

lien was supported by an attached summary of invoices prepared by CK Design that alleged

unpaid costs of labor and materials due to CK Design for the condominium project. The

amount of the lien made it impossible for Cherrad to borrow money to continue the

development of the condominium project.

¶16    MWB brought this action on January 14, 2008, against the Hale interests and the

Estate.1 MWB sought foreclosure on the three secured loans that MWB made to Cherrad that

were guaranteed by Merritt & Marie, Max & V, and the Hales. Although Cherrad was not

behind on any payments of its loan to MWB, MWB alleged it was adversely affected and

insecure because of the Estate’s $3.3 million construction lien against the real property that

secured the loans that were the subject of the action. MWB also requested that the District

Court declare the Estate’s construction lien inferior to the secured interests of MWB.

       1
      Mark Olson, a contractor who filed a construction lien against Lakeside Village
Condominiums, was also originally a defendant in the action. He was subsequently
                                          7
¶17    The Hale interests filed an answer and cross-claim against the Estate for slander of

title and intentional interference with contract.2 The Estate filed an answer, counter-claim,

and cross-claim against the Hale interests alleging various claims including breach of

contract and unjust enrichment. MWB and the Hale interests each moved for summary

judgment against the Estate. They argued the Estate’s construction lien was invalid because

it failed to comply with the statutory requirements of § 71-3-535, MCA, and was not based

on the personal knowledge of Kinnaman because Nancy filed the lien.

¶18    On September 17, 2008, the District Court granted the motions for summary judgment

and declared the construction lien invalid. The court determined that because the Estate

failed to include all the requisite information under § 71-3-535(3), MCA, the Estate did not

comply with the procedural requirements for a valid construction lien.

¶19    The Estate’s counterclaim against MWB was subsequently dismissed by the District

Court. The cross-claims made between the Hale interests and the Estate proceeded to bench

trial on November 7-8, 2011. At trial, the parties presented evidence and witness testimony

to the court. Among several witnesses was Fred Flanders, an expert for the Hale interests.

Flanders has worked in the banking industry for over forty years. Flanders discussed the

effect of the delay in the development of the condominiums. He testified that had the

timeline in the AIA contracts been followed, the units would have been available for sale at

dismissed after MWB settled his construction lien.
       2
         The Hale interests also filed a third-party complaint against Nancy alleging
various claims that are not at issue in this appeal. Thus, they will not be discussed
further.
                                               8
the peak of the market; instead, the delay resulted in much reduced sales prices. He also

testified that the construction lien filed in this case caused the project to come to a standstill

and restricted Cherrad’s ability to sell any of the units that were covered by the lien.

¶20    Krista Mach, the former bookkeeper for CK Design, testified for the Estate. Among

other duties, Mach was responsible for preparing invoices for work that was performed by

CK Design for the Lakeside Village project. Mach testified that CK Design regularly

received invoices from vendors on the project. Mach stated she would use the information

from the invoices to create new invoices to send to Cherrad. Forty-one invoices were

admitted. Three lien releases were admitted as well, indicating that some of the invoices had

been paid.

¶21    The District Court entered its findings of fact, conclusions of law and order on March

22, 2012. The court determined that multiple provisions of the AIA contracts were

disregarded by the parties and that the practice for paying CK Design for building the

condominium units was as follows: CK Design was to be paid $350,000 from the sale of

each unit as the unit closed. CK Design was expected to pay all subcontractors and suppliers

from its share of the proceeds of the sale.

¶22    The court determined the parties’ course of conduct established by the distribution of

sale proceeds from units 1, 2, and 4 was the best evidence of the agreement between the

parties, and that payment to CK Design for the sale of units 3, 5, and 6 did not conform to

this practice. The court therefore found that CK Design was entitled to be paid some amount

for units 3, 5, and 6. The court reasoned that because no further amounts were owed on
                                                9
materials for units 3, 5, and 6—these amounts were paid pursuant to the Agreement

Regarding Outstanding Debts—a fair price to award CK Design was 10 percent of the units’

selling prices. Accordingly, the court ordered Cherrad to compensate the Estate in the

amount of $76,278.

¶23    In reaching its conclusion, the court analyzed the 41 invoices prepared by Mach,

finding each one was supported by copies of bills, statements, invoices, and hours of labor

incurred by CK Design from December 27, 2004 to July 5, 2007. The court found the

invoices appeared to “generally support the amount of the $3.3 million construction lien . . .

