Title: Synchronized Constr. Servs., Inc. v. Prav Lodging, LLC
Citation: N/A
Docket Number: 131569
State: Virginia
Issuer: Virginia Supreme Court
Date: October 31, 2014

Present:  Kinser, C.J., Lemons, Goodwyn, Millette, Mims, and 
Powell, JJ., and Koontz, S.J. 
 
SYNCHRONIZED CONSTRUCTION 
SERVICES, INC.  
 
 
 
 
  OPINION BY 
 
 
 
 
 
 
   JUSTICE LEROY F. MILLETTE, JR. 
v. 
Record No. 131569 
 
         October 31, 2014 
 
PRAV LODGING, LLC, ET AL. 
 
FROM THE CIRCUIT COURT OF ORANGE COUNTY 
Daniel R. Bouton, Judge 
 
In this appeal we consider whether a general contractor, 
who has no pecuniary interest in the bond posted to release the 
real estate subject to a subcontractor's mechanic's lien, is a 
necessary party to a subcontractor's mechanic's lien 
enforcement action. 
I. 
Facts and Proceedings 
In 2008, Prav Lodging, L.L.C. ("Prav") acquired a parcel 
of real estate in Orange County, Virginia to build a hotel 
facility.  Secured by a credit line deed of trust, Virginia 
Community Bank ("VCB") financed the construction of the hotel 
facility.  Prav entered into a contract with Paris Development 
Group, LLC ("Paris") to act as construction manager for the 
project.  As construction manager, Paris had the authority to 
enter into subcontracts with subcontractors to facilitate the 
project.  Paris entered into several such subcontracts, 
including a subcontract with Synchronized Construction 
Services, Inc. ("Synchronized"). 
 
 
2 
The owner-construction manager contract between Prav and 
Paris was a cost-plus agreement, whereby Prav would pay Paris 
the cost of the work plus a $192,000 fixed fee.  Prav's 
payments were scheduled to be made on a monthly basis upon 
Paris' submission of an invoice to Prav. 
The construction manager-subcontractor subcontract between 
Paris and Synchronized was a fee agreement, whereby Paris would 
pay Synchronized a $398,000 fee subject to additions and 
deductions as the project progressed.  Paris' payments were 
scheduled to be made on a monthly basis upon Synchronized's 
submission of a pay application to Paris. 
By February 3, 2010, the construction project was 
"substantially complete," with the remaining work to be 
"obtainable in a matter of a few days."  On March 11, 2010, 
Synchronized recorded a mechanic's lien for unpaid work on the 
construction project in the amount of $208,250.80 with the 
Orange County Clerk's Office.  On September 9, 2010, 
Synchronized filed a complaint to enforce its mechanic's lien 
in the Circuit Court of Orange County, naming Prav, Paris, VCB, 
and numerous other subcontractors as defendants.  In its 
complaint, Synchronized asserted a claim to enforce its 
mechanic's lien as well as a claim that Paris breached its 
contract with Synchronized by failing to make all payments due 
to Synchronized under their subcontract. 
 
 
3 
Paris did not enter an appearance in the case.  Indeed, it 
could not do so because it no longer existed.  According to the 
public records of its state of incorporation, Paris was 
dissolved on March 12, 2010 – the day after Synchronized had 
recorded its mechanic's lien. 
Prav and VCB filed an application to post a bond in the 
amount of $237,906.80 in accordance with Code § 43-70.  The 
circuit court granted that application, thereby releasing the 
real estate which had been subject to Synchronized's mechanic's 
lien. 
Prav filed a motion to dismiss the entire complaint on the 
basis that Synchronized failed to timely serve numerous 
defendants.  In response, the circuit court held that 
Synchronized "failed to exercise due diligence" to serve Paris 
within one year of the date of the filing of the complaint, and 
therefore dismissed Synchronized's breach of contract claim 
against Paris.  However, the court declined to dismiss 
Synchronized's mechanic's lien claim. 
Later, VCB filed a motion to dismiss the mechanic's lien 
claim on the basis that Synchronized failed to timely serve 
Paris, who, as the construction manager, was a necessary party 
to the mechanic's lien enforcement action.  In response, the 
circuit court held that Paris was in fact a necessary party, 
and that Synchronized's failure to timely serve Paris required 
 
