Donna T. Moore, David B. Moore and Provident Funding Associates, LP D/B/A Provident Home Loans v. Brenham Ready Mix, Inc. , 463 S.W.3d 109 ( 2015 )

Opinion issued March 10, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-13-00615-CV
———————————
DONNA T. MOORE, DAVID B. MOORE, AND PROVIDENT FUNDING
ASSOCIATES, LP D/B/A PROVIDENT HOME LOANS, Appellants
V.
BRENHAM READY MIX, INC., Appellee
On Appeal from the 155th District Court
Waller County, Texas
Trial Court Case No. 09-12-20105
OPINION
In this case, Brenham Ready Mix, Inc., a supplier of ready-mix concrete and
fill dirt for the development of a residential subdivision, sought to foreclose upon
two materialman’s liens on two lots owned by Donna T. and David B. Moore and
Provident Funding Associates, LP d/b/a Provident Home Loans 1 (collectively, “the
individual homeowners”). After a bench trial, the trial court ruled that Brenham
Ready Mix could foreclose upon its liens in the amount of $214,757.76 against
each of the lots, and the court awarded $75,000 in trial-level attorney’s fees and
$25,000 in conditional appellate attorney’s fees. In three issues on appeal, the
individual homeowners contend that (1) the trial court erroneously enforced the
full amount of the liens, which represented materials used for the entire
development project, against their individual lots; (2) Brenham Ready Mix did not
perfect its lien for the concrete because it did not substantially comply with the
statutory notice requirements; and (3) the trial court erred in awarding attorney’s
fees to Brenham Ready Mix due to the excessive-demand doctrine or, if the trial
court properly awarded attorney’s fees, the court erred in the amount awarded
because Brenham Ready Mix did not segregate its fees relating to each particular
property.
We reverse and remand.
1
Brenham Ready Mix obtained a judgment against the only other individual
homeowners who had bought lots in Phase 3, Brent Dirden and Christopher St.
Mary, as well. While this appeal was pending, Brenham Ready Mix, Dirden, and
St. Mary reached a settlement agreement, and Dirden and St. Mary moved to
dismiss their appeal. We granted this motion and dismissed their appeal in an
interlocutory order dated August 14, 2014.
2
Background
Art DePue owned twenty-five acres of land in Prairie View, Texas. In 2002,
DePue subdivided the land and filed a plat for the Brookside Meadow subdivision.
DePue filed a replat of the subdivision in 2006, subdividing the land into seventy-
one lots. L&F Homes and Development (“L&F”) was the initial original
contractor for the construction project, which involved, among other things,
building duplexes on each of the lots.
Brenham Ready Mix supplies ready-mix concrete and other materials for
residential and commercial construction projects. In early 2006, Felix Meyer,
Brenham Ready Mix’s president, met with David Solomon of L&F, who was the
project manager for the Brookside Meadow project, and George Mott of Mott
Concrete, Inc., the subcontractor that had a contract with L&F to provide and pour
the concrete to be used for the slabs, sidewalks, and parking lots in the subdivision.
Meyer quoted a price for concrete to Mott, and Brenham Ready Mix entered into a
subcontract on an open-account basis with Mott to provide ready-mix concrete for
the entire development. Brenham Ready Mix’s contract with Mott did not specify
the amount of concrete to be used on each specific lot, and it did not “enter into
any contracts that were specific to lots.”
The construction project was divided into three phases. Mott paid Brenham
Ready Mix for the concrete provided for Phases One and Two, and there is no
3
dispute in this litigation about those two phases. Phase Three involved thirty-seven
lots, and Brenham Ready Mix delivered concrete for this phase in July and
September 2007.2 During construction, Mott would inform Brenham Ready Mix
of how much concrete it needed for the next day, Brenham Ready Mix would
deliver that amount to the jobsite, and Mott would direct and pour the concrete.
Brenham Ready Mix generally billed Mott monthly, although it occasionally billed
more frequently if it had delivered a large volume of concrete. Mott failed to pay
for $206,661.76 worth of the concrete deliveries in July and September. The trial
court admitted several unpaid invoices from Brenham Ready Mix to Mott dated
throughout August, September, and October 2007.
During construction, DePue sold the Phase Three property to L&F, which
then sold the property to Jim Fitchett on September 12, 2007. Around September
2007, Stability Homes replaced L&F as the general contractor on the project.3
Solomon, the project manager for L&F, remained the manager for the project.
2
Brenham Ready Mix also delivered concrete to the project in December 2007. By
that point, Terra Estrada had replaced Mott as the concrete subcontractor, and
Terra Estrada paid Brenham Ready Mix upfront for these deliveries. There is no
dispute in this litigation concerning these deliveries of concrete.
3
The record does not indicate the precise date that Stability Homes replaced L&F
as the general contractor on the project. David Solomon testified that he was the
project manager for Stability Homes on the project from September 2007 through
January 2008 and that he had previously been involved with the project prior to
September 2007. This is the only testimony relevant to this question that is
contained in the record.
