Cottage City Mennonite Church, Inc. v. Jas Trucking, Inc.

DAVIS, J. Cottage City Mennonite Church, Inc., appellant, appeals from a Final Order Establishing Mechanic’s Lien Pursuant to Arbitration Award granted against it and in favor of JAS Trucking, Inc., appellee, by the Circuit Court for Prince George’s County on March 28, 2005 (Martin, J.). Appellant presents three questions for our review: 1. Did the Trial Court abuse its discretion, commit plain legal error, and deny Appellant due process of law by entering a Final Order against Appellant, a non-party to an arbitration, without giving the Appellant an opportunity to present its independent defenses to the Mechanic’s Lien at statutorily prescribed hearings? 2. Did the Trial Court abuse its discretion in entering a Final Order, and refusing to vacate that Final Order, without having considered Appellant’s timely filed Response to [appellee’s] Motion for Entry of Final Order Establishing Mechanic’s Lien Pursuant to Arbitration Award? 3.

Did the Trial Court abuse its discretion in entering a lien in this Case based on an arbitration award that was the basis for an un-enrolled judgment in a second Circuit Court case? We answer all three questions in the negative. Accordingly, we shall affirm the judgment of the circuit court. FACTUAL BACKGROUND Appellee entered into a subcontractor-prime contractor agreement with Maryland Construction Inc. (“MCI”), to construct a church building for appellant on appellant’s land located in Lanham, Maryland.

Appellee agreed to perform ⁶⁹⁷ “trucking, grading and excavating services [as] required by the prime contract.” As the construction progressed, disputes arose among the three parties; appellee and MCI disagreed about the manner in which appellee was operating under its subcontract, while appellant blamed appellee for destruction of a barn and other items on the property. The disputes led appellee to file a Mechanic’s Lien cause of action against appellant on April 8, 2004, seeking a lien of $49,185 .00 for the work it had performed. The court issued a Show Cause Order dated April 27, 2004, ordering appellant to “show cause by filing a counter-affidavit or a verified answer on or before the 27th day of May, 2004, why a lien for the amount claimed should not attach upon the land.... ” The parties stipulated to postponing the show cause hearing and filed a Consent Motion to Continue on May 25, 2004, which the Court (Smith, J.) granted. On that same date, appellant also filed a Motion to Compel Mediation and/or Arbitration and to Dismiss Complaint.

Appellant claimed that there was an express agreement to arbitrate contained within the “controlling contractual language.” Appellant averred that the subcontract between appellee and MCI “expressly incorporate^] the Prime Contract between MCI and [appellant],” which stated: The Subcontract documents consist of (1) this Agreement; (2) the Prime Contract and other Contract Documents enumerated therein; ... These form the Subcontract and are as fully a part of the Subcontract as if attached to this Agreement or repeated herein. With respect to resolving disputes, the contract further provided: Any claim arising out of or related to this Subcontract, ... shall be subject to arbitration. Prior to arbitration, the parties shall endeavor to resolve disputes by mediation ... that in addition to and prior to arbitration, the parties shall endeavourer [sic] to settle disputes by mediation in accordance with the Construction Industry Mediation Rules of the American Arbitration Association ... ⁶⁹⁸ Appellant contended that, because appellee failed to mediate the dispute, it should have been barred from seeking arbitration.

In addition, according to appellant, appellee was not entitled to a mechanic’s lien because it agreed to arbitrate disputes. As a result, appellant “demand[ed] that [appellee] honor the terms of the contract and mediate and/or arbitrate this dispute,” and requested the court to dismiss the mechanic’s lien case. The Motion included a subheading titled “Verification,” and signed by Douglas C. Winger, Construction Manager for MCI, which stated, “I solemnly swear under penalty of perjury that the contents of the foregoing are true to the best of my knowledge, information and belief.” On June 1, 2004, appellee filed for arbitration against MCI demanding payment for its work. Appellant and appellee filed a Consent Motion to Stay Proceedings associated with the mechanic’s lien case on June 9, 2004.

