## Facts

- Homeowners Miller and Janet Myers hired Richard T. Leekley, Inc. to perform extensive residential remodeling in 1966–1967.
- The parties initially proceeded under an oral cost-plus arrangement: reasonable labor and materials plus 10% overhead and 10% profit.
- The Myers claimed the parties agreed to a $45,000 maximum price; the contractor disputed any binding cap and sought payment under the cost-plus formula.
- J.F. Anderson Lumber Co. supplied materials for the project and, after nonpayment, filed a mechanic’s lien foreclosure action under Minn. Stat. § 514.10 against the owners, the contractor, a mortgagee bank, and another lien claimant.
- The contractor asserted a cross-claim against the Myers for labor and materials; the Myers counterclaimed for damages based on the alleged maximum price agreement.
- After an order for judgment but before entry of judgment, the contractor’s shareholders formed a second corporation; the trial court later amended the judgment to add the new entity as an additional judgment debtor.

## Issues

1. Whether the evidence reasonably supported the trial court’s findings in the lien foreclosure and related owner–contractor dispute, including that the contract was cost-plus without an enforceable $45,000 cap and the amounts due for labor and materials.
2. Whether the trial court properly amended the judgment to impose liability on the newly formed, related corporation as a continuation/alter ego of the original contractor.

## Decision

- The court affirmed the judgment resolving the mechanic’s lien foreclosure and the owner–contractor dispute.
- The court held the challenged findings of fact were reasonably supported by the evidence and not manifestly and palpably contrary to the record.
- The court affirmed the amended judgment adding the second corporation as an additional judgment debtor.
- The court concluded the second corporation could be treated as a continuation of the first where ownership and control were the same and the new entity was formed in circumstances indicating an effort to avoid existing liabilities.

## Legal Principles

- Appellate courts do not disturb trial court findings of fact in civil cases if reasonably supported by the evidence; reversal is warranted only when findings are manifestly and palpably contrary to the evidence.
- A claimed maximum-price limitation on a cost-plus construction arrangement must be proved; absent persuasive proof, the trier of fact may enforce the cost-plus terms as found.
- In mechanic’s lien foreclosure litigation, determinations of contract terms, value of labor and materials, and related amounts due are primarily factual and receive substantial deference on appeal.
- A newly formed corporation may be held liable for a predecessor’s debts when there is unity of ownership and interest and the new entity is, in substance, a continuation formed to avoid existing obligations; equity permits disregarding formal separateness in such circumstances.

## Conclusion

The Minnesota Supreme Court upheld the trial court’s resolution of a remodeling cost dispute and mechanic’s lien foreclosure because the findings were supported by the evidence, and it approved imposing liability on a newly created, closely related corporation where the record showed continuity of ownership and business and an apparent attempt to evade the predecessor’s debts.


J.F. Anderson Lumber Co. v. Myers, 206 N.W.2d 365 (Minn. 1973)