.” However, it recognized the amount was “astronomically higher” than the amount of

$180,731 that Kinnaman warranted owing on September 6, 2007. The court also pointed out

that the $3.3 million, if accurate, would mean that CK Design was roughly $1.5 million over

the contract price set forth in the AIA contracts. The court found that CK Design did not

timely, or ever, complete the condominium project. Although the amount of the construction

lien was supported by the invoices provided by CK Design, the court concluded the invoices

were “difficult to credit” and the lien was “not supportable given the warranty made by Craig

Kinnaman on September 6, 2007 and the practice of the parties regarding payment to CK

Design.”

¶24    The Estate appeals the District Court’s order granting summary judgment to MWB

and the Hale interests and its final judgment awarding the Estate $76,278.

                               STANDARD OF REVIEW

                                             10
¶25    We review the grant of summary judgment de novo, using the same M. R. Civ. P. 56

criteria used by the district court. Dubiel v. Mont. DOT, 2012 MT 35, ¶ 10, 364 Mont. 175,

272 P.3d 66. Summary judgment is appropriate when the moving party establishes both the

absence of any genuine issues of material fact and entitlement to judgment as a matter of

law. Dubiel, ¶ 10.

¶26    We review a district court’s findings of fact to determine whether they are clearly

erroneous. Dubiel, ¶ 10. A finding is clearly erroneous if it is not supported by substantial

evidence, if the district court misapprehended the effect of the evidence, or if a review of the

record leaves this Court with a definite and firm conviction that a mistake has been made.

Larsen v. Richardson, 2011 MT 195, ¶ 25, 361 Mont. 344, 260 P.3d 103. In determining

whether substantial evidence supports the district court’s findings, we view the evidence in

the light most favorable to the prevailing party. Larsen, ¶ 25.

¶27    We review an award of damages to determine whether the trial court abused its

discretion. Wohl v. City of Missoula, 2013 MT 46, ¶ 28, 369 Mont. 108 __ P.3d __. A

district court’s determination of damages is a factual finding that must be upheld if it is

supported by substantial evidence. Lewistown Miller Constr. Co. v. Martin, 2011 MT 325,

¶ 16, 363 Mont. 208, 271 P.3d 48. We will not overturn a district court’s determination of

damages unless it is clearly erroneous. Lewistown, ¶ 16. We review a district court’s

conclusions of law for correctness. Lewistown, ¶ 17.

                                       DISCUSSION

                                              11
¶28    Issue One: Did the District Court err when it granted summary judgment to the Hale

interests and MWB, determining that the Estate’s construction lien was invalid due to its

failure to comply with § 71-3-535, MCA?

¶29    The Estate challenges the District Court’s interpretation of Montana’s construction

lien statutes and argues the court erred in its determination that the Estate’s $3.3 million

construction lien was invalid. In response, the Hale interests contend the issue of the validity

of the construction lien is moot because the properties formerly encumbered by the lien have

been purchased, for value, by third parties in good faith. Accordingly, the Hale interests

assert we should avoid ruling on the issue. We agree.

¶30    We have explained many times that the judicial power of Montana courts is limited to

justiciable controversies, which are controversies that can be disposed of and resolved in the

courts. Gateway Opencut Mining Action Group v. Bd. of Co. Commrs., 2011 MT 198, ¶ 16,

361 Mont. 398, 260 P.3d 133. Among several central concepts of justiciability is mootness.

Gateway Opencut, ¶ 16. A matter is moot when, due to an event or happening, the issue has

ceased to exist and no longer presents an actual controversy. Shamrock Motors, Inc. v. Ford

Motor Co., 1999 MT 21, ¶ 19, 293 Mont. 188, 974 P.2d 1150. In deciding whether a matter

is moot, we determine whether the court can grant effective appellate relief. Not in Mont.:

Citizens Against CI-97 v. State, 2006 MT 278, ¶ 7, 334 Mont. 265, 147 P.3d 174. Mootness

is a threshold issue which must be resolved before addressing the substantive merits of a

dispute. Progressive Direct Ins. Co. v. Stuivenga, 2012 MT 75, ¶ 17, 364 Mont. 390, 276

P.3d 867.
                                              12
¶31    The Estate argues that since MWB failed to present the issue of mootness before the

District Court and raises it now for the first time on appeal it should be dismissed.

Regardless of whether this issue was brought before the District Court, this Court has an

independent obligation to determine whether jurisdiction exists and, thus, whether

constitutional justiciability requirements, such as mootness, have been met. Plan Helena,

Inc. v. Helena Reg’l Airport Auth. Bd., 2010 MT 26, ¶ 11, 355 Mont. 142, 226 P.3d 567.

