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Hammerhead Contracting & Development, LLC v. Ladd

Supreme Court of Arkansas

April 14, 2016

HAMMERHEAD CONTRACTING & DEVELOPMENT, LLC, AND BRANDON HOLMES APPELLANTS
v.
DALE LADD APPELLEE

APPEAL FROM THE INDEPENDENCE COUNTY CIRCUIT COURT [NO. CV-2014-229-4] HONORABLE TIM WEAVER, JUDGE

Brett D. Watson, Attorney at Law, PLLC, by: Brett D. Watson, for appellants.

Murphy, Thompson, Arnold, Skinner & Castleberry, by: Kenneth P. "Casey" Castleberry, for appellee.

JOSEPHINE LINKER HART, Justice

Hammerhead Contracting & Development, LLC, and Brandon Holmes (Hammerhead), appeal from the grant of summary judgment in favor of Dale Ladd. Ladd had sued Holmes to remove a "Laborer's, Mechanic's, or Materialman's Lien" that Holmes had filed on behalf of his wholly owned limited-liability company (Hammerhead). Ladd had withheld payment of $101, 676.82 that Hammerhead claimed it was owed. On appeal, Hammerhead argues that: (1) the circuit court erred in finding that the direct-sales exception to the residential-preconstruction notice requirement, codified at Arkansas Code Annotated section 18-44-115(a)(8), can never apply to a contractor-even though the plain language of the statute covers contractors; (2) the circuit court's interpretation of Arkansas Code Annotated section 18-44-115(a)(4) that bars contractors from exercising their constitutional right to redress wrongs in a court of law; and (3) the owner of an LLC can file a lien on the LLC's behalf. We accepted original appellate jurisdiction over this case in accordance with Arkansas Supreme Court Rule 1-2 because it involves construction of the Arkansas Constitution as well as an issue of first impression, an issue of substantial public interest, and statutory construction.

In January 2014, Ladd hired Hammerhead to build a house in Batesville, Arkansas. Under the agreement, Ladd agreed to pay $355, 550. A further provision in the job estimate stated that "prices will not change unless upgrades are requested by the buyer." It is not disputed that prior to beginning construction, Hammerhead did not provide Ladd with the statutory notice provided for in Arkansas Code Annotated section 18-44-115.

A dispute arose regarding the amount owed for the construction of Ladd's home. According to Hammerhead's records, Ladd paid more than $370, 000 through August 2014, but Ladd contends that he paid more. As noted previously, Hammerhead asserted that Ladd owed an additional $101, 676.82, and on September 23, 2014, Holmes filed a "Laborer's, Mechanic's, or Materialman's Lien" for that amount on behalf of the LLC.

On October 2, 2014, Ladd filed suit against Holmes to remove the lien. On January 22, 2015, Hammerhead filed an amended complaint against Ladd seeking judgment for the $101, 676.82. Ladd moved to dismiss, asserting that the failure to give statutory notice required by Arkansas Code Annotated section 18-44-115 (Repl. 2015) barred Hammerhead from pursuing his cause of action. Hammerhead responded to the motion to dismiss, continuing to assert that it was not required to give notice because it was a direct sale and additionally asserting that subsection (a)(4) in section 18-44-115 was unconstitutional. Hammerhead and Ladd moved for summary judgment. The cases were consolidated on May 26, 2015.

In his summary-judgment motion, Ladd asserted that Hammerhead had failed to give him the notice required by Arkansas Code Annotated section 18-44-115. Quoting section 18-44-115(a), Ladd argued that the plain wording of the statute barred Hammerhead from acquiring a lien on his home. The statute states in pertinent part,

(a)(1) No lien upon residential real estate containing four (4) or fewer units may be acquired by virtue of this subchapter unless the owner of the residential real estate, the owner's authorized agent, or the owner's registered agent has received, by personal delivery or by certified mail, a copy of the notice set out in this subsection. . . . .
(3) It shall be the duty of the residential contractor to give the owner, the owner's authorized agent, or the owner's registered agent the notice set out in this subsection on behalf of all potential lien claimants before the commencement of work.
(4) If a residential contractor fails to give the notice required under this subsection, then the residential contractor is barred from bringing an action either at law or in equity, including without limitation quantum meruit, to enforce any provision of a residential contract.

Ladd further argued that he anticipated that Hammerhead might assert that he was not required to give notice under the "direct sale" exception found in section 18-44-115(a)(8)(A):

(8)(A) If the residential contractor supplies a performance and payment bond or if the transaction is a direct sale to the property owner, the notice requirement of this subsection shall not apply, and the lien rights arising under this subchapter shall ...

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