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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Lakloey, Inc. v. Ballek (07/10/2009) sp-6386

Lakloey, Inc. v. Ballek (07/10/2009) sp-6386

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,


) Supreme Court No. S- 12961
) Superior Court No. 4FA-07- 0932 CI
v. )
) O P I N I O N
CONSTRUCTION, and WHITE EAGLE,) No. 6386 - July 10, 2009
INC., )
          Appeal  from the Superior Court of the  State
          of    Alaska,   Fourth   Judicial   District,
          Fairbanks, the Honorable Winston S.  Burbank,
          Judge pro tem.

          Appearances: John J. Connors, Law  Office  of
          John   J.   Connors,  P.C.,  Fairbanks,   for
          Appellant.  John J. Burns, Borgeson &  Burns,
          P.C., Fairbanks, for Appellee.

          Before:    Fabe,  Chief  Justice,   Eastaugh,
          Carpeneti, and Winfree, Justices.  [Matthews,
          Justice, not participating.]

          WINFREE, Justice.

          Alaskas  mechanics  lien statutes  allow  a  lessor  of
construction equipment to lien real property if its equipment  is
used  under agreement with the property owner or the owners agent
for  the  construction, alteration, or repair of  a  building  or
improvement  on  the  property.1   In  this  case  a   landscaper
purchased fill dirt from a construction company and rented  heavy
machinery  from an equipment lessor to remove and  transport  the
          dirt from the construction companys property.  The landscaper did
not  pay for the equipment rental, and the lessor recorded a lien
against  the  property on which the fill dirt had  been  located.
The  construction company sued to expunge the lien.  The superior
court  found in favor of the construction company, declaring  the
lien  void  and awarding the construction company full reasonable
attorneys  fees  under the mechanics lien statutes.   The  lessor
appeals.  We affirm the rulings because the lessors equipment was
not used to perform lienable work on the property and because the
court  did not abuse its discretion in determining the amount  of
attorneys fees awarded under the statutes.
     A.   Facts
          White Eagle, Inc. owned property in North Pole on which
it intended to build condominiums.  Three pits were excavated for
foundations, and the dirt removed from the pits was piled  up  on
White  Eagles property.  The dirt pile extended onto an  adjacent
state  right-of-way,  but the state never contacted  White  Eagle
about this encroachment.
          In  September  2006  Charles Yingst,  the  owner  of  a
landscaping business, contacted Jeffrey Ballek, the president  of
White   Eagle,  about  purchasing  some  of  the  dirt  for   his
landscaping  projects.   Yingsts  landscaping  projects  did  not
involve  Ballek  or White Eagle.  Ballek and Yingst  agreed  that
Yingst  would purchase dirt at one dollar per yard and would  use
his own equipment and personnel to load and move the dirt.
     Yingst  rented  a  loader  from Lakloey,  Inc.   The  rental
agreement  did not mention Ballek, White Eagle, or  White  Eagles
property; it specified only that the loader would be used in  the
North  Pole  area.  Yingst testified that he used the  loader  to
remove some dirt from White Eagles property, which then was  used
for Yingsts landscaping projects.
          Yingst later was arrested and convicted of felony theft
unrelated to this case.  Yingsts employees returned the loader to
Lakloeys  equipment  yard in damaged condition.   Fearing  Yingst
would  be unable to pay the rental charges and the cost to repair
the loader, Lakloey recorded a lien against White Eagles property
on  October  27,  2006, for $9,663 plus costs, fees,  and  twelve
percent  interest.   Ballek learned of the lien and asked Lakloey
to  release  it.   Although Lakloey indicated  a  willingness  to
negotiate, the lien remained in place.
     B.   Proceedings
          White  Eagle  filed  suit  requesting  that  the  court
declare  Lakloeys lien invalid and award actual and consequential
damages  caused by the lien.  Lakloey answered and counterclaimed
to foreclose its lien.
          During  discovery  Lakloey submitted  an  interrogatory
asking  White  Eagle  to  identify any  actual  or  consequential
damages  caused by the lien.  White Eagle responded by  asserting
damages from [i]nterest lost due to the delay in closing sales of
real  property and in [l]ost tax advantage for delay of a planned
IRS   1031  exchange during the 2006 tax year,  but  provided  no
supporting evidence.
          Shortly  before trial Lakloey filed a motion in  limine
to  exclude  evidence  of  White  Eagles  claim  for  actual  and
consequential damages, arguing that White Eagle had  provided  no
information  relevant to damages during discovery.   White  Eagle
opposed  the  motion as untimely.  The court granted the  motion,
but,  noting  that White Eagle had also argued an entitlement  to
inconvenience  and  frustration  damages,  gave  White  Eagle  an
opportunity to provide legal support authorizing such damages  in
the   mechanics  lien  context.   White  Eagle  then  voluntarily
withdrew its request for inconvenience and frustration damages.
          After  a bench trial the court determined that (1)  the
purchase-and-sale agreement between Yingst and  White  Eagle  did
not  give rise to a contractor-subcontractor agreement under  the
mechanics  lien statutes, and (2) Yingst was not otherwise  White
Eagles subcontractor for the condominium project on the property.
The  court  also  determined that Yingst did not have  actual  or
constructive  authority to enter into any agreements  that  would