4
After Mott failed to pay the outstanding invoices for the concrete, Brenham
Ready Mix retained attorney Katherine Kenjura to prepare a lien. Kenjura sent a
notice letter regarding Brenham Ready Mix’s lien on the concrete to Mott, the
subcontractor for the concrete, Stability Homes, the then-current general contractor
for the project, and DePue, the former owner of the Phase Three property, on
November 21, 2007. She sent a second notice letter on December 18, 2007, to
L&F, the former general contractor for the project, Stability Homes, and Mott.
Meyer testified that Brenham Ready Mix provided its outstanding invoices solely
to Mott. Thus, the November 21, 2007 notice letter was the first written notice
Brenham Ready Mix provided to entities other than Mott. It had not sent any
notice letters before Stability Homes became the general contractor for the project.
And it did not send the November 21, 2007 notice letter to L&F. Instead,
Solomon, the project manager for both L&F and Stability Homes, testified by
deposition that Meyer spoke with him in “September, October, around the end of
October, first of November of 2007” and informed him that Mott had not paid
Brenham Ready Mix for the concrete.
By January 2008, Brenham Ready Mix had finished all of the concrete
deliveries to the project. It then entered into a second contract, this time with
Stability Homes, the general contractor, to provide fill dirt to the site. This
contract, like Brenham Ready Mix’s initial contract with Mott, the concrete
5
subcontractor, required Brenham Ready Mix to provide fill dirt to the entire
development, not to specific lots within the development. Stability Homes failed
to pay Brenham Ready Mix $8,096 for the fill-dirt deliveries, so Brenham Ready
Mix filed another lien affidavit for these materials. All of the fill-dirt deliveries
occurred in January 2008, and Kenjura sent the notice letter for this lien on January
30, 2008.
On January 9, 2008, Brenham Ready Mix filed an “Affidavit Claiming
Mechanic’s and Materialman’s Lien” for the ready-mix concrete, averring that it
had an unpaid claim in the amount of $206,661.76 for labor and materials
furnished. This affidavit specifically listed each lot in Phase Three. Brenham
Ready Mix listed L&F as the “owner or reputed owner” of the property, identified
Stability Homes as the original general contractor, and identified Mott as the
subcontractor. The affidavit further stated that Brenham Ready Mix had sent
notice of the claimed lien to L&F by certified mail on November 21, 2007, and
December 18, 2007. Brenham Ready Mix sent notice of the lien affidavit to L&F,
Stability Homes, and Mott.
Brenham Ready Mix filed an affidavit claiming a lien for the fill dirt on
February 13, 2008. This affidavit again specifically listed each lot, named L&F as
the owner or reputed owner, and listed Stability Homes as both the original general
contractor and as subcontractor for the fill dirt. This affidavit stated that Brenham
6
Ready Mix had sent notice of the claimed lien to L&F by certified mail on January
30, 2008.
Beginning in March 2008, individuals began to purchase lots in the
subdivision from Jim Fitchett, who had purchased the property in September 2007.
The individual homeowners offered Brenham Ready Mix approximately $5,800 to
release the liens claimed on their property. This amount represented 1/37th of the
total amounts claimed by Brenham Ready Mix in the two liens, representing the
relation of the individual lot to the total number of lots in Phase Three of the
project. The individual homeowners arrived at this amount based on the theory
that the individual lots were no longer owned by the original owner of the entire
unplatted property, L&F, which had benefited from the delivery of the entire
amount of concrete and fill dirt delivered to the property. The individual
homeowners reasoned that each lot received 1/37th of the total amount of ready-
mix concrete and fill dirt provided by Brenham Ready Mix to the project and that
each homeowner should, therefore, be liable, if at all, for only that proportionate
share of the liens, and not for the entire value of the liens on the entire property.
Brenham Ready Mix rejected these partial payments and instead demanded
payment of the full lien totals placed on the property for deliveries made to benefit
the entire subdivision as a condition of releasing the lien as to the individual lot
owners.
7
Regions Bank provided construction financing for Phase Three of the
project. It held liens superior to those of Brenham Ready Mix on all of the
property in the subdivision. On November 4, 2008, Regions Bank foreclosed on
its liens on the thirty-four lots in Phase Three that remained unsold at that time.
Regions Bank then released the liens it held on the three lots that had been sold to
individual homeowners, including the two lots that are the subject of this dispute.
Joseph Garnett, Brenham Ready Mix’s counsel, testified concerning
attorney’s fees. He testified that charges billed to Brenham Ready Mix totaled
$118,070.71. He also stated that Brenham Ready Mix originally filed three
separate suits to foreclose on its liens relating to the three separate properties at
issue and that, as a result, he had segregated the fees incurred for each suit up until
the time the trial court consolidated the three suits. After that point, he no longer
segregated his fees by property.
