WILDER, P.J.
Defendant Flagstar Bank, FSB, appeals by leave granted an August 27, 2011, judgment that established that the construction lien of C.D. Barnes Associates, Inc., was valid for its full amount and had priority over Flagstar's mortgage interest. We affirm the construction lien judgment in favor of Barnes, affirm in part and reverse in part the award of attorney fees to Barnes, and remand this case.
This action arises out of a failed construction project undertaken by defendant Star Heaven, L.L.C., for which Flagstar provided mortgage financing and Barnes served as the general contractor.
The pertinent facts are largely undisputed. In February 2005, Star Heaven purchased a partially completed apartment project in Grand Haven. At the time of acquisition, the property consisted of 19 buildings, each containing, or planned to contain, 10 apartment units of varying sizes, along with a pool and a clubhouse, all in different stages of completion.
After Star Heaven acquired the site, it began to market the project as a "high-end condominium project" and eventually changed the name to "Grand Haven Club." In July 2005, Star Heaven hired Barnes to finish construction of the 19 buildings on the site and perform upgrades to some of the existing units and structures consistent with the new vision for the project. Barnes submitted a fixed-price contract to Star Heaven for the work to be performed, but because of uncertainty about the configuration of the units to be constructed as the project progressed, Barnes and Star Heaven instead entered into a time and materials agreement under which Barnes was to submit monthly invoices with supporting documentation to Star Heaven for work performed at the site and Star Heaven was to pay each application for payment within 30 days of its receipt.
Barnes performed its first physical improvement to the property for Star Heaven
On May 2, 2006, at Star Heaven's request, Barnes executed a sworn statement that represented that, as of that date, the subject property was "free from claims of construction liens." On May 16, 2006, Star Heaven recorded the master deed for the new condominium project. Shortly thereafter, Flagstar's loans to Star Heaven closed. Flagstar recorded its mortgage on May 23, 2006.
In May and October 2007, Star Heaven filed amended master deeds for the project, which changed the name of the condominium to "Grand Haven Club," amended the total acreage included in the property, redesignated the property into Units 1 to 40 and added Units 41 to 60 to the project.
During the course of the project, Barnes submitted 27 applications for payment to Star Heaven, which totaled approximately $3.11 million. Star Heaven paid the first 20 invoices, leaving 7 invoices totaling $360,909.11 unpaid. Before ceasing work for nonpayment, Barnes completely enclosed all 19 buildings, with two of the buildings achieving "occupancy" status, and another 11 or 12 of the buildings being completed to "white box[]" condition, such that each unit in each building was complete with all mechanical, electrical, and plumbing and was "roughed-in" with drywall. Star Heaven never expressed any concerns with the work that was performed at the site; the explanation for late or slow payments was always an inability to pay.
Barnes last provided labor and materials to the site on March 5, 2008. On May 8, 2008, Barnes recorded nine separate claims of lien, in the amount of $360,909.11. Six of these claims of lien referred to particular individual unit numbers within the project. The three remaining claims were filed against the overall project. Each of the three liens filed against the project referred to the last day on which Barnes provided any work to the "overall project," and each used a metes and bounds description encompassing the entire property set forth in the 2005 notice of commencement; they did not refer to the dates on which labor or materials were provided to any individual condominium unit within the project.
On December 31, 2008, Star Heaven assigned all of its interests in the property to David Findling, for the purpose of liquidating the assets and distributing the proceeds to creditors according to applicable statutes.
On May 8, 2009, Barnes filed the instant complaint, seeking to foreclose on its claims of lien under the Construction Lien Act and alleging claims of breach of contract and unjust enrichment against Star Heaven and Findling. Flagstar contested the priority of Barnes's construction lien over its mortgage.
On December 24, 2009, a default was entered against Star Heaven. Thereafter, on December 28, 2009, Barnes moved for partial summary disposition on the issue of the priority of its lien over the Flagstar mortgage. Barnes argued that because there was no issue of material fact that Barnes's first day of actual physical improvement to the property predated the recording of Flagstar's mortgage, its liens had priority over the Flagstar mortgage. Barnes also asserted in support of its motion that, in response to discovery requests, Flagstar disclosed no facts and produced no documents contesting the priority of the construction lien.