This Court lacks jurisdiction over non-justiciable matters; thus, if a matter is moot it exceeds

our jurisdiction. Not in Mont., ¶ 7. If we determine we lack jurisdiction, we may take no

further action in the matter other than to dismiss it. Plan Helena, ¶ 11. It is therefore

necessary we determine as a preliminary matter whether this issue is moot.3

¶32    The District Court invalidated the Estate’s construction lien in its September 17, 2008

order. Since then, the Estate has failed to take any action to seek a stay of the order or an

injunction to prevent the sale of the property. See M. R. App. P. 22. Although a party is not

required to seek a stay of execution, a party choosing not to seek such a stay runs the risk of

having the appeal become moot. Progressive, ¶ 45. We have previously warned against the

“‘particular danger of dismissal for mootness’ where the sale of property to a third party is

involved.” Charlotte Mills, Clerk & Recorder v. Alta Vista Ranch, 2008 MT 214, ¶ 22, 344

Mont. 212, 187 P.3d 627 (quoting Turner v. Mt. Engr. and Constr., Inc., 276 Mont. 55, 63,

       3
         Additionally, we point out that at the time of the District Court’s order granting
summary judgment and declaring the construction lien invalid, the properties were not
yet sold, and mootness not yet an issue. When the case went to bench trial, the lien had
already been declared invalid and was not an issue before the court. Therefore, a
                                              13
915 P.2d 799, 804 (1996)). In such circumstances there is a “‘special need for seeking a

stay.’” Charlotte Mills, ¶ 22 (quoting Turner, 276 Mont. at 63, 915 P.2d at 804).

¶33    Here, each of the units named in the construction lien—units 2, 3, 5, and 6—have

been sold to third-party purchasers in good faith. Each of these purchasers took title to the

units free of any encumbrances placed upon them by the Estate. Even if we were to agree

with the Estate that the District Court incorrectly determined the construction lien was

invalid, there is no effective relief we can grant to the Estate at this point without implicating

the validity of the third-party sales. Therefore, the sale of the property to bona fide third

parties renders moot the Estate’s claim regarding the validity of its lien.

¶34    Issue Two: Did the District Court err when it calculated the amount of money

Cherrad owed the Estate for costs related to the condominium construction project?

¶35    As noted above, the District Court rejected the Estate’s $3.3 million claim and instead

ordered Cherrad to pay the Estate $76,278.            The Estate argues the District Court

misapprehended the effect of the evidence of the amount CK Design owed to its suppliers.

Specifically, the Estate claims the District Court erroneously reasoned that because CK

Design mistakenly represented by $50,000 the amount owed to its suppliers, Cherrad did not

owe CK Design the $3.3 million amount of the lien. The Estate argues the District Court

abused its discretion when determining that Cherrad does not owe CK Design the $3.3

million amount in the construction lien.

mootness argument would not have been relevant to the case before the District Court.
                                        14
¶36    First, the Estate’s interpretation of the court’s factual findings is incorrect. In its

finding of fact number 44, the court stated:

       Krista Mach, CK Design’s bookkeeper, identified 41 invoices she prepared
       and mailed to Cherrad at 5295 York Road, Helena, Montana. Each invoice
       was supported by copies of bills, statements, invoices, and hours of labor
       incurred by CK Design from December 27, 2004 to July 5, 2007. The
       invoices appear to generally support the amount of the $3.3 million
       construction lien filed by Nancy Kinnaman as personal representative for the
       Estate, even considering amounts over $1.2 million that Cherrad had paid CK
       Design for the infrastructure and buildings. Nonetheless, that amount is
       astronomically higher than the amount Craig Kinnaman warranted was owing
       on September 6, 2007. It would also mean that CK Design[] was around $1.5
       million over the contract price set forth in the AIA contracts prepared by Craig
       Kinnaman. The invoices are therefore difficult to credit. Testimony at trial
       also established that CK Design did not timely, or ever, complete the
       infrastructure or any of the condominium units.

The court further provided in its finding of fact number 64:

       As noted above, the amount of the construction lien filed by Nancy Kinnaman
       as personal representative of the Estate is not supportable given the warranty
       made by Craig Kinnaman on September 6, 2007 and the practice of the parties
       regarding payment to CK Design. However, the amount of the lien was
       supported by the invoices found at the offices of CK Design.

¶37    Contrary to what the Estate asserts, the District Court did not determine that CK

Design’s inaccurate reporting of outstanding debts was the reason CK Design was not

awarded $3.3 million. Rather, it found that while the invoices generally supported the

amount of the construction lien, other evidence undermined their credibility. This evidence

included the contract price originally agreed to in the AIA contracts, the parties’ course of

conduct regarding payment to CK Design, CK Design’s failure to finish the project, and the

amount CK Design warranted to owing subcontractors and suppliers in September 2007.

