Iowa Court Reverses Dismissal of Mechanic’s Lien Foreclosure Petition

July 22, 2021 | Kitt Tovar Jensen

On July 21, 2021, the Iowa Court of Appeals issued an opinion involving a subcontractor’s attempt to foreclose on a mechanic’s lien. The district court dismissed the case, finding that the subcontractor had not property provided written notice to the owners. Ruling that the district court went beyond the pleadings to make that determination, the Court of Appeals reversed the case and remanded for further proceedings.

Background

A couple hired a contractor to build a custom home. The contractor hired a subcontractor to perform concrete work. The subcontractor completed the project by June 24, 2019; however, a $27,126 balance still remained on August 7th.

Four months later, the subcontractor filed a verified statement of account of the demand due in the Mechanic’s Notice and Lien Registry (MNLR). See Iowa Code § 572.8 (2019). In May 2020, the subcontractor filed a lawsuit to foreclose on the lien.

The couple accepted service of the lawsuit and filed a pre-answer motion to dismiss, alleging that the subcontractor did not perfect the lien because he failed to give proper notice under Iowa Code § 572.10. The district court ruled that the lien was not perfected and granted the motion to dismiss. The subcontractor appealed.

Perfecting a Mechanic’s Lien

The court first considered whether a mechanic’s lien can be perfected by giving notice of the foreclosure through service of the lawsuit. Mechanic’s liens are created by statute. See Iowa Code § 572.1 et seq. To enforce a mechanic’s lien, the lien must be perfected. Iowa Code § 572.24(1). A contractor or subcontractor can perfect a lien by posting to the MNLR within 90 days of the last delivery of material or labor. Alternatively, if the lien is not perfected within 90 days, the contractor or subcontractor must both post to the MNLR and give written notice to the owner. Id. at 572.10. Because perfection is a requirement to enforce a lien, the court agreed with the district court that giving written notice is, by default, a precursor to bringing a lawsuit.

Consideration Outside of the Pleadings

Next, the court determined whether the district court went beyond the pleadings to decide the merits of the case. A court can only consider the facts alleged in the proceedings. See Iowa R. Civ. P. 1,421 official comment, matters outside pleadings (citations omitted).

Here, the district court found that the subcontractor’s lien was never perfected. However, the subcontractors pleading did not address whether the subcontractor delivered written notice before suing, only that it filed in the MNLR. The maxim “expressio unius est exclusio alterious” or the “expression of one thing is the exclusion of another” has been used for statutory and contract construction. Sanford v. Manterach, 601 N.W.2d 360, 371–72 (Iowa 1999); Marcus v. Young, 538 N.W.2d 285, 289 (Iowa 1995). Yet, there is no Iowa precedent for applying the concept in a motion to dismiss.

While it is best practice to plead all relevant facts in the petition, the failure to do so does not warrant dismissal. Thus, the court concluded that it could not determine that there was “no conceivable state of facts” under which the subcontractor could show a right of recovery. Accordingly, the court reversed the district court’s ruling and remanded the case for further proceedings.