Flagstar argued that summary disposition was premature because discovery was not set to close until April 23, 2010, and additional discovery stood a fair chance of
On January 18, 2010, the trial court held a hearing on Barnes's motion for summary disposition, during which the parties reiterated the positions set forth in their briefs. Barnes asserted the priority of its lien on the basis of the facts before the trial court, and it argued that under the circumstances, and considering the length of time it took to get all parties properly served, Flagstar had more than sufficient time to conduct discovery. Flagstar acknowledged that the evidence submitted suggested that Barnes's construction lien could have priority, but it also asserted that this view was the result of an incomplete picture because "it is reasonable to believe that additional documentation exists that supports Flagstar's position that a subordination agreement may have been executed at the time of the closing of this loan." Counsel for Flagstar admitted that he had not been able to "track ... down" the loan officer who closed the loan or locate what he believed to be the complete documentation relating to the closing of the loan. Counsel explained that there were "two factors that suggest that [a subordination] agreement may exist":
Flagstar asked the court to deny Barnes's motion and allow it until the end of discovery (which was approximately three months away) "to just get to the bottom of what happened" to see if there was a subordination agreement or, alternatively, take the motion under advisement and afford it some defined period, such as six to eight weeks, to continue its efforts to unearth evidence of such an agreement.
At the close of the hearing, the trial court ruled from the bench as follows:
The trial court entered an order effectuating this ruling on February 9, 2010.
While the instant action was pending, a separate action was also pending in the Ottawa Circuit Court before a different trial judge, Judge Edward Post. This other action was brought by Findling to liquidate the property for the benefit of Star Heaven's creditors. As the parties explained to the trial court in the instant action, the sale of the property was proceeding as part of that separate action and that sale was expected to close in March 2009. The parties and the trial court agreed, therefore, that the instant action was solely for the purpose of determining the priority and amount of valid liens to be asserted against the proceeds of that sale.
Flagstar later moved to modify, amend, or vacate the order granting Barnes's motion for summary disposition. Flagstar filed its motion under MCR 2.612 (as a motion for relief from judgment), under MCR 2.613 (as a request to "correct" the court's prior order), and under MCR 2.116(0(10) and (I)(2) (as a motion for summary disposition of Barnes's claims). Flagstar asserted that the May 2, 2006, sworn statement, in which Barnes represented that the property was free of construction liens as of that date, barred Barnes from asserting that its lien had priority over Flagstar's mortgage. Flagstar also claimed that the sworn statement was defective because, rather than state that the property was free from "the possibility of construction liens" as required by MCL 570.1110(4) of the Construction Lien Act, the sworn statement provided only that the property was "free from construction liens." Flagstar further asserted that Barnes's claims of lien were invalid because they referred to the metes and bounds description for the entire property and not to the individual condominium units to which materials or labor or both were supplied. Last, Flagstar maintained that the liens on the entire property were invalid because Barnes had provided work and materials only to one particular condominium unit within 90 days of recording its claims of lien.
Barnes opposed Flagstar's motion, asserting that Flagstar's motion was "essentially a motion for reconsideration" and that it did not present any new evidence for, or any legal basis requiring, reversal of the trial court's prior decision. Barnes argued that its May 2, 2006, sworn statement did not alter the priority of its lien over the mortgage because the sworn statement was not a lien waiver and did not extinguish lien rights under the Construction Lien Act. Barnes averred that if Flagstar had wanted a lien waiver, it could have requested one pursuant to the Construction Lien Act. Additionally, Barnes asserted that it was permitted to use the metes and bounds legal description set forth in the notice of commencement in its claims of lien, and it denied that Barnes's lien was rendered invalid because it did not refer to individual condominiums units within the project. Finally, Barnes argued that its claims of lien were timely filed because they were filed well within 90 days of the last furnishing of labor and materials for improvements to the project as contracted for by Star Heaven.
While Flagstar's motion was pending, Barnes moved for entry of a foreclosure judgment, asking the trial court to enter a judgment in its favor against the property
After conducting a hearing on June 11, 2010, the trial court issued an opinion and order granting in part and denying in part Barnes's motion for entry of judgment and denying Flagstar's motion to modify, amend, or vacate its prior order granting partial summary disposition with respect to priority. The trial court noted that the sworn statement did not constitute newly discovered evidence as required by MCR 2.612(C)(1)(b), making Flagstar's reliance on this court rule misplaced. Additionally, the trial court held that MCR 2.613 likewise was inapplicable "because Flagstar did not provide the sworn statement as evidence or present the arguments that it now submits in its first brief in opposition to [Barnes's] motion for partial summary disposition." As a result, the trial court concluded that Flagstar's motion was in essence a motion for reconsideration under MCR 2.119(F). In this context, the trial court proceeded to consider and reject each of Flagstar's challenges to the validity of Barnes's lien.