The parties stated in their motion that they had “agreed that these [] proceedings should be stayed pending the outcome of [appellee’s] pending arbitration [claim against Prime Contractor MCI.]” In an Order of Court dated June 16, 2004, the court ordered that the mechanic’s hen matter be stayed and removed the matter from the docket, “pending the outcome of arbitration between the parties and [MCI] on the merits of [appellee’s] Complaint.” MCI submitted a Counterclaim in opposition to appellant’s claim for arbitration. The arbitrator denied MCI’s counterclaim and, as a result, MCI was precluded from presenting much of its opposing evidence. Appellee presented its claim to the Construction Arbitration Tribunal over three hearing dates in October and November of 2004. In the Award of Arbitrator, dated December 30, 2004, the arbitrator found: It is clear from the detailed drafting of the contract that [MCI] was prepared to accept an efficient “in and out” effort of less than 60 days on substantially [appellee’s] guarded terms.

In essence, [appellee’s] scope of work here is generally SOP for the industry and if not explicitly modified, there may be some risk to the other party, unless this risk can be transferred to the owner. While the ⁶⁹⁹ primary question here would appear to be whether [MCI’s] interpretation of borrow pit trumps [appellee’s] exclusion for undercutting and/or backfilling below the design sub-grade, the delay in resolution of this and other matters hindering the continuous operations of [appellee,] had a more significant effect on the project than the core trench issue itself. Where the parties anticipated a short and unobstructed operation, the project became fragmented into a phased effort. In mid-November, 2003, when [appellee] should have been off the job a month earlier, [MCI] was both advising and demanding where [appellee] could work even though there was no prior contract prohibition why any work should still be undone.

Prior to this time, absent the core trench issue, there is lacking any substantive correspondence or daily report comments reflecting a failure on the part of [appellee] to perform. Absent the barn issue, had the actions, or lack of action by [appellee] diminished [appellee’s] application for payment? As to the core trench issue, working under the direction of [MCI], [appel-lee] maintained their reservation of rights in this matter and it has been determined here that [appellee’s] position has prevailed. Given the importance of this issue and [appel-lee’s] explicit superseding contract exception here, it was incumbent upon [MCI], as drafter of the agreement, to clarify this issue so that the risk to [appellee] would be exposed for whatever consideration.

Having prevailed on the core trench issue, the delay and subsequent consequence of this matter are not chargeable to [appellee]. The unresolved barn issue is significant only as to an amount possibly due [MCI] in excess of the insurance proceeds. While [MCI’s] letter of March 24, 2004 lists a barn claim against [appellee’s] balance of $57,887, [MCI]’s exhibit # 7 of all backcharges ($130,243), the barn back charge cost is listed as $8,125 plus overhead/profit. This issue, with the earlier unresolved claim for the core trench clay, was followed by [MCI’s] direction to [appellee] to perform work not required of the contract and to re-work material resulting from the exposure of the site through the winter. ⁷⁰⁰ [MCI] has failed to refute [appellee’s] position that, barring areas where they could not work, they [appellee] had brought the site to sub-grade.

The aggregate of these issues has resulted in a cardinal change in the scope of work being imposed on [appellee]. For whatever reason that this project became fragmented, it is not surprising that [MCI] expended a considerable sum on “dirt issues,” however, of this amount, only a small portion of this cost would appear to be related in any way to [appellee’s] scope of work. Therefore, in recognition of these issues and the likely prospect that there may be no payment forthcoming, [appel-lee] has prevailed in their position to terminate the contract and pursue collection for work performed. Accordingly, I AWARD as follows: [MCI] shall pay to [appellee] the sum of FORTY-THREE THOUSAND FIVE HUNDRED DOLLARS AND NO CENTS ($43,500.00) within thirty days(30) from the date of this Award....

This Award is in full settlement of all claims submitted to this Arbitration. All claims not expressly granted herein are hereby, denied. MCI filed a Petition to Vacate Arbitration Award, which the court (Nichols, J.) denied in an Order of Court dated March 16, 2005. Subsequently, appellee moved for Entry of Final Order Establishing Mechanic’s Lien Pursuant to Arbitration Award for a reduced amount on January 19, 2005.