In its final judgment, the trial court rendered judgment in favor of Brenham
Ready Mix. Specifically, the trial court ordered that Brenham Ready Mix “have
foreclosure of its liens in the amount of $214,757.76” on each of the current
homeowners’ properties. The court issued an order of sale of the current
homeowners’ properties to satisfy the judgment. The trial court also awarded
Brenham Ready Mix $75,000 in trial-level attorney’s fees and $25,000 in
conditional appellate-level attorney’s fees.
8
The trial court also issued findings of fact and conclusions of law, several of
which the current homeowners challenge on appeal. This appeal followed.
Standard of Review
Findings of fact in a bench trial have the same “force and dignity as a jury’s
verdict upon questions.” Village Place, Ltd. v. VP Shopping, LLC, 404 S.W.3d
115, 124 (Tex. App.—Houston [1st Dist.] 2013, no pet.) (quoting Anderson v. City
of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991)). As a result, the trial court’s
findings of fact are subject to sufficiency challenges under the same standards that
we use in evaluating the sufficiency of evidence to support a jury verdict. Id.
Unchallenged findings of fact are binding on the parties and on this Court. Id.
To determine whether legally sufficient evidence supports a challenged
finding of fact, we consider evidence favorable to the finding if a reasonable fact-
finder could consider it, and we disregard evidence contrary to the challenged
finding unless a reasonable fact-finder could not disregard it. City of Keller v.
Wilson, 168 S.W.3d 802, 827 (Tex. 2005); Village Place, 404 S.W.3d at 124. We
sustain a legal sufficiency challenge only if the record demonstrates: (1) a
complete absence of evidence of a vital fact; (2) the court is barred by the rules of
law or of evidence from giving weight to the only evidence offered to prove a vital
fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla;
9
or (4) the evidence conclusively establishes the opposite of the vital fact. City of
Keller, 168 S.W.3d at 810; Village Place, 404 S.W.3d at 124.
In determining whether factually sufficient evidence supports a challenged
finding, we consider and weigh all of the evidence and set aside the judgment only
if it is so contrary to the overwhelming weight of the evidence as to be clearly
wrong and unjust. Village Place, 404 S.W.3d at 124 (citing Arias v. Brookstone,
L.P., 265 S.W.3d 459, 468 (Tex. App.—Houston [1st Dist.] 2007, pet. denied)).
The trial court, as the fact-finder in a bench trial, is the sole judge of the credibility
of the witnesses. Id. (citing HTS Servs., Inc. v. Hallwood Realty Partners, L.P.,
190 S.W.3d 108, 111 (Tex. App.—Houston [1st Dist.] 2005, no pet.)).
We review conclusions of law de novo, and we will uphold the trial court’s
conclusions if the judgment can be sustained on any legal theory supported by the
evidence. Id. (citing Noble Mortg. & Invs., LLC v. D & M Vision Invs., LLC, 340
S.W.3d 65, 74–75 (Tex. App.—Houston [1st Dist.] 2011, no pet.)). Conclusions of
law are not subject to challenge for factual insufficiency, but we may review the
legal conclusions drawn from the facts to determine their correctness. Id. (citing
Brown v. Brown, 236 S.W.3d 343, 348 (Tex. App.—Houston [1st Dist.] 2007, no
pet.)).
10
Substantial Compliance with Notice Requirements
In their second issue, the individual homeowners contend that Brenham
Ready Mix failed to perfect its materialman’s lien with respect to the concrete
because it did not substantially comply with the statutory written notice
requirements for materialman’s liens and, therefore, the lien is invalid. 4
A subcontractor, or, as in this case, a supplier to a subcontractor, is a
derivative claimant and, unlike a general contractor, has no constitutional, common
law, or contractual lien on the owner’s property. See First Nat’l Bank in Graham
v. Sledge, 653 S.W.2d 283, 285 (Tex. 1983). As a result, a subcontractor’s lien
rights “are totally dependent on compliance with the statutes authorizing the lien.”
Id.; Indus. Structure & Fabrication, Inc. v. Arrowhead Indus. Water, Inc., 888
S.W.2d 840, 844 (Tex. App.—Houston [1st Dist.] 1994, no writ). The Texas
Supreme Court has recognized, however, that substantial compliance with the
statutes “is sufficient to perfect a lien . . . .” Sledge, 653 S.W.2d at 285.
Property Code section 53.056 sets out the notice requirement for lien
claimants who are not general contractors. See TEX. PROP. CODE ANN. § 53.056
(Vernon 2014). This section provides that if the lien claim arises, as here, from a
4
The individual homeowners do not contend that Brenham Ready Mix failed to
substantially comply with the statutory notice requirements with respect to its
materialman’s lien for the fill dirt.
