Flynn Builders, L.C. v. Lande, 814 N.W.2d 542 (Iowa 2012)

In 2009, Matthew and Chris Lande sought a builder to construct a new home. They received a bid from Gregg Flynn, the owner of Flynn Builders, to construct the home for $259,576. The Landes accepted the bid, and Flynn began construction.
Construction continued until July 2009 when the Landes discovered a $20,000 materials markup that Flynn did not disclose. The Landes’ lender and the Landes refused to pay the markup. Because the Landes and their lender refused to continue making payments, Flynn stopped construction on the project and filed a mechanic’s lien for $28,307.50. In August 2009, Flynn filed a petition to enforce the mechanic’s lien. The matter proceeded to trial in May 2010 at which time the district court found Flynn had substantially performed the contract and was entitled to a judgment against the Landes. The court concluded Flynn had substantially performed as the home was framed, enclosed, roofed, sided, and the electrical and plumbing were roughed-in. The Iowa Court of Appeals affirmed, and the Landes appealed to the Iowa Supreme Court.
The Iowa Supreme Court reversed the district court and court of appeals. Iowa case law required that, in order to enforce a mechanic’s lien, the work must be substantially performed by the contractor. The court concluded Flynn did not substantially perform the contract. The plumbing, drywall, paint, carpet, floor coverings, and trim remained unfinished when Flynn abandoned the project. The unfinished trim included the installation of cabinets, doors, and windows. The heating and air conditioning systems were not complete, and the concrete had not been poured in front of the garage. The court concluded Flynn completed only eighty to eighty-five percent of the project when the contract was terminated. The court held that “while no mathematical rule relating to the percentage of the price, of cost of completion or of completeness can be laid down to determine substantial performance of a building contract, the work left unfinished in this case was much more than a technical or inadvertent omission; rather, the omissions materially affected the habitability of the house.” Although the Landes could perform some of the remaining work or hire others to do so, the court ruled that the owner’s willingness to take on additional responsibilities did not absolve Flynn of responsibility to substantially perform the work he agreed to perform.

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