Appeals court sides with contractor in dispute over Saukville project

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A state appeals court has sided with a general contractor in a dispute over unpaid work on a commercial building and camper-parking lot in Saukville.

Wednesday’s decision stems from work Oneida-based Bayland Buildings Inc. did on a more-than-$3 million, 30,477 square-foot project for a company named Siren Saukville LLC, whose principal office is listed in state records as being in Florida. The project, built at Saukville’s 800 East Green Bay Road, includes a one-story commercial building and camper-parking lot that would be turned over to Siren’s tenant, Camping World.

Before the project was completed in February 2014, its cost had increased by more than $100,000. Most of the increase stemmed from unforeseen conditions at the site’s parking lot, such as overly wet soil and frost. As a result, Bayland contended, there were 24 change orders made to its initial agreement with Siren.

However, once the project was completed, Bayland asked Siren to pay the remaining $485,051.24 owed on the work. When Siren refused, Bayland filed a construction lien on the project and later a lawsuit for foreclosure on that lien.

The case before the state appeals court primarily concerned whether that suit was filed against the right party. Bayland officials changed their minds several times – first targeting Siren then Spirit Master Funding IX LLC, the company to which Siren had sold the property.

Spirit Master argued to Ozaukee County Circuit Court Judge Paul Malloy that the lawsuit should be dismissed because Bayland had failed to file the construction lien against the right property owner. Seeking sanctions, Spirit Master also argued that Bayland had in effect waived its right to file liens when it accepted payments during the project.

Malloy agreed in May last year with Spirit Master’s first argument, dismissing the case on the grounds that Bayland should have known to go after Spirit Master, not Siren, for the unpaid work. Bayland officials should have been aware of which company to pursue, Malloy found, after reading emails that were sent between Siren and Bayland representatives noting that a new “investor” would be brought on and a new warranty would be signed for the project.

On appeal, Bayland contended that the case should not have been dismissed, arguing that Malloy, in reaching his decision, had improperly made determinations of fact and weighed the credibility of the evidence. Those duties are typically left to juries.

A three-judge panel of the District 2 Court of Appeals on Wednesday handed a victory to Bayland and reversed Malloy, finding that Bayland could not have inferred from the emails and warranty that the ownership of the property had changed hands. It also noted that the new warranty that Siren had had Bayland sign did not contain the name of the now-owner Spirit Master.

The appeals court found that it’s well settled in the law that contractors have no duty to search title records after the start of construction on a particular project. The court also found that the trial court in this case should have inquired whether the emails and warranty would have caused a reasonable contractor to believe Siren had sold its entire interest in the property.

The appeals court’s decision Wednesday sends the case back to Ozaukee County Circuit Court.