First, regarding the effect of the May 2, 2006, sworn statement, the trial court reasoned that a sworn statement is not a waiver of construction liens and that
The trial court also determined that the sworn statement substantially complied with the Construction Lien Act, despite the fact that it failed to exactly follow the statutory language that "the property is free from ... the possibility of construction liens." MCL 570.1110(4).
Next, the trial court rejected the assertion that Barnes's lien was invalid because it referred to the metes and bounds description of the property rather than the unit descriptions as allegedly required by the Condominium Act, MCL 559.101 et seq. The trial court reasoned that MCL 570.1107 and MCL 570.1108 of the Construction Lien Act allowed for the use of the metes and bounds description and that the Condominium Act did not alter this.
The trial court likewise rejected Flagstar's assertion that Barnes's lien was not timely filed or that Barnes was required to file individual liens for each condominium unit to which work was furnished:
Having concluded that the full amount of Barnes's lien was valid, that the lien had priority over Flagstar's mortgage, and that the lien attached to Star Heaven's interest in the property (as then held by Findling as assignee), the trial court nevertheless determined that, because of the action pending before Judge Post, it lacked the authority to grant a judgment of foreclosure. Therefore, the trial court denied Barnes's motion for entry of a judgment of foreclosure.
Following entry of the trial court's order, Barnes moved for attorney fees under § 118(2) of the Construction Lien Act, MCL 570.1118(2), and sanctions under MCR 2.114 and MCR 2.625. Barnes stated that it had incurred attorney fees through July 29, 2010, in an amount exceeding $56,000. Additionally, Barnes observed that Flagstar had failed to disclose during discovery that it discharged its mortgage on March 23, 2010, depriving it of any interest in the property thereafter and that it had continued to argue that its now-discharged mortgage had priority over Barnes's lien. Barnes asserted that this position was frivolous and devoid of legal merit, thereby entitling it to sanctions.
Flagstar opposed Barnes's request for attorney fees and sanctions on the basis that an award of attorney fees was discretionary, and not mandatory, under the Construction Lien Act and that it "had a right to defend this $360,000.00 lien claim recorded two years after the closing of the Flagstar mortgage. It had a right to receive and review [Barnes's] `proof of work done, the amounts claimed, and take [Barnes's] deposition." Flagstar also noted the novelty of the issues, which it described as "on the cutting edge of construction lien law right now." Because its defense of the action was justified, Flagstar urged the court to decline to award Barnes attorney fees. Flagstar further requested that if the trial court determined that an award of fees was appropriate, it require Barnes to produce itemized billings of the work performed in order to permit the court to properly evaluate the reasonableness of the fees claimed.
With regard to the request for sanctions, Flagstar explained that it was required to discharge its mortgage so that the property could be sold in the case brought by Findling and that its right to its appropriate share of the sale proceeds because of its mortgage was preserved by Judge Post in that action. Further, Flagstar asserted that Barnes never requested information through discovery that would have included the only very recent discharge of the mortgage.
After conducting a hearing on Barnes's motion for fees and sanctions, the trial court directed Barnes to provide more detailed invoices related to its requested attorney fees and costs. Barnes did so, Flagstar timely filed objections, and Barnes responded to those objections. On August 26, 2010, the trial court issued its opinion granting Barnes $32,460 in attorney fees but denying sanctions. The trial court found that Flagstar had unreasonably disputed the priority of Barnes's lien after Flagstar failed to find a subordination agreement by the February 18, 2010, deadline imposed by the court. The trial court also concluded that Flagstar's subsequent motion to modify, amend, or vacate the court's order granting Barnes's motion for summary disposition "raised no issue that could not have been raised in the original response in opposition to summary disposition." Therefore, the trial court awarded Barnes reasonable attorney fees incurred after February 18, 2010, totaling $32,460. However, the trial court rejected
On August 27, 2010, the trial court entered judgment in favor of Barnes, declaring that Barnes's construction lien had priority over Star Heaven's mortgage to Flagstar and that it was "valid for the full amount claimed of $360,909.11 and attorney fees in the amount of $32,460." Thereafter, proceedings were stayed pending resolution of this appeal to this Court.