 
4 
dismissing Synchronized's mechanic's lien claim with prejudice.  
The court entered an order to that effect and denied 
Synchronized's motion for reconsideration. 
Synchronized timely filed a petition for appeal with this 
Court.  We granted the following assignments of error: 
1. The [c]ircuit [c]ourt erred in dismissing 
Synchronized's mechanic's lien enforcement action 
where Paris, the construction manager, did not have a 
recognized possessory or expectancy interest in the 
lien enforcement action which could be defeated or 
diminished as the result [of that] suit and therefore 
was not a necessary party to the action.  While Paris 
may have had a contractual claim against the owner of 
the [p]roject arising out of its [c]ontract, the facts 
below reveal that Paris never satisfied the express 
conditions precedent[] found in its [c]ontract in 
order to preserve and maintain such claims.  Hence, 
even if Paris had contractual claims, those claims 
would not be sufficient to mandate a finding that 
Paris was a necessary party to the lien enforcement 
action brought by Synchronized. 
2. The [c]ircuit [c]ourt applied an incorrect standard 
in analyzing whether Paris was a necessary party to 
the lien enforcement action and thus erred in 
dismissing Synchronized['s] mechanic's lien 
enforcement action where the presence of . . . Paris[, 
the general contractor,] was not required under 
Virginia law. 
3. The [c]ircuit [c]ourt erred in that Virginia Code 
§ 43-22 does not explicitly require a [general 
contractor] to be included as a party to a mechanic's 
lien enforcement action or at all times be [a] viable 
party in a mechanic's lien enforcement action where 
the facts below showed that Synchronized had the 
ability to present proof at trial of the balance due 
under the Prav Lodging-Paris [c]ontract at all 
relevant times included at the time Synchronized's 
mechanic's lien was recorded. 
 
 
5 
II. Discussion 
A. 
Standard of Review 
Whether a party is a necessary party to a particular claim 
is a question of law that we review de novo.  Glasser & 
Glasser, PLC v. Jack Bays, Inc., 285 Va. 358, 369, 741 S.E.2d 
599, 604 (2013). 
B. 
Necessary Parties in Mechanic's Lien Enforcement Actions 
This appeal requires us to address the meeting of two 
different areas of law: mechanic's lien enforcement actions, 
and necessary party jurisprudence.  However, as this is not an 
issue of first impression, precedent controls our decision. 
A mechanic's lien was "[un]known to the common law or to 
courts of equity," and therefore is purely "a creature of the 
statute" allowing for its creation.  Shenandoah Valley R.R. Co. 
v. Miller, 80 Va. 821, 826 (1885); Sergeant v. Denby, 87 Va. 
206, 208, 12 S.E. 402, 402 (1890).  Being in derogation of the 
common law, "there must be a substantial compliance with the 
requirement of that portion of the statute which relates to the 
creation of the [mechanic's] lien; but . . . the provisions 
with respect to its enforcement should be liberally construed."  
American Standard Homes Corp. v. Reinecke, 245 Va. 113, 119, 
425 S.E.2d 515, 518 (1993).  That is to say, a party must 
strictly comply with the "specific time frame and in the manner 
set forth in the statutes" to perfect its mechanic's lien, "or 
 
 
6 
the lien will be lost."  Britt Constr., Inc. v. Magazzine 
Clean, LLC, 271 Va. 58, 63, 623 S.E.2d 886, 888 (2006) 
(collecting cases).  Once a mechanic's lien is created by 
operation of law and is perfected in accordance with the 
relevant statutory requirements, the party holding the 
mechanic's lien is able to bring suit to enforce that lien.  
Code § 43-22. 
A mechanic's lien enforcement action "must name all 
necessary parties within the time set forth by Code § 43-17, 
and a failure to name a necessary party as defendant requires 
dismissal."  Glasser, 285 Va. at 369, 741 S.E.2d at 605.  The 
Code does not provide an answer as to which parties are 
necessary parties to a mechanic's lien enforcement action.  See 
Walt Robbins, Inc. v. Damon Corp., 232 Va. 43, 46-47, 348 
S.E.2d 223, 226 (1986) (rejecting the argument that Code § 43-
22 establishes who is a necessary party in mechanic's lien 
enforcement actions).  We have therefore relied upon our common 
law authority to supply the answer. 
We have consistently defined "necessary party" broadly.  
See, e.g., Asch v. Friends of Mt. Vernon Yacht Club, 251 Va. 
89, 90-91, 465 S.E.2d 817, 818 (1996).  Generally, we have 
described necessary parties as follows: 
 