Appellee claimed: That pursuant to agreement between the parties, this matter was continued and essentially stayed until such time as [appellee] and general contractor [MCI] on the job for [appellant] arbitrated the disputed issues pursuant to an arbitration clause in the contract between the respective parties. That the parties have in fact arbitrated that issue and ... the Award granted by the arbitrator [to Appellee] and the American Arbitration Association on or about December 30, 2004. ⁷⁰¹ That as evidenced by the Award, [appellee] is entitled to a mechanic’s lien in the amount of $43,500.00. That further, there is no legal defenses [sic] to the claim of [appellee] and therefore a Final Order Establishing Mechanic’s Lien ought to be entered in this matter against [appellant’s] property. Appellant argued, in response, that the arbitrator exceeded his authority in making the award and that the award to appellee was arbitrary and without evidentiary support.

Appellant insisted that it would be improper for the court to establish the lien given that MCI filed a petition to vacate the arbitration award. As such, appellant requested that the court deny appellee’s motion. The court reviewed appellee’s motion and appellant’s response and found: Upon the Motion for Entry of Final Order Establishing Mechanic’s Lien Pursuant to Arbitration Award, no Answer having been filed by [appellant] and it appearing that there is no genuine dispute as to any material fact and that the lien should attach as a matter of law it is this 28th day of March, 2005, by the Circuit Court for Prince George’s County, ORDERED, that a Mechanic’s Lien be and it is hereby established in the amount of $43,500.00 in favor of [appellee] against the land and improvements consisting of demolition, clearing, sediment control, site excavation and rough grading for a free-standing church owned by Cottage City Mennonite Church at the address known as 10411 Greenbelt Road, Lanham, Prince George’s County, Maryland, and which property is more particularly described as the Cottage City Mennonite Church; and it is further ORDERED, that the said property shall be sold unless the amount of the Mechanic’s Lien in the sum of $43,500.00, together with interest and costs be paid on or before the 5th day of May, 2005, and it is further ORDERED, [Counsel for appellee] be and is hereby appointed Trustee to make such sale.... ⁷⁰² The clerk of the court entered the Final Order on April 4, 2005. Appellant filed a Motion to Vacate Final Order Establishing Mechanic’s Lien Pursuant to Arbitration Award or in the Alternative Stay Execution Pending Motion to Reconsider on April 27, 2005.

Appellant subsequently filed its timely Notice of Appeal to this Court on May 3, 2005. The circuit court summarily denied appellant’s Motion to Vacate in an Order dated May 10, 2005, and docketed May 12, 2005. 1 Appellant also filed a Reply to appellee’s response opposing appellant’s Motion to Vacate; it was filed, however, four days after the court below entered its order denying the motion. LEGAL ANALYSIS Appellant argues that the circuit court erred, abused its discretion and denied it due process of law in violation of the Maryland Declaration of Rights Article 24 2 when it entered the Final Order in favor of appellee and against appellant where appellant was not a party to the arbitration and did not have an opportunity to “present its independent defenses to the Mechanic’s Lien at statutorily prescribed hearings.” Appellant also contends that the court abused its discretion in that it refused to vacate the Final Order without considering appellant’s timely filed Response to Plaintiffs Motion for Entry of Final Order, and entered the mechanic’s lien in this case based upon an arbitration award that was the “basis for an un-enrolled judgment” in another circuit court case. We disagree, and, accordingly, shall affirm the judgment of the circuit court. ⁷⁰³ I As is the case with the matter before us, “[w]hen an action has been tried without a jury, the appellate court will review the case on both the law and the evidence.” Md. Rule 8-181(c)(2006).

