Opinion ID: 2068152
Heading Depth: 1
Heading Rank: 7

Heading: Construction Contract with Tenant Statement of Claim for Mechanics' Lien Must Allege Date Work Was Completed

Text: In this appeal, King also contends that the Superior Court erred when it dismissed the statement of claim for failure to allege the date upon which King's work on the project was completed, and for being filed prematurely. King argues that filing its statement of claim prior to the completion of work under the contract causes no unfairness or prejudice to PFR. King also asserts that, because it has not yet completed work under the contract, it cannot state the date the work was completed. King argues that the Superior Court should have overlooked this pleading failure because the purpose of stating the completion date is to enable the court to determine whether the statement of claim was filed within the statute of limitations. Here, King claims, there is no statute of limitations issue because the time to file has not yet commenced. King argues that a subcontractor may file a statement of claim before the furnishing of materials or performance of labor is completed. We disagree. The Mechanics' Lien Statute provides different filing-time requirements for contractors and subcontractors. [49] A plaintiff who has performed labor or furnished materials under a contract with a tenant is considered a subcontractor subject to section 2711(b). [50] Section 2711(b) provides: All other persons embraced within this chapter and entitled to avail themselves of the liens herein provided shall 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. For purposes of this subsection, and without limitation, a statement of claim on behalf of such person shall be deemed timely if it is filed within 120 days of either of the following: (1) The date final payment, including all retainage, is due to such person; or (2) The date final payment is made to the contractor: a. Who has contracted directly with the owner or reputed owner of any structure for the erection, alteration or repair of same; and b. With whom such person has a contract, express or implied, for the furnishing of labor or materials, or both, in connection with such erection, alteration or repair. [51] Section 2711 was amended in 1999. [52] Before its amendment, section 2711(a) imposed a timing floor for mechanics' liens filed by contractors. It required contractors to wait ninety days after completing a project before filing a claim. The 1999 amendments eliminated this floor for contractors and enlarged the time for filing a statement of claim in both subsections (a) and (b). [53] Although section 2711(b) never imposed a timing floor on mechanics' liens filed by subcontractors, the synopsis to the bill enacting the amendment clearly establishes that the General Assembly recognized, both before and after the 1999 amendments, that section 2711(b) contains a required beginning time and ending time for the period within which a subcontractor claimant must file a statement of claim. The synopsis provides: Corresponding to the time limit changes regarding mechanics' lien action[s] filed by general or prime contractors, [the amendment to section 2711(b)] also enlarges from 90 to 120 days the time period within which a subcontractor or materialman must file a lien following the completion of the labor performed or the materials furnished by them. Finally, [the amendment to section 2711(b)] clarifies when the time periods commence for filing liens by subcontractors or materialmen. The time periods within which a subcontractor or materialman must file a mechanics' lien are calculated from the date of completion of the labor performed or from the last delivery of materials furnished by them, respectively. Although such dates usually are not difficult to determine, they may trigger the filing of a lien before the time established by the contract for final payment to the subcontractor or materialman or final payment to the general or prime contractor with whom the subcontractor or materialman has his contract. In such circumstances, [the amendment to section 2711(b)] allows the subcontractor or materialman to defer filing a lien until 120 days after either the date final payment is due him or the date when the general or prime contractor with whim he has a contract is finally paid. [54] The language of section 2711(b), as amended, demonstrates that the General Assembly intended that the right of subcontractors to obtain a mechanics' lien would not be triggered until after the furnishing of materials or performance of labor is completed. [55] This reading is reinforced by the requirement in section 2712(b)(6) that a statement of claim by persons covered by section 2711(b) must set forth 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. [56] As we stated in Builders' Choice, Inc. v. Venzon : The right to `obtain a lien' is subject to certain `restrictions, limitations and qualifications.' ... These statutory requirements are positive and substantial in character. It follows, therefore, that if the statement of claim fails to meet the requirements of the statute, the right to the lien is not implemented. [57] In this case, neither the completion of the labor performed nor the last delivery of materials had occurred to trigger the start of the 120 day filing period under section 2711(b). Instead, King alleged in its statement of claim that it is continuing to supply labor and materials to the