11
debt incurred by a subcontractor, the claimant must give the original contractor5
written notice of the unpaid balance not later than the fifteenth day of the second
month following each month in which all or part of the claimant’s material was
delivered. Id. § 53.056(b). The claimant must then give the same notice to the
owner or reputed owner of the property and the original contractor not later than
the fifteenth day of the third month following each month in which all or part of
the claimant’s material was delivered. Id. Section 53.056(f) provides that “[a]
copy of the statement or billing in the usual and customary form is sufficient as
notice under this section.” Id. § 53.056(f). The “liberal construction” of the
materialman’s liens statutes “does not excuse failure to comply with the statutory
requirement that the materialman provide ‘timely written notice.’” Wesco Distrib.,
Inc. v. Westport Grp., Inc., 150 S.W.3d 553, 558 (Tex. App.—Austin 2004, no
pet.).
A. July 2007 Deliveries
For the concrete that Brenham Ready Mix delivered to the worksite in July
2007, Brenham Ready Mix was required to give written notice of the claim to the
original contractor, Stability Homes, by September 15, 2007, which was the
5
The Property Code defines “original contractor” as “a person contracting with an
owner either directly or through the owner’s agent.” See TEX. PROP. CODE ANN.
§ 53.001(7) (Vernon 2014). The Property Code defines “subcontractor” as “a
person who has furnished labor or materials to fulfill an obligation to an original
contractor or to a subcontractor to perform all or part of the work required by an
original contract.” Id. § 53.001(13).
12
fifteenth day of the second month following the month in which Brenham Ready
Mix delivered part of its materials. See TEX. PROP. CODE ANN. § 53.056(b). As
evidence that it complied with the statutory notice requirement for the July 2007
deliveries, Brenham Ready Mix points to David Solomon’s deposition testimony in
which he stated that, as project manager for both L&F and Stability Homes, he
received and approved the invoices from suppliers, that Felix Meyer, Brenham
Ready Mix’s president, approached him in “September, October and early
November about the unpaid invoices,” and that he saw “additional documents”
from Meyer to substantiate Brenham Ready Mix’s claims during conversations
occurring from September through early November 2007.
Solomon testified that his general duties as project manager included
“inspecting and the processing [of] invoices” relating to the project. He also
testified that he first saw information relating to Brenham Ready Mix’s claim when
Meyer “first told [him], hey, I didn’t get paid.” According to Solomon, that
occurred in “September, October, around the end of October, first of November of
2007.” Solomon then testified that, with regard to L&F’s and Stability Homes’
subcontracts with Mott, his job as project manager did not involve “looking at
invoices and paying invoices” because L&F and Stability Homes had a turnkey
contract with Mott. As a result, Mott gave Solomon “one price for the whole
thing,” Mott supplied all the labor and materials to complete its contractual
13
obligations, and Solomon was not “privy [to] what [Mott] actually pays for each
and how much [Mott] buys.” Mott turned in one bill to the original contractor
when it completed work on a specific phase of the project.
Brenham Ready Mix did not present any specific testimony or other
evidence that Solomon, on behalf of either L&F or Stability Homes, the two
original contractors on the project, received written notice of Brenham Ready
Mix’s lien claim for the concrete delivered in July 2007, either in the form of an
unpaid invoice or otherwise, by September 15, 2007. Even if Solomon had actual
notice by September 15, 2007, that Brenham Ready Mix had not been paid, an
issue we need not determine, courts have held that “liberal construction [of the
materialman’s liens statute does] not save the materialman’s lien from his failure to
provide timely written notice.” Wesco Distrib., 150 S.W.3d at 558 (citing Tex.
Constr. Assocs., Inc. v. Balli, 558 S.W.2d 513, 518–19 (Tex. Civ. App.—Corpus
Christi 1977, no writ)). As the Austin Court held in Wesco Distribution, “[l]iberal
construction cannot read the timing requirements out of the statute.” Id. Because
the record contains no evidence that Brenham Ready Mix notified the general
contractor, Stability Homes, of its lien claim with regard to the July 2007 deliveries
of concrete by written notice on or before September 15, 2007, as required by
Property Code section 53.056(b), we conclude that the trial court erroneously
14
determined that Brenham Ready Mix substantially complied with the statutory
notice requirements with respect to these deliveries.
We sustain the individual homeowners’ second issue with respect to the July
2007 concrete deliveries.
B. September 2007 Deliveries
For the concrete that Brenham Ready Mix delivered to the worksite in
September 2007, Brenham Ready Mix was required to give written notice of the
claim to Stability Homes, the general contractor, by November 15, 2007, which
was the fifteenth day of the second month following the month in which Brenham
Ready Mix delivered part of its materials. It is undisputed that Brenham Ready
Mix sent a written notice dated November 21, 2007, to Mott, Stability Homes, and
Art DePue concerning its claim. Brenham Ready Mix contends that it satisfied the
statutory notice requirement because Solomon testified that he received and
approved invoices for the project and that “Meyer showed him documents about
the unpaid invoices in September, October, and early November.”
