Court Opinion

ID: 5156831
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:23:36.165834+00
Date Added: 2024-06-11T08:25:24.083552
License: Public Domain

DAVIS, Presiding Judge
(dissenting):
126 I do not agree that the statutory scheme at issue here necessarily prohibits subordination agreements between construction financing providers and contractors. Further, even were I to completely agree with the majority opinion's statutory analysis, I think Owners are entitled to restitution under the facts of this case.
127 First, I do not agree that the plain language of Utah Code section 38-1-29 nee-essarily leads to the interpretation set forth in the majority opinion. The statute states, "The applicability of the provisions of this chapter, including the waiver of rights or privileges granted under this chapter, may not be varied by agreement." Utah Code Ann. § 838-1-29 (2010). Thus, the statute provides that "the waiver of rights or privileges granted under [the Mechanics' Liens Act]" is itself one of the provisions of the Act that may not be made inapplicable by agreement. That is, the language states not that the applicability of rights granted under the Act cannot be altered, but that the applicability of the waiver of those rights cannot be altered, thus indicating that at least some sort of waiver was allowed under the Act at the time this statute was created in 2001. In sum, although I understand the majority opinion's logic in reading the statute in a way that prohibits the waiver of any rights granted under the Act, I think the plain language of the statute also indicates that there are at least some waivers of those rights that are provided for within the Act. Due to such inconsistent interpretations, the language of the statute is, at best, unclear.1
*546{28 Second, I do not agree that the later addition of section 38-1-89 in 2006 was the legislature's attempt to create a "safety valve" on the total prohibition against any form of lien waiver. From the comments made during legislative debates when this provision was being considered, it is clear that the legislators understood the provision was not starting to allow some previously forbidden lien waivers, but was instead just an attempt to standardize certain types of waivers. See Recording of Utah Senate Debates, 2006 Leg., Gen. Sess. (Jan. 16, 2006) (statement of Sen. Hatch), available at http:// le.utah.gov/asp/audio/index.asp?Sess=2006 GS&Day=0&Bill=8B0161801&House=S ("As a person that deals with these lien waivers all the time in my business, I commend Senator Jenkins as bringing some standardization to it ... because ... we see every form from written on the back of a napkin to a fifty-page legal document, and I think this makes a lot of sense and I would urge your support of the bill."); Recording of Utah Senate Debates, 2006 Leg., Gen. Sess. (Jan. 17, 2006) (statement of Sen. Jenkins), available at http://le.utah.gov/asp/audio/ index.asp?Sess=2006GS&Day=0&Bill=SB 0161S01&House=S ("Senate Bill 161 is the bill that we talked about yesterday afternoon late in regards to lien waivers and the fact that we are redoing lien waivers and the way they're done. It makes a couple of standard forms and also addresses restrictive endorsements on the backs of the checks."). Because the legislature had standardization in mind when enacting this statute, I do not agree with the majority opinion that reading section 38-1-29 as allowing subordination agreements would by any means render seetion 38-1-89 superfluous.
29 Third, section 38-1-89 applies to only those lien waivers that are made after a lien claimant has received full payment for the amount of the claim that he is waiving. See Utah Code Anu. § 38-1-89(2) (2010). Therefore this section does not address the situation here, where a construction financing provider is seeking lien priority as a condition to financing a construction project. Thus, the section does not resolve Owners' concerns regarding the chilling effect our decision will likely have on the ability to obtain construction financing-a very serious concern in my estimation.
30 Fourth, even if the majority opinion's interpretation of the Mechanics' Liens Act is correct and the subordination agreement is unenforceable, Owners should be entitled to restitution under the cireumstances here, where their predecessor in interest made the construction loan only after securing the promises made by Maestro in the subordination agreement.
A party has a claim in restitution for performance that he has rendered under or in return for a promise that is unenforceable on grounds of public policy if (a) he was exceusably ignorant of the facts or of legislation of a minor character, in the absence of which the promise would be enforceable....
Restatement (Second) of Contracts § 198 (1981); see also id. § 199 ("A party has a claim in restitution for performance that he has rendered under or in return for a promise that is unenforceable on grounds of public policy if he did not engage in serious misconduct and ... allowance of the claim would put an end to a continuing situation that is contrary to the public interest."). See generally id. § 178(1) ("A promise or other term of an agreement is unenforceable on grounds of public policy if legislation provides that it is unenforceable. ..."). The funding for the project, and the resulting job for Maestro, would not have existed but for Maestro's signing of the subordination agreement. I think it patently unjust for Maestro to be allowed to ultimately secure a benefit via signing the subordination agreement yet at the same time be allowed to exeuse the performance it promised by arguing that the agreement was contrary to statutory provisions.

. "When faced with a question of statutory construction, we look first to the plain language of the statute. If the statute is unclear, we then resort to legislative history and purpose for guidance." Strawberry Elec. Serv. Dist. v. Spanish Fork City, 918 P.2d 870, 875 (Utah 1996) (citations omitted); see also Brent Brown Dealerships v. Tax Comm'n, Motor Vehicle Enforcement Div., 2006 UT App 261, ¶ 36, 139 P.3d 296 ("Ambiguity in a statute allows us to look beyond a statute's plain language and take into account legislative history and public policy considerations...."). See generally Li v. Zhang, 2005 UT App 246, ¶ 8, 120 P.3d 30 ("[The] existence of two reasonable, yet conflicting, interpretations of [a] statute ren*546ders it ambiguous."), aff'd sub nom. Li v. Enterprise Rent-A-Car Co., 2006 UT 80, 150 P.3d 471.