Iowa Court of Appeals Affirms Mechanic’s Lien Foreclosure for Conservation Project
On May 12, 2021, the Iowa Court of Appeals released an opinion concerning the foreclosure of a mechanic’s lien. Because the contractor substantially performed the contract, the court affirmed the foreclosure.
A farmer hired a contractor to build two ponds as part of a conservation program contract with the Natural Resources Conservation Services (NRCS). The contractor completed $50,706 worth of work. After the farmer made several payments, the contractor attempted to collect the remaining $35,201 balance, but was unable to do so. He then filed a mechanic’s lien and petitioned to foreclose the lien.
While the contractor attempted to engage in pretrial discovery, the farmer resisted, claiming that the contractor negligently built the pond. The farmer refused to cooperate for years until the contractor moved for an order compelling compliance and for sanctions. Two months before the rescheduled trial and well after the extended discovery deadline, the farmer gave the contractor 2,265 files and 49 folders on a zip drive. The district court granted the contractor’s request for sanctions and ordered any documents provided after August 29, 2017, to be excluded.
The district court went on to find in favor of the contractor foreclosing the lien in the amount of $35,201. The district court also ordered the farmer to pay the contractor’s attorney fees. The farmer appealed.
Exclusion of Evidence
The Court of Appeals first considered whether the district court abused its discretion in ordering and enforcing the exclusion of evidence submitted after August 29. Any information not disclosed during discovery may be excluded unless “the failure was substantially justified or is harmless.” Iowa R. Civ. Pro. 1.517(3).
The farmer did not comply with the discovery requests for two and a half years. While the farmer claimed he could not produce documents until after an August 2017 deposition, he did not specify which of the many documents related to the deposition, as opposed to the previously requested information. Additionally, the court found that the farmer attempted to introduce new evidence throughout trial or reintroduce evidence previously deemed inadmissible, thus creating an unnecessary 13-day trial. Therefore, the court affirmed the district court’s order and its enforcement.
Substantial Performance of a Contract
A contractor must show he “substantially complied” with the contract to enforce a mechanic’s lien against a property. At trial, the farmer’s expert witness testified that it was clear that the ponds were “substandard in build and with major deficiencies which were due to construction error,” but that he did not expect the structures to fail. He specifically noted that there was seepage in the large dam indicating that the integrity of the structure was compromised.
However, the expert could not determine the exact cause of the leak and conceded that the issue was caused by the NRCS-required design. The NRCS was also responsible for periodic inspections and gave final approval for the project. At the same time, the district court found that the farmer’s initial payments showed that he believed the contractor delivered substantial performance. Giving weight to the district court’s finding that the contractor was a credible witness, the court affirmed the foreclosure of the mechanic’s lien and award of attorney fees under Iowa Code § 572.32(1).
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