 
7 
Where an individual is in the actual enjoyment of the 
subject matter, or has an interest in it, either in 
possession or expectancy, which is likely either to 
be defeated or diminished by the plaintiff's claim, 
in such case he has an immediate interest in 
resisting the demand, and all persons who have such 
immediate interests are necessary parties to the 
suit. 
Id. (internal quotation marks omitted).  What constitutes the 
"subject matter" or res of a mechanic's lien enforcement action 
narrows the necessary party analysis to a specific set of 
interests in this type of litigation. 
1. 
Enforcement of a Mechanic's Lien Against Real Estate 
A mechanic's lien enforcement action seeks to enforce the 
mechanic's lien "against the property bound thereby."  Code 
§ 43-22.  As a mechanic's lien enforcement action implicates 
real property rights, we have turned to due process principles 
to determine who is a necessary party in such litigation.  See 
Walt Robbins, 232 Va. at 46-47, 348 S.E.2d at 226. 
Such due process principles qualify a necessary party as 
any party who has a real property interest in the real estate 
subject to the mechanic's lien.  See, e.g., James T. Bush 
Constr. Co. v. Patel, 243 Va. 84, 87-88, 412 S.E.2d 703, 705 
(1992) (beneficiary of a deed of trust, recorded after the real 
estate subject to the mechanic's lien was improved, is a 
necessary party); Mendenhall v. Douglas L. Cooper, Inc., 239 
Va. 71, 75-76, 387 S.E.2d 468, 740-71 (1990) (owner of real 
 
 
8 
estate subject to the mechanic's lien is a necessary party); 
Walt Robbins, 232 Va. at 47, 348 S.E.2d at 226 (beneficiary of 
a deed of trust, recorded before the real estate subject to the 
mechanic's lien was improved, is a necessary party); id. at 48, 
348 S.E.2d at 227 (trustee of a deed of trust, recorded before 
the real estate subject to the mechanic's lien was improved, is 
a necessary party).  In sum, the "subject matter" or res of a 
mechanic's lien enforcement action is the real estate subject 
to the mechanic's lien, and a necessary party is one who has a 
real property interest in such real estate because it is that 
real property interest "which is likely either to be defeated 
or diminished by the plaintiff's claim."  Asch, 251 Va. at 90, 
465 S.E.2d at 818. 
Importantly, the focus is on which parties actually have a 
relevant interest in the real property.  Just because a party 
may be generally "interested" in the mechanic's lien 
enforcement action, such as having a pecuniary interest in the 
outcome of the litigation, does not mean that the party is 
necessary to the proceedings.  See, e.g., Air Power, Inc. v. 
Thompson, 244 Va. 534, 537-38, 422 S.E.2d 768, 770 (1992) (land 
trust beneficiaries are not necessary parties to a mechanic's 
lien enforcement action against the trust's real estate because 
they only have a personal property interest in the profits from 
 
 
9 
the trust's real estate, and have "no interest, [either] legal 
or equitable, in the [real estate] itself"). 
2. 
Release of the Real Estate by a Posted Bond 
Certain "parties in interest" may, in accordance with the 
rules set forth by the General Assembly, post a bond after a 
mechanic's lien enforcement action has been filed.  Code § 43-
70.  A properly posted bond releases the real estate from the 
mechanic's lien enforcement action.  Id.  We have previously 
recognized that this bonding-off process only "substitutes the 
bond for the real estate" that had been subject to the 
mechanic's lien.  York Fed. Sav. & Loan Ass'n v. William A. 
Hazel, Inc., 256 Va. 598, 602, 506 S.E.2d 315, 317 (1998).  
Because the real estate is no longer subject to the mechanic's 
lien enforcement action once a bond is properly posted, the 
"subject matter" or res of the suit is no longer the real 
estate, but is instead the posted bond itself. 
This has a logical impact on the necessary party analysis.  
If no bond has been posted the inquiry turns upon which parties 
have a real property interest in the real estate subject to the 
mechanic's lien, but when a bond is posted the inquiry focuses 
upon which parties have a pecuniary interest in the bond itself 
which is "likely either to be defeated or diminished" by the 
plaintiff's "claim against the bond."  George W. Kane, Inc. v. 
 
