July 7, 2022 – By crossing out the words “to Date” and writing the word “Partial,” a subcontractor transformed a complete waiver of a construction lien into a partial one, the Wisconsin Supreme Court has ruled.
In Great Lakes Excavating, Inc. v. Dollar Tree Stores, Inc., the supreme court held (5-2) that the handwritten additions “specifically and expressly” limited the waiver to $33,448, the amount listed as consideration on the waiver form.
Justice Rebecca Grassl Bradley wrote the majority opinion. Joining her on the opinion were Chief Justice Annette Ziegler, Justice Patience Roggensack, Justice Brian Hagedorn, and Justice Jill Karofsky. Justice Rebecca Dallet dissented; she was joined by Justice Ann Walsh Bradley.
Parking Lot Project
In 2016, Riverworks executed a contract with AMCON Design and Construction Co. (AMCON) to build a parking lot and commercial building in Milwaukee. Dollar Tree Stores, Inc., (Dollar Tree) agreed to be the building’s anchor tenant.
AMCON subcontracted with Great Lakes Excavating, Inc. (Great Lakes) to excavate land for the building’s parking lot. The original amount of the subcontract was $37,165 but given the poor quality of the soil, additional excavation was required and AMCON approved work-change orders submitted by Great Lakes. The final amount AMCON owed Great Lakes was $222,238.
Great Lakes sent AMCON a bill for $222,238. After not receiving payment from AMCON, Great Lakes served a notice of intent to file a claim for a construction lien on Riverworks and Dollar Tree.
AMCON invited Duwayne Bruckner, the owner of Great Lakes, to come to AMCON’s office to receive payment. At the office, an AMCON representative told Bruckner that the company would pay him only $33,448 and presented Bruckner with a pre-printed “Waiver of Lien to Date” to sign.
The form specified that Bruckner’s signature on the form meant that in exchange for the $33,448, Great Lakes “does hereby waive and release any and all lien or claim of, or right to, lien, under the statutes of the State of WI.”
Bruckner crossed out the words “To Date” where they appeared in the title of the form, then wrote the word “Partial” next to the crossed out words and initialed the modification. He signed the form and took the check.
Circuit Court Rules for Riverworks
Great Lakes attempted to collect the $188,790 balance, to no avail. Great Lakes then filed a “Subcontractor Claim for Lien” against Riverworks. Riverworks, joined by Dollar Tree, moved for partial summary judgment.
The circuit court granted the motion, ruling that all Bruckner had done was change the title of the form. The court of appeals affirmed, and Great Lakes appealed to the Wisconsin Supreme Court.
Specifically and Expressly Limits’
Justice R.G. Bradley began her opinion by noting that under state law, a construction lien waiver is deemed to waive all lien rights “except to the extent that the document specifically and expressly limits the waiver to apply to a particular portion of such labor, services, materials, plans, or specifications.”
Under the statute, any ambiguity in a construction lien waiver, R.G. Bradley pointed out, is construed against the person signing the waiver.
Riverworks argued that Bruckner’s handwriting created an ambiguity, because his handwriting attempted to make the waiver partial while the printed form made clear that the wavier was total.
Great Lakes argued that the modified waiver was not ambiguous because Bruckner’s handwriting made possible only one interpretation of the form.
Handwriting Trumps Printing
Justice R.G. Bradley acknowledged that the handwritten word “Partial” in the form’s title conflicted with the form’s pre-printed wording. But she noted that because the form was a release, precedent required the supreme court to apply contract principles to determine the form’s effect.
According to Williston on Contracts, R.G. Bradley noted, when printed contract provisions and provisions added by the parties conflict, the added provisions control. And under supreme court precedent, a contract containing both handwritten and pre-printed provisions should be interpreted so as to give effect to the handwritten provisions, Justice R.G. Bradley pointed out.
“The lien waiver in this case cannot be construed as a full waiver because the handwritten word ‘Partial’ must be given effect,” R.G. Bradley wrote. “Because the word ‘Partial’ is handwritten, it governs over the preprinted language waiving all lien rights to date.”
Waiver was Expressly Limited
Justice R.G. Bradley also explained the waiver was “specifically and expressly limited to a particular portion of work” and therefore not ambiguous.
“‘Partial’ unambiguously applies to the ‘particular portion of such labor, services, materials, plans, or specifications’ represented by the amount of the ‘$33,448 Dollars’ written on the wavier form and received in consideration for the partial release,” R.G. Bradley wrote.
Majority Conflicts with Legislature’s Policy
In her dissent, Justice Dallet argued that “[t]he majority’s reliance on common law contract principles is misguided, resulting in a decision at odds with the legislature’s chosen policy regarding construction-lien waivers.”
Bruckner’s handwriting did nothing more than change the title of the form, Dallet argued.
“Nowhere, however, does Great Lakes’ waiver specifically and expressly identify what particular ‘part’ of Great Lakes’ lien claims were waived,” Justice Dallet wrote. “The waiver is not limited to a certain dollar amount’s worth of services, work completed up to a certain date (short of the date Great Lakes signed the waiver), or certain raw materials, for example.”
Left with ‘Guessing Game’
Justice Dallet also argued that it was unfair to hold Riverworks to any agreement between Great Lakes and AMCON to limit the waiver because Riverworks was not a party to the agreement and there was no evidence AMCON was acting as Riverworks’ agent.
Additionally, Dallet wrote, even if Bruckner’s handwriting meant that Great Lakes and AMCON intended the wavier to be partial, “we – and Riverworks – are still left to guess the particular portion of work to which Great Lakes is waiving its lien claims. The point of section 779.05(1), however, is to eliminate such a guessing game from how courts or third parties understand a lien waiver.”