As stated above with respect to the July deliveries, Solomon testified that he
did not receive invoices relating to the concrete subcontract with Mott because
Stability Homes had a turnkey contract with Mott and only received one bill from
Mott at the end of each phase of construction. Solomon testified that, while in
conversation with Meyer, he “[thought he] saw a copy of all this stuff” in
15
“September, October, around the end of October, first of November of 2007,” but
Meyer testified that Brenham Ready Mix did not send copies of outstanding
invoices to any party other than Mott, and he agreed that the November 21, 2007
notice letter “was the first written notice that [Brenham Ready Mix] provided to
the entities involved in the delivery of ready mix material other than Mott
Concrete.” Meyer specifically agreed that the November 21, 2007 letter “would
have been the first notice to the owner of the original contract”—Stability
Homes—and that “[t]here were no notice letters sent before November 21st,
2007.” Furthermore, Katherine Kenjura, the attorney who prepared the notice
letters and handled the filing of Brenham Ready Mix’s lien claims, had the
following exchange with the current homeowners’ counsel:
[Counsel]: So it’s true, isn’t it, that Stability Homes was not given
notice of this claim by the 15th day of the second month
after September 2007, that’s true, isn’t it?
[Kenjura]: They were not given notice.
[Counsel]: That’s what I said, Stability did not receive that notice,
did they?
[Kenjura]: They did not.
Even if Solomon’s deposition testimony supports an argument that Stability
Homes had actual notice that Brenham Ready Mix had not been paid for its
September 2007 deliveries, as we have already held with respect to the July 2007
deliveries, actual notice of an unpaid claim does not satisfy the statutory notice
16
requirements of section 53.056. See Wesco Distrib., 150 S.W.3d at 558; Balli, 558
S.W.2d at 518–19. Brenham Ready Mix presented evidence that Stability Homes
received written notice of the unpaid claim on November 21, 2007, but it did not
present any evidence that Stability Homes received written notice before
November 15, 2007, the relevant date pursuant to section 53.056.
Furthermore, to the extent Brenham Ready Mix contends that, because the
current homeowners do not challenge the trial court’s fact finding that Art DePue,
the initial reputed owner of the property, received timely notice of the lien claim,
this finding obviates the need to provide proper statutory notice to Stability Homes,
the general contractor, we note that our sister courts have rejected this argument.
Notice to the general contractor “is the only notice that the original contractor
personally receives” and is “for the benefit of the original contractor.” Wesco
Distrib., 150 S.W.3d at 560; Stone Fort Nat’l Bank v. Elliott Elec. Supply Co., 548
S.W.2d 441, 445–46 (Tex. Civ. App.—Tyler 1977, writ ref’d n.r.e.) (holding that
materialman did not substantially comply with notice requirement relative to
general contractor even though materialman properly and timely provided notice to
owner of property).
Based on the record, we conclude that the trial court erroneously determined
that Brenham Ready Mix substantially complied with the statutory requirement to
provide timely written notice to Stability Homes, the general contractor, pursuant
17
to Property Code section 53.056. Because Brenham Ready Mix did not
substantially comply with the statutory notice requirements with regard to its lien
for ready-mix concrete, we hold that that lien is invalid. See Wesco Distrib., 150
S.W.3d at 561 (affirming trial court’s decision that materialman’s lien was invalid
for failure to substantially comply with statutory notice requirements).
We sustain the individual homeowners’ second issue in its entirety.
Enforcement of the Liens
In their first issue, the individual homeowners contend that the trial court
erred by enforcing the full amount of both of Brenham Ready Mix’s materialman’s
liens, which covered concrete and fill dirt delivered and used on all thirty-seven
lots in Phase Three, against their individual lots. 6 They argue that the extent of
Brenham Ready Mix’s lien on their individually-owned lots is limited by the
proportionate share of the entire property represented by their lots as defined on the
recorded subdivision plats and that the total amount of the lien against the entire
property cannot be applied to each lot sold individually. Instead, the trial court can
only apply the value of the proportion of the materials used on each lot in relation
to the total value of the lien on the entire property.
6
Because we have already held that Brenham Ready Mix’s lien for concrete is
invalid due to its failure to substantially comply with the statutory notice
requirements, we analyze only whether the entire amount of Brenham Ready
Mix’s fill-dirt lien can be enforced against each individual lot.
18
Brenham Ready Mix contends that because it delivered materials to the
project pursuant to a single contract with the contractor, the contract did not
designate which materials were to be used on which lot, and it was not paid by the
lot, the lien may extend to more than one lot and the aggregate amount of the lien
may be applied to each lot. The individual homeowners respond that the amount
of actual materials used on the entire property is immaterial. It is the proportionate
share of the value of the lien that is at issue, not the proportionate value of the
actual amount of materials used. We agree with the individual homeowners.
Texas Property Code Chapter 53 governs materialman’s liens. See TEX.