 
10 
NuScope, Inc., 243 Va. 503, 509, 416 S.E.2d 701, 705 (1992) 
(internal quotation marks omitted). 
 To this end, we have previously considered which parties 
constitute "necessary parties-defendant to [a] bond enforcement 
suit."  Id. at 509, 416 S.E.2d at 704.  The principal on the 
bond and the surety on the bond are necessary parties.  Id.  
However, the owner of real estate, the trustee under the deed 
of trust, and the beneficiary of the deed of trust are no 
longer necessary parties when their only relation to the 
litigation is their respective real property interests in the 
real estate that had been subject to the mechanic's lien, but 
that was no longer encumbered once the bond had been posted in 
accordance with Code § 43-70.  Id. at 510, 416 S.E.2d at 705. 
3. 
Concerns Not Addressed by the Necessary Party Doctrine 
The circuit court incorporated into its necessary party 
analysis concerns that go beyond the scope of this precedent, 
and the parties dispute these concerns on appeal.  We address 
these points to underscore that they are not part of the 
necessary party analysis. 
First, the court expressed concerns about issues of proof.  
The amount that the owner is indebted to the general 
contractor, and the amount that the general contractor is 
indebted to the subcontractor, are factual issues that the 
parties may dispute when a subcontractor seeks to enforce its 
 
 
11 
mechanic's lien.  See Code § 43-7(A).  And such disputes remain 
present even "with respect to a bond enforcement suit, 
[because] the party-plaintiff has the burden of proving the 
same elements of his claim that he would have had to prove in a 
suit to enforce the lien released by that bond."  George W. 
Kane, 243 Va. at 509, 416 S.E.2d at 704. 
However, concerns regarding which parties might be vital 
to proving the plaintiff's case are not relevant to the 
necessary party analysis.  See id. at 509-10, 416 S.E.2d at 
704-05.  This conclusion is compelled by the fact that we have 
previously held that the owner of the real estate subject to a 
mechanic's lien is no longer a necessary party once a bond is 
posted to release and replace that real estate as the res 
subject to the lien.  Id. at 510, 416 S.E.2d at 705.  If an 
owner is not a necessary party even though the mechanic's lien 
enforcement action may implicate issues relating to a contract 
entered into by that owner, see Code § 43-7(A), then a general 
contractor is not a necessary party simply because the 
mechanic's lien enforcement action may implicate issues 
relating to a contract entered into by that general contractor. 
Simply put, the controlling considerations of the 
necessary party doctrine are not issues of proof and issues as 
to which party may be best situated to provide proof.  Instead, 
the necessary party doctrine is calculated to ensure that all 
 
 
12 
parties central to a dispute can have their interests resolved, 
so that absent parties' interests are not adversely affected 
and participating parties may be awarded complete relief.  See 
Michael E. Siska Revocable Trust v. Milestone Dev., LLC, 282 
Va. 169, 173-77, 715 S.E.2d 21, 23-25 (2011).  As established, 
this requires defining a necessary party to a mechanic's lien 
enforcement action as a party who has a recognized interest in 
the "subject matter" or res of the litigation. 
Second, the circuit court believed that the "subject 
matter" or res of a mechanic's lien enforcement action was more 
than simply the real estate or the posted bond.  The court 
expanded those terms to include the contractual issues that may 
arise through the course of a plaintiff's prima facie case or 
by way of an affirmative defense. 
This position incorrectly conflates a mechanic's lien 
enforcement claim with a breach of contract claim.  A necessary 
party to a mechanic's lien enforcement action must have a 
specifically defined interest in the "subject matter" or res of 
that litigation, which we have repeatedly defined as being 
either the real estate or posted bond.  See George W. Kane, 243 
Va. at 509-10, 416 S.E.2d at 705; Air Power, 244 Va. at 537-38, 
422 S.E.2d at 770; James T. Bush Constr. Co., 243 Va. at 87-88, 
412 S.E.2d at 705; Mendenhall, 239 Va. at 75-76, 387 S.E.2d at 
470-71; Walt Robbins, 232 Va. at 47-48, 348 S.E.2d at 226-27.  
 
