Oral Argument September 16, 2013.
[Copyrighted Material Omitted]
Appeal from Whatcom County Superior Court. Docket No: 10-2-00048-4. Date filed: 07/20/2012. Judge signing: Honorable Steven J Mura.
Frederick W. Bovenkamp, pro se.
Kennard M. Goodman (of Bishop White Marshall & Weibel PS ), for appellant.
Gregory E. Thulin, for respondent.
AUTHOR: Marlin Appelwick, J. WE CONCUR: Michael S. Spearman, A.C.J., Ronald Cox, J.
[179 Wn.App. 798] ¶ 1 Top Line foreclosed on its statutory mechanics' lien and recovered the unpaid contract price plus sums awarded in quantum meruit for extra work performed at the owner's request but without written change orders required by contract. U.S. Bank argues that its deed of trust, though junior to the mechanics' lien, should have priority over the amounts awarded in quantum meruit. We affirm.
¶ 2 In early 2008, Frederick Bovenkamp asked Top Line Builders Inc. to construct a prototype residence on his property in Blaine, Washington. The residence was designed to meet the gold certification standard of Leadership in Energy and Environmental Design (LEED)--the standard for green building design.
¶ 3 Top Line began construction on February 10, 2008. Though Top Line believed the parties agreed to construction on a cost-plus basis, Bovenkamp and Top Line in fact executed a written fixed price contract for $845,286.80 in February 2008. The contract required written, signed change [179 Wn.App. 799] orders. At the time, Bovenkamp did not have any financing in place and initially paid Top Line $170,000.00 from his own funds. As construction progressed, Top Line submitted monthly invoices to Bovenkamp with supporting documents detailing costs incurred.
¶ 4 In June 2008, after being denied financing by at least two other lenders, Bovenkamp met with U.S. Bank (USB) to discuss financing. Bovenkamp presented the $845,286.80 fixed price contract to USB, and USB approved Bovenkamp's construction loan for $995,000.00. This additional amount above the fixed price was a contingency for taxes and cost overruns. To secure the loan, USB filed a deed of trust against Bovenkamp's property on August 12, 2008.
¶ 5 Bovenkamp, USB, and Top Line signed a residential construction Loan Procedures Assignment and Consent Agreement (LPA) at USB's request. The LPA required that Top Line and Bovenkamp execute a written construction contract and written change orders for any extra work requiring additional funds. This reflected the existing contract between Top Line and Bovenkamp.
¶ 6 Over the course of construction, Bovenkamp requested unforeseen modifications to the plans and specifications of the residence, which Top Line performed. This extra work increased the cost of labor and materials for Top Line above the fixed contract price. Top Line and Bovenkamp usually discussed the changes, and sometimes--but not always--agreed to the costs associated with those [179 Wn.App. 800] changes. Top Line and Bovenkamp did not prepare or execute signed, written change orders for this extra work. Bovenkamp sent draw requests to USB, but neither Bovenkamp nor Top Line submitted change orders to USB.
¶ 7 By April 2009, Top Line substantially completed construction on the prototype residence. Bovenkamp and Top Line did a walk-through and created a punch list of items for Top Line to address before final completion. Top Line performed all the punch list items and Bovenkamp did not request any further corrections. At this time, Bovenkamp still owed Top Line $111,085.29 for work and materials. Approximately $25,000.00 was overdue under the fixed price contract. Another $85,507.31 for extra work and materials exceeding the written contract price was also overdue.
¶ 8 Bovenkamp assured Top Line that it would be paid in full when it sent USB the certificate of occupancy. Top Line did so on April 30, 2009. Top Line also sent Bovenkamp and USB a list of changes that occurred during the project, but USB told Top Line that it could do nothing about the cost overruns. Even after Top Line provided the certificate of occupancy, Bovenkamp never submitted a final draw request to USB for the overdue $111,085.29 owed to Top Line and never paid Top Line any of that remaining amount. On June 9, 2009, Top Line filed an amended mechanics' lien on the property for $111,085.29.
¶ 9 On January 6, 2010, Top Line filed suit seeking foreclosure of its amended mechanics' lien. Top Line named USB as a defendant, along with Bovenkamp and other parties with an interest in the property. Bovenkamp answered, but USB failed to appear or submit an answer. Top Line obtained a default order against USB. The trial court also granted Top Line's motion for partial summary judgment establishing that its mechanics' lien had priority over all other security interests, to the extent that Top Line prevailed in obtaining a monetary judgment on its lien.
[179 Wn.App. 801] ¶ 10 USB subsequently appeared and requested that the trial court set aside the partial summary judgment order. The court declined to do so but allowed USB to answer the complaint and contest at trial the amount of money Top Line could recover.
¶ 11 On August 12, 2011, Top Line moved to amend its complaint to add a cause of action for quantum meruit, which the trial court granted. Top Line's second amended complaint requested recovery in quantum meruit for the extra work and materials it provided above the fixed contract price, as claimed in its lien.
¶ 12 On the eve of trial, Top Line filed a motion in limine arguing that USB did not have standing to dispute issues related to the construction contract between Bovenkamp and Top Line--specifically, the change order provision and amount owed. The court denied Top Line's motion, and trial began on November 1, 2011.
¶ 13 At trial, Top Line's owner, Charles Rohrer, testified that his actual agreement with Bovenkamp was a verbal cost-plus contract that did not require change orders. Rohrer explained that when Bovenkamp was unable to secure financing based on this cost-plus contract, Rohrer drafted a fixed price contract to induce USB into financing the project. Bovenkamp disputed Rohrer's assertion and testified that he and Rohrer agreed to a fixed price contract that predated any loan agreement with USB.
¶ 14 At the end of trial, the trial court ruled that the agreement between Top Line and Bovenkamp was a fixed price contract requiring written, signed change orders. It concluded that Top Line did not comply with the change order obligations. However, it also found that " Mr. Bovenkamp is in equity in quantum meruit obligated to [Top Line] in an amount of an additional $79,731.15. Plus the amount unpaid under the contract of $25,544.43." The trial court concluded that
only the $25,544.43 under the contract attached to Top Line's mechanics' lien. On January 25, [179 Wn.App. 802] 2012, it entered written findings of fact and conclusions of law pursuant to its oral ruling.
¶ 15 On Top Line's and Bovenkamp's separate motions for reconsideration, the trial court entered amended findings of fact and conclusions of law. It concluded that Top Line and Bovenkamp mutually waived the change order requirement. The trial court further held that USB did not waive the change order requirement, but because extra work did not exceed the loan amount, the parties' breach was technical and immaterial. The trial court ultimately concluded that Top Line's quantum meruit award was secured by its mechanics' lien with priority over USB's interest. USB appeals from these amended findings of fact and conclusions of law.
¶ 16 USB argues that the trial court erred in reconsidering its original verdict and including quantum meruit recovery in Top Line's mechanics' lien. USB also argues the trial court erred in allowing Top Line to amend its complaint to include a claim in quantum meruit. Further, USB argues that equitable ...