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HomeStar Property Solutions, LLC v. Safeguard Properties, LLC

United States District Court, D. Minnesota

February 6, 2019

HomeStar Property Solutions, LLC, Plaintiff,
v.
Safeguard Properties, LLC, and Bank of America, N.A., Defendants, and Safeguard Properties, LLC, Counterclaim Plaintiff,
v.
HomeStar Property Solutions, LLC, Counterclaim Defendant.

          Andrew D. Parker, Anthony G. Edwards, Christopher M. Daniels, and Russell M. Spence, Jr., Parker Daniels Kibort LLC, and Todd C. Pearson, for Plaintiff and Counterclaim Defendant.

          Joseph J. Santoro and Markus E. Apelis, Gallagher Sharp, and Brian A. Wood, Lind Jensen Sullivan & Peterson, PA, for Defendants and Counterclaim Plaintiff.

          MEMORANDUM OPINION AND ORDER

          SUSAN RICHARD NELSON, UNITED STATES DISTRICT JUDGE

         This is a complicated commercial litigation matter between two businesses that “preserve properties” on behalf of banks while those properties are in foreclosure: Plaintiff Homestar Property Solutions LLC (hereinafter “Homestar”) and Defendant Safeguard Properties LLC (hereinafter “Safeguard”). Homestar, which served as an independent contractor for Safeguard for approximately two years, accuses Safeguard of failing to pay it (and/or underpaying it) for services it provided, thereby causing it to fall behind on its bills and, eventually, go out of business. Safeguard adamantly rejects this narrative, and, in turn, accuses Homestar of failing to abide by the companies' contract regarding mechanics' liens, which it alleges caused it to incur damages.

         After years of on-and-off again discovery, punctuated by a final settlement and judgment that was later vacated (see generally Doc Nos. 127-54), Safeguard moved for summary judgment on the following claims: (1) Homestar's breach of contract claim; (2) Homestar's unjust enrichment claim; (3) Homestar's promissory estoppel claim; (4) Homestar's account stated claim; and (5) Safeguard's breach of contract counterclaim against Homestar. (See Safeguard's Br. in Support of Summ. J. [Doc. No. 163] (“Safeguard Primary Br.”); Safeguard's Br. in Support of Summ. J. on its Counterclaim [Doc. No. 168] (“Safeguard Counterclaim Br.”).) In addition, Bank of America, also represented by Safeguard's counsel, per an indemnification agreement between the two companies, moved for summary judgment on (6) Homestar's solo unjust enrichment claim against it. (See Bank of America's Summ. J. Br. [Doc. No. 173] (“BANA Br.”); see id. at n.7 (noting this indemnification agreement).) Homestar opposed all of these motions. (See Homestar's Br. in Opp. to Summ. J. [Doc. No. 189] (“Homestar Primary Opp. Br.”); Homestar's Br. in Opp. to Counterclaim Summ. J. [Doc. No. 207] (“Homestar Counterclaim Opp. Br.”); Homestar's Br. in Opp. to Bank of America Summ. J. [Doc. No. 209] (“Homestar BANA Opp. Br.”).)[1]

         On September 20, 2018, following an extensive oral argument on Safeguard's primary summary judgment motion (i.e., counts 1-4 listed above), the Court denied summary judgment from the bench. (See Sept. 20, 2018 Minute Entry [Doc. No. 223].) The Court then took Safeguard's counterclaim summary judgment motion and Bank of America's unjust enrichment summary judgment motion under advisement (i.e., counts 5-6 listed above), to be decided on the papers. (Id.)[2]

         In an effort to streamline this case as the parties prepare for trial, the Court will now render its decision on the latter two motions; a written decision further explaining the Court's denial of Safeguard's primary summary judgment motion will be issued in due course. As detailed below, the Court grants in part Safeguard's motion seeking summary judgment on its counterclaim, and grants in whole Bank of America's motion seeking summary judgment on Homestar's unjust enrichment claim. The Court will discuss each motion in turn.

