UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
DEBTOR CASE NO. 93-60281
MANLON, INC. PLAINTIFF
VS. ADV. NO. 93-6028
SANITATION DISTRICT NO. 1
OF CAMPBELL AND KENTON COUNTIES;
ASSOCIATED PIPELINE CONTRACTORS, INC.;
ACCELERATION NATIONAL INSURANCE
COMPANY; BELLEVIEW SAND & GRAVEL, INC. DEFENDANTS
This matter is before the Court on the Motion of defendant Acceleration National Insurance Company as Assignee of Associated Pipeline Contractors, Inc. ("Acceleration") for Summary Judgment on all Counts of the plaintiff's Complaint. This Court entered an Order on June 8, 1994, adjudging that Acceleration was entitled to Summary Judgment on Counts 4, 5, 8, 9, 10, and 11, and sustaining the Motion on those Counts. The Court overruled the Motion in regard to Count 1. The Motion in regard to Counts 2, 3, 6, 7 and 12 was taken under submission.
The plaintiff was a general contractor on a sewer construction project in northern Kentucky. It filed its Chapter 11 petition in this Court on July 12, 1993. Acceleration and the plaintiff had entered into a Master Surety Agreement on October 5, 1989. Pursuant to this Agreement, Acceleration provided payment and performance bonds, including one entered into on August 20, 1992, concerning the sewer construction project being performed for Sanitation District No. 1 ("the owner"). Defendant Associated Pipeline Contractors, Inc. ("Associated"), was a subcontractor of the plaintiff on the sewer construction project. Associated made a claim under Acceleration's bond which Acceleration paid. It then took an assignment of Associated's lien claim.
Count 2 alleges that Associated's work on the project was rejected by the owner and that Associated refused to make the changes necessary to make the work acceptable under the contract. Count 2 further alleges that such refusal was a breach of the contract, and that the plaintiff suffered actual and consequential damages as a result. Count 3 disputes the amount and validity of a lien filed by Associated. The validity of the lien has already been adjudicated by this Court by Order of October 20, 1993, and only the amount remains in dispute.
Count 6 alleges that Acceleration violated the automatic stay by sending a letter to the owner, and Count 7 alleges that Acceleration breached its contract with the plaintiff. Neither of these Counts allege any liability on the part of Associated. At the time these Counts were submitted for decision herein, this Court had not yet ruled on Acceleration's Motion for Summary Judgment on its own behalf on these Counts, among others. However, an Order Sustaining Motion for Partial Summary Judgment was entered on June 21, 1994, which disposed of the issue of Acceleration's liability on these two Counts, and it is now moot.
Count 12 seeks damages from Acceleration and/or Associated for failure to release Associated's lien. It alleges that this was a willful violation of the automatic stay. The issue of whether the plaintiff could recover damages on the basis of willful violation of the automatic stay has also been disposed of by the above-referenced Order Sustaining Motion for Partial Summary Judgment. The plaintiff may not recover damages from Acceleration under this theory, and neither may it recover them from Acceleration as Assignee of Associated.
The issues that remain to be adjudicated, therefore, are whether Associated's refusal to make changes in work it did on the project was a breach of its contract with the plaintiff, and whether the amount of Associated's lien is excessive. The Court will address the issue of the amount of the lien first. It is not clear to what extent the plaintiff claims the lien amount is excessive. In its Response to the within Motion for Summary Judgment, the plaintiff states that the lien amount upon completion of the work should be $56,106.59, "substantially less than the $83,936.16 claimed in the lien filed in the courthouse".
However, neither Acceleration nor Associated appear to claim that the lien amount is as much as $83,936.16. In fact, Acceleration in its Answer...as Assignee of Associated...to First Amended Complaint stated that "the amount of the lien/claim has been agreed to by the parties in the total amount of $67,909.17". Its Motion for Summary Judgment does not discuss the amount of the lien, and no evidence is offered by either party as to the correct amount.
A lien which is excessive in amount may be reduced. In Tempo, Inc. v. Rapid Electric Sales & Service, Inc., 132 Mich.App. 93, 347 N.W.2d 728 (1984), the court, in considering a mechanics' lien, stated:
Even where the amount of a lien filed is found to be excessive, the lien is lost only where bad faith is evident; if the error in the amount was due to a good faith mistake, the appropriate remedy is simply to reduce the amount of the lien.
At page 104. It therefore appears to this Court that, absent any allegation of bad faith, it may reduce the claimed amount, presumably $67,909.17, if it is demonstrated to be excessive.
As concerns any breach of contract by Associated, Acceleration contends that this issue is now moot because Associated completed the requested work on the job, and it has been preliminarily accepted by the owner. The plaintiff argues in response that the work was completed late, and that the completion only kept damages from increasing, it did not eliminate them. The plaintiff ignores the language of Count 2, however, which states in part:
25. Defendant Associated Pipeline's work has been rejected and changes must be made to comply with the contract specifications.
26. Defendant Associated Pipeline has orally refused to make those changes.
27. Defendant Associated Pipeline's refusal to complete the contract is a breach of its contract.
28. Plaintiff will have to complete performance under the contract and will suffer actual and consequential damages in an undetermined amount as a direct of defendant Associated Pipeline's breach of its contract.
The plaintiff ties any damages it claims to Associated's alleged refusal to complete the contract, and the necessity of completing performance under the contract itself.
The work now having been completed, the plaintiff insists that the delay in completion damaged it. However, the allegations in Count 2 have been answered by the undisputed fact of completion, and there is nothing in Count 2 which alleges that delay will cause the plaintiff damage. This Court therefore agrees with Acceleration that the question of whether Associated breached its contract with the plaintiff is moot.
In summary, the issues under Counts 2, 6, 7, and 12 are moot, as is the issue of the validity of Associated's lien under Count 3, and Acceleration's Motion for Summary Judgment as to those issues should be sustained. The amount of the lien remains to be established, and the Court reserves judgment on that issue. An order in conformity with this opinion will be entered separately.
By the Court -
Robert J. Brown, Esq.
William T. Shier, Esq.
William T. Robinson, III, Esq.
Dixie R. Satterfield, Esq.
Michael L. Baker, Esq.