Axia Contracting, LLC, Respondent,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-1823

Axia Contracting, LLC,
Respondent,

vs.

Jon Grefsrud, et al.,
Defendants,

Minnesota National Bank,
Appellant.

Filed June 24, 2019
Affirmed
Jesson, Judge

Otter Tail County District Court
File No. 56-CV-17-2819

Michael L. Gust, Anderson, Bottre ll, Sanden & Thompson, Fargo, North Dakota (for
respondent)

Roger C. Justin, Rinke Noonan, St. Cloud, Minnesota (for appellant)

Considered and decided by Worke, Presiding Judge; Jesson, Judg e; and Florey,
Judge.
U N P U B L I S H E D O P I N I O N
JESSON, Judge
After financing for a hotel construction project fell through, respondent Axia
Contracting, LLC asserted a mechanic’s lien on the property for the outstanding amount

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owed for the work performed. But Axia did not provide notice t o the property owners
before filing the lien. Appellant Minnesota National Bank cont ends that because Axia
failed to provide pre-lien notice, the district court improperly granted summary judgment
in Axia’s favor. Because we conclude that the property in question was not in agricultural
use when the lien attached—meani ng that Axia was not required t o provide pre-lien
notice—we affirm.
FACTS
In October 2014, Jon and Linda Grefsrud purchased a piece of property previously
used for farming.1 The Grefsruds intended to build a hotel. In pursuit of constructing the
hotel, the Grefsruds began consulting with respondent Axia Contracting, LLC (Axia).
While the Grefsruds sought financing for the hotel in 2015, th ey asked the previous
owner of the land to plant soybeans on the property so that they would not have to pursue
w e e d c o n t r o l o p t i o n s . T h e p r e v i o u s o w n e r d i d s o . T h e l a s t c r op was harvested on
September 23, 2015.
About one month later, Axia began construction of the hotel. The Grefsruds
personally funded the first two payments to Axia for this work. In February 2016, appellant
Minnesota National Bank made a third payment to Axia, and obtai ned a mortgage on the
property.2 But Minnesota National Bank made no additional payments. And when
construction of the hotel was com plete approximately eleven months later, Axia was still

1 The Grefsruds are not parties to this appeal.
2 Financing from Minnesota Nationa l Bank subsequently fell throu g h a f t e r a d i s p u t e
between the Grefsruds and the bank.

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owed a substantial amount of money. Because payments had not been made, Axia filed a
mechanic’s lien.3 Axia then commenced this lien foreclosure action.
In district court, Axia and Minn esota National Bank filed cross -motions for
summary judgment. The court granted Axia’s motion for summary judgment, concluding
that Axia had an enforceable mechanic’s lien in the amount of $510,591. In reaching this
conclusion, the district court determined that Axia was not required to give pre-lien notice
because the property met one of the statutorily-outlined except ions to the notice
requirement. Minnesota National Bank appeals.
D E C I S I O N
Minnesota National Bank asserts that the district court erred b y granting summary
judgment in favor of Axia, contending that Axia’s mechanic’s li en is invalid because
pre-lien notice was not provided. We review a district court’s grant of summary judgment
de novo, evaluating whether the district court properly applied the law and whether genuine
issues of material fact exist. Montemayor v. Sebright Prods., Inc. , 898 N.W.2d 623, 628
(Minn. 2017). In doing so, we “view the evidence in the light most favorable to the party
against whom summary judgment was granted.” STAR Ctrs., Inc. v. Faegre & Benson,
L.L.P., 644 N.W.2d 72, 76-77 (Minn. 2002).
A mechanic’s lien—a remedy created by statute—grants a security interest in an
improved property to those who provided labor or materials duri ng the improvement

3 A mechanic’s lien grants those who provide labor or materials during the improvement
of real property with a security interest in the improved property. Ryan Contracting Co. v.
O’Neill & Murphy, LLP, 883 N.W.2d 236, 243 (Minn. 2016).

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process. Ryan Contracting Co., 883 N.W.2d at 243; see also Minn. Stat. § 514.01 (2018)
(describing a mechanic’s lien). In general, laws governing mec hanic’s liens are strictly
construed regarding the question of whether a lien attaches but are liberally construed after
the lien has been created. S.M. Hentges & Sons, Inc. v. Mensing , 777 N.W.2d 228, 230
(Minn. 2010).
While the statute provides a remedy for those who labor to improve property, it also
requires notice of the potential lien to property owners in mos t circumstances. Minn.
Stat. § 514.011 (2018). In fact , anyone who enters into a cont ract with an owner for the
improvement of real property a nd “who has contracted or will co n t r a c t w i t h a n y
subcontractors or material supp liers to provide labor, skill or m a t e r i a l s f o r t h e
improvement” must provide pre-lien notice to the owner. Id., subd. 1. And that notice
must convey to property owners that any person or company providing labor or materials
can file a lien against the property if they are not paid for their contribution. Id. The statute
requires that the provided notice state as follows:
“(a) Any person or company supplying labor or
materials for this improvement to your property may file a lien
against your property if that person or company is not paid for
the contributions.