As a threshold matter, we note that Barnes argues that the instant appeal is moot because Flagstar discharged its mortgage during the pendency of these proceedings. Barnes correctly observes that an issue becomes moot when an event occurs that renders it impossible for the reviewing court to grant relief. Tenneco Inc. v. Amerisure Mut. Ins. Co., 281 Mich.App. 429, 472, 761 N.W.2d 846 (2008). However, contrary to Barnes's assertions, because of the circumstances presented here, Flagstar's claim to the proceeds of the sale was not rendered moot by the discharge of its mortgage as a part of the judicially approved sale of the property in the action brought by Findling before Judge Post. As Barnes indicates, under Judge Post's supervision, Findling sold the property for $4.5 million. As a condition of that sale, Flagstar executed a discharge of its mortgage so that Findling could convey clear title to the purchaser, and $375,000 from the sale was placed in escrow pending resolution of the priority dispute presented in the instant action. Whether Barnes or Flagstar is entitled to receipt of those funds is solely dependent on whether Barnes's construction lien has priority or whether Flagstar's mortgage has priority. Accordingly, under the circumstances here presented, Flagstar's discharge of its mortgage did not render the instant appeal moot or otherwise deprive Flagstar of standing to challenge the trial court's orders.
This Court reviews a trial court's decision on a motion for summary disposition under MCR 2.116(G)(10) de novo. Dressel v. Ameribank, 468 Mich. 557, 561, 664 N.W.2d 151 (2003). When reviewing a decision on a motion brought under MCR 2.116(C)(10), which tests the factual sufficiency of the complaint, this Court must consider all the substantively admissible evidence submitted by the parties in the light most favorable to the nonmoving party. MCR 2.116(G)(6); Maiden v. Rozwood, 461 Mich. 109, 120, 597 N.W.2d 817 (1999). A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue on which reasonable minds could differ. Allison v. AEW Capital Mgt, LLP, 481 Mich. 419, 425, 751 N.W.2d 8 (2008).
This Court also reviews issues of statutory interpretation de novo. Saffian v. Simmovis, 477 Mich. 8, 12, 727 N.W.2d 132 (2007). The primary goal of judicial interpretation of statutes is to discern the intent of the Legislature by examining the plain language of the statute. Driver v. Naini 490 Mich. 239, 246-247, 802 N.W.2d 311 (2011). The starting point in every case involving construction of a statute is the language itself. House Speaker v. State Admin Bd., 441 Mich. 547, 567, 495 N.W.2d 539 (1993). "Each word of a statute is presumed to be used for a purpose, and, as far as possible, effect must be given to every clause and sentence." Robinson v. Detroit, 462 Mich. 439, 459, 613 N.W.2d 307 (2000). If the statutory language
Flagstar first argues that Barnes's claims of lien are ineffective because they described the subject property by metes and bounds instead of as individual condominium units. We disagree.
Barnes relies on §§ 107 and 108 of the Construction Lien Act, MCL 570.1107 and MCL 570.1108, to assert that it properly filed its claims of lien using the metes and bounds property descriptions set forth in the notice of commencement filed by Star Heaven.
The Construction Lien Act "control[s] all rights to a construction lien arising from any project" for which a contract was first entered into after certain dates in 1982. MCL 570.1301(1) and (3). Section 107 of the Construction Lien Act provides in relevant part:
And relating to the notice of commencement, § 108 of the Construction Lien Act provides in relevant part:
Flagstar, on the other hand, argues that despite those provisions, § 126 of the Construction Lien Act, MCL 570.1126, and §§61 and 132 of the Condominium Act, MCL 559.161 and MCL 559.232, required Barnes to file separate liens against each individual condominium unit for work performed on that unit and precluded Barnes from filing a lien against the entire project.
Sections 126 of the Construction Lien Act and 132 of the Condominium Act both provide that a construction lien for an improvement furnished to a condominium unit attaches only to the condominium unit to which the improvement was furnished. MCL 570.1126(1); MCL 559.232.