PROP. CODE ANN. §§ 53.001–.287 (Vernon 2014). A mechanic’s or materialman’s
lien is a “lien created by law on real estate, and the improvements thereon, to
secure persons who, within the intent of the law, have labored or furnished
material, machinery, fixtures, or tools to erect or repair the improvements.”
Efficient Energy Sys., Inc. v. J. Hoyt Kniveton, Inc., 631 S.W.2d 538, 540 (Tex.
App.—El Paso 1982, no writ). Courts liberally construe the statutes providing for
materialman’s liens “for the purpose of protecting laborers and materialmen.”
Sledge, 653 S.W.2d at 288.
A materialman has a lien on property if it furnishes labor or materials for
construction of a house, building, or improvement, and it “furnishes the labor or
materials under or by virtue of a contract with the owner or the owner’s agent,
19
trustee, receiver, contractor, or subcontractor.” TEX. PROP. CODE ANN. § 53.021(a)
(Vernon 2014). Section 53.022(a) provides that “[t]he lien extends to the house,
building, fixtures, or improvements, . . . and to each lot of land necessarily
connected or reclaimed.” Id. § 53.022(a) (Vernon 2014) (emphasis added).
Section 53.022(c) specifies that “[a] lien against land in a city, town, or village
extends to each lot on which the house, building, or improvement is situated or on
which the labor was performed.” Id. § 53.022(c). The Property Code does not
define “lot.” The Texas Supreme Court has stated, however, that the term “lot”
“usually refers to a parcel of land as marked on a plat or survey.” Valdez v.
Diamond Shamrock Ref. & Mktg. Co., 842 S.W.2d 273, 275 (Tex. 1992). The
Property Code also does not define “necessarily.” The construction of that term is
a matter of first impression for this Court.
The law in this area derives from the Texas Supreme Court’s 1887 decision
in Lyon v. Logan, a case decided well prior to the enactment of Property Code
Chapter 53. In Lyon, the Texas Supreme Court held that “[w]hen materials have
been furnished under a single contract for buildings erected on two or more
contiguous lots owned by the person to whom the material is furnished, we see no
reason why the lien should not attach to all the lots.” 5 S.W. 72, 74 (Tex. 1887).
The court reasoned that, when materials are furnished to multiple lots owned by
the same person or entity, the property owner controls how much of the materials
20
are used on each lot, and if the owner does not make separate contracts for each
lot, “he cannot be heard to say that a lien does not attach upon all the lots upon
which the material is used.” Id.
The Texas Supreme Court later emphasized that the land, even if divided or
platted into multiple lots, must be continuous and must be treated as one unit under
the contract for the materialman’s lien to attach to all. Guar. Sav. Loan & Inv. Co.
v. Cash, 91 S.W. 781, 783 (Tex. 1906) (holding that lien attached to two
contiguous lots for which improvements were contracted but did not attach to non-
contiguous lot on which improvements were made); see also Oil Field Salvage Co.
v. Simon, 168 S.W.2d 848, 853 (Tex. 1943) (holding that “[w]here different lots or
tracts of land are contiguous, and are treated as a single tract, the lien statutes do
not require the affidavit and account to stipulate on which tract the material was
delivered or used”; and that lien attaches to whole).
The Texas Supreme Court revisited the issue of the scope of the lien in
Valdez. In Valdez, the property owner owned a 7.9 acre tract of land, on which
Valdez poured and fabricated concrete pursuant to a subcontract on the entire tract
while it was singly owned. 842 S.W.2d at 274. While Valdez was working at the
property, the owner replatted the land into a 7.1 acre tract and a 0.8 acre tract and
sold the 0.8 acre tract to Diamond Shamrock. Id. All of Valdez’s work occurred
on the 7.1 acre tract, but he claimed a lien covering the entire 7.9 acres to which he
21
had agreed to supply concrete. Id. The Texas Supreme Court ultimately
concluded that the term “lot,” as used in section 53.022, “refers to a single tract of
land as recorded in the county deed records” and held that Valdez had a properly
perfected lien that extended “to the lot that existed when construction began—the
entire undivided 7.9 acres.” Id. at 275. The court also stated that a financing
agreement reflecting the division of the property, which had been entered into
before construction began and which was not filed in the real property records, did
not “serve the same legal purposes of a duly recorded replatting,” and, as a result,
Valdez “had no reason to believe anything other than that Opus owned the 7.9-acre
tract as an undivided lot.” Id.; see also Habitat, Inc. v. McKanna, 523 S.W.2d 787,
789 (Tex. Civ. App.—Eastland 1974, no writ) (holding that trial court correctly
applied full amount of lien to forty-two lots on which materialman provided
plumbing materials to owner for townhouses).
All of the foregoing cases hold that a materialman’s lien attaches to the
entire contiguous property, or tract, on which the owner contracted to have the
materials used. But none addresses the issue presented by this case: the
enforcement of the value of a lien that attached to undivided property against
subsequent purchasers of a specified portion of the tract, here the subsequent
owners of individual lots in a subdivision platted into individual lots prior to the
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delivery of the materials but sold after the material had been supplied to the entire
undivided property.
