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

Heading: Propriety of Fees Included in Jack Bays' Lien

Text: Jack Bays must also show that it did not include in its lien sums due for labor or materials furnished before May 2, 2007, the date 150 days prior to September 28, 2007. Code § 43-4. 21 The Lenders argue that Jack Bays' lien is invalid because it includes sums for work performed prior to May 2, 2007, the beginning of the 150-day period. First, the Lenders