obligate  or bind White Eagle.  For these reasons the court  held
that  Lakloey  was not legally entitled to file a lien  on  White
Eagles property.  The court designated White Eagle the prevailing
party and awarded it costs and reasonable attorneys fees pursuant
to  AS  34.35.074(a)(2);2 no damages were awarded  because  White
Eagle had withdrawn its damages claims.
          White  Eagle moved for attorneys fees in the amount  of
$43,853.    Lakloey  opposed  the  motion.   The  court   awarded
attorneys fees totaling $35,000.
          Lakloey  appeals the courts decision that the lien  was
invalid and the courts award of attorneys fees.
          The validity of a mechanics lien is a mixed question of
fact and law.3  Interpretation of the statutory requirements  for
a  valid  lien  is  a  question of law  to  which  we  apply  our
independent judgment;4 whether these requirements are  met  is  a
question  of fact.5  We review the trial courts factual  findings
for  clear  error, which exists when this court is  left  with  a
definite and firm conviction, based on the entire record, that  a
mistake has been made.6
          We  review a trial courts award of attorneys  fees  for
abuse  of  discretion.7  The interpretation of rules and statutes
governing attorneys fees presents a question of law to  which  we
apply our independent judgment.8
     A.   Lakloey Was Not Entitled To Record a Lien Against White
          Eagles Property.
          A.   Lakloey contends that the use of its equipment to remove
dirt from White Eagles property entitled Lakloey to record a lien
against the property under both AS 34.35.050(4) and AS 34.35.065.
Alaska  Statute  34.35.050(4)  allows  a  mechanics  lien  for  a
claimant  who furnishes equipment that is delivered to  and  used
upon  real property under a contract with the owner or the  agent
of  the  owner for the construction, alteration, or repair  of  a
building  or  improvement.   Alaska Statute  34.35.065  allows  a
mechanics  lien  even  when  no  such  contract  exists,  if  the
          equipment was used for construction of a building or improvement
and  the  property owner knew this activity was taking place  but
did not disclaim responsibility for it.9
          A  lien  claimant under either provision must show  its
equipment was used for the construction, alteration, or repair of
a  building  or  improvement.   The definition  of  construction,
alteration,    or   repair   includes   partial   construction.10
 [B]uilding or other improvement includes a wharf, bridge, ditch,
flume, tunnel, fence, well, land clearing, machinery, aqueduct to
create hydraulic power, or for mining or other purposes, and  all
other  structures and superstructures.11  The key issue  then  is
whether  Yingsts purchase and removal of dirt from  White  Eagles
property  was,  as  Lakloey argues, partial  construction  of  an
improvement and therefore lienable work.
          The trial court concluded that the agreement for Yingst
to  pay White Eagle one dollar per yard of fill dirt removed from
White  Eagles  property  did  not  give  rise  to  a  contractor-
subcontractor  agreement for the purposes of  AS  34.35.050.   It
also  concluded  that neither Yingst nor his  company  were  sub-
contractors  of  White  Eagle . . . for the building/construction
project  on  .  .  .  the  White Eagle sub-division.   Under  the
mechanics lien statute, a prime contractor is defined as a person
who  enters  into  a contract directly with an owner  to  furnish
labor,  materials,  services, or equipment for the  construction,
alteration, or repair of a building or other improvement  on  the
owners  real property.12  A subcontractor is a person who  enters
into  a  contract  with  a  prime contractor  to  furnish  labor,
services,  or  equipment  for  the construction,  alteration,  or
repair  of  a  building or other improvement on the  owners  real
property.13  In light of these statutory definitions, the  courts
conclusions  that  Yingst was not White Eagles subcontractor  and
that  their  agreement  did not create a contractor-subcontractor
agreement  for the purposes of AS 34.35.050 must  be  read  as  a
finding  that Yingst did not engage in construction or alteration
of a building or improvement on White Eagles property by removing
the fill dirt.
          Lakloey  contends that when considering its  arguments,
the trial court erred by failing to apply the remedial intent and
effect  of  the  mechanics  lien statutes.   We  have  previously
observed  that  there is a significant distinction between  those
portions of Alaska mechanics liens statutes which are remedial in
nature,  and those portions which articulate mandatory conditions
precedent to the very creation and existence of the lien.14  These
mandatory conditions precedent, such as the determination of  who
qualifies as a lienholder are to be strictly construed.15
          Lakloey substantively argues that [t]he foundations for
White Eagles buildings . . . qualify as an other improvement  and
that the removal of the [dirt] was a necessary component of . . .
White  Eagles  condominium  construction.   Although  foundations
would  be  improvements, the evidence fails to show, and  Lakloey
does  not explain, how Yingsts purchase and removal of dirt  from
standing  piles on White Eagles property was partial construction
of these foundations or any other improvement.
          The trial court found that Yingst contacted White Eagle
          and asked to purchase dirt, which had already been excavated and
placed  in  piles, for use on Yingsts own projects.   Yingst  and
White  Eagle reached an agreement for Yingst to purchase dirt  at
