KENNETH D COLLINS AGENCY v HAGERO
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No. 83-506 IN THE SUPREME COURT OF THE STATE OF XONTANA 1984 KENNETH D. COLLINS AGENCY, a Montana corp., Plaintiff and Respondent, LEON R. HAGEROTT, Architect, a professional corp., Defendant and Appellant. APPEAL PROM: District Court of the Thirteenth Judicial District, In and for the County of Yellowstone, The Bonorable William J. Speare, Judge presiding. COUNSEL OF RECORD: For Appellant: Lynaugh, Fitzgerald Billings, Montana & Hingle; Thomas Lynaugh argued, For Respondent : Ralph Herriott argued, Billings, Montana Filed: - Clerk - - Mr. Justice L.C. Court. This case Gulbrandson delivered the Opinion of the comes on appeal from an order of the District Court, Thirteenth Judicial District, Yellowstone County, granting the appellant, Leon Hagerott, $10,000 in architectural fees and holding Hagerott's lien on certain real estate invalid. The District Court also awarded the respondent, Kenneth D. Collins Agency, attorney's fees in the amount of $3,851.25. We affirm in part, vacate in pa.rt and remand. The appellant is a North Dakota professional corporation (hereinafter referred to as Hagerott) with Leon Hagerott being the principal officer and stockholder. Hagerott is an architect licensed in the State of Montana. Respondent is a Montana corporation (hereinafter referred to as Collins) with Kenneth Collins being the principal officer and stockholder. Collins is the owner of certain real property located in Custer County. During Hagerott contemplated Administration February, application (FHA) for authority 1978, Collins and to the Farmers Home to receive a loan to build twenty-four low-cost housing units. The cost of the units was to be subsidized by the FHA and the units were to be located on Collins' property in Custer County. On July 27, 1978, Collins and Hagerott entered into a contract which provided that Hagerott would draw plans and specifications and perform other architectural services for construction of the twenty-four units. Section 5 of the architectural contract provided that Hagerott, as architect, would receive five percent of the construction cost of the project. H a g e r o t t p r e p a r e d p l a n s and s p e c i f i c a t i o n s which w e r e a p p r o v e d b y C o l l i n s a n d t h e FHA. Costs of the project were prepared by Collins in c o n j u n c t i o n w i t h H a g e r o t t and t h e t o t a l c o s t of c o n s t r u c t i o n was d e t e r m i n e d t o b e a p p r o x i m a t e l y were set signed forth by in the Hagerott. basic The FHA $630,500. loan These c o s t s application approved the which Collins' was loan a p p l i c a t i o n i n t h e amount o f $ 5 7 0 , 0 0 0 . A f t e r f u r t h e r n e g o t i a t i o n s between t h e p a r t i e s and a n unsuccessful bid letting, n o f u r t h e r p r o g r e s s w a s made o n t h e p r o j e c t u n t i l March o f 1 9 8 0 a t w h i c h t i m e H a g e r o t t w i t h Collins' approval, April 3, 1 9 8 0 C o l l i n s p r e p a r e d a n d s u b m i t t e d a new c o s t o f the project procured a new b i d o n t h e p r o j e c t . On t o H a g e r o t t a n d t h e FHA t h a t r a i s e d t h e t o t a l c o s t o f t h e p r o j e c t t o $740,000. On May 2 3 , reiterating his 1980 H a g e r o t t w r o t e desire to letter with continue a the to project s t a t i n g h i s w i l l i n g n e s s t o keep t h e p r o j e c t going. late that same month Collins decided to Collins and However, terminate the p r o j e c t a n d c o n t a c t e d J o h n Ramage a n d Tom F i e l d s i n Miles City for the purpose a p p l i c a t i o n over of t o them. turning the project and loan 1980, Ramage and I n l a t e May, F i e l d s m e t w i t h H a g e r o t t a n d t o l d him t h e y were n o l o n g e r interested and his s e r v i c e s were terminated. Ramage and F i e l d s n e v e r took o v e r t h e p r o j e c t and abandoned t h e p l a n s i n t h e f a l l o f 1980. When Hagerott was notified terminated he f i l e d a lien against original project site. Eventually, his services t h e r e a l e s t a t e of were the t h e p r o j e c t was r e d u c e d i n s i z e and c o n s t r u c t e d on a d i f f e r e n t s i t e . Collins commenced this action to remove Hagerott's lien filed against Collins' real property at the original project site and for damages, attorney's fees and costs. Hagerott counterclaimed for the amount of architectural fees due under the contract or on the basis of quantum meruit. On April 1 , 1983, the District Court held that Hagerott was entitled to $10,000 on the basis of