JJID, INC. v. DELAWARE RIVER IND., 03L-06-087-PLA (Del.Super. 7-30-2007)

C.A. No. 03L-06-087-PLA.Superior Court of Delaware, New Castle County.Submitted: May 11, 2007.
Decided: July 30, 2007.

Upon Consideration of Plaintiff’s Motion for Summary Judgment,Denied

Upon Consideration of Intervenor’s Motion for Summary JudgmentDenied

James S. Green, Esquire, SEITZ VAN OGTROP GREEN, P.A., Wilmington, Delaware. Attorney for Plaintiff.

James M. Geddes, Esquire, ASHBY GEDDES, P.A., Wilmington, Delaware. Attorney for Defendant Delaware River Industrial Park, LLC.

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James E. Huggett, Esquire, MARGOLIS EDELSTEIN, Wilmington, Delaware. Attorney for Defendants Hardcore Composites, LLC and Hardcore Composites, Ltd.

Douglas N. Candeub, Esquire, MORRIS JAMES LLP, Wilmington, Delaware. David R. Fine, Esquire and Christopher R. Nester, Esquire, KIRKPATRICK LOCKHART, LLP, Harrisburg, Pennsylvania. Attorneys for Intervenor Flow Robotics Systems.

MEMORADUM OPINION
ABLEMAN, JUDGE

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I.
Before the Court are cross-motions for summary judgment filed by Plaintiff JJID, Inc. (“JJID”) and Intervenor Flow Robotics Systems (“Flow”). JJID seeks a declaration that its mechanic’s lien on Defendants Hardcore Composites, LLC and Hardcore Composites, Ltd.’s (collectively “Hardcore”) leased property at 618 Lambson Lane, New Castle, Delaware (“the Property”) encompasses a water jet system. That is, JJID claims the water jet system, which was manufactured and delivered to the Property by Flow, became a fixture of the Property and, therefore, its mechanic’s lien should attach to the water jet system. Flow, however, contends there is not enough evidence to conclude that the water jet system ever became a fixture of the Property. Flow further alleges that JJID’s lien cannot attach to the water jet system because neither Flow nor DRIP gave written consent to Hardcore to install the water jet system as required by DEL. CODE ANN. tit. 25, § 2722 (“Section 2722”). The Court finds that whether the water jet system was a fixture of the Property presents a genuine issue of material fact and that Section 2722 is neither controlling nor applicable in this case. Therefore, JJID’s Motion for Summary Judgment and Flow’s Motion for Summary Judgment are DENIED.

II.
Delaware River Industrial Park, LLC (“DRIP”) is the owner of the Property. DRIP leased its property to Hardcore. On January 6, 2003, Hardcore contracted

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with JJID to construct a concrete foundation on the Property so that it could accommodate a water jet system. The contract price for the concrete foundation was $26,190. Pursuant to the agreement, JJID furnished material and labor to Hardcore and completed the construction of the concrete foundation for the water jet system.[1]

On February 10, 2003, Hardcore and Flow entered into a contract whereby Hardcore financed the purchase of a water jet system from Flow in exchange for Hardcore’s payment of five monthly installments totaling more than $300,000. As agreed, Flow delivered the water jet system to Hardcore.[2] However, some time after the equipment was delivered by Flow, Hardcore breached its contract with both JJID and Flow by failing to pay either in full.

JJID subsequently filed this mechanic’s lien action against Hardcore. On January 14, 2004, the Court granted the mechanic’s lien by entering a Judgment by Default against DRIP and Hardcore.[3]

Flow also filed an action against Hardcore in the United States District Court for the District of Delaware seeking damages for breach of contract and return of the water jet system. JJID attempted to intervene in Flow’s federal lawsuit against

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Hardcore by asserting that its mechanic’s lien extended not only to the real estate owned by DRIP and leased by Hardcore, but also to the water jet system.[4]

In June 2004, JJID and Flow entered into a stipulation whereby Flow deposited $26,190 with the Prothonotary in consideration of JJID’s agreement to withdraw its intervention in Flow’s district court case.[5] After the stipulation was entered, Flow removed the water jet system. JJID and Flow also entered into a stipulation allowing Flow to intervene in this action. The parties now agree that the only issue that remains unresolved is whether JJID’s mechanics’ lien attaches to the water jet system.[6]

