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Big Lake Lumber, Inc. v. Security Property Investments, Inc.

Supreme Court of Minnesota

August 28, 2013

Big Lake Lumber, Inc., Appellant,
v.
Security Property Investments, Inc., et al., Defendants, 21st Century Bank, Respondent, Wright Lumber & Millwork, Inc., Respondent, Pearson Plumbing Corp., Respondent, J. DesMarais Construction, Inc., Appellant.

Court of Appeals Office of Appellate Courts.

Karl E. Robinson, Hellmuth & Johnson, PLLC, Edina, Minnesota, for appellant Big Lake Lumber, Inc.

Steven R. Little, Steven F. Buterin, Heley, Duncan & Melander, PLLP, Minneapolis, Minnesota, for respondent 21st Century Bank.

Gerald W. Von Korff, Rinke Noonan, St. Cloud, Minnesota, for appellant J. DesMarais Construction, Inc.

Bradley N. Beisel, David J. Krco, Beisel & Dunlevy, P.A., Minneapolis, Minnesota, for amicus curiae Minnesota Land Title Association.

SYLLABUS

1. Under Minn. Stat. § 514.05, subd. 1 (2012), a mechanic's lien for labor or materials provided after a mortgage is recorded relates back to the actual and visible beginning of the improvement on the ground.

2. The court of appeals' integrated analysis is rejected because it is inconsistent with Minn. Stat. § 514.05.

3. Whether a mechanic's lien relates back to the actual and visible beginning of the improvement on the ground is a question of fact that appellate courts review for clear error.

4. The district court did not clearly err when it found that appellants' liens relate back to the actual and visible beginning of the improvement on the ground, and therefore have priority over respondent's mortgage.

OPINION

ANDERSON, Justice.

The question presented in this case is whether the court of appeals erred when it reversed the district court's lien priority decision by applying a new "integrated analysis" to find that the mortgage of respondent 21st Century Bank (the Bank) was superior to the mechanic's liens of appellants Big Lake Lumber, Inc. and J. DesMarais Construction, Inc. Following a bench trial, the district court found that Big Lake Lumber and DesMarais Construction contributed to the same improvement project as Wruck Excavating. Accordingly, the district court concluded that the mechanic's liens of Big Lake Lumber and DesMarais Construction related back to the date Wruck commenced work on the improvement project, and therefore had priority over the mortgage of the Bank. The court of appeals reversed. Because we conclude that the court of appeals erred by adopting and then applying a new "integrated analysis" to find the Bank's mortgage superior to the liens, and that the district court did not clearly err when it found that the liens of Big Lake Lumber and DesMarais Construction related back to the actual and visible beginning of the improvement by Wruck, we reverse.

In 2005, Mark Hilde, through a company owned by him, purchased a vacant lot in Zimmerman.[1] The property was heavily wooded and not improved or ready for residential construction. Shortly after the purchase, Hilde began to prepare the property for the building of a "spec home."[2] More specifically, Hilde had a survey performed and soil samples taken to determine whether the property was suitable for the construction of a home. In addition, Big Lake Lumber prepared a blueprint of the home that Hilde wanted to build on the property. Hilde also hired Wruck to haul dirt to the property, cut down trees and underbrush, clear a rough driving path and building pad, haul trees and stumps away, and design a septic system for the home.

In early 2006 Hilde contacted a real estate agent to help him sell the property with the spec home constructed on it. Through one of its associates, respondent Security Property Investments agreed to purchase the property with the spec home. In July 2006 Hilde sent out requests for proposals to contractors regarding the work necessary to construct the home. He also had the property staked to facilitate installation of silt fencing and to mark the final location of the home site. Around the same time, Hilde purchased and personally installed about 100 feet of silt fencing on the property. ...


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