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2004-UP-261 - 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Unpublished Opinion No. 2004-UP-261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).