         I. Safeguard's Breach of Contract Counterclaim Against Homestar

         A. Background

         As the primary summary judgment briefing demonstrates, the parties dispute arguably hundreds of discrete billing records and fees. The Court need not recount that history in deciding this motion, though, because Safeguard's breach of contract counterclaim centers around a much narrower issue: Homestar's contractual responsibilities with respect to mechanics' liens.

         In short, Safeguard began contracting with Homestar in 2012; Homestar provided, “on an as-needed basis, repair and construction services for residential properties in repair as part of the property preservation process associated with foreclosed properties.” (Safeguard Counterclaim Br. at 3.) Homestar, in turn, often contracted out its work to subcontractors. (See Safeguard Ex. B [Doc. No. 169-3] at 21 (“Breese Dep.”).) As Safeguard's independent contractor, Homestar agreed to abide by various contractual provisions, with respect to both its own conduct and its sub-contractors' conduct. (See Safeguard Ex. C [Doc. No. 169-4] (“Vendor Acknowledgement Forms”); Breese Dep. at 147-49 (agreeing that he signed these contracts on behalf of Homestar after reading them beforehand).)

         Two contractual provisions are of note here. First, Homestar agreed to waive its right “to claim any liens, including mechanic's liens, against any property (or improvements thereon), ” upon which it worked, and also agreed to “obtain a Lien Waiver from all of [its] subcontractors who [it] hire[d] to perform work for Safeguard on [its] behalf.” (Id. (the “Lien Waiver Provision”).) Second, Homestar agreed to indemnify Safeguard against “all claims, liabilities, costs and expenses, including, without limitation, litigation costs, attorney's fees, settlement costs, judgments, taxes, interest, penalties or fines, resulting from and including, ” it or its subcontractors' “placing a lien on any property for which they performed work on behalf [of] Safeguard.” (Id. (the “Lien Indemnification Provision”).)

         Despite these provisions, in mid-2014, Homestar filed mechanics' liens on 49[3]different properties, spread across 15 states: Alabama, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, and Texas. (See Safeguard Ex. D [Doc. No. 169-5] (“Homestar Liens”) (attaching copies of all 49 liens); Breese Dep. at 150-51 (admitting that Homestar filed these liens, in knowing violation of the contract).) Homestar did this because it believed that Safeguard had “failed to timely pay” it with respect to work Homestar performed on those properties. (See Michael Breese Aff. in Opp. to Safeguard Counterclaim [Doc. No. 206] ¶ 4 (“Breese Aff.”).) Homestar later withdrew these liens after Safeguard filed the at-issue counterclaim, in an effort “to be cooperative.” (Breese Dep. at 150.)

         Importantly, however, Homestar was not the only entity to file, or threaten to file, mechanics' liens on properties connected to Safeguard's work. 16 of Homestar's subcontractors also filed, or threatened to file, mechanics' liens on properties in eight different states: Alabama, Florida, Georgia, Maryland, Minnesota, New Hampshire, Ohio, and Wisconsin. (See Meyer Aff. in Support of Safeguard Counterclaim [Doc. No. 169-1] ¶¶ 8-11 (“Meyer Aff.”).) The subcontractors did this because Homestar was not paying them. (Id. ¶ 8.) Although Safeguard's records showed that it had fully paid Homestar for the work associated with the subcontractors' complaints, Safeguard nonetheless paid the 16 subcontractors $203, 401.73, over 22 payments, “to avoid significant disputes with Safeguard's own clients as a result of improperly placed mechanics' liens.” (Id. ¶ 9; see also Safeguard Ex. 1 [Doc. No. 169-2] (“Subcontractor Payments”) (showing copies of each check that Safeguard paid).) Homestar disputes that Safeguard “paid Homestar in full for the work which [was] the subject of the mechanics' liens filed ...


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