one dollar per yard and that [Yingst] would use his equipment and
personnel to load and move the fill dirt.  The agreement did  not
require Yingst to take any, all, or some specific amount of  dirt
from the property.  The contract was solely for the sale of dirt,
and Yingsts removal of that dirt was not partial construction  of
the  condominium  foundations or any other improvement  on  White
Eagles property.16
          Lakloey  also argues that removing dirt from the  piles
was lienable activity because it benefitted White Eagle.  Lakloey
relies  on  testimony suggesting that there was  more  dirt  than
could  be used as backfill on the property and that the dirt  was
of  poor  quality.17  It also asserts that the  removal  of  dirt
sitting on the states right-of-way potentially saved White  Eagle
from incurring fees and fines.
          The  trial  court  found that [t]he  agreement  between
Yingst  and White Eagle to remove dirt was of primary benefit  to
Yingst  and  a  secondary or ancillary benefit  to  White  Eagle.
Yingst  may well have benefitted White Eagle in paying  cash  for
dirt,  saving  White  Eagle potential fines  by  the  state,  and
freeing up space for construction.  But beneficial activity alone
does  not  give  rise to a lien right unless it is  part  of  the
process of constructing, altering, or repairing some structure on
the  land,18 and the sale of an unfixed quantity of dirt  from  a
standing pile, without more, does not satisfy that element of the
mechanics lien statutes.
          The  trial courts finding that Yingst did not construct
any  improvement by removing fill dirt from White Eagles property
is  not  clearly  erroneous.  It was not error to  conclude  that
Yingst  did  not perform lienable activity on White  Eagles  land
with  Lakloeys  equipment and that Lakloeys  lien  therefore  was
invalid.   We affirm the trial courts decision in favor of  White
     B.   It  Was  Not  Error  To Award White  Eagle  $35,000  in
          Attorneys Fees.
          Alaska  Statute  34.35.074(a) provides full  reasonable
attorneys fees for successfully enjoining a mechanics lien or for
recovering  damages caused by an invalid lien, which White  Eagle
sought in this litigation.  The trial court determined that White
Eagle was the prevailing party because it successfully challenged
Lakloeys lien and Lakloey was unable to foreclose that lien.  The
trial  court then applied the statutory attorneys fee  provisions
instead of Rule 82.19  White Eagle requested an award of $43,853,
representing all of its attorneys fees in the litigation, and the
court awarded $35,000.
          Lakloey  argues the attorneys fee award should  be  set
aside because it was not limited to fees White Eagle incurred  on
its  successful injunctive claim.  But the success  of  both  the
injunctive  and damages claims depended on the legal validity  of
the  lien, and the bulk of the litigation focused on that  issue.
The only fees attributable specifically to the damages claim, but
          not to the validity claim, were incurred in limited interrogatory
responses, opposing the motion in limine, and preparing  proposed
jury  instructions.   Totaling the  value  of  every  time  entry
mentioning  these  activities results  in  legal  fees  of  about
$11,800,  and because the work in drafting jury instructions  and
responding  to interrogatories also involved issues unrelated  to
damages,  this figure overstates the amount of fees  attributable
to the damages claim alone.  The trial court reduced White Eagles
request  for attorneys fees from $43,853 to $35,000, a difference
of   $8,853.   Because  this  reduction  is  consistent  with   a
determination that not all of White Eagles legal fees were  spent
on the claim on which it prevailed, the ultimate award was not an
abuse of discretion.20
          Lakloey  also argues the attorneys fee award should  be
set  aside because the superior court did not offset fees awarded
to  White  Eagle  by  the  amount of  fees  Lakloey  incurred  in
successfully  defending White Eagles damages claim, citing  Brand
v.  First  Federal Savings & Loan.21  Brand involved a  plaintiff
seeking to foreclose liens on four separate properties owned by a
bank.22   The plaintiff successfully foreclosed on one lien;  the
bank  successfully enjoined the three other liens.23   The  trial
court  did  not  award  attorneys fees to  either  party.24   The
plaintiff appealed, arguing he was entitled to attorneys fees  on
his  single  successful foreclosure under AS 34.35.005(b),  which
provided that [i]n an action to foreclose a lien, the court shall
allow . . . a reasonable attorney fee for the foreclosure of  the
lien.25  We affirmed the trial court in that case, stating it was
reasonable to assume that the trial court had taken the attorneys
fees  due  the plaintiff for successfully foreclosing  one  lien,
then offset those by the attorneys fees that would have been  due
the  defendant for successfully defending against the other three
          Lakloey cites Brand for its argument that a trial court
is justified in setting off fees for the successful claim against
costs incurred on the successful defense of other claims.  But we
have long held that the determination of the prevailing party  is
within the province of the trial courts broad discretion.27   And
we  have often stated that the prevailing party generally is  the
one  who prevails on the main issue in the case.28  In this  case
that party was White Eagle, and the trial court did not abuse its
discretion  in  concluding that Lakloey was not  entitled  to  an
award of attorneys fees.
          The decision of the trial court is AFFIRMED.
     1    AS 34.35.050(4).