Brenham Ready Mix contends that because the lots in Phase Three were
contiguous, because it delivered the materials to the project pursuant to a single
contract, and because the contract did not specify the amount of materials to be
used on each specific lot, the entire amount of the fill-dirt lien can be enforced
against any given individual lot. We agree that the lien attached to all the
properties. The law established in Lyon and its progeny is clear: a materialman
who provides goods and services to a property owner may place a lien for the value
of unpaid materials and labor on all the “necessarily connected” lots, i.e., all lots
that are contiguous and owned by a single owner at the time the work is done. See
Lyon, 5 S.W. at 74. But the issue is not whether the lien could be placed on the
entire property to which materials were supplied when all the lots were contiguous
and the property was owned by a single owner. The issue is whether the lien may
be enforced in its entirety against the subsequent purchasers of individual lots of
the property.
As the Texas Supreme Court noted in Cash, a case which involved two
contiguous lots and one non-contiguous lot,
The leading purpose running through [the predecessor statutes to
Property Code Chapter 53] is to secure persons furnishing labor or
materials in improving land by a lien upon that into which the labor or
material has entered; i.e., the structures and the land to which they are
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attached. . . . Evidently the statute contemplates one improvement,
constituting an entirety, to be affected by the lien to secure the value
of the work, material, etc., which made it, and not that one
improvement is to be charged [with] the cost of an entirely different
one.
91 S.W. at 782 (emphasis added). In discussing Lyon, the court noted that several
lots “constituted one continuous body or area which the owner, disregarding
artificial divisions, had the right to treat as a unit.” Id. at 783. The court then
turned to whether the lien could be extended to the third, non-adjoining lot. The
court noted that “[t]he lien is not given by contract but by the statute, and that does
not make the character of the contract at all important.” Id. The court stated:
[The statute] attaches the lien to an improvement upon land, treating
the land and the improvement as one, for the labor and material which
have gone into such improvement, and because they have gone into it,
and not because of the particular form of contract under which it was
done. The lien is given upon the house, building, improvement, etc.,
and upon the ‘lot or lots’ of land, or the ‘tract’ of land necessarily
connected therewith. This refers the inquiry to the facts existing and
not to the contracts of the parties. The contract cannot change the
actual situation of parcels of land separated from each other by
intervening lands and make them one; nor can it locate upon or
necessarily connect with one an improvement actually made on the
other, and yet this would have to be done in order, under the terms of
the statute, to give the lien claimed upon all for improvements upon
each.
Id. (emphasis added). The supreme court reversed the judgment extending the lien
to all three lots and remanded the case to give the materialman an opportunity to
establish “a lien upon each of the lots with its improvement for the price of the
labor and material expended on it.” Id.
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Here, it is undisputed that the concrete and fill dirt delivered to the
Brookside Meadow subdivision were all contracted for by the then sole owner of
the entire property and were intended by the owner to benefit the entire property.
However, before Brenham Ready Mix began delivering materials to Phase Three,
Art DePue, the owner of the property, filed a plat and a replat of Phase Three with
the Waller County Clerk’s office. These documents divided Phase Three into
thirty-seven individual lots. See TEX. PROP. CODE ANN. § 13.002(1) (Vernon
2014) (“An instrument that is properly recorded in the proper county is . . . notice
to all persons of the existence of the instrument . . . .”). The plat changed the
operative existing facts. See Cash, 91 S.W. at 782. Thus, in contrast to Valdez, at
the time Brenham Ready Mix delivered the materials to the project, although
DePue was still the record owner of the property, he had already platted and
replatted the property into thirty-seven separate lots for the Brookside Meadow
subdivision. Brenham Ready Mix was therefore on notice that DePue owned the
property as divided lots that composed the Brookside Meadow subdivision and that
the plat contemplated the sale of the lots as individual lots to individual property
owners. In other words, Brenham Ready Mix was on notice that ownership of the
property on which the lien had attached would not necessarily remain in the same
owner’s hands but might be transferred to a single future owner of the whole or
many individual owners of separate portions of the property.
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Thus, although the lots of Phase Three were contiguous and a single contract
governed Brenham Ready Mix’s delivery of materials to the project, allowing
Brenham Ready Mix to treat all thirty-seven lots of the subdivision as one, such
that its lien attached to all of the lots in Phase Three, without regard for the amount
of the materials used to improve the particular lot, it does not follow that Brenham
Ready Mix could enforce the full amount of its lien against any and all subsequent
purchasers of individual lots.
