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Prodigy Construction Corporation, Inc. v. Brown Capital, Ltd.

Court of Appeals of Kentucky

August 4, 2017

PRODIGY CONSTRUCTION CORPORATION, INC. APPELLANT
v.
BROWN CAPITAL, LTD.; AND NOLTEMEYER CAPITAL, LTD., D/B/A BROWN NOLTEMEYER CO. APPELLEES

         APPEALS FROM JEFFERSON CIRCUIT COURT HONORABLE SUSAN SCHULTZ GIBSON, JUDGE ACTION NO. 10-CI-403538

          BRIEFS FOR APPELLANT: D. Sean Nilsen Louisville, Kentucky

          BRIEFS FOR APPELLEES: Cathy S. Pike, A. Andrew Draut Louisville, Kentucky

          BEFORE: DIXON, J. LAMBERT, AND MAZE, JUDGES.

          OPINION AFFIRMING

          LAMBERT, J., JUDGE.

         Prodigy Construction Corporation, Inc., appeals from the Jefferson Circuit Court's order granting summary judgment to Brown Capital, Ltd., and Noltemeyer Capital, Ltd., doing business as Brown Noltemeyer Company, as well as a subsequent order releasing Brown Noltemeyer's bond. We affirm.

         The facts and procedural history are well known to the parties and will be repeated only as is necessary to the understanding of this opinion. We begin with a recitation of the circuit court's findings of fact, with references to other parties not included in this appeal omitted for simplicity's sake:

Brown Noltemeyer is the owner of certain real property and improvements, located at 4840 Outer Loop, Louisville, Kentucky (the "Property"). The Property, which formerly housed a Wal-Mart store, was leased by Brown Noltemeyer to New Vision Ministry Center, Inc. ("New Vision"), as tenant under a Lease Agreement dated March 26, 2009. After entering into the Lease Agreement with Brown Noltemeyer, New Vision apparently entered into one or more contracts with contractors and/or subcontractors for modifications of the Property to enable it to be used as a church facility (the "Project"). Prodigy was the contractor in charge of the Project. Construction commenced. Due to financial difficulties, New Vision did not complete the lease term and is no longer located at the Property. New Vision subsequently defaulted under the Lease.
On or about September 13, 2010, Prodigy filed a foreclosure Complaint against New Vision, Brown Noltemeyer and several subcontractors who asserted claims against New Vision and/or mechanics' liens against the Property. . . . On or about September 14, 2010, New Vision filed Chapter 7 bankruptcy proceedings with the United States Bankruptcy Court for the Western District of Kentucky. In the bankruptcy proceeding, the trustee sold a substantial portion of the property upon which Prodigy relies as the basis for its lien against Brown Noltemeyer (the "Demised Property"). Prodigy did not object to the sale of this property or make any effort whatsoever to recover from New Vision. Brown Noltemeyer ultimately regained possession of the Demised Property, listed the property for sale and entered into a sales contract. The Demised Property is under contract and being sold to Wal-Mart, who intends to demolish the building located on the Property, and is not using any of the alleged improvements made by Prodigy.
. . . .
Brown Noltemeyer . . . makes a Motion for Summary Judgment against Prodigy, arguing that Prodigy has not perfected its lien, in that it does not comply with the requirements of [Kentucky Revised Statute] KRS 376.080 and Hub City Wholesale Electric, Inc. v. Mik-Beth Electrical Co., 621 S.W.2d 242, 243-44 (Ky. App. 1981); and that Prodigy cannot recover under the theory of quantum meruit, as the elements to recover under that theory cannot be met by Prodigy as a matter of law, and the terms of the Lease Agreement between Brown Noltemeyer and New Vision render any recovery under the theory of quantum meruit inapplicable.
Prodigy responds that, under [Kentucky Rule of Civil Procedure] CR 43.13, affidavits are allowed to be sworn or "affirmed, " and not simply sworn, in order to be accepted by the Court; and that the statement was actually sworn, as the phrase "in testimony thereof" is in the body of the lien and should be construed as being sworn thereto. Prodigy also argues that Hub City is distinguishable and is not applicable to the facts in this case. Prodigy also argues that it provided valuable services, in that its work allowed Brown Noltemeyer to obtain a certificate of occupancy and otherwise lease the premises; that it did work on Brown Noltemeyer's property; that the services were received on the Brown Noltemeyer property; that it did so expecting to be paid by Brown Noltemeyer, by virtue of the New Vision Lease; and that Prodigy expected to be paid by Brown Noltemeyer, as the tenant was acting as the landlord's authorized agent.
The Court thereafter referred the matter to the Master Commissioner, who held a hearing on the motions on or about October 1, 2013. By Master Commissioner's Report, dated January 27, 2014, the Master Commissioner recommended . . . that the Court conclude that the mechanic's lien law, pursuant to KRS Chapter 376, does not apply. By Supplemental Report, dated January 29, 2014, the Master Commissioner tendered an order in conformity with the recommend[ed] findings from the January 27, 2014, report.
Prodigy timely filed an objection to the Master Commissioner's Report and Supplemental Report and Order, arguing that the Statement of Lien is a valid and enforceable lien that has been perfected, pursuant to KRS 376.010; that the Kentucky cases cited by Brown Noltemeyer do not apply and do not control the situation in the case at bar; that Prodigy's lien fully complies with CR 43.13; that it is undisputed that Mr. Bosco was instructed and advised that the Statement of Lien was a sworn statement and he swore or affirmed that he was telling the truth; that Brown Noltemeyer has made a representation in the New Vision bankruptcy proceeding which constitutes a judicial admission that Prodigy had a lien in the amount of $425, 150.10 and is estopped ...

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