Monthly Lien Law Update: November 2019

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Staffing Services Don’t Qualify as “Subcontractor Labor” for Purposes of Mechanic Lien Rights in Oklahoma.

Advanced Resource Solutions, LLC provided, on an open account, staffing services in the form of licensed apprentice and journeymen electricians to Stava Building Corp. for a commercial construction project. Advanced alleges Stava failed to pay for the laborers provided and filed a mechanics lien to recover the unpaid amounts outstanding. The trial court granted Stava’s motion for summary judgement to invalidate the mechanics lien on the basis Advance did not perform “labor” as contemplated in the mechanics lien statute.

Advanced appealed the ruling against it to the Oklahoma Court of Civil Appeals. The Appeals Court examined the wording of Oklahoma’s mechanics lien law which stated in relevant part: “”[a]ny person who . . . perform[s] such labor as a subcontractor” is a proper lien claimant under the statute.” The Appeals Court further considered previous cases which distinguished between providing labor and supplying provisions to perform labor. The Court also examined the meaning of “subcontractor” in the language of the state.

The Court found Advance did not have mechanics lien rights, first, because Advanced was not a subcontractor. Advanced’s staffing services were provided on an open account, not pursuant to a subcontract that flows from a particular construction project. The Court also followed the distinction between providing “labor” and supplying laborers. The Appeals Court upheld the lower court’s granting of summary judgement against Advanced, thereby extinguishing the lien claims asserted against the construction project.




Hurricane Ravaged Homes Repaired by Government Program Closer to Lien Foreclosure

TJ Sutton Enterprises was hired by Citadel Recovery Services, LLC, (an AECOM contractor) to repair hurricane damaged homes through the U.S Virgin Islands’ STEP Recovery program. In June, TJ Sutton filed mechanic liens against the repaired homes claiming non-payment from the government program for repair work performed. In addition to the mechanics lien notice previously received, homeowners will soon also receive a notice of TJ Sutton’s lawsuit to execute the liens to foreclose on the homes to recover the debt.

Virgin Islands Housing Finance Authority Executive Director Daryl Griffith expressed his opposition to TJ Sutton’s action to foreclose: “This matter is a business dispute between a contractor and its subcontractor, and homeowners should not be dragged into the middle of this.” Also, in response to TJ Sutton’s actions, Senator Marvin Blyden recently introduced legislation to preclude contractors from filing mechanic liens for work performed for the emergency home repair program.

TJ Sutton responded that its actions are merely required so that it can protect its bond rights. Citadel, the contractor who hired TJ Sutton, purchased a $10 million-dollar performance and payment bond on the project which guarantees all subcontractor’s, like TJ Sutton, are fully paid. TJ Sutton can only recover under the bond if it has a valid and enforceable mechanics lien claim and proves it has not been paid for over 90 days. To preserve the mechanic liens it has filed, it must pursue its payment rights until the 90 days has expired and the bonding company approves its claims. It appears unlikely the homeowners will actually be subjected to foreclosure on their homes if TJ Sutton’s bond claim is ultimately approved.

Change Orders Lead to Dispute Over Payment’s Owed, Leading to Filing of HVAC Mechanics Lien

Dynamic Systems Inc. contracted with Skanska USA for performance of HVAC services on the Westchester Medical Center-Ambulatory Care Pavilion project in Valhalla, New York. The original contract amount was for $17.8 million, which increased to $22.5 million from numerous change orders. Dynamic alleges it is unpaid for $4.2 million and filed a mechanics lien against the property to recover the unpaid amount.

Reports indicate Skanska is in a dispute with the owner of the facility Westchester County Health Care Corp. over major design changes that resulted in the increased project costs. Skanska’s dispute with owner likely includes nonpayment for the design changes and resulted in Skanska’s inability to pay Dynamic. If accurate, Dynamic’s lien claims will likely resolve once Skanska resolves its dispute with Westchester.