Opinion ID: 2068152
Heading Depth: 1
Heading Rank: 6

Heading: Construction Contract with Tenant Statement of Claim for Mechanics' Lien Must Allege Prior Written Consent of Owner

Text: In this appeal, King contends that the Superior Court erred when it dismissed King's statement of claim for failure to allege that PFR gave prior written consent to the construction work on the property. King argues that no such requirement appears in section 2712(b) of the Mechanics' Lien Statute. [28] Accordingly, King submits that construing the statute to impose such a requirement would be unreasonable and unwarranted. A mechanics' lien proceeding is entirely statutory in origin. [29] Because such actions are in derogation of the common law, Delaware courts have consistently held that the Mechanics' Lien Statute must be strictly construed and pursued. [30] The Mechanics' Lien Statute appears in title 25, chapter 27 of the Delaware Code. [31] It sets forth the procedure for obtaining and enforcing a mechanics' lien. Title 25, section 2702(a) provides that any person having performed or furnished labor or material, or both, to an amount exceeding $25 in or for the erection, alteration or repair of any structure, in pursuance of any contract, express or implied, with the owners of such structure or with the agent of such owner or with any contractor ... [may] obtain a lien upon such structure and upon the ground upon which the same may be situated or erected. [32] To enforce a mechanics' lien, section 2711(b) provides that a contractor who has made a contract with a tenant of leased property, rather than directly with the owner of the property, must file a statement of their respective claims within 120 days from the date from the completion of the labor performed or from the last delivery of materials furnished by them respectively. [33] Section 2712(b) provides the required elements for a statement of claim for a mechanics' lien. [34] It states that the statement of claim shall set forth the following: (1) The name of the plaintiff or claimant; (2) The name of the owner or reputed owner of the structure; (3) The name of the contractor and whether the contract of the plaintiff-claimant was made with such owner or his agent or with such contractor; (4) The amount claimed to be due ...; (5) The time when the doing of the labor or the furnishing of the materials was commenced; (6) The time when the doing of the labor or the furnishing of the material or the providing of the construction management services was finished, except that: a. With respect to claims on behalf of contractors covered by § 2711(a) of this title, the date of the completion of the structure, including a specification of the act or event upon which the contractor relies for such date, and b. With respect to claims on behalf of other persons covered by § 2711(b) of this title, the date of completion of the labor performed or of the last delivery of materials furnished, or both, as the case may be, or a specification of such other act or event upon which such person relies for such date. (7) The location of the structure with such description as may be sufficient to identify the same; (8) That the labor was done or the materials were furnished or the construction management services were provided on the credit of the structure; (9) The amount of plaintiff's claim (which must be in excess of $25) and that neither this amount nor any part thereof has been paid to plaintiff; (10) The amount which plaintiff claims to be due him on each structure. (11) The time of recording of a first mortgage, or a conveyance in the nature of a first mortgage, upon such structure which is granted to secure an existing indebtedness or future advances provided at least 50% of the loan proceeds are used for the payment of labor or materials, or both, for such structure. [35] In addition, section 2722 provides for a special category of mechanics' liens when the labor is performed or the materials are furnished pursuant to a contract with a tenant, and the plaintiff seeks a lien on the owner's interest in the property. [36] Section 2722 provides: Nothing contained in this subchapter shall be construed to render property liable to liens under this chapter for repairs, alterations or additions, when such property has been altered, added to or repaired by or at the instance of any lessee or tenant without the prior written consent of the owner or his duly authorized agent. [37] Accordingly, in order for a plaintiff to hold the property owner responsible for unpaid alterations, repairs or additions to the leased property, the plaintiff must have obtained the owner's prior written consent to the tenant entering into the construction contract. If there is no such prior consent, the action will fail. [38] More than fifty years ago, in Silverside Home Mart, Inc. v. Hall , the Superior Court determined that the statement of claim must allege that the owner gave prior written consent to the construction contract between the plaintiff and the tenant. [39] The Superior Court reasoned that [l]iens obtainable for labor or materials done at the instance of a tenant are a special category of liens, [40] and explained that sections 2712(b) and 2722 must be read together and required the statement of claim to allege prior written consent of the owner. [41] Therefore, the Superior Court granted the property owner's motion to dismiss the mechanics' lien action because the statement of claim did not allege the owner's prior written consent. [42] Thirty years later, in Lakewood Builders, Inc. v. Vitelli, the Superior Court applied the same reasoning and held that before a lien for a tenant's improvements on leased property will attach, section 2722's requirement of prior written consent must be pleaded and proven. [43] Section 2712 provides eleven requirements that the statement of claim shall set forth. [44] Section 2722 clearly states that where the labor is performed or materials are furnished at the request of the tenant, the prior written consent of the owner is necessary for the plaintiff to obtain a mechanics' lien on the property. [45] We conclude that in order for a statement of claim to state a cause of action for a mechanics' lien on leased property improved at the request of the tenant, the statement of claim must allege that all eleven of the section 2712(b) requirements and the section 2722 prior written consent requirement have been met. We agree with the well-reasoned opinions of the Superior Court in Silverside and Lakewood. Accordingly, we hold that where the plaintiff contracts with the tenant for construction on leased property, the plaintiff must allege in its statement of claim for a mechanics' lien that the owner of the property gave its prior written consent to the work. [46] In this case, King did not allege PFR's prior written consent in its statement of claim. King argues that PFR's December 2006 letter to the Department of Land Use constituted prior written consent. But, King first raised the issue of the letter not in its pleading, but in its response to PFR's motion to dismiss. Matters outside the pleadings may not be considered upon a motion to dismiss under Superior Court Civil Rule 12(b)(6). [47] Accordingly, the Superior Court correctly granted PFR's motion to dismiss King's statement of claim for failure to plead prior written consent, as required by section 2722. King's argument that dismissal of its claim is an unreasonable construction of the Mechanics' Lien Statute is unavailing. Because King did not raise that argument in the Superior Court, it is deemed waived and cannot be considered on appeal. [48]