quantum meruit but concluded that the lien filed by Hagerott against the real property of Collins was invalid because Hagerott failed to show that he furnished enhancement of Collins' property. that, "[tlhe burden of proof materials for the The District Court stated is on a lien claimant to establish his lien and support his burden; he must show not only that he furnished the materials, but also that they were used for the enhancement of the property to which he claims a right to resort as security for the debt thus created. In the abscence of this showing, his equity does not arise.'' The District Court ordered Hagerott's lien expunged from the record and awarded Collins attorney's fees for time spent on litigating removal of the lien but awarded Hagerott $10,000 on the basis of quantum meriut. Hagerott appealed and a cross-appeal was filed by Collins. Hagerott raises three issues on appeal: (1) Did the District Court err in awarding Hagerott only $10,000 in architectural fees based upon quantum meruit? (2) Did the District Court err in holding Hagerott's lien agains Collins' real property invalid and expunging it from the record? (3) Did the District Court err in the amount of attorney's fees awarded to Collins? Initially, Hagerott asserts the District Court erred in awarding him meruit. only a $10,000 fee based upon quantum Collins contends the contract between the parties did not entitle Hagerott to any fee. The District Court correctly held that Hagerott was entitled to an architectural fee based upon quantum meruit. However, the amount of the architectural fee found by the District Court to be appropriate is not supported by the record. In its finding of fact the District Court stated at Finding number "[alt 38: the time his services were terminated, [Hagerott] had approximately 600 hours of time in the project. through The hourly charge for his time in 1978 1980 was $30 per hour. However, even though [Hagerott] spent this number of hours, he is only entitled to a lesser amount [$10,000] due services to the project." 1983), 670 P.2d to the value In Robertus v. 540, 40 St.Rep. Candee of his (Mont. 1391, this Court defined quantum meruit as the market value for the work done by the plaintiff. In this case, the quantum meruit amount would be the market value of the services rendered based upon the number of hours spent on the project. The evidence established the reasonable amount per hour and the number of hours expended. The evidence was incorporated into Finding number 38 by the District Court. show any lesser value. There was no evidence to In reviewing the District Court's order, this Court may not substitute its judgment for that of the District Court, but must determine substantial evidence findings. to support the if there was District Court's Bagnell v. Lemery (Mont. 1983), 657 P.2d 608, 40 St.Rep. 58. Substantial evidence is evidence which: ". . . will convince reasonable men and on which such men may not reasonably differ as to whether it establishes the Plaintiff's case and if all reasonable men must conclude that the evidence does not establish such case then it is not substantial evidence. The evidence may be inherently weak and still be deemed Westfork substantial." Olson v. Properties, Inc. (1976), 171 Mont. 154, 557 P.2d 821. The value of Hagerott's services could be measured only by the number of hours and the reasonable value of those hours as indicated by the evidence. The District Court's award of $10,000 in quantum meruit was not supported by substantial evidence. Since the District Court found $30 per hour for 600 hours to be appellant's fee and there was no evidence to the contrary, that portion of the District Court's order awarding Hagerott $10,000 is vacated, and the cause is remanded to the District Court for the purpose of entering judgment for Hagerott in the amount of $18,000. Next, Hagerott argues that the District Court erred in holding that the lien filed against the property of Collins was invalid. invalid The District Court stated that the lien was because the services Hagerott enhance the value of the property. provided did not The pertinent statute to this issue is Section 71-3-501 MCA, which provides: "Who may have lien. Every mechanic, miner, machinist, architect, foreman, engineer, builder, lumberman, artisan, workman, laborer, and any other person performing any work and labor upon, or furnishing any material, machinery, or fixture for, any building, structure, bridge, flume, canal, ditch, aqueduct, mining claim, coal mine, quartz lode, tunnel, city or town lot, farm, ranch, fence, railroad, telegraph, telephone, electric light, gas, or