III.
In its motion for summary judgment, JJID claims the water jet system is a fixture of the Property and therefore argues its mechanic’s lien should attach to the water jet system. As support, JJID relies solely on the testimony of Scott Hemphill, President of Hardcore. In a hearing in the district court proceeding, Mr. Hemphill stated the following:

[T]here’s big metal frames [of the water jet system] that are imbedded in this — in these concrete foundations, and the — then the concrete foundations are further reinforced with reinforcing bar and the water jet machine is welded to these — these metal imbedments that are in

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the floor of the building. The machine is pretty much is pretty much permanently there.[7]

Based on this testimony, JJID maintains that the water jet system was permanently attached to the concrete foundation and, as such, lost its identity as personal property and became fixed to the Property.[8]
Therefore, JJID concludes that its mechanic’s lien attaches to the water jet system and its motion should be granted.[9]

In response, Flow asserts that JJID’s lien does not attach to the water jet system because it never became a fixture of the Property. Flow contends that JJID has offered no credible evidence demonstrating how Flow’s equipment became affixed to the real estate such that it lost its identity as personal property. Flow claims that Mr. Hemphill’s testimony does not explain how the foundation was affected when Flow’s water jet system was removed, but rather that Mr. Hemphill only speculated as to what events would have occurred. Therefore, Flow argues that, because of the speculative nature of Mr. Hemphill’s testimony, and further because JJID solely relies upon that testimony, JJID cannot establish that its lien attaches to the water jet system. Accordingly, Flow concludes that JJID’s motion should be denied.[10]

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In Flow’s motion for summary judgment, it argues that JJID’s mechanic’s lien can not attach to the water jet system pursuant to Section 2722.[11] Flow contends that Hardcore, because it had a leasehold interest in the water jet system, was required under Section 2722 to obtain written consent from both Flow and DRIP prior to installing the water jet system into the concrete foundation. That is, because Flow is the lessor/owner of the water jet system and leased its system to Hardcore, Hardcore was required by Section 2722 to obtain written consent from Flow and DRIP prior to the installation of the water jet system. Therefore, Flow concludes that, because Hardcore did not obtain Flow’s or DRIP’s prior written consent, JJID’s lien cannot attach to the water jet system.[12]

In response, JJID argues that Flow lacks standing to assert the “prior written consent” provision because Flow has cited no case law that permits a third-party vendor (Flow), as opposed to a real property owner (DRIP), to claim Section 2722 as a defense. JJID further claims that Flow has failed to prove there was no written

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consent between Flow and Hardcore. Therefore, JJID concludes that Flow is not entitled to summary judgment.[13]

IV.
In considering a motion for summary judgment, the Court’s function is to examine the record to ascertain whether genuine issues of material fact exist and to determine whether the moving party is entitled to judgment as a matter of law. The court will view the record in the light most favorable to the non-moving party and will draw all rational inferences in favor of the non-movant based upon the undisputed facts and the non-movant’s version of any disputed facts. If the Court finds that material facts are in dispute or that judgment as a matter of law is not appropriate, summary judgment will be denied. However, if no material facts are in dispute and the moving party is entitled to judgment as a matter of law, summary judgment will be granted.[14]

The standard of review “is not altered because the parties have filed cross-motions for summary judgment.”[15] As the Supreme Court has observed:

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[T]he existence of cross motions for summary judgment does not act per se as a concession that there is an absence of factual issues. Rather, a party moving for summary judgment concedes the absence of a factual issue and the truth of the nonmoving party’s allegations only for the purposes of its own motion, and does not waive its right to assert that there are disputed facts that preclude summary judgment in favor of the other party. Thus, the mere filing of a cross motion for summary judgment does not serve as a waiver of the movant’s right to assert the existence of a factual dispute as to the other party’s motion.[16]

V. A. Fixture

A fixture is defined as “[p]ersonal property that is attached to land or a building and that is regarded as an irremovable part of the real property[.]”[17] To determine whether or not a chattel has become a fixture, the Court must look at “the intention of the party making the annexation as disclosed by the surrounding circumstances.”[18] Several factors are taken into consideration in order to determine the intent of the party, such as the “nature of the chattel, the mode of its annexation, the purpose or use for which the annexation has been made, and the