Project. Accordingly, the statement of claim was filed prematurely. The decision of the Supreme Court of New Mexico, cited by King, is distinguishable. In Allsop Lumber Co. v. Continental Casualty Co., the plaintiff provided materials to the general contractor pursuant to a written contract. [58] The plaintiff commenced furnishing the materials on October 22, 1959, and finished furnishing the materials on July 29, 1960. [59] The plaintiff filed an action for a mechanics' lien for the unpaid materials on December 21, 1960, alleging that both projects were completed on or about October 31, 1960. [60] The law in New Mexico at the time gave all lien claimants other than the original contractor the same time period for filing a lien. The law provided that every person, save the original contractor claiming the benefit of this article, must within ninety days after completion of any building, improvement or structure ... file his claim. [61] In Allsop, the trial court granted the plaintiff a mechanics' lien. On appeal, the appellant argued that the plaintiff had filed its claim for a lien prematurely on December 21, 1960, because the two projects were not actually completed until December 22, 1960, and April 4, 1961. [62] The Supreme Court of New Mexico concluded that the statute did not fix the date the project was completed as a floor, before which time no lien could be filed: As we read the requirement that the filing be within 90 days after completion, a claim of lien filed before completion would amount to substantial compliance. We do not read the language as limiting the time both before and after completion, but merely fixing a date after performance of the claimant's contract after which filing will not be timely. To hold otherwise would put upon a creditor a most onerous responsibility of determining the date of completion which might be difficult to ascertain with any degree of certainty. It might also delay for prolonged periods the time at which a lien could be filed, and then require that it be done precisely within the 90-day limitation period. No such meaning was intended, and it would serve no beneficial purpose to make such a requirement. [63] The concerns in Allsop are not present in this case. First, the Supreme Court of New Mexico explained that New Mexico's mechanics' lien law should be liberally construed and substantial compliance is all that is required to enjoy its benefits. [64] In contrast, Delaware courts have consistently held that the Delaware's Mechanics' Lien Statute must be strictly construed and pursued. [65] Second, the Supreme Court of New Mexico's concern stemmed from its recognition that a claimant that had completed performance of its contract and was not involved in the completion of the building would have the onerous responsibility of determining the date of completion of the building, which might be difficult to ascertain with any degree of certainty. [66] In Delaware, such a claimant does not bear the responsibility of determining the date of completion of the building. Section 2711(b) provides that the claimant may file a statement of lien within 120 days from the date from the completion of the labor performed or from the last delivery of materials furnished by them respectively. [67] Therefore, had the claimant in Allsop had the benefit of the Delaware Mechanics' Lien Statute, it would not have had to wait for the project to be completed. The claimant could have filed its statement of claim as early as July 29, 1960, the date it finished furnishing the materials. Even if section 2711(b) did require the claimant to wait until the project was completed, determining the date of completion is not an onerous responsibility under Delaware law. Section 2711(a)(2) provides nine alternative benchmarks that can be used to determine when a structure is completed. [68] Moreover, the claimant in Allsop, unlike King, had finished furnishing materials before filing its statement of claim and had alleged that date in its pleading. Here, King seeks to enforce a mechanics' lien, in part, for work it did not complete. King alleges in its statement of claim that it completed $967,992.51 in work and was paid $661,194.42. [69] The difference between these amounts is $306,798.09. Yet, King sought a lien on PFR's property in the amount of $367,749.35, which is $60,961.26 more than the cost of work performed by King and reflects the cost of work that remains unfinished under the contract between King and AWC, equal to $1,028,943.77. As King concedes in its statement of claim, it is continuing to supply labor and materials to the Project. For these reasons, Allsop is distinguishable as a matter of fact and law. Finally, King argues that because it has not yet completed work under the contract, it cannot plead the date such work was completed. King asserts that this failure should be overlooked. We cannot do so. As noted above, the time to file a statement of claim for a mechanics' lien has both a starting date and an ending date. The statement of claim may not be filed until after the furnishing of materials or the performance of labor is completed. Before that date, no cause of action has yet accrued under the Mechanics' Lien Statute. Section 2712(b)(6) requires that this date must be set forth in the statement of claim. [70] Because King's statement of claim fails to plead a finishing date in conformity with Section 2712(b)(6), the Superior Court properly dismissed the statement of claim.