Additionally, § 61 of the Condominium Act provides:
As this Court recently reaffirmed in Stock Bldg. Supply, LLC v. Parsley Homes of Mazuchet Harbor, LLC, 291 Mich.App. 403, 406-07, 804 N.W.2d 898 (2011):
The Legislature has specified that because the Construction Lien Act is a remedial statute, "[s]ubstantial compliance with the provisions of this act shall be sufficient for the validity of the construction liens provided for in this act." MCL 570.1302(1);
The unambiguous, plain language of §§ 107(1) and 111(2) of the Construction Lien Act required that Barnes's claims of lien refer to the legal description set forth in the notice of commencement filed by Star Heaven. It is undisputed that the notice of commencement used a metes and bounds description for the entire property. Thus, the form of Barnes's liens, using the metes and bounds descriptions, substantially complied with the Construction Lien Act in this regard.
Having determined that the requirements for a valid lien were met under the Construction Lien Act, the question then becomes, upon the filing of the master deed after the notice of commencement was filed, which redefined the project as a condominium project, whether Barnes was required by § 132 of the Condominium Act to file separate liens against each individual condominium unit within the project. As discussed below, we conclude that the statute does not require such individual filings.
At issue is the interplay between the Construction Lien Act and the Condominium Act. Section 126 of the Construction Lien Act, MCL 570.1126, and § 132 of the Condominium Act, MCL 559.232, provide that a construction lien for work performed on a condominium unit or for an improvement furnished to a condominium unit attaches only to the condominium unit on which the work was performed or for which the improvement was furnished.
Generally, "pursuant to MCL 570.1119(3), a construction lien that arises under the [Construction Lien Act] takes effect upon the first actual physical improvement to the property and has priority over all interests recorded after the first actual physical improvement," and this Court has "further held that liens relate back to the first actual physical improvement regardless of the time when, or the person by whom, the particular work was done or the materials furnished for which a lien is claimed." Jeddo Drywall, Inc. v. Cambridge Investment Group, Inc., 293 Mich.App. 446, 452-453, 810 N.W.2d 633 (2011) (citations and quotation marks omitted); see also M D Marinich, Inc. v. Mich. Nat'l Bank, 193 Mich.App. 447, 454, 484 N.W.2d 738 (1992).
At the time that Barnes performed its first actual physical improvement to the property, under the notice of commencement, Star Heaven had yet to record the master deed designating the project as a condominium project or identifying condominium unit numbers. Consequently, from the outset, Barnes was providing material and labor to a construction project as defined by the metes and bounds description set forth in the notice of commencement; Barnes was not providing labor or material to a "condominium unit" as contemplated by § 126 of the Construction Lien Act and § 132 of the Condominium Act. Considering the importance placed on the date of first actual improvement in determining the priority of construction liens, MCL 570.1119(3), we conclude that at the time Barnes's lien arose under the Construction Lien Act, the work performed was not "performed upon a condominium unit," so as to invoke the requirement that Barnes file separate liens on each condominium unit under § 132 of the Condominium Act. As a result, we hold that Barnes's claims of lien were valid and that the lien was entitled to priority over Flagstar's mortgage interest. Importantly, Star Heaven did not record a master deed for the condominium project until May 2006, after Barnes began working on the project in August 2005. Flagstar offers this Court no authority requiring that, under these circumstances, Barnes was required by virtue of the subsequently filed
We further observe that to hold otherwise would require a contractor who begins work on a non-condominium project, under a notice of commencement setting forth a metes and bounds description of the property to be improved, to be hypervigilant about whether at any point during the course of construction the property owner converts the project to a condominium project and then, if the owner does so, to file any liens for work performed before the conversion in accordance with the notice of commencement as required by § 108 of the Construction Lien Act and file separate liens for work performed after the conversion with respect to each condominium unit under § 126 of the Construction Lien Act and § 132 of the Condominium Act. This result runs counter to both the principle that a construction lien arises under the Construction Lien Act as of the date of first actual physical improvement to the property and the remedial purpose of the Construction Lien Act itself.
Flagstar next argues that the trial court erred when it determined that the May 2, 2006, sworn statement substantially complied with the statutory requirements. We disagree.
