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IN THE COURT OF APPEALS OF IOWA No. 7-854 / 07-0156 Filed November 29, 2007

R & G ELECTRIC, INC., Plaintiff-Appellee, vs. HARLAN AND JULIE WEYDERT, husband and wife, Defendants-Appellants. ________________________________________________________________ Appeal from the Iowa District Court for Kossuth County, Don E. Courtney, (summary judgment) and Joseph J. Straub (trial), Judges.

Defendants contend district court erred when it dismissed their counterclaim on summary judgment. AFFIRMED.

David M. Nelsen of Nelsen Law Office, Mason City, for appellant. Kevin J. Driscoll and Eric G. Hoch of Finley, Alt, Smith, Scharnberg, Craig, Hilmes & Gaffney, P.C., Des Moines, for appellee.

Considered by Huitink, P.J., and Miller and Eisenhauer, JJ.

2 HUITINK, P.J. I. Background Facts and Prior Proceedings On January 8, 2004, R & G Electric filed a mechanic's lien in the amount of $52,346.55 against property owned by Harlan and Julie Weydert for materials and labor furnished pursuant to a contract to install one grain bin and to relocate two smaller grain bins on the Weyderts' property. Shortly thereafter, R & G filed a petition to foreclose the lien, and then filed an amended petition asserting damages for breach of written contract, breach of oral contract, breach of implied contract, quantum meruit, and unjust enrichment. The Weyderts answered by denying the existence of any written contract, oral contract, or implied contract and also denying the claims for quantum meruit and unjust enrichment. The Weyderts also noted the statute of frauds as an affirmative defense and set forth the following counterclaims or setoffs: For Counterclaims or setoffs to the allegations of Plaintiff's Petition, Defendants . . . state: 48. Any work performed was inadequate and inferior thereby causing damages to the Defendants. 49. Any work performed was untimely and thereby causing damages to the Defendants. R & G filed a motion for summary judgment requesting the court to enter an order establishing the mechanics lien and to enter an order that the Weyderts may not recover consequential damages in the form of alleged crop losses on their counterclaim. The Weyderts filed a resistance to the motion for summary judgment and R & G filed a reply to the Weyderts' resistance stating, in pertinent part: [T]he undisputed evidence established that Defendants have repeatedly denied and continue to deny the existence of any

3 contractual relationship whatsoever with plaintiff. They cannot now at the same time assert a counterclaim for breach of contract and consequential damages. And in fact, defendants' have not asserted a counterclaim based on breach of contract. Therefore, as a matter of law, there can be no recovery by defendants for any alleged consequential damages arising from a breach of contract. Further, defendants have no right to any recovery on a counterclaim based on a negligence theory as the economic loss doctrine bars defendants' counterclaim for economic damages based on negligence. The court held an unrecorded hearing on the motion and entered a written ruling denying R & G summary judgment on its request to enter an order establishing the mechanic's lien. The court based this decision on the Weyderts' denial of the existence of any contract and their claims that the conversations surrounding the grain bins consisted of mere negotiations that never materialized into a contractual relationship. However, in light of the Weyderts' claim that there was no contract, the court proceeded to analyze the Weyderts' counterclaim as a negligence claim, rather than a contract claim. Because the Weyderts sought only economic losses on their counterclaim, the court found they were barred from recovering damages under a tort theory, and therefore dismissed the Weyderts' counterclaim for damages. See Nebraska Innkeepers, Inc. v.

Pittsburgh-Des Moines Corp., 345 N.W.2d 124, 126 (Iowa 1984) ("The wellestablished general rule is that a plaintiff who has suffered only economic loss due to another's negligence has not been injured in a manner which is legally cognizable or compensable."). The Weyderts did not file any post-ruling motion challenging the court's conclusion that their counterclaim was based on negligence, rather than contract. The Weyderts also did not seek to amend their

4 counterclaim after the summary judgment ruling to assert a claim for breach of contract. The matter proceeded to a bench trial. The court found the parties had entered into an oral contract and then amended the original contract with a written amendment. The court determined that Harlan breached the contract by not making his final payment and that R & G also breached the contract when it performed some of the work in an unsatisfactory manner. The court entered an order entering judgment against Harlan Weydert in the amount of $35,352.60 with an additional judgment of $13,434.96 for R & G's attorney fees. The Weyderts now appeal, claiming the court erred when it dismissed their counterclaim on summary judgment and erred when it did not further reduce the judgment for other problems associated with R & G's alleged failure to perform the work in a satisfactory manner. II. Scope of Review An action to enforce a mechanic's lien is in equity. Iowa Code

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