     2    AS 34.35.074 provides in part:

          (a)  A  person injured by a violation  of  AS
          34.35.050   34.35.120  may  bring  a    civil
          (1)  except as provided in AS 34.35.062,  for
          actual  and  consequential damages  that  are
          proximately  caused  by  the  violation  plus
          costs, including reasonable attorney fees;
          (2)  to  enjoin  the violation,  and  if  the
          person  prevails, the person shall be awarded
          costs, including reasonable attorney fees.
     3     See,  e.g., Vaara v. Ketchikan Spruce Mills, 432  P.2d
618,  621-22  (Alaska  1967) (noting  that  compliance  with  the
mechanics lien statutes involves factual and legal questions).

     4     D.H. Blattner & Sons, Inc. v. N.M. Rothschild &  Sons,
Ltd., 55 P.3d 37, 41 (Alaska 2002).

     5    See Vaara, 432 P.2d at 621-22.

     6     Nerox Power Sys., Inc. v. M-B Contracting Co., 54 P.3d
791, 794 (Alaska 2002).

     7     Braun  v.  Denali Borough, 193 P.3d 719,  726  (Alaska

     8    See Grimes v. Kinney Shoe Corp., 938 P.2d 997, 1000 n.7
(Alaska 1997) (holding prior version of Alaska Wage and Hour  Act
did   not   provide  for  attorneys  fee  award   to   prevailing

     9    AS 34.35.065 provides in relevant part:

          (a) A building or improvement mentioned in AS
          34.35.050  constructed with the knowledge  of
          the owner of the land or the person having or
          claiming   an   interest  in  the   land   is
          considered to be constructed at the  instance
          of the owner or person having or claiming the
          (b)  The interest owned or claimed is subject
          to  a  lien  recorded under  AS  34.35.050  -
          34.35.120, unless
          (1) the owner or person having or claiming an
          interest  in  the  land gives  notice  within
          three  days  after the owner or other  person
          obtains knowledge of the construction .  .  .
          that  the owner or other person will  not  be
          responsible  for it, by posting a  notice  to
          that  effect  in writing in some  conspicuous
          place . . . .
     10    AS 34.35.120(3).