As this Court explained in Big L Corp. v. Courtland Constr. Co., 278 Mich.App. 438, 441-42, 750 N.W.2d 628 (2008), vacated in part on other grounds 482 Mich. 1090, 757 N.W.2d 852 (2008):
In addition to the general provision of the Construction Lien Act, MCL 570.1302(1), only requiring substantial compliance with the act's provisions, MCL 570.1110(4) explicitly requires that sworn statements be in "substantially" the form set forth in the statute:
The exemplar form advises the owner that the information provided is
Additionally, the exemplar form sets forth the following attestation by the contractor or subcontractor issuing the statement:
Flagstar argues that the May 2, 2006, sworn statement from Barnes, in which Barnes represented that the property was "free from claims of construction liens," but did not state that it was "free from the possibility of construction liens" did not substantially comply with the Construction Lien Act. Flagstar asserts further that "[s]ince an invalid Sworn Statement was provided here, there is no Sworn Statement," which results in Barnes's claims of lien being invalid.
Addressing Flagstar's second assertion first, § 110(9) of the Construction Lien Act provides that
It is not disputed that Barnes provided a sworn statement, reflecting unpaid amounts owing, in advance of instituting the instant action. Thus, even if the May 2, 2006, sworn statement was deemed to constitute a failure to provide a sworn statement, contrary to Flagstar's position, Barnes's lien remained valid and enforceable.
Moreover, we conclude that Barnes's May 2, 2006, sworn statement did substantially comply with the statute. Flagstar does not assert that the sworn statement failed to advise Star Heaven of the name of each subcontractor, supplier, and laborer with whom Barnes had contracted; the improvement furnished by each such subcontractor, supplier, or laborer; the total contract price for those improvements; or the amount paid and remaining owing to each such subcontractor, supplier, or laborer. Flagstar also takes no issue with the accuracy of Barnes's sworn statement. Instead, Flagstar asserts only that the omission of the "possibility" language from the sworn statement was material. Considering that the purpose to be served by a sworn statement is to advise the owner of outstanding amounts owed to contractors, subcontractors, or laborers who might have a lien on property as of the date of the statement so as to permit the property owner to retain out of payment to the general contractor any money owed to subcontractors or laborers, Erb Lumber, Inc. v. Gidley, 234 Mich.App. 387, 399 n. 5, 594 N.W.2d 81 (1999), we reject Flagstar's position and conclude that the sworn statement substantially complied with the requirements of MCL 570.1110(4). See Big L, 278 Mich.App. at 443-444, 750 N.W.2d 628 (stating that an unverified sworn statement substantially complied with MCL
Flagstar argues that the trial court erred by refusing to limit Barnes's claims of lien to work and material actually provided to each unit within 90 days of the filing of the claims of lien. We disagree.
As noted earlier, § 107(1) of the Construction Lien Act states that a contractor who provides an improvement
Examining the pertinent language of each these statutory provisions, we first observe that a claimant must file its lien no later than
It is undisputed that there was no written contract between Barnes and Star Heaven delineating the scope of the improvement to which Barnes was contributing its labor and material. However, the Construction Lien Act does not require a written contract; it permits a contract "of whatever nature." MCL 570.1103(4).
Flagstar next argues that the trial court erred by failing to reduce the amount of the lien for work and materials provided to units that were subsequently sold. We disagree.
Again, § 107(2) of the Construction Lien Act specifies that a construction lien "attaches to the entire interest of the owner... who contracted for the improvement, including any subsequently acquired legal or equitable interest." MCL 570.1107(2). Star Heaven contracted for the improvements — the materials and labor — that Barnes provided to the property, and Star Heaven did so as part of a single project. Plainly, then, under § 107(2) of the Construction Lien Act, Barnes's lien attached to the entire interest of Star Heaven in the property as described in the notice of commencement. And, in its notice of commencement, Star Heaven described the property to which the improvement was being undertaken with a metes and bounds description outlining the entire project. It thus exposed the entire project to the possibility of a lien for payment for work performed.
