Celta Corp. v. A.G. Parrott Co.

GARRITY, Judge. The matter before us is an appeal from a judgment by the Circuit Court for Howard County (Sweeney, J.) granting a Petition to Establish and Enforce a Mechanic’s Lien. It involves two issues. First, we are asked to review the lower court’s factual determination as to whether the cost of certain work installing street trees was or was not properly accounted for under a contract between the developer and a contractor.

The second issue before us is whether the trial court correctly calculated the per lot share of a blanket mechanics lien for improvements to a development consisting of 141 lots, when 126 of the lots had been sold and were no longer subject to the mechanics lien and the remaining 15 lots were still owned by the developer. FACTS Appellant, Celta Corporation (“Celta”) is the owner and developer of a residential housing development in Howard County known as Brampton Hills. A.G. Parrott Company (“Parrott”) is an excavating and paving contractor that provided paving, grading, installation of sanitary sewers, and other services to Celta in various sections of the Brampton Hills development. Celta and Parrott entered into two written contracts on November 21, 1986.

The first contract (Contract # 1) was for grading and installation of sewer, water, and storm drains, curbs and street paving in Brampton Hills. It totalled $1,738,081.40. The second contract (Contract # 2) was for the sum of $592,997.16 and provided for other work, including the installation of street trees. Both contracts were concerned only with section 4 of Brampton ³¹⁴ Hills, which is comprised of lots 77 through 217 (141 total lots).

Because of Celta’s inability to secure complete financing through its construction lender, Celta divided the work to be done at Brampton Hills by Parrott into the two contracts referenced above. Celta expected to gain substantial savings by redesigning various aspects of the work under Contract # 1 and providing that work performed under Contract # 2 could be paid for under Contract # 1. Thus, as work was completed under Contract # 2 it was to be transferred by change order to Contract # 1 and billed through Contract # 1. The installation of street trees was covered under Contract #2.

From June 1987 through May 1990, significant work was completed under the two contracts. On July 18, 1990, as a result of non-payment by Celta, however, Parrott sent Celta notice of intention to terminate the contract. Parrott ultimately terminated the contract on July 24, 1990. On July 31, 1990, Parrott filed a petition to establish and enforce a mechanic’s lien in the amount of $143,726.66 against the property owned by Celta at Brampton Hills.

Celta filed a Motion to Dismiss, and Parrott filed an amended petition, which, among other things, increased the amount sought to $159,249.22. After a show cause hearing, an interlocutory lien was issued on November 28, 1990. On May 9, 1991, the case proceeded to a trial on the merits. Parrott sought the mechanic’s lien for the amount of unpaid bills for contract work, extra work and the cost of certain road repairs.

Celta disputed the balance due Parrott for the contract work and also argued that it was due credits and set-offs for work not performed under the contracts and to repair certain defective work. After five days of hearings, consideration of voluminous affidavits and other documents, and review of the proposed findings of fact and law submitted by the parties, the trial judge issued a memorandum opinion consisting of 103 separate findings. The court ultimately ruled that Parrott was enti ³¹⁵ tied to a mechanic’s lien in the amount of $75,097.15 against the 15 Brampton Hills lots owned by Celta. This ruling was based on the following reconciliation: [[Image here]] Change Orders 1 through 16 $ 2,342,183.40 less Celta’s payments to Parrott — 2,070,341.91 Amount owed Parrott under Contract # 1 $ 271,841.49 less final paving credit due Celta 74,331.49 less sidewalk credit due Celta 47,403.85 less total of other set-offs awarded Celta 75,009.00 Net amount owed Parrott (lien amount) $ 75,097.15 Lien amount divided by number of lots owned by Celta (15) $ 5,006.41 Celta claims on appeal that it should have received an additional credit ($87,807.15) due to Parrott’s failure to install the street trees as agreed in Contract # 2.

QUESTIONS PRESENTED 1. Whether the trial court erred by failing to award a credit for the cost to install street trees. 2. Whether the trial court erred by incorrectly calculating the pro rata amount of the lien applicable to each lot. ANALYSIS Credit for Street Tree Costs Finding and conclusion number 93 in the trial court’s Memorandum Opinion is as follows: 93.

Celta contends that the costs of the installation of the street trees in the amount of $87,807.72 is included in the final contract sum and thus seeks a credit for this amount. Street trees were an item of Contract 2 which were never transferred to Contract 1 by change order because the street trees were not installed. Celta is not entitled to a credit of $87,702.72. ³¹⁶ On appeal, Celta contends that the trial court erred and that a credit was in fact due to Celta for the street trees in the amount of $87,807.72. Had the trial court awarded this credit to Celta there would have been no basis for the ordering of a mechanic’s lien since the credit being sought by Celta is greater than the $75,097.15 mechanic’s lien against its property.

In reviewing the trial court’s factual finding regarding whether the credit claimed by Celta was allowable, we may not set aside the trial court’s finding on the evidence unless it is clearly erroneous, and we must give due regard to the opportunity of the trial court to judge the credibility of the witnesses. Md.Rule 8-131(c). We hold that the methodology employed by the trial court to determine the amount due to Parrott for work at Brampton Hills was sound, that the trial court properly reconciled the amount due to Parrott, and that the appellant was due no credit for the cost of installing street trees. We shall affirm the trial court’s determination as to the amount subject to the mechanic’s lien.

As noted earlier, the parties mutually agreed that Contract # 1 would be the “base” contract for work done at Brampton Hills. Any work performed under Contract # 2 would be transferred by change order to Contract # 1 and billed through Contract # 1. In determining the amount, if any, owed by Celta to Parrott, the court first retraced the steps taken by the two parties in the change orders to Contract # 1. There were 16 change orders in all, and as a result of the various additions and subtractions to the total contract price resulting from these change orders, the contract price increased from $1,738,081.40 to $2,342,183.40.

None of the 16 change orders transferred the charge for street trees from Contract # 2 to Contract # 1. In determining the amount, if any, owed by Celta to Parrott, the court charged Celta only for work listed under Contract # 1, additional work agreed to by both parties, and ³¹⁷ those portions of Contract # 2 that were actually accomplished and transferred to Contract # 1 from Contract # 2 through a change order. This conforms with the agreement reached by the parties and their practice during the period of work under the contract. Those portions of Contract # 2 that were not completed by Parrott and not transferred to Contract # 1 by change order were not counted as part of the contract payment due from Celta to Parrott.

The installation of the street trees under Contract # 2 was treated by the court in this manner. The installation was not completed by Parrott, the cost of the installation was not transferred by change order to Contract # 1 and, accordingly, the court properly did not include the $87,702.72 in the contract price. After determining the contract price, the court then determined how much Celta paid Parrott under the contract and whether any credits were due Celta. Allocation of Mechanics Lien The second issue before us relates to the proper allocation of the mechanic’s lien among the remaining lots in Brampton Hills.

The trial court ruled that the total amount of the lien should be divided among the 15 lots in Brampton Hills owned by Celta. Hence, it found that each lot was subject to a mechanic’s lien in the amount of $5,006.47. Celta, however, argues that the total amount of the lien should be apportioned equally among the 141 lots in Brampton Hills, despite the fact that 126 lots had been sold to bona fide purchasers for value and were therefore no longer subject to a mechanic’s lien. The net result of Celta’s proposed allocation of the lien among the remaining properties would be to subject the 15 lots still owned by the appellant to a lien of $532.60 and decrease the total amount of the mechanic’s lien actually secured by Celta’s property from $75,097.15 to $7,989.00.

Under the circumstances in this case, i.e., where a number of the lots in a