(b) Under Minnesota law, you have the right to pay
persons who supplied labor or materials for this improvement
directly and deduct this amount from our contract price, or
withhold the amounts due them from us until 120 days after
completion of the improvement unless we give you a lien
waiver signed by persons who supplied any labor or material
for the improvement and who gave you timely notice.”

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Id. This required noti ce can be in a written contract, a copy of which is provided to the
owner, or other written notice as provided by the statute. Id.
But the statute provides three exceptions to the pre-lien notic e requirement.
Id., subds. 4a-4c. The exception at issue here states:
The notice required by this section shall not be required
to be given in connection with an improvement to real property
which is not in agricultural use and which is wholly or partially
nonresidential in use if the work or improvement:

. . . .

(c) is an improvement to real property which contains
more than 5,000 square feet and does not involve the
construction of a new building or an addition to or the
improvement of an existing building.

Id., subd. 4c(c) (emphasis added).
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The Minnesota Supreme Court’s recent interpretation of this ve ry law—Minnesota
Statutes section 514.0 11, subdivision 4c—in Ryan Contracting Co. dictates the result in
this case. In interpreting the provision, the supreme court determined that the language is
“clear and unambiguous” and that “the phrase ‘in use’ in subdivision 4c refers to land use
at the time the lien attaches and takes effect.” Ryan Contracting Co., 883 N.W.2d at 245.
Further, the supreme court discer ned that the phrase “in use” “ refers to both active and
passive uses of land in existence at the time the mechanic’s lien attaches.” Id.

4 And the statute adopts the definition of “[a]gricultural use” found in Minnesota Statutes
section 473H.02, subdivision 3 (2018), which states: “‘Agricult ural use’ means the
production for sale of livestock, dairy animals, dairy products, poultry or poultry products,
fur-bearing animals, horticultural or nursery stock, fruit, vegetables, forage, grains, or bees
and apiary products.”

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Here, it is undisputed that Axia did not provide pre-lien noti ce. Accordingly, the
central question is whether the property was in agricultural use at the time the lien attached
and thus subject to the exception to the pre-lien notice requir ement. The district court
concluded that when the lien attached, the land was not being actively used for agricultural
purposes and that the land was passively vacant, so no pre-lien notice was required.
We agree that no genuine issue of material fact exists regardin g whether the land
was in agricultural use when the lien attached. Axia began con struction—and the lien
attached—on October 26, 2015. See Minn. Stat. § 514.05, subd. 1 (2018) (providing that
a lien attaches and takes effect when “the first item of materi al or labor is furnished upon
the premises for the beginning of the improvement”). Harvestin g of soybeans planted on
the land concluded on September 23, 2015.5 Therefore, after September 23, 2015, the land
was no longer actively being used for agricultural purposes. In terms of the land’s passive
use, the land was vacant between September 23, 2015 and October 26, 2015. And vacant
land does not qualify as an agricultural use of land. Ryan Contracting Co., 883 N.W.2d at
245. As a result, because the land was not in agricultural use on October 26, 2015, Axia
was not required to provide pre-lien notice. Minn. Stat. § 514.011, subd. 4c.
Still, Minnesota National Bank contends that the property was in agricultural use,
asserting that the Ryan Contracting Co. definition of “in use” refers to the actual use of the

5 There is some contention that some straw or byproduct from the soybean crop remained
on the property because a neighbor who intended to purchase it never picked it up. But the
fact that some byproduct from harvesting may have remained on the land does not create a
genuine issue of material fact about whether the property was i n agricultural use on the
date the lien attached.

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property immediately before impro vements were commenced. But t his argument is
contrary to the supreme court’s interpretation that land use is determined at the time the
lien attaches. Ryan Contracting Co., 883 N.W.2d at 245. And even if we evaluated the
use of the land immediately befo re construction began, the land was vacant between the
harvest of the soybeans on September 23, 2015 and the start of construction. Vacant land
is not considered to be in agricultural use. Id. Minnesota National Bank further suggests
that “when a crop has been planted, cared for, and harvested in the same year, it continues
to carry its purpose for ‘agricultural use’ throughout that year.” But again, this is contrary
to the supreme court’s mandate in Ryan Contracting Co. that the use of land is evaluated
when the lien attaches.6
Because the property in question was not in agricultural use when the lien attached,
Axia was not required to give pre-lien notice. Accordingly, th e district court properly
granted summary judgment in favor of Axia.7
Affirmed.

6 Minnesota National Bank also contends that the district court improperly considered the
zoning classification of the prope rty and the intention of the landowner when evaluating
whether the property was in agricultural use. Even if we adopt ed this reasoning and
concluded that the district cour t should not have considered th ose factors, it does not
change the outcome of the case. Although the district court did note that the property was
zoned for commercial use and that the Grefsruds intended to build a hotel on the property,
the district court still properly examined the use of the property on October 26, 2015 when
the lien attached following the supreme court’s mandate in Ryan Contracting Co.
7 Additionally, Minnesota National Bank raises a policy argument that agricultural use does
not end when a crop is harvested. But here, it is not necessar y to consider this question
because it is clear that the property in question was not in ag ricultural use on
October 26, 2015 when the lien attached.