Flagstar maintains that because of § 126 of the Construction Lien Act and § 132 of the Condominium Act, the unpaid amounts attributable to work performed on condominium units since sold by Star Heaven should be apportioned from the lien amount enforceable against the remaining Star Heaven property. However, MCL 570.1126(1)(a) addresses a construction lien "for an improvement furnished to a condominium unit" and provides that the lien "shall attach only to the condominium unit to which the improvement was furnished." (Emphasis added.) MCL 559.232(a) provides a similar limitation for "work" performed on a condominium unit. But as discussed in part IV(A) of this opinion, the scope of an "improvement" is defined by the contract. Because the contract addressed furnishing material and labor to the entire project, rather than individual condominium units, the complete unpaid amount of Barnes's lien attached to the entire remaining interest of Star Heaven. As a result, the trial court did not err by permitting Barnes to satisfy its lien out of the proceeds of the sale of Star Heaven's remaining interest in the property.
Flagstar next argues that the trial court erred when it denied its motion to amend, vacate, or modify the court's prior order granting Barnes's motion for summary disposition. We disagree.
This Court reviews both a trial court's decision whether to set aside a prior order or judgment under MCR 2.612(C)(1) and a trial court's decision regarding a motion
Flagstar asserts on appeal that the trial court's order granting Barnes partial summary disposition with regard to priority was premature because discovery remained open and, further, relief from that order was warranted under MCL 2.612(C)(1)(f).
At the January 18, 2010, hearing on Barnes's motion for partial summary disposition, Flagstar represented to the trial court that it needed additional time to locate a subordination agreement, which it believed would have been executed in conjunction with the closing of its loan to Star Heaven. Flagstar did not identify any other discovery it believed pertinent to its defense. Despite granting Barnes's motion, the trial court afforded Flagstar an additional 30 days to locate the agreement. Flagstar did not, and does not, complain that this amount of time was insufficient. Flagstar does not assert that it needed additional time or that more time would have resulted in it locating additional documentation supporting its position. It merely asserts that the trial court should have waited until the close of discovery to rule on Barnes's motion. Therefore, because Flagstar has failed to establish that discovery stood a fair chance of uncovering additional facts to support its position, the trial court's decision to grant Barnes's motion for partial summary disposition was not premature.
Further, to the extent that Flagstar's argument is premised on MCR 2.116(C)(1)(f), we conclude that Flagstar has not established "[a]ny other reason justifying relief from the trial court's order. Instead, as discussed earlier, the trial court properly determined that Barnes's claim of lien was valid and was timely filed, that the entire amount of that claim was enforceable against Star Heaven's interest in the property, and that the primacy of Barnes's lien was not affected by the May 2, 2006, sworn statement.
MCR 2.612(C)(1) provides:
As this Court explained in Heugel, 237 Mich.App. at 478-479, 603 N.W.2d 121:
Assuming arguendo that the first two requirements were met, there is no extraordinary circumstance present in this case and no allegation that the trial court's order was obtained as a result of improper conduct by Barnes. Thus, Flagstar fails to show any justification to set aside the trial court's order under MCR 2.116(C)(1)(f), and the trial court did not abuse its discretion by denying Flagstar relief from the prior order under that court rule.
Finally, Flagstar asserts that there were additional questions of fact about the validity and amount of Barnes's lien for resolution by the trial court. However, Flagstar does not specifically identify any such questions. Rather, Flagstar simply asserts that the trial court failed to give appropriate effect to the May 2, 2006, sworn statement as related to the issue of priority. Moreover, as the trial court concluded, Flagstar's motion to vacate, amend, or modify the prior order of the trial court was essentially a motion for reconsideration. Flagstar's motion was premised on the existence of the sworn statement. However, Flagstar did not assert that the sworn statement constituted newly discovered evidence, and even had it done so, a trial court properly denies a motion for reconsideration when, as was the case here, the evidence offered in support of the motion could have, with reasonable diligence, been produced at the time the court made it initial ruling. Churchman, 240 Mich.App. at 233, 611 N.W.2d 333. Therefore, we hold that the trial court did not abuse its discretion by denying Flagstar's motion to amend, vacate, or modify the prior order granting Barnes's motion for partial summary disposition with regard to the priority of its lien.
Flagstar last argues that the trial court erred when it awarded attorney fees under the Construction Lien Act. We disagree.
This Court reviews a trial court's decision to award attorney fees under the Construction Lien Act for an abuse of discretion. Solution Source, 252 Mich. App. at 381, 652 N.W.2d 474. Any attendant findings of fact are reviewed for clear error. Id. Findings are clearly erroneous when, although there is evidence to support them, the reviewing court on the entire record is left with a definite and firm conviction that a mistake was made. Id. at 381-382, 652 N.W.2d 474.