 
13 
A party whose only relation to a mechanic's lien enforcement 
action is his status as a party to a contract, the terms of 
which may be contested during the course of litigation, is akin 
to a party who has only a general pecuniary interest in the 
outcome of a mechanic's lien enforcement action.  We have 
previously recognized that such a general, tangential interest 
is insufficient to elevate a party to necessary party status.  
See Air Power, 244 Va. at 537-38, 422 S.E.2d at 770. 
Moreover, as with many mechanic's lien situations, in this 
case any litigation in the mechanic's lien enforcement action 
will not foreclose the ability for Paris, as the general 
contractor, to bring or defend a claim in the future relating 
to its contracts with the owner, Prav, or the subcontractor, 
Synchronized.  Neither collateral estoppel nor res judicata 
would encumber such future litigation because Paris would not 
have been a party to the mechanic's lien enforcement action, 
and no party in that mechanic's lien enforcement action 
identifies with Paris' interest to such a degree that it could 
be said to have represented Paris' legal rights.  See Rule 1:6 
(governing res judicata); Raley v. Haider, 286 Va. 164, 170, 
747 S.E.2d 812, 815 (2013) (setting forth the requirements for 
res judicata to bar suit, including identity of the parties or 
their privies); Ellison v. Commonwealth, 273 Va. 254, 258, 639 
S.E.2d 209, 212 (2007) (noting the mutuality of parties 
 
 
14 
requirement among the standards for application of collateral 
estoppel to bar litigation of an issue of fact). 
C. 
Whether Paris Is a Necessary Party 
In this case, Prav and VCB posted a bond that released the 
real estate subject to Synchronized's mechanic's lien.  Code 
§ 43-70.  As a bond has been posted, the necessary party 
inquiry is whether Paris has a pecuniary interest in that 
posted bond, being the "subject matter" or res of 
Synchronized's mechanic's lien enforcement action, which is 
"likely either to be defeated or diminished" by Synchronized's 
"claim against the bond."  George W. Kane, 243 Va. at 509, 416 
S.E.2d at 705 (internal quotation marks omitted).  The answer 
is no. 
Paris is neither the principal nor the surety on the bond.  
Moreover, Paris has no ability to be awarded a judgment to be 
paid out from the bond.  A posted bond is "subject to the final 
judgment of the court upon the hearing of the [mechanic's lien 
enforcement action] upon its merits," and is "for the payment 
of such judgment."  Code § 43-70.  That is, a posted bond can 
only be paid out to those claimants who have a valid mechanic's 
lien on the real estate released by the bond. 
Paris does not have such a mechanic's lien.  It is true 
that Paris was the construction manager and, by providing such 
services for the construction of the hotel facility, acquired a 
 
 
15 
mechanic's lien on that real estate.  Code § 43-3.  But the 
continued existence of a mechanic's lien requires the party 
acquiring the lien to perfect it in accordance with the Code.  
Id.; see Britt Constr., 271 Va. at 63, 623 S.E.2d at 888 
(collecting cases). 
The requirements for perfection differ depending upon 
whether the party asserting the lien is a general contractor, a 
subcontractor, or a party who contracts with a subcontractor.  
See Code §§ 43-4; 43-7; 43-9.  Being the party who 
"contract[ed] directly with the owner," Paris was a "general 
contractor" for purposes of the mechanic's lien statutory 
scheme.  Code § 43-1.  Code § 43-4, governing the perfection of 
a general contractor's mechanic's lien, required Paris to file 
a "memorandum of lien" and "a certification of mailing of a 
copy of the memorandum of lien [to] the owner of the property" 
in the Orange County clerk's office.  The record reflects that 
Paris did not undertake these actions.  As such, Paris failed 
to perfect its mechanic's lien on the real estate, and that 
mechanic's lien was lost.  Britt Constr., 271 Va. at 63, 623 
S.E.2d at 888.  Because Paris lost its mechanic's lien, the 
posted bond is incapable of being subject to a monetary 
judgment in favor of Paris through the course of Synchronized's 
mechanic's lien enforcement action. 
 
 
16 
We therefore hold that the circuit court can render 
"complete relief" in Synchronized's mechanic's lien enforcement 
action, even in Paris' absence, because Paris' lack of a 
pecuniary interest in the posted bond means that there is no 
monetary claim upon which the circuit court could award 
judgment in favor of Paris, and no interest held by Paris which 
might need to be shielded from an adverse judgment.  See Lamar 
Co. v. City of Richmond, 287 Va. 322, 324-25, 757 S.E.2d 15, 16 
(2014) (proper decree could be entered without participation of 
the absent and putatively necessary party). 
III. Conclusion 
Under the facts of this case, Paris, as the general 
contractor, is a proper party but not a necessary party to a 
subcontractor's mechanic's lien enforcement action.  We will 
therefore reverse the circuit court's judgment to the contrary, 
vacate the order dismissing Synchronized's mechanic's lien 
enforcement claim with prejudice, and remand for further 
proceedings consistent with this opinion. 
Reversed and remanded. 
 
