Zahn v. Allen

THIS OPINION
HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT
IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

Paul Zahn, individually and d/b/a Zahn Construction Company,       
Respondent,

v.

Sadie Allen and Abbeville Savings & Loan,       
Defendants,

Of Whom Sadie Allen is the       
Appellant.

Appeal From Abbeville County

Joseph J. Watson, Circuit Court Judge

Unpublished Opinion No. 2004-UP-261

Submitted March 8, 2004 – Filed April
19, 2004

AFFIRMED

Hemphill P. Pride II, of Columbia,
for Appellant. 

Edward S. McCallum, III, of Greenwood, and James B. Richardson,
Jr., of Columbia, for Respondent.

PER CURIAM:  In this action to foreclose
a mechanic’s lien, the trial court awarded homebuilder Paul Zahn a $43,848.73
judgment against homeowner Sadie Allen.  Allen appeals, arguing the trial court
erred in:  (1) finding the mechanic’s lien was timely filed; (2) ruling she
was liable under the contract; and (3) awarding attorney’s fees to Zahn.  We
affirm. [1]

BACKGROUND

The parties contracted for Zahn to build
Allen a house.  The house was based on a design the parties modified to accommodate
Allen’s needs including handicapped features for her mother.  It is undisputed
Zahn made mistakes in constructing the home.  He also failed to deliver it in
a timely fashion.  After Zahn informed Allen the home was complete and demanded
payment, Allen refused to pay the remainder due under the contract until the
home could be independently inspected.  In response to a complaint filed by
Allen, an inspector with the South Carolina Department of Labor, Licensing,
and Regulation inspected the home, finding a number of construction deficiencies. 
Zahn repaired the items noted in the report and approximately a month later
filed a mechanic’s lien and this action.  Allen answered, asserting several
affirmative defenses and a breach of contract counterclaim.  Zahn completed
additional repairs after the filing of pleadings.  However, problems continued
with the home. 

Following a bench trial, the trial court issued an
order finding Zahn timely filed the mechanic’s lien and awarding him $43,848.73. 
This amount reflected two setoffs to Allen, one for the interest she lost during
the time between scheduled delivery and actual completion and another for repair
costs to correct an error in the foyer’s construction.  The court also held
Zahn was entitled to legal fees and costs it later determined to be $14,610.08. 

DISCUSSION

I.     Filing of the Mechanic’s Lien

Allen argues the trial
court erred in concluding Zahn timely filed his mechanic’s lien.  We disagree.

“An action to foreclose a mechanic’s lien is a
law case in South Carolina.”  Keeney’s Metal Roofing, Inc. v. Palmieri,
345 S.C. 550, 553, 548 S.E.2d 900, 901 (Ct. App. 2001).  In an action at law
tried without a jury, the appellate court’s standard of review extends only
to the correction of errors of law.  Barnacle Broad. v. Baker Broad.,
343 S.C. 140, 146, 538 S.E.2d 672, 675 (Ct. App. 2000), cert. dismissed,
348 S.C. 11, 558 S.E.2d 516 (2002).  Therefore, the trial court’s factual
findings will not be disturbed on appeal unless the record discloses there is
no evidence reasonably supporting the court’s findings.  Id.

Mechanics’ liens
[2] serve to secure payment for a “person to whom a debt is due for labor
performed or furnished or for materials furnished and actually used in the erection
. . . of a building or structure . . . by virtue of an agreement with, or by
consent of, the owner of the building or structure.”  S.C. Code Ann. § 29-5-10(a)
(Supp. 2003).

For a person to be entitled to enforce
a mechanic’s lien, he must file within ninety days of furnishing labor or materials
for the building or structure.  S.C. Code Ann. § 29-5-90 (providing a mechanic’s
lien “shall be dissolved” unless the person holding the lien serves and files
the lien within ninety days of providing labor or materials); see also
Preferred Sav. & Loan Ass’n, Inc. v. Royal Garden Resort, Inc., 301
S.C. 1, 4, 389 S.E.2d 853, 854 (1990) (stating when a person files a mechanic’s
lien, he is essentially asserting work has been performed in the ninety days
prior to filing for which he is entitled to a lien). 

The court found for Zahn’s lien to be timely, he
must have performed work sometime between March 28 and June 26, 2000, the date
he filed the lien.  Zahn sent Allen a letter on May 31, 2000 stating the problems
outlined in LLR’s April 6 report had been remedied.  Based on this letter and
the testimony adduced at trial, the court found Zahn performed work within the
ninety-day period.  Thus the trial court properly found Zahn timely filed his
lien.

Allen also argues S.C. Code Ann. § 29-5-250 (1991)
precludes Zahn from asserting a mechanic’s lien under the facts of this case. 
However, because Allen raises this issue for the first time on appeal, it is
not preserved.  See Wilder Corp. v. Wilke, 330 S.C. 71, 76, 497
S.E.2d 731, 733 (1998) (finding an issue must be raised to and ruled on by the
trial court to be preserved for appeal).

II.    
Enforceability of Mechanic’s Lien

Allen also contends the trial court erred in finding
an enforceable mechanic’s lien because it should have found Allen was not liable
under the contract.  The contract provides for final payment to be made “at
the time of completion.”  Allen asserts because numerous problems arose during
construction, the house was never completed, and thus, the final payment never
became due.  We disagree. 