     11    AS 34.35.120(1).

     12    AS 34.35.120(15).

     13    AS 34.35.120(17).

     14    H.A.M.S. Co. v. Elec. Contractors of Alaska, Inc., 563
P.2d 258, 262 (Alaska 1977).

     15     Nerox  Power  Sys., Inc. , 54  P.3d  at  800  (citing
H.A.M.S. Co., 536 P.2d at 262; AS 34.35.930).

     16    We observe that Yingsts payment of money to White Eagle
does  not,  in  and  of  itself, compel the conclusion  that  his
activity  was not for the purpose of constructing an improvement.
A  contractor conceivably could be paid in kind (with  dirt)  for
its  work, and if the value of the dirt removed was greater  than
the  value  of construction work, then the contractor  might  pay
cash  to make up the difference.  This was not the case here,  as
Yingst did not perform any construction work on the property.

     17    Testimony to this effect was contradicted by testimony
of other witnesses.  One witness, White Eagles foreman, testified
that  the sale of dirt to Yingst ultimately required White  Eagle
to  purchase  more dirt to finish grading and to use as  backfill
once  the  foundations were set.  Another witness testified  that
although some of the dirt was of poor quality, about half  of  it
was good material and all could be used for fill dirt.

     18    Cf. Noble v. Gustafson, 204 F. 69, 71 (9th Cir. 1913).
The  Ninth  Circuit, interpreting the territorial law of  Alaska,
held that miners did not have a valid mining lien for the work of
sluicing a mining dump to extract gold from the soil.  The mining
lien    statute  gave  a  lien  to  laborers  and  other  persons
performing  labor upon the construction, development, alteration,
or  repair  of  any building, flume, mine, tunnel,  aqueduct,  or
other  structure.   The  court  distinguished  the  mining  work,
namely, the sinking of the shafts, the running of the tunnels and
the development work in general, from the sluicing, which was not
a  work  incidental  to  the  development  of  the  mine  or  the
alteration  or  repair  of  any building,  flume,  or  tunnel  in
connection  therewith.   Id.   As in  Noble,  the  mere  fact  of
financial  benefit in this case does not give rise to a  lien  if
the activity does not fall within the statutory terms.

     19     Alaska R. Civ. P. 82(a) (Except as otherwise provided
by  law  or agreed to by the parties, the prevailing party  in  a
civil case shall be awarded attorneys fees calculated under  this

     20     Lakloey  also  argues that White  Eagles  motion  for
attorneys  fees  was unreasonable because it failed  to  identify
which  fees  White  Eagle incurred in pursuit of  its  successful
claim to enjoin the lien and which fees it incurred in pursuit of
its  unsuccessful claim for damages.  It is possible to determine
from   White  Eagles  records  which  entries  were  attributable
specifically to the damages claim.  The trial court did not abuse
its discretion by declining to reject the motion on its face.

     21    Brand v. First Fed. Sav. & Loan Assn of Fairbanks, 478
P.2d 829 (Alaska 1970).

     22    Id. at 829-30.

     23    Id. at 829-30.

     24    Id.

     25     Id.  at  833-34  (quoting AS 34.35.005(b))  (internal
quotation marks omitted).

     26     Id. at 834.  AS 34.35.074(a)(2), providing a cause of
action  to  enjoin an invalid lien, did not exist when Brand  was
decided.   See  ch.  102,  6, SLA 1986.  The bank  therefore  was
assumed  to be entitled to attorneys fees under Rule 82  for  its
successful defense.  Brand, 478 P.2d at 834.  The 1986  statutory
change  eliminated the issue posed in Brand.  When  a  party  now
brings  a  foreclosure action against a property owner but  loses
because the lien is invalid, the property owner should be awarded
attorneys fees under AS 34.35.074(a)(2).

     27     See, e.g., Bliss v. Bobich, 971 P.2d 141, 148 (Alaska

     28    See, e.g., K & K Recycling, Inc. v. Alaska Gold Co., 80
P.3d  702,  721 (Alaska 2003)); Gwichin Steering Comm. v.  State,
Office of the Governor, 10 P.3d 572, 584 (Alaska 2000) (To decide
which  party  prevails, the court must determine, in  an  overall
sense,  which  party  the decision favors.)  (internal  quotation
marks and citations omitted).

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