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2005-UP-422 - Zepsa Construction v. Randazzo

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

Zepsa Construction, Inc.,        Appellant,

v.

Phillip A. Randazzo and Virginia M. Randazzo,        Respondents.


Appeal From York County
John C. Hayes, III, Circuit Court Judge


Unpublished Opinion No. 2005-UP-422
Submitted June 1, 2005 – Filed June 27, 2005


AFFIRMED


Lucy London McDow, of Rock Hill, for Appellant.

Douglas F. Gay, of Rock Hill, for Respondents.

PER CURIAM:  Zepsa Construction, Inc. appeals the trial court’s order denying its request for disbursement of funds from a mechanic’s lien bond to pay a personal judgment Zepsa asserts it is owed from Phillip and Virginia Randazzo.  We affirm.1

FACTS

The Randazzos entered into a contract with Zepsa under which Zepsa agreed to construct a restaurant for the Randazzos for $610,000.  After Zepsa commenced work on the project, the Randazzos notified it, through their attorney, that they wished to terminate the contract.  Subsequently, Zepsa filed a complaint and notice of mechanic’s lien against property owned by the Randazzos seeking payment of a total of $108,461.33.  This amount included the alleged $81,346.00 balance due on the Randazzos’ account and attorney’s fees in the amount of $27,115.33. 

Initially, the Randazzos did not respond to Zepsa’s complaint and after a hearing on the matter, the trial court issued an order for judgment and foreclosure of mechanic’s lien.  The trial court subsequently set aside this default judgment after the Randazzos asserted service of the summons and complaint was insufficient.  After another hearing on the matter, the trial court issued an order in January of 2001 finding the Randazzos liable for $10,846 for the unpaid balance of the work done to the property and $40,000 in lost profits and overhead to Zepsa.  In addition to the $50,846 award, the trial court ordered the Randazzos to pay prejudgment interest on this amount to Zepsa.  Later, the trial court issued another order requiring the Randazzos to pay attorney’s fees and costs to Zepsa pursuant to the mechanic’s lien statute. 

The Randazzos appealed both the trial court’s orders.  This court initially issued an order affirming, as modified, the trial court’s order.2  In that order, we determined the trial court erred in awarding the $40,000 in lost profits and overhead to Zepsa.  First, we determined the trial court erred in awarding this amount as an element of damages under Zepsa’s breach of contract action because Zepsa only pleaded a mechanic’s lien theory of recovery.  Second, we found as lost profits and overhead generally are not recoverable as an element of damages in mechanic’s lien foreclosure action, Zepsa was limited to recovery of only $10,846.00 for the work actually completed.  Later, we withdrew this opinion and filed a substituted opinion only addressing the issue of whether the trial court erred in determining lost profits and overhead were recoverable as an element in a mechanic’s lien foreclosure action.3  Again, we determined such amounts were not recoverable under a mechanic’s lien foreclosure action, thereby only entitling Zepsa to $10,846, the amount due related to work performed. 

Zepsa filed an ex parte motion to attach a $108,461 cash bond the Randazzos had posted with the York County Clerk of Court, pursuant to South Carolina Code Annotated Section 29-5-110.  Zepsa sought to have the entire amount of the funds disbursed to pay the mechanic’s lien judgment and the personal judgment it claimed the trial court ordered in the underlying action.  The Randazzos opposed this motion, objecting to disbursement of any funds other than the $10,846.00 for the mechanic’s lien judgment.  After the hearing, the trial court issued an order granting Zepsa’s request with regard to the amount owed under the lien.  This appeal followed.

LAW/ANALYSIS

Zepsa argues the trial court erred in not ordering disbursement of the entire bond amount.  Zepsa asserts although this court’s decision precluded damages for lost profits and overhead under its action to foreclose on a mechanic’s lien, it remains entitled to this award as a personal judgment against the Randazzos. 

Regardless of whether Zepsa is entitled to a personal judgment against the Randazzos, we find Zepsa is not entitled to collect this amount from the bond posted by the Randazzos.  Section 29-5-110 of the South Carolina Code governs the release of a lien upon filing security.  This section provides: 

At any time after service and filing of the statement required under § 29-5-90 the owner or any other person having an interest in or lien upon the property involved may secure the discharge of such property from such lien by filing in the office of clerk of court or register of deeds where such lien is filed his written undertaking, in an amount equal to one and one-third times the amount claimed in such statement, secured by the pledge of United States or State of South Carolina securities, by cash or by a surety bond executed by a surety company licensed to do business in this State, and upon the filing of such undertaking so secured the lien shall be discharged and the cash, securities or surety bond deposited shall take the place of the property upon which the lien existed and shall be subject to the lien. In the event of judgment for the person filing such statement in a suit brought pursuant to the provisions of this chapter, such judgment shall be paid out of the cash deposited or, in event of pledge of securities, it shall be paid from the proceeds of a sale of so much of the pledged securities as shall be necessary to satisfy such judgment or, in event of the filing of a surety bond, the surety company issuing such bond shall pay such amount found due, not to exceed the amount of the bond.

. . . .

S.C. Code Ann. § 29-5-110 (Supp. 2004) (emphasis added).  This statute allows any person with an interest in property subject to a mechanic’s lien to file a bond releasing the property from the lien.  When a lien is released upon the posting of a bond pursuant to this statute, the effect of the release is to transfer the lien from the property to bond.  See Maddux Supply Co. v. Safhi, Inc., 316 S.C. 404, 412, 450 S.E.2d 101, 105 (Ct. App. 1994). 

Prior to trial, the Randazzos posted a $108,461.33 bond in exchange for the release of the mechanic’s lien placed on their property by Zepsa.  After the trial and the disposition of Zepsa’s appeal, Zepsa filed a motion for attachment of the Randazzos’ bond.  In its motion, Zepsa acknowledged the bond was for the purpose of releasing of the mechanic’s lien pursuant to section 29-5-110.  In addition, Zepsa stated in its motion:  “The funds on deposit for the mechanic’s lien released exceed the amount necessary to pay the liened part of Zepsa’s judgment.  Zepsa seeks an order attaching the excess funds so that they may be applied against its personal judgment against the Randazzos, which is not covered by the lien.” 

The bond the Randazzos filed may only be used to satisfy a judgment awarded pursuant to the provisions of the mechanic’s lien statutes.  Even if Zepsa may recover the $40,000 related to lost profits and overhead as a personal judgment against the Randazzos, it cannot seek to recover this amount in an action to attach a mechanic’s lien bond.4 

CONCLUSION

In accordance with our findings above, the order of the trial court is

AFFIRMED. 

GOOLSBY, HUFF, and KITTREDGE, JJ., concur.


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

2 Zepsa Constr., Inc. v. Randazzo, 356 S.C. 39, 586 S.E.2d 599 (Ct. App. 2003).

3 Zepsa Constr., Inc. v. Randazzo, 357 S.C. 32, 591 S.E.2d 29 (Ct. App. 2004).

4 We take no position as to whether the trial court’s January of 2001 order included an award of a personal judgment.