We “will not set aside the judgment of the trial court on the evidence unless clearly erroneous, and will give due regard to the opportunity of the trial court to judge the credibility of the witnesses.” Id. With respect to the mechanic’s lien statute, Judge Wilner, writing for the Court of Appeals, explained: The mechanic’s lien law has historically been construed “in the most liberal and comprehensive manner in favor of mechanics and materialmen.” T. Dan Kolker, Inc. v. Shure, 209 Md. 290, 296 , 121 A.2d 223, 226 (1956) and cases cited therein. Indeed, the law itself provides that it is remedial and is to be construed to give effect to its purpose. § 9-112 [of the Real Property Article]. The need for a, liberal construction is particularly important with respect to subcontractors who, though benefitting the owner and enhancing the value of the owner’s property by the provision of their labor or materials, ham no direct contractual, relationship with the owner and therefore cannot othenoi.se subject the owner’s property or assets to the payment of their claim,s.

That bent of the statute in favor of subcontractors has always been subject to the caveat, however, that, as a mechanic’s lien was unknown at common law and is purely a creature of statute, it is “obtainable only if the requirements of the statute are complied with.” Freeform Pools v. Strawbridge, 228 Md. 297, 301 , 179 A.2d 683, 685 (1962); Aviles v. Eshelman Elec. Corp., 281 Md. 529, 536 , 379 A.2d 1227, 1231 (1977). Winkler Construction Co., Inc. v. Jerome, 355 Md. 231, 246-47 , 734 A.2d 212 (1999)(emphasis added). See also Kaufman v. Miller, 75 Md.App. 545 , 542 A.2d 391 (1988)(holding that the mechanic’s lien statute also permits general contractors the opportunity to establish and enforce liens against owners). ⁷⁰⁴ We reiterated the show cause procedure associated with mechanic’s lien matters in Reisterstown Lumber Co. v. Royer, 91 Md.App. 746, 754-55 , 605 A.2d 980 (1992)(quoting E.L. Gardner, Inc. v. Bowie Joint Venture, 64 Md.App. 302, 305-06 , 494 A.2d 988 (1985), cert. denied, 304 Md. 296 , 498 A.2d 1183 (1985))(emphasis in original): The proceeding is commenced by a petition or complaint setting forth certain required information about the parties, the property, and the basis of the claim____If, upon review of the petition and any exhibits appended to it, the court determines, preliminarily, that a lien should attach, it must issue an order directing the owner to show cause why the requested lien should not attach....

Upon the owner’s response (or upon his failure to respond within the time set by the show cause order), the court must review the matter again and take one of three actions. If the evidence then before it shows that ‘there is no genuine dispute as to any material fact and that the lien should attach [in whole or in part] as a matter of law,’ the court must enter a final order establishing the lien, at least for that part of the claim not in dispute.... If, conversely, the evidence shows that ‘there is no genuine dispute as to any material fact and that the petitioner failed to establish his right to a lien as a matter of law, than a final order shall be entered denying the lien for cause shown.... ’ If, however, the court determines from the evidence before it ‘that the lien should not attach, or should not attach in the amount claimed, as a matter of law, by any final order, but that there is probable cause to believe the petitioner is entitled to a lien,’ the court must enter an interlocutory order that, among other things, establishes the lien in the amount for which probable cause is found and assigns a date ‘for the trial of all the matters at issue in the action.... ’ In essence, the sole function of the court at that stage of the proceeding is to determine whether there is a genuine dispute of material fact and, if not, whether the claimant ⁷⁰⁵ is, or is not, entitled to a lien as a matter of law.... [T]he court is then ‘in the same position as a judge passing upon a motion for summary judgment’ and it is ‘not justified in weighing the evidence and adjudicating the case----’ (Citations omitted.) This language, however, only covers the first step in the process: the determination of whether there are any genuine disputes of material fact. It is at this stage that the prohibition against weighing facts, ... is relevant.

In other words, no final order establishing or denying a mechanics’ lien should be entered if there are any genuine disputes as to material fact. See also Caretti, Inc. v. Colonnade Ltd. P’ship, 104 Md.App. 131, 135 , 655 A.2d 64 (1995), cert. denied, 339 Md. 641 , 664 A.2d 885 (1995)(noting that “the claimant does not get his lien until the court establishes it, and the court may not