waterworks or plant or any improvements, upon complying with the provisions of this part, for his work or labor done or material, machinery, or fixtures has a lien upon the property upon which the work or labor is done or material is furnished." In arguing that the statute allowed Hagerott to file a valid lien, Hagerott relies on the language of this Court's decision in Caird Engineering Works v. Co. (1941), 111 Mont. Court said that when 471, 111 P.2d the Seven-up Gold Mine 267. legislature In Caird, this used the term "architect" in the lien statute it did not mean that the architect's actual labor must be done upon the premises and structure being erected for a lien to arise. Rather, this Court in Caird said the term "architect" as used in the lien statute means architectural services as they are usually performed. Caird, supra, 111 Mont.498. However, the situation in Caird is distinguishable from the facts in this case. In Caird, the architect provided services that contributed to structural improvement and, thus, enhancement of the property. In the present case, no enhancement occurred and therefore a lienable interest did not arise. Several other jurisdictions have also held that a lien does not arise absent some tangible improvement of the property. See, e.g., Construction Engineering Co. v. Village Shopping Center, Inc. (La.App. 1964), 168 So.2d 826; Clark v. Smith (Wisc. 1940), 290 N.W. 592. Hagerott argues the situation in the present case is analogous to the facts in O'Hara v. Architects Hartung and Association (Ind. 1974), 326 N.E.2d 283, in which the court agreed with the general proposition that there must be the erection of a building for an architect's lien to arise, but qualified the proposition by stating that "[i] t is not always necessary to show that the material went into the building. Circumstances in a given case may be such that the owner of the building is estopped from invoking the general rule. " Estoppel is a principle of equity. Cremer v. Cremer Rodeo Land and Livestock Co, (1979), 181 Mont, 87, 592 P.2d 485. Equity will grant relief sought when in view of all the circumstances to deny it would permit one of the parties to suffer a gross wrong at the hands of the other party who brought about the condition. Hostetter v. Inland Development Corp. of Montana (1977), 172 Mont. 167, 561 P.2d 1323. upon Estoppel is not favored and will only be sustained clear and convincing evidence. (1976), 171 Mont. 201, 557 P.2d there were 813. insufficient findings to Tribble v. Reely In the case at bar, create an estoppel situation based upon clear and convincing evidence. Finally, Hagerott argues the District Court erred in the amount of attorney's fees awarded Collins. The District Court ordered Hagerott to pay those attorney's fees that related to removal of the lien. We find from the agreed statement of proceedings stipulated to by both parties on September 15, 1983, and the time and expense sheet submitted by Collins' counsel, that the District Court awarded $3,851.25 in attorney's fees for the removal of the invalid lien under Section 71-3-124, MCA. No award of attorney's fees was made for trial time, post trial briefs or costs. The fixing of attorney's fees is largely within the discretion of the District Court and will not be disturbed absent a clear abuse of that discretion. (Mont. 1980), 613 P.2d Carkeek v. Aver 1013, 1015, 37 St.Rep. 1274, 1276. We find there was substantial evidence to support the award of attorney's fees. Affirmed in part, vacated in part, and remanded to the District Court for entry of amended judgment in accordance with this opinion. We concur: Chief Justice Justices / tr q . Chief dissenting: Justice Frank I. Haswell, concurring and I concur with the discussion and holding on Issues 2 and 3. I dissent from the discussion and holding on Issue 1. The vice in holding that the architect is entitled to an award of $18,000 for his services based on quantum meruit is that there is no evidence that this is the market value of his services. The figure of $18,000 is simply a mechanical calculation of the number of hours he spent multiplied by the rate he charged per hour. market value. This does not necessarily equal The District Court recognized this and awarded only $10,000 which itself is an arbitrary figure not supported by substantial credible evidence. I would vacate the $18,000 award and remand for further proceedings to establish the market value of the architect's services. 7Chief~J, 4 a.&t..ubtq Justice Mr. Justice Frank l. Morrison, Jr., dissents and will file a 3 written dissent later.
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