Section 118(2) of the Construction Lien Act, MCL 570.1118(2) provides that "[t]he court may allow reasonable attorneys' fees
The trial court considered the complexity of the case, the validity of Flagstar's position, the amount and purpose of the fees charged, and the results obtained. It determined that Barnes was not entitled to any fees for prosecuting this action to enforce its lien up to, and through, the granting of its motion for partial summary disposition with regard to the first priority of its lien, noting that
It concluded, however, that Flagstar's continued litigation of the issue of the priority of Barnes's lien, in the absence of any subordination agreement elevating the Flagstar mortgage over the Barnes lien, became unreasonable and warranted an award of attorney fees, "particularly when the subsequent motion raised no issue that could not have been raised in the original response in opposition to summary disposition."
Flagstar does not challenge the trial court's evaluation of the complexity of the case. It instead argues that its defense of the action was justified, asserting that it "had an absolute right (even if the [trial court's] priority order was appropriate) to thereafter examine and challenge the lien based upon its invalidity and amount." But Flagstar fails to recognize that the only requirement for a claimant to receive attorney fees under the Construction Lien Act is to be the prevailing party. Vugterveen Sys., Inc. v. Olde Millpond Corp., 454 Mich. 119, 133, 560 N.W.2d 43 (1997), citing MCL 570.1118(2). In the present case, the trial court correctly determined that Barnes was the prevailing lien claimant; no more was required to permit the trial court to exercise its discretion to award Barnes its attorney fees under the Construction Lien Act. Therefore, the trial court did not abuse its discretion by awarding Barnes reasonable attorney fees.
The trial court did err, however, by combining the awarded attorney fees with the amount of the construction lien. The judgment stated that Barnes's construction lien had priority over Flagstar's mortgage interest and that the lien was "valid for the full amount claimed of $360,909.11 and attorney fees in the amount of $32,460." (Emphasis added.) MCL 570.1118(2), which authorizes the award of attorney fees to a lien claimant as long as it was the prevailing party, does not address whether the attorney fees should be included in or excluded from the lien claimant's entitlement under the construction lien.
MCL 570.1107(1) states that "[a] construction lien acquired pursuant to this act shall not exceed the amount of the lien claimant's contract less payments made on the contract." The word "shall" in a statute denotes mandatory action. Costa v. Community Emergency Med. Servs., Inc., 475 Mich. 403, 409, 716 N.W.2d 236 (2006).
Flagstar alternatively argues that if an attorney fee award is proper, any such award should be included in a judgment against "the contracting party" — that is, against Star Heaven. However, Star Heaven did not contest Barnes's lien, and Barnes did not prevail against Star Heaven. Rather, for purposes of the trial court's award of attorney fees, Barnes prevailed against Flagstar, the awarded attorney fees are properly attributable to conduct by Flagstar, and the attorney fee award is properly enforced by way of judgment against Flagstar, not Star Heaven.
Since the attorney fees are to be enforced on remand through a judgment against Flagstar, we agree with Flagstar's assertion that it was improper to award attorney fees for work that was not related to Flagstar. The trial court concluded that, because all of the proceedings after February 18, 2010, involved the enforcement of Barnes's construction lien, to be paid from the proceeds of the sale of the remainder of Star Heaven's interest in the property, it did not need to apportion the fees among the various defendants to the action. However, as discussed above, because those awards are to be enforced through a judgment against a particular party, it is not reasonable to have that party pay for attorney fees that were incurred for work associated with other parties. Thus, on remand, the trial court is to assess attorney fees only for work related to Flagstar's contest of Barnes' lien.
We affirm in part, reverse in part, and remand. We affirm the validity and priority of Barnes's construction lien. However, on remand, the trial court is to remove the award of attorney fees to Barnes from the construction lien and enter a separate judgment awarding attorney fees to Barnes against Flagstar. Further, the trial court is to award only the amount of the attorney fees that were incurred as a result of work attributable to Flagstar's actions after February 18, 2010. We do not retain jurisdiction. No costs are taxable pursuant to MCR 7.219, neither party having prevailed in full.
O'CONNELL and KIRSTEN FRANK KELLY, JJ., concurred with WILDER, P.J.
