Opinion ID: 1057769
Heading Depth: 3
Heading Rank: 4

Heading: Subcontractor Liens

Text: The Lenders argue that if this Court determines that work on the structure otherwise terminated on September 28, 2007, then Scaffold Resource, Becker Electric, and United Sprinkler were untimely in filing their liens on January 11, 22, and 29, 2008 respectively. 28 Because we find that the circuit court was not plainly wrong in concluding that work on the church did not terminate on September 28, 2007, and because we have held that the ninety-day deadline applies to each individual contractor, rather than the group collectively, United Masonry Inc. of Va. v. Riggs Nat'l Bank of D.C., 233 Va. 476, 479, 357 S.E.2d 509, 511 (1987) (the [ninety-day] filing deadline [is] dependent upon each contractor's own activity), the validation of the mechanics' liens of Scaffold Resource, Becker Electric, and United Sprinkler was not plainly wrong or without evidence to support it. D. The Stipulation, Lien Priority, and Sale of Land 1. The Stipulation The Lenders argue that at the January 2010 hearing before Commissioner Zelnick, all parties stipulated, and the Commissioner ruled, that the hearing was confined to the issue of the enforceability of the liens, and all other issues of valuation and priority would be deferred to a subsequent hearing. Relying on Bauer v. Harn, 223 Va. 31, 36, 286 S.E.2d 192, 194 (1982), they contend that [s]tipulations are definitive of the issues and are binding. Unfortunately, the Lenders omit from their argument that the Commissioner's stipulation was contingent on future hearings being necessary. 29 The parties agreed that Commissioner Zelnick could address issues of priority and valuation at the January 2010 hearing, and that those issues would be deferred to a subsequent hearing, if needed. The Commissioner reiterated the conditional nature of future hearings on priority and valuation by stating that a hearing on those matters would occur only if necessary. For this reason, the stipulation did not require that further hearings be held. 2. Lien Priority The Lenders argue that no evidence concerning lien priority was submitted to Commissioner Zelnick during the five-day hearing. Consequently, they claim, the Commissioner and circuit court were plainly wrong in determining that the Contractors' liens had priority over the Lenders' Deed of Trust. Jack Bays argues that evidence of lien priority was introduced. Various subcontractors claim that because Jack Bays commenced its contract work on the church before the Deed of Trust was recorded, any mechanic[s'] liens arising out of that contract take priority over the Lenders' Deed of Trust. Commissioner Zelnick reviewed the validity of the liens filed by each of the dozen-plus claimants and concluded that the Claimants' liens, with the exception of the lien filed by Capital Contracting, are valid and enforceable, [and] have 30 priority over the . . . Deed of Trust. The Commissioner reasoned that [p]ursuant to Virginia Code § 43-23, there is no priority among mechanic[s'] liens, 'except that the lien of a subcontractor shall be preferred to that of his general contractor. . . .'  Accordingly, the Commissioner gave priority to subcontractor liens over Jack Bays' lien, and gave priority to Jack Bays' lien over the Lenders' lien. See Code § 43-23. In relevant part, Code § 43-21 states that [n]o lien or encumbrance upon the land created before the work was commenced or materials furnished shall operate upon the building or structure erected thereon, or materials furnished for and used in the same, until the lien in favor of the person doing the work or furnishing the materials shall have been satisfied; nor shall any lien or encumbrance upon the land created after the work was commenced or materials furnished operate on the land, or such building or structure, until the lien in favor of the person doing the work or furnishing the materials shall have been satisfied. Of course, a lien or encumbrance upon land may include a deed of trust. See Bayview Loan Servicing, LLC v. Simmons, 275 Va. 114, 119, 654 S.E.2d 898, 900 (2008); see also Woodington Electric, Inc. v. Lincoln Sav. & Loan Ass'n, 238 Va. 623, 630, 385 S.E.2d 872, 875 (1989) (the mechanic[s'] lien 'leaps to the head of the class,' coming before virtually every other lien.). With the possible exception of priority 31 concerning the land (discussed infra), the Commissioner was not plainly wrong or without evidence to support his determination concerning priority. 3. Sale of the Land The Lenders also assert that, under Code § 43-3, a mechanics' lien applies only to  'so much land therewith as shall be necessary for the convenient use and enjoyment thereof.'  See Code § 43-3. They maintain that there was no basis for suggesting th[at] all of the land is necessary for the use and enjoyment of the improvements. They argue that [i]n the case of the property at issue, the uncompleted church sits on approximately 22 acres of land. The uncompleted structure accounts for only 125,000 square feet (or 2.8 acres). Jack Bays suggests that objections to the sale of the entire parcel of land were not preserved. At the hearing on exceptions to the Commissioner's report, counsel for Citizens Business Bank stated to the circuit court, I don't see how the property can be sold at this point because it is clear from the record that the way the hearing proceeded, those issues were not determined, and by agreement they were not determined. They were deferred. The question of objection to the sale of the entire parcel was adequately preserved. 32 Because of the significant total sum of the mechanics' liens, Commissioner Zelnick determined that a sale of the land was necessary to satisfy the liens. See Code § 43-3. The Commissioner stated that proceeds remaining after the sale and satisfaction of the liens would be payable to New Life. Code § 43-3(A) states as relevant here that [a]ll persons performing labor or furnishing materials of the value of $150 or more, including the reasonable rental or use value of equipment, for the construction, removal, repair or improvement of any building or structure . . . shall have a lien . . . upon such building or structure, and so much land therewith as shall be necessary for the convenient use and enjoyment thereof. (emphasis added). Commissioner Zelnick recommended the sale of the twentytwo acre property because there were liens totaling approximately $32,360,000, and sale of the entire parcel was necessary to pay all of the liens. However, not all of these liens were mechanics' liens. Additionally, sale of the property to satisfy a mechanics' lien may only extend to so much [of the] land therewith as shall be necessary for the convenient use and enjoyment thereof. Code § 43-3. The record does not reflect evidence presented on this question. Sale of the entire property may or may not be proper. Determination of this question may affect priority determination as it applies to the land. 33