Contracts and Claims
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CONCRETE SUPPLIER PREVAILS ON LIEN EVEN THOUGH MATERIALS SUPPLIED WERE NOT INCORPORATED INTO THE FINAL STRUCTURE



In a unique Missouri Court of Appeals decision, a concrete supplier was able to enforce its lien against a project in accordance with R.S.Mo. §§ 429.010-429.340, even though virtually none of the materials it supplied were incorporated into the final structure. Bates County Redi-Mix, Inc. v. Windler, 162 S.W.3d 98 (Mo. Ct. App. 2005). The case represents a novel application of the general rule which provides that only materials that ‘went into’ or were ‘used in’ construction of the property are lienable. E.g, Boyer Lumber, Inc. v. Blair, 510 S.W.2d 738, 745 (Mo. Ct. App. 1974).

This unusual situation arose when the concrete supplier, who apparently provided perfectly good-quality concrete, was not paid because the concrete subcontractor allegedly poured the concrete foundation improperly and the owner required the defective foundation to be totally demolished and removed from the site. The concrete supplier was not paid and accordingly filed its mechanic’s lien and a suit to enforce it. Bates, 162 S.W.3d at 100.

The trial court held that the concrete supplier was not entitled to a mechanic’s lien because the concrete was removed from the property entirely and was not incorporated into the final structure. Id. at 101. The concrete supplier appealed and the Missouri Court of Appeals reversed the trial court’s decision. The Court of Appeals went into a detailed analysis of the case law in the context where materials are not incorporated into the final structure and where work is destroyed during construction. The Court of Appeals concluded that suppliers of only material (that do not perform work on the project) should be protected when they provide acceptable materials and those materials are ruined by others during construction. Accordingly, the Court of Appeals held that the concrete supplier was entitled to a mechanic’s lien against the property. Id. at 108.
The court found its case to be distinguishable from other Missouri cases, which have held that only materials actually used or consumed in the construction process and which benefited the property were lienable. For example, in Shine’s Executrix v. Heimburger, the court ruled that a materialman was not entitled to a mechanic’s lien for bricks used in a building that was destroyed by high winds during construction. 60 Mo. App. 174 (Mo. App. 1895). However, the materialman was also the subcontractor hired to build the structure; thus, the court ruled that a subcontractor is required to look at the terms of contract between the owner and the general contractor, and should therefore bear the loss in the absence of a contract provision allocating the risk to the owner. Id. at 184.

The court in Bates reasoned that the requirement that the material be used in the property for a lien to attach was not a statutory necessity. Rather, it was a factor used by the Shine’s Executrix court in determining whether equity should allow such a lien. Bates, 162 S.W.3d at 103. In this case, however, the court reasoned that the materialman had no contractual relationship with the owner and so could not contractually shift the risk. Id. at 107.

In Davidson v. Fisher, a materialman was also precluded from asserting a mechanic’s lien for materials supplied to a construction project. 258 S.W.2d 297 (Mo. Ct. App. 1953). However, in that case the court ruled that there was not enough evidence to find that the materials were used in the construction process at all. Id. at 302. A similar result occurred in Kansas City Elec. Supply Co. v. Bomar Elec. Co. when the court also did not find enough evidence that the materials supplied were ever used. 581 S.W.2d 411, 413 (Mo. Ct. App. 1979). The court in Bates easily distinguished these cases from its own facts, finding that there was no disagreement that the materialman’s concrete was actually utilized in the completion of the property’s foundation before it was destroyed. 162 S.W.3d at 104.

The court did find significant similarity to the facts in Boyer. In that case, the plaintiff supplied materials for a house that was destroyed by a fire during construction. The court granted the plaintiff a lien that included the value of material that was at the site but that was burned before it was ever installed. The court concluded that the material was “nevertheless ‘consumed’ in the sense of being used or depreciated before it could have been incorporated into the structure,” thus qualifying it for a lien. 510 S.W.2d at 747. The court found Boyer to be the most similar to its own facts because it involved a materialman, rather than a contractor or subcontractor, and the material was destroyed and removed. Bates, 162 S.W.3d at 105.

The court further established that the general requirement that the materials be used in the property is based on a policy of preventing contractors from obtaining supplies from materialman and then secretly transporting them to different construction sites. Id. at 102 n.5 (citing State v. Gregory, 71 S.W. 170, 171 (Mo. 1902). Finding that policy inapplicable, id. at 104, it also noted the general policy in Missouri that mechanic’s lien statutes are to be construed as favorably to materialmen as their terms allow. Id. at 107 (citing Refrigeration Supplies, Inc. v. J.L. Mason of Mo., Inc., 872 S.W.2d 105, 107 (Mo. Ct. App. 1994)).

The court concluded its analysis after recognizing the familiar principle that when one of two innocent parties must suffer a loss caused by an independent wrongdoer, the loss should be shifted to the party that gave the wrongdoer authority to commit the harm. Id. at 107-08 (citing Henry & Coatsworth, Co. v. Evans, 10 S.W. 868, 872 (Mo. 1889)). Applying that principle, the court held that, though both parties were innocent, the owner was in a better position to accept the risk because the owner hired the contractor and could oversee his work. Id. at 108. Finally, the court acknowledged that since the function of the mechanic’s lien law was to encourage materialman to extend credit to land so that improvements will be made, the best result was for the innocent plaintiff to be entitled to a lien, even for improperly installed materials that are later removed from the land.