                                               15
¶38    The District Court was in the best position to judge the credibility of testimony and

proffered evidence, and as such, we will defer to its resolution of conflicting evidence. In re

Marriage of Haberkern, 2004 MT 29, ¶ 34, 319 Mont. 393, 85 P.3d 743. We will not

substitute our judgment for that of the District Court if there is evidence to sufficiently

support a factual finding, even where there is evidence in the record to support contrary

findings. Trad Indus., Ltd. v. Brogan, 246 Mont. 439, 447, 805 P.2d 54, 59-60 (1991). If

there is substantial credible evidence to support the lower court’s determination, that

determination will be upheld. Trad Indus., 246 Mont. at 447, 805 P.2d. at 59.

¶39    Upon a thorough review of the record, we determine there was substantial credible

evidence to support the District Court’s findings that a proper amount to award CK Design

for its work on units 3, 5, and 6 was 10% of the sale prices, and not the $3.3 million

supported by the invoices. The court was presented with conflicting evidence from which to

calculate the amount owed from Cherrad to CK Design—among them being the amount

provided in the AIA contracts, the amount reflected by the invoices, and the amounts paid

from prior sales of the units. Although the court looked at the AIA contracts to get an idea of

the expected contract price between Cherrad and CK Design, it determined that since many

of the contract provisions were ignored by the parties, they were not the best evidence of the

parties’ agreement. The court likewise determined the invoices were not the best evidence of

the parties’ obligations. Not only were the invoices for an amount much greater than what

the parties had originally agreed to, but they were also much greater than what CK Design

had warranted owing subcontractors and suppliers in the Agreement Regarding Outstanding
                                              16
Debts. In this agreement, CK Design warranted that all of the outstanding debts on the

project amounted to $180,731. In actuality, the total amount of outstanding subcontractor

and supplier debts against the project was $223,898. Because the amount in the invoices was

“astronomically higher” than the amount in the agreement, the court found the invoices were

difficult to credit. The court therefore determined the parties’ conduct was the best evidence

of their agreement.

¶40    The parties’ conduct did not involve Cherrad paying CK Design for each invoice it

received from every subcontractor CK Design owed money. Rather, the parties’ practice

was for Cherrad to pay CK Design $350,000 from the sale of each unit as it closed, and CK

Design was expected to pay all subcontractors from its share of the proceeds of the sale.

However, CK Design quickly fell behind schedule and did not timely, or ever, complete

construction on the units or the infrastructure. When unit 4 was sold—the second unit to

sell—CK Design was paid less from the proceeds because of its untimely work. This

demonstrates that the parties’ agreement regarding the amount Cherrad would pay CK

Design took into consideration whether the work was completed in a timely manner; delays

would result in reduced pay. The delays continued and affected the sales of units 3, 5, and 6,

which were all sold only partially completed and for a much lower price than units 1, 2, and

4. Since the amounts owed for materials for construction on units 3, 5, and 6 were already

paid upon the sale of unit 2, the amount owed to CK Design was for its labor. Given the

delays and the fact that CK Design never completed the condominium units and the

                                             17
infrastructure, the District Court’s finding that a proper amount to award CK Design for its

work on units 3, 5, and 6 was 10% of the sale prices was not clearly erroneous.

¶41    Finally, the Hale interests request attorney fees in the appellate litigation of the

construction lien issue pursuant to § 71-3-124(1), MCA. This statute provides:

       In an action to foreclose any of the liens provided for in Title 71, chapter 3,
       part 3, 4, 5, 6, 8, 10, or 16, the court shall allow as costs the money paid and
       attorney fees incurred for filing and recording the lien and reasonable attorney
       fees in the district and supreme courts. The costs and attorney fees must be
       allowed to each claimant whose lien is established, and the reasonable attorney
       fees must be allowed to the defendant against whose property a lien is claimed
       if the lien is not established.

The Estate’s lien was filed under Title 71, Chapter 3, Part 5, and therefore § 71-3-

124(1), MCA, is applicable. Accordingly, the Hale interests are entitled to reasonable

attorney fees incurred in both the District Court and this Court. The District Court

has issued an order entitling the Hale interests to its reasonable attorney fees incurred

in the District Court. Because the Hale interests were successful in defending against

the Estate’s lien, we remand for a determination of the Hale interests’ reasonable

attorney fees incurred in the appellate litigation of the construction lien issue.

                                       CONCLUSION

¶42    For the reasons stated above, we affirm the District Court’s judgment. We remand to

the District Court for a determination of the Hale interests’ reasonable attorney fees incurred

on appeal.

¶43    Affirmed.

                                              18
                           /S/ MICHAEL E WHEAT

We Concur:

/S/ MIKE McGRATH
/S/ PATRICIA COTTER
/S/ BETH BAKER
/S/ JIM RICE

                      19