 
SENIOR JUSTICE KOONTZ, with whom JUSTICE MIMS and JUSTICE 
POWELL join, dissenting. 
 
 
I respectfully dissent.  This case presents the issue 
whether the general contractor in a project involving the 
construction of a hotel was a "necessary party" in a 
 
 
17 
subcontractor's action to enforce its mechanic's lien when that 
perfected lien had been discharged, pursuant to Code § 43-70, 
upon the filing of an appropriate bond by the owner of the real 
estate upon which the hotel was constructed. 
 
Today the majority of this Court holds that because the 
general contractor failed to perfect its statutorily granted 
mechanic's lien under Code § 43-3 it had no "pecuniary 
interest" in the bond and, therefore, was not a necessary party 
to the subcontractor's action to enforce its perfected 
mechanic's lien.  Neither the majority in its opinion, nor the 
subcontractor in its appellee's brief, cites to any prior 
decision by this Court in which we have held that a general 
contractor is not a necessary party to a subcontractor's action 
to enforce its mechanic's lien.  In my view, the statutory 
scheme involving the enforcement of a mechanic's lien by a 
subcontractor and the significant role of the general 
contractor in all construction projects provide persuasive 
reasons that such is the case. 
 
Initially, I am reminded of the old adage that bad facts 
can lead to bad law.  In this case no evidentiary hearing was 
conducted in the trial court and, thus, the material facts are 
drawn necessarily from the parties' pleadings, memoranda, and 
supporting exhibits filed in that court.  While the majority 
makes reference to the fact that the general contractor did not 
 
 
18 
enter an appearance in the case because it was apparently 
dissolved the day after the subcontractor recorded its 
mechanic's lien, there are no facts in the record reflecting 
the status of the general contractor at the time the 
subcontractor subsequently filed its action to enforce its 
mechanic's lien nor at the time the bond was posted by the 
owner of the real estate. 
 
What is undisputed, however, is the fact that the general 
contractor was not given notice of the subcontractor's action 
because the subcontractor "failed to exercise due diligence" to 
serve the general contractor.  That finding by the trial court 
was not challenged by the subcontractor even though it suggests 
that the general contractor could have been served.  Under 
these circumstances, the proper analysis of the issue in this 
appeal necessarily must be premised upon the fact that the 
subcontractor simply failed to give the general contractor 
notice of the proceeding and thereby deprived the general 
contractor of the opportunity to appear and provide evidence in 
the case if it desired to do so.  This is not a case in which 
the general contractor with notice declined to participate.  
Moreover, under these circumstances there is no factual basis 
upon which a determination can be made as to what pecuniary 
interest, if any, the general contractor had in the proceeding 
initiated by the subcontractor. 
 
 
19 
 
Nevertheless, the majority opinion seems to suggest that 
the posting of the bond made these "bad facts" irrelevant to 
its determination that the general contractor was not a 
necessary party in this case.  In that context, it is not clear 
what the reasoning would be had, for example, the general 
contractor been given notice, appeared, and asserted that the 
owner was indebted to it and that it was not indebted to the 
subcontractor.  For the reasons that follow, in my view, the 
statutory scheme for enforcing a mechanic's lien contemplates 
the central role of the general contractor in construction 
cases so that all claims may be resolved and future litigation 
avoided. 
 
The analysis in this appeal is guided by settled law 
regarding the enforcement of a mechanic's lien.  Mechanic's 
liens arise by statute and are in derogation of the common law.  
Britt Constr., Inc. v. Magazzine Clean, LLC, 271 Va. 58, 63, 
623 S.E.2d 886, 888 (2006); Carolina Builders Corp. v. Cenit 
Equity Co., 257 Va. 405, 410, 512 S.E.2d 550, 552 (1999). 
 
The statutory authority for a mechanic's lien for those 
whose labor or materials is incorporated in construction 
projects is found in Code §§ 43-1 to 43-23.2.  As pertinent to 
this appeal, Code § 43-3(A) provides that a mechanic's lien is 
created automatically by "performing labor or furnishing 
materials of the value of $150 or more . . . for the 
 
 
20 
construction, removal, repair or improvement of any building or 
structure."  Both the general contractor and subcontractor are 
granted a mechanic's lien in this manner.  See Code § 43-4 
(general contractors); Code § 43-7 (subcontractors). 
 
