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Northdale Construction Co., Inc. v. Veritas Development Inc.

Court of Appeals of Minnesota

July 29, 2013

Northdale Construction Co., Inc., Respondent,
v.
Veritas Development, Inc., et al., Defendants, NTC Homes, Inc., Appellant.

UNPUBLISHED OPINION

Wright County District Court File No. 86CV0810006

David J. Lenhardt, Frederick M. Young, Gries & Lenhardt, P.L.L.P., St. Michael, Minnesota (for respondent)

Bradley N. Beisel, Beisel & Dunlevy, P.A., Minneapolis, Minnesota (for defendants)

Katherine M. Melander, Brian W.Varland, Heley, Duncan & Melander, P.L.L.P., Minneapolis, Minnesota (for appellant)

Considered and decided by Hudson, Presiding Judge; Stauber, Judge; and Willis, Judge.[*]

STAUBER, Judge

Appellant NTC Homes, Inc. (NTC) appeals the district court's entry of default judgment against appellant and foreclosure of respondent Northdale Construction Co., Inc.'s mechanic's lien. Appellant contends that the district court erred as a matter of law by failing to apportion respondent's blanket mechanic's lien against the 17 affected lots on a pro-rata, per-lot basis as required by Premier Bank v. Becker Development, LLC., 785 N.W.2d 753 (Minn. 2010), and thus improperly calculated appellant's share of the amount owed. We reverse and remand.

FACTS

In 2008, respondent Northdale Construction Co., Inc. (Northdale) served and filed a complaint to foreclose its blanket mechanic's lien against the 17 lots that made up a development in Wright County. The complaint alleged that respondent contracted with defendant Veritas Development, Inc. (Veritas) to provide improvements to the 17 lots in a project being developed by Veritas, including sanitary sewer, water main, storm sewer, curb and gutter, and bituminous street. The work constituting the improvements was done between 2005 and late 2007. Appellant NTC owns two of the improved lots, and defendant Copperhead Development, Inc. owns the other 15 lots.

The cost of the improvement was $193, 789.74, of which Copperhead paid respondent $166, 495.59. Appellant NTC did not pay any of the remainder. Respondent Northdale then timely filed a blanket mechanic's lien statement in the office of the Wright County Recorder on February 25, 2008, as Document No. 1080394, reciting an unpaid lien balance of $27, 294.15.[1] Respondent later filed its lien-foreclosure complaint, alleging that it was still owed $27, 294.15 for the improvement work, plus interest, costs, and disbursements, including attorney fees.

Appellant did not file an answer to the complaint until March 2012, more than three years after the filing of the complaint and did not appear at the pretrial hearing in February 2012, but did participate in pretrial settlement negotiations and in one phone conference with the court. At the telephone conference before the district court, the parties discussed the Minnesota Supreme Court's recent decision in Premier Bank and its implications for calculating their proportionate shares. See Premier Bank, 785 N.W.2d at 755-56 (directing blanket liens to be enforced on a pro-rata, per-lot basis).

Respondent Northdale subsequently moved for default judgment and to foreclose the mechanic's lien. The district court awarded default judgment against appellant. The district court found that respondent was originally owed $193, 789.74 for improvements to the 17 lots, and that after respondent completed its work, but before it filed the mechanic's-lien statement, Copperhead paid respondent $166, 495.59. After receiving Copperhead's payment, respondent filed a blanket mechanic's-lien statement against all 17 lots for the remaining balance of $27, 294.15. The district court apparently applied an equitable theory and credited Copperhead for its significant earlier payment, finding that appellant's proportionate share of the mechanic's-lien claim was $22, 789.80, which is two-seventeenths of $193, 789.74, and determining ...


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