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relationship of the annexor to the property.”[19] “[W]hether a chattel has become a fixture to real estate is a factual question.”[20]

In this case, the only evidence JJID has provided to establish that the water jet system was a fixture of the Property is the testimony of Mr. Hemphill. This alone is not sufficient evidence to warrant summary judgment. Mr. Hemphill’s testimony is purely speculative as he testified only as to what he thought might happen when actually attempting to install and remove the water jet system from the Property. His testimony was based on his general knowledge, and not on the facts involved with the installation and removal of the water jet system in this case. The Court is, therefore, reluctant to rely solely on Mr. Hemphill’s testimony in making a finding as to whether the water jet system was a fixture of the Property. Accordingly, whether the system was a fixture remains a genuine issue of material fact that should be decided by the trier of fact.

B. Section 2722
To reiterate, Section 2722 provides:

Nothing contained in this subchapter shall be construed to render property liable to liens under this chapter for repairs, alterations or additions, when such property has been altered, added to or repaired

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by or at the instance of any lessee or tenant without the prior written consent of the owner or his duly authorized agent.[21]

“The obvious basis for the consent requirement is that the owner should not be held liable for erections or repairs that he did not authorize.”[22] “In other words, [Section] 2722 was meant to ensure that one who holds an interest in realty does not have the interest subjected to a lien unless they have consented to the work for which a lien is claimed.”[23]

In those cases that have addressed the “prior written consent” provision of Section 2722, all have considered Section 2722 in the context of obtaining consent from real property owners/lessors/landlords (such as DRIP), as opposed to personal property owners/lessors (such as Flow). Nevertheless, even though Flow is an owner of personal property (the water jet system) and not a real property owner, Flow maintains that Hardcore, as lessee, was required under Section 2722 to obtain written consent from both Flow and DRIP prior to installing the water jet system. Flow contends that, because Section 2722 does not define “property,” Section 2722 may be applied to a situation involving owners of personal property and not merely

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real property owners. As such, Flow argues that Hardcore was required to obtain Flow’s written consent prior to the installation of the water jet system and, because it did not obtain that consent, JJID’s lien cannot attach to the water jet system. The Court does not agree.

“[A] cursory reading of [Section 2722] indicates an intention that that section be applicable [w]henever a landlord-tenant relationship exists.”[24] Stated differently, Section 2722 i not applicable unless it is determined that “a landlord-tenant relationship existed at the time of the contract.”[25] The term “prior written consent” contained in Section 2722 has generally been construed “as requiring a landowner’s written consent to the tenant’s erection of the improvement.”[26] Therefore, “where labor or materials are supplied to the owner of the leasehold interest in a structure, the supplier may obtain a mechanic’s lien on that leasehold interest.”[27] That mechanic’s lien, however, “is limited to the leasehold interest,

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unless the fee simple owner has expressly consented, in writing, to the pertinence of the work for which the lien is sought.”[28]

Flow cites no authority where Section 2722 was applied in the context of obtaining the prior written consent of an owner/lessor of personal property. The Court likewise was unable to locate any cases where Section 2722 was applied in such a context. Similarly, a review of the legislative history of Section 2722 reveals no evidence of a situation where the consent of a personal property owner was contemplated. The Court is, therefore, unwilling to interpret Section 2722 as requiring a lessee (Hardcore) to obtain the written consent of a lessor/owner (Flow) of personal property prior to installing or adding that personal property to the real property as a fixture. Section 2722 was not intended to apply to such a situation and, as such, the prior written consent of a personal property owner should not be a prerequisite to attaching a mechanic’s lien to that specific personal property, if and when, it becomes a fixture of the property.

VI.
For all of the foregoing reasons, the Court finds that whether the water jet system was a fixture of the Property is a disputed issue of material fact that should

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be decided by the trier of fact. The Court is also satisfied that Section 2722 is neither controlling nor applicable in making the determination of whether Flow’s water jet system became a fixture of the Property. Accordingly, both JJID’s and Flow’s motions for summary judgment are DENIED.
IT IS SO ORDERED.

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