A mechanic's lien cannot be enforced, however, unless it 
is first perfected in accord with Code § 43-7.  Britt Constr., 
271 Va. at 63, 623 S.E.2d at 888 (collecting cases).  Pertinent 
to the present case, Code § 43-7(A) provides that "the amount 
for which a subcontractor may perfect a lien . . . shall not 
exceed the amount in which the owner is indebted to the general 
contractor."  This statute further provides that it shall be an 
affirmative defense that the owner is not indebted to the 
general contractor, or that the amount owed to the general 
contractor is less than the amount of the subcontractor's 
asserted mechanic's lien.  These provisions reflect the central 
role of the general contractor in all construction projects.  
Thus, we have long held that the burden of proof in a suit to 
enforce a mechanic's lien requires the subcontractor to prove 
both that he is entitled to payment for labor and materials 
furnished under his contract with the general contractor and 
that the owner was indebted to the general contractor under 
their contract at the time notice of the subcontractor's lien 
was given or became so indebted thereafter.  John T. Wilson Co. 
v. McManus, 162 Va. 130, 135, 173 S.E. 361, 362 (1934). 
 
 
21 
 
Once a mechanic's lien has been perfected, Code § 43-22 
provides, in pertinent part, that the lien "may be enforced in 
a court of equity" by a complaint filed in the county or city 
wherein the property upon which the building was constructed is 
located.  The statutory scheme for enforcing a perfected 
mechanic's lien is a unique equity proceeding.  Once the 
subcontractor's suit invokes the equity jurisdiction of the 
trial court, "it may go on to a complete adjudication, even to 
the extent of establishing legal rights and granting legal 
remedies which would otherwise be beyond the scope of its 
authority."  Such is the case even though the complainant may 
have failed to establish its right to a mechanic's lien.  
Johnston & Grommett Bros. v. Bunn, 108 Va. 490, 493, 62 S.E. 
341, 342 (1908); see also Erlich v. Hendrick Constr. Co., 217 
Va. 108, 115, 225 S.E.2d 665 (1976). 
 
In a suit by a subcontractor to enforce a mechanic's lien 
the focus of the equity court's determination is upon the 
status of the general contractor's accounts with the owner and 
the subcontractor.  In this context, we have observed that 
there is a distinction between a "proper party" and a 
"necessary party" in that the failure to include the former is 
not a ground for dismissing the suit whereas the failure to 
include the latter renders the court powerless to proceed with 
the suit.  Mendenhall v. Douglas L. Cooper, Inc., 239 Va. 71, 
 
 
22 
74, 387 S.E.2d 468, 470 (1990).  There we explained that a 
necessary party's "interests in the subject matter of the suit, 
and in the relief sought, are so bound up with that of the 
other parties, that their legal presence as parties to the 
proceeding is an absolute necessity, without which the court 
cannot proceed.  In such cases the court refuses to entertain 
the suit, when those parties cannot be subjected to its 
jurisdiction."  Id. 
In Raney v. Four Thirty Seven Land Co., we stated that 
"[w]here an individual is in the actual enjoyment of 
the subject matter, or has an interest in it, either 
in possession or expectancy, which is likely either 
to be defeated or diminished by the plaintiff's 
claim, in such case he has an immediate interest in 
resisting the demand and all such parties who have 
such an interest are necessary parties to the suit." 
233 Va. 513, 519-20, 357 S.E.2d 733, 736 (1987) (quoting 
Gaddess v. Norris, 102 Va. 625, 630, 46 S.E. 905, 907 
(1904)) 
Code § 43-70 provides that when a suit has been filed 
under Code § 43-22 to enforce a mechanic's lien, "parties in 
interest" may petition the court "for permission to pay into 
court an amount of money sufficient to discharge such lien."  
If the court permits the posting of the bond, "the property 
affected thereby shall stand released from such lien" and 
enforcement of the lien "shall be subject to the final judgment 
of the court upon the hearing of the case on its merits."  The 
 