Allen points to several deficiencies as evidence
the house was not completed, including problems with the garage, the foundation,
the foyer, and the roof trusses.  She also contends Zahn failed to deliver the
house for inspection.  Zahn repaired some of these items and the trial court
granted Allen setoffs (1) for the interest she paid to the bank and lost in
investment income caused by the delay in delivery and (2) to bring the foyer
into compliance with the building plans.  However, the court further noted “[a]ny
other setoffs alleged by [Allen] that are not mentioned in this order are denied
because they lacked evidence in the record to support them or no damages were
proven by Allen.”  Allen does not challenge the sufficiency of the setoffs,
either by the items they covered or the amounts credited to her. 

Additionally, Zahn’s action was based on a mechanic’s
lien, not the parties’ contract.  A mechanic’s lien secures payment to the provider
of materials and labor who provides them either by agreement with or consent
of the recipient, regardless of the existence of a formal contract.  See
S.C. Code Ann. § 29-5-10(a) (providing a person due a debt for labor or materials
furnished in the building, alteration, or repair of a structure on real estate
shall have a lien against the structure and the owner’s interest in the land
on which it is situated).  Thus whether Zahn can enforce a mechanic’s lien against
Allen is based on the materials and labor he provided in the home’s construction,
not whether he could demand full payment of the contract amount. 

Although the court found Zahn breached his agreement
with Allen, it also found Zahn was entitled to $57,340 for labor and materials
minus the amount of Allen’s setoffs.  In addition to the major construction
efforts, the record demonstrates Zahn repaired all items brought to his attention
by LLR, additional items asserted by Allen’s engineer, and that he even made
repairs during the pendency of litigation.  Because the evidence supports the
court’s ruling, it properly held the mechanic’s lien was enforceable against
Allen. 

III.    
Attorney’s Fees

Allen also argues the trial court erred in granting
attorney’s fees to Zahn.  We disagree.

South Carolina Code section 29-5-10(a) clearly
provides “[t]he costs which may arise in enforcing or defending against the
lien under this chapter, including a reasonable attorney’s fee, may be recovered
by the prevailing party.”  S.C. Code Ann. § 29-5-10(a).  This section further
provides the amount of the fee recovered is to be decided by the court, but
in no event should the fee and costs exceed the amount of the lien.  Id.

Subsection (b) provides instructions to determine
who is the prevailing party for the purposes of awarding attorney’s fees and
litigation expenses.  The party whose settlement offer is closer to the ultimate
verdict is the prevailing party.  In the event neither party makes a settlement
offer, the amount prayed for in the complaint is considered the plaintiff’s
offer and the value of defendant’s counterclaim is the negative value of his
settlement offer.  S.C. Code Ann. § 29-5-10(b). 

As neither party made a settlement offer under
section 29-5-10(b), Zahn’s offer is considered the amount he prayed for in his
complaint, or $58,355, whereas Allen’s is considered to be the value of her
counterclaim, or negative $5,000.  Because Zahn’s settlement offer is closer
to the ultimate verdict of $43,848.73 than negative $5,000, Zahn is clearly
the prevailing party and therefore entitled to attorney’s fees.  See
Brasington Tile Co., Inc. v. Worley, 327 S.C. 280, 288, 491 S.E.2d
244, 248 (1997) (holding that in determining the prevailing party in a mechanic’s
lien case, the ultimate verdict should include setoffs). 

However, Allen argues the court erred in considering
the contingency fee agreement between Zahn and his attorney because the agreement
did not differentiate between the amount of time spent on assertion of the lien
claim and the time spent defending against Allen’s counterclaims.  Allen relies
on Utilities Constr. Co., Inc. v. Wilson, 321 S.C. 244, 468 S.E.2d 1
(Ct. App. 1996), to support the argument that the time spent by Zahn’s counsel
on these items should be separate.  We find this reliance misplaced. 

In Utilities Constr., a utility company brought three
causes of action against Wilson—a mechanic’s lien foreclosure claim, unjust
enrichment, and breach of contract.  The court directed a verdict against the
utility company on the mechanic’s lien claim, and the remaining causes of action
were submitted to the jury.  The jury subsequently returned a verdict for the
utility company.  Id. at 246, 468 S.E.2d at 2. 

Having prevailed on the mechanic’s lien claim, the court
awarded Wilson attorney’s fees pursuant to S.C. Code Ann. § 29-5-10(a).  Id. 
The utility company appealed this award arguing it should have received the
award because it was the prevailing party on the verdict.  The court disagreed,
holding “it is the enforcement of the lien which confers the right to attorney’s
fees, and not the joinder of an attempted enforcement with another non-statutory
cause of action on which the lienor prevails.”  Id. at 247-248, 468 S.E.2d
at 2.  Accordingly, the case stands for the proposition that when a plaintiff
brings a mechanic’s lien action along with other causes of action, if the plaintiff
does not prevail on the mechanic’s lien claim, he or she is not entitled to
attorney’s fees under the statute.  As the case does not stand for the proposition
for which Allen cites it, we find her argument without merit.

Allen also argues the trial court erred by considering the
contingency fee agreement in awarding attorney’s fees because it does not comport
with Rule 407, SCACR.  We disagree.  The reasonableness of a statutorily mandated
attorney’s fee award is not controlled by a contract between lawyer and client. 
See, e.g., Jackson v. Speed, 326 S.C. 289, 308, 486 S.E.2d 750,
759 (1997); see also Blumberg v. Nealco, Inc., 310 S.C. 492, 494,
427 S.E.2d 659, 660 (1993) (noting six factors to be considered when considering
reasonableness of an award for attorney’s fees).

AFFIRMED.

HUFF and STILWELL, JJ., and
CURETON, A.J., concur.

[1]        We decide this case without oral argument pursuant to Rule
215, SCACR.

[2]        Mechanics’ liens are creatures of statute in South Carolina. 
See S.C. Code Ann. §§ 29-5-10 – 440 (1991 & Supp. 2003).