It is undisputed that the materials delivered by Brenham Ready Mix to the
project were not solely applied to one particular lot in Phase Three; instead, the
materials were applied to each of the thirty-seven lots. We therefore conclude,
under the particular facts of this case, that Brenham Ready Mix may not enforce
the full value of its fill-dirt lien against any individually-owned lot but may instead
only enforce its fill-dirt lien to the proportion the individual improved lot bears to
the entire tract. See id. at 782 (“Evidently the statute contemplates one
improvement, constituting an entirety, to be affected by the lien to secure the value
of the work, material, etc., which made it, and not that one improvement is to be
charged [with] the cost of an entirely different one.”).
Were we to hold otherwise, a cascade of absurd and unreasonable results
would follow in violation of the rules of statutory construction and the case law
applying those rules. See TEX. GOV’T CODE ANN. § 311.021(3) (Vernon 2013)
26
(“In enacting a statute, it is presumed that . . . a just and reasonable result is
intended . . . .”); In re Blair, 408 S.W.3d 843, 848 (Tex. 2013) (orig. proceeding)
(“[C]ourts will not interpret statutes to work absurd results.”).
First, the purchaser of an individual unit in a multi-million-dollar complex of
condominiums or a mixed-use development or a subdivision could—as here—be
held liable for the entire value of a debt incurred by someone else for the benefit
not simply of the individual property purchased but for all contiguous property in
the project benefitted by the original owner’s contract with a materialman. The
result could be—as it is here—the court-ordered enforcement of the entire value of
the lien against an individual lot owner for many times the value of the labor and
materials proportionately supplied to the property purchased by that individual lot
owner. And the result could well be—again, as it is here—the court-ordered sale
of the individual lot owner’s property to satisfy a debt incurred by another on a
much larger piece of property than that owned by the person against whom the
debt is enforced.
Such a result also allows for multiple recoveries of the same total value of
the lien against multiple individual property owners, violating the one-satisfaction
rule. See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 303 (Tex. 2006)
(“‘There can be but one recovery for one injury, and the fact that . . . there may be
27
more than one theory of liability[] does not modify this rule.’”) (quoting Stewart
Title Guar. Co. v. Sterling, 822 S.W.2d 1, 8 (Tex. 1991)).
For all of the foregoing reasons, we conclude that the trial court erroneously
determined that Brenham Ready Mix could enforce the full value of its fill-dirt lien
against either of the current individual homeowners’ lots. And we find support for
our conclusion as far back as Lyon. In that seminal 1887 case, the supreme court
held, “So long as [the owner of the entire property] treats each lot as one property,
by making one contract for material to be used on all of them . . . , so long may the
material-man treat the lots as one piece of property in fixing his lien upon it.”
Lyon, 5 S.W. at 74.
We now hold that the converse is also true. Once the owner no longer treats
the lots encumbered by a materialman’s lien as one piece of property by retaining
ownership of the whole, then, although the lien is fixed upon the entire property
and its scope extends to future purchasers, the value of the debt secured by any
individual lot, or individual portion of the property divided and sold to another
owner, must be proportioned to the percentage of the individual property or lot
purchased relative to the entire property subject to the lien.
Because the debt of an individual purchaser of a lot or individual portion of
the encumbered property must be treated proportionately to the area of the property
purchased, it follows that the debt is not apportioned to the value of the actual
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amount of fill-dirt supplied to the individual lot against which the lien is sought to
be enforced when the property was undivided and owned by one owner. This
conclusion too is supported by Lyon. See id. (stating that, although lien attached to
all contiguous lots that benefitted from materials and labor supplied under owner’s
contract with materialman, “it would be exceedingly unreasonable to require the
person who furnishes the material in such a case to ascertain how much of the
material [was] placed in each house,” as this was “a matter under the control of the
owner of the property improved”).
We hold that when an improvement has been made to an entire undivided
property, a materialman’s lien has attached to the whole, and an individual portion
of the encumbered property, such as a lot, is subsequently sold to an individual
homeowner or lot owner, the court must apportion the value of the lien to the
percentage of the property purchased by that individual owner to determine the
value of the lien enforceable against the individual owner. We therefore hold in
this case that the percentage of the value of the fill-dirt lien for which the
individual homeowners are liable is restricted to the individual homeowner’s pro
rata share of the total value of the lien.
We sustain the individual homeowners’ first issue.7
7
Because we conclude that Brenham Ready Mix’s concrete lien is invalid and that
the trial court improperly enforced the full amount of the fill-dirt against each of
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Conclusion
We reverse the judgment of the trial court awarding Brenham Ready Mix
foreclosure of the full amount of both of its liens and attorney’s fees, render
judgment that Brenham Ready Mix’s concrete lien is invalid, and remand the case
to the trial court to determine the dollar amount of the fill-dirt lien that can be
enforced against each of the individual homeowners’ properties.
Evelyn V. Keyes
Justice
Panel consists of Chief Justice Radack and Justices Jennings and Keyes.
the current homeowners’ properties, we vacate the trial court’s award of attorney’s
fees in favor of Brenham Ready Mix.
30