Lake County, Rohl argue over mechanics lien
EDITOR'S NOTE: This is part two of a two-part series regarding motions made by Lake County and Rohl Networks at a hearing Monday, Dec. 18. Part one was published Dec. 22.
Lake County and Rohl Networks attorneys argued Dec. 18 during a court hearing in Two Harbors over a mechanic's lien on Lake Connections, the county's broadband project.
Rohl, a Jupiter, Fla., company hired to construct Lake County's broadband project, filed a mechanic's lien against the county's broadband project on April 1, 2016. The lien was originally for $2.3 million. After a jury returned a verdict at the end of a week-long trial Nov. 3, 2017, Rohl says it adjusted the lien down to what the jury said is owed to Rohl.
The two main disputes over the lien are whether the project is for public purpose and whether Rohl intentionally overstate the lien.
Public purpose or not?
Lake County argues the mechanic's lien should be dismissed because the broadband network serves a public purpose.
The county claims it built the network because no commercial telecommunications provider would do, therefore it serves a public purpose. Attorney Jonathan Bye, representing Lake County, pointed to Commissioner Rich Sve's affidavit, dated Dec. 11, 2017.
Sve stated that "prior to Lake County's construction of the network, the incumbent commercial telecommunications provider focused on the higher-population areas along the Highway 61 corridor. As a result, approximately half of the county's residents did not have access to high-speed broadband. Even in the areas served by the incumbent commercial providers, due to the age of the system and lack of redundancy, and service was often slow and unreliable. Even emergency 911 communications were interrupted on more than one occasion."
Sve claim that it became apparent to the County Board that the only way residents and businesses in Lake County "were going to get the broadband services we felt were essential to the future, was if the county itself undertook construction of the network."
The county also pointed to testimony by Rohl's project manager Jeff Lopez, who said they decided to stay on the project after all of the setbacks because he wanted to help ensure that the children in Lake County would have the same advantages as children in the Twin Cities.
Rohl argued that the network doesn't fall under the public purpose exemption because it has never been treated as such.
"The county has used two different private companies to run it and are currently planning on selling the network to a private entity," Rohl attorney Gregory Spalj said.
Rohl's memorandum on a motion for mechanic's lien point to County Board minutes from June 13, 2017, when the board discussed the sale of the network. The minutes state that "Lake County now has the opportunity to seek an owner that can provide the expertise in managing the network and make the necessary investments for the work that still needs to be completed."
Spalj said because the county admitted during that board meeting that it didn't know how to run a broadband network and is planning to sell it to a private entity, the project doesn't fall under the public purpose exemption.
Rohl's memorandum also states "the fact a project conveys a public benefit has never been enough to elevate a private project to public project status and to exempt the project from the mechanics' lien statutes."
Rohl pointed to a Comstock & Davis, Inc. v. City of Eden Prairie, 1997, judgment that states: "The fact the public will derive some benefit from the use of the property does not, alone, render the property exempt from liens."
Court debates mechanic's lien
A person or company that performs work, supplies materials or improves property is entitled to a mechanic's lien on the property on which it worked. A mechanic's lien allows the contractor or subcontractor or material supplier for a project to go to court and try to take possession of the property if they aren't paid.
Rohl filed for a mechanic's lien on the county's broadband network April 1, 2016. Lake County argues the mechanic's lien isn't valid for two reasons: The lien wasn't filed in the time frame laid out by law and it was intentionally overstated.
Rohl had 120 days after completion of work on the project to file the lien. Lake County believes that day is Sept. 21, 2015 — the last date of work listed on the closeout documents of Contract 2B. Rohl believes the last day of work is actually Jan. 15, 2016, because Rohl continued to make improvements on the project throughout the winter and pointed to testimony during the November trial on both sides.
As for being overstated, Lake County argued that the lien was overstated because it "blankets" all three phases as one contract. If the lien was filed on time, Lake County still believes it's not valid because it should be three separate liens — one for each phase of the contract.
"Because the project was bid out in three separate phases, it was not guaranteed that Rohl would have been awarded all three contracts. Therefore, they should have filed three separate liens," Spalj said.
Rohl's position on the the matter is because all of the contracts were for a single improvement, then it is one project and they were only required to file one lien. Rohl cited Minnesota Supreme Court decision on Rochester's Suburban Lumber Co. v. Slocumb, 1986, which states: "separate constructionpases on the same overall construction project constitutes on continuous improvement."
Rohl is asking for a mechanic's lien of more than $2.6 million, which includes principal, costs, disbursements and prejudgment interest, plus $284 per day in prejudgment interest until a judgement is entered and then $227 per day thereafter. Rohl is also asking the judge to foreclose on the mechanic's lien and all the property to be sold by the Lake County Sheriff's office at a public auction accordance with state statutes.
According to Minnesota Statute 546.27, a judge has 90 days after a submission of the motion to file a decision with the court administrator.
The motion for a new trial was filed Dec. 4.