 
23 
posting of the bond does not constitute a confession of 
judgment or otherwise resolve the underlying controversy of 
whether the alleged debt secured by the lien is owed.  See York 
Fed. Sav. & Loan Ass'n v. William A. Hazel, Inc., 256 Va. 598, 
602, 506 S.E.2d 315, 317 (1998).  Thus, we held in George W. 
Kane, Inc. v. NuScope, Inc., 243 Va. 503, 509, 416 S.E.2d 701, 
704 (1992), that "with respect to a bond enforcement suit, the 
[subcontractor] has the burden of proving the same elements of 
his claim that he would have had to prove in a suit to enforce 
the lien released by that bond." 
In the present case, the subcontractor filed a complaint 
in the Circuit Court of Orange County to enforce its perfected 
mechanic's lien on September 9, 2010.  Subsequently, in August 
2011 the owner filed an appropriate bond in accordance with 
Code § 43-70 and the subcontractor's lien was discharged.  
Although the complaint named the general contractor as a 
defendant, the subcontractor failed to give the general 
contractor notice of the proceeding and the general contractor 
did not enter an appearance. 
It is readily apparent that when a bond is filed under 
Code § 43-70 the subject matter of the subcontractor's lien 
enforcement suit remains the determination of what 
indebtedness, if any, existed between the owner and the general 
contractor at the time the lien was perfected or thereafter, 
 
 
24 
and what indebtedness, if any, exists between the general 
contractor and the subcontractor.  The bond is not the subject 
matter of the suit.  Rather, the bond provides the monetary 
pool from which the equity court makes a "complete 
adjudication" of the financial issues between all the parties 
involved in the construction project that have been provided 
proper notice of the proceeding, while releasing the property 
of the owner in question from claims of parties involved in 
that construction project.  Significantly, in this way the bond 
provides the mechanism by which the equity court is able to 
resolve any financial claims that may exist between all the 
parties to the construction project and thus protect them from 
future litigation involving the construction project. 
In the present case, the general contractor was not 
provided the opportunity to assert any claims it may have had 
against the owner or to refute any assertions of the 
subcontractor against it in its capacity as the general 
contractor in the construction project.  Moreover, the equity 
court was called upon to render a complete adjudication of the 
financial issues in the case "on its merits" without the 
benefit of the general contractor's evidence of what, if any, 
indebtedness existed between it and the owner and what, if any, 
indebtedness existed between it and the subcontractor.  In that 
circumstance, in my view the general contractor was a necessary 
 
 
25 
party to the subcontractor's suit to enforce its mechanic's 
lien, and the trial court did not abuse its discretion in 
refusing to entertain that suit and dismissing it with 
prejudice. 
The majority relies, in part, upon our decision in Kane to 
conclude that a general contractor is not a necessary party to 
a bond enforcement suit by a subcontractor.  There, we held 
that the owner of the real estate subject to a mechanic's lien 
is no longer a necessary party once a bond is posted to release 
the real estate.  243 Va. at 510, 416 S.E.2d at 705.  The 
majority reasons that if an owner is not a necessary party in 
those circumstances then it follows that the general contractor 
is also not a necessary party.  In Kane, however, the general 
contractor, rather than the owner, posted the bond.  Id. at 
505, 416 S.E.2d at 702.  The distinction is significant.  When 
the owner posts the bond it does so to release a mechanic's 
lien claim so that the owner's property is no longer 
encumbered.  When the general contractor posts the bond it 
becomes a party to the subcontractor's enforcement suit and 
thereby protects itself from future litigation with the 
subcontractor. 
The majority also relies upon our decision in Air Power, 
Inc. v. Thompson, 244 Va. 534, 422 S.E.2d 768 (1992), to 
support its reasoning in this case.  There, we held that land 
 
 
26 
trust beneficiaries are not necessary parties to a mechanic's 
lien enforcement action against the trust's real estate.  This 
was so because the beneficiaries only had a personal property 
interest in the profits of the trust's real estate.  Id. at 
537-38, 422 S.E.2d at 770.  Obviously, Air Power did not 
involve the status of a general contractor and the unique role 
the general contractor plays in a construction project and the 
resulting role it maintains in the resolution of a 
subcontractor's mechanic's lien enforcement suit. 
For these reasons, I would hold that the general 
contractor, where available for service by a subcontractor in 
its mechanic's lien enforcement suit in which a bond has been 
posted by the owner in accordance with Code § 43-70, is a 
necessary party.  Accordingly, I would further hold that the 
trial court did not abuse its discretion in refusing to 
entertain the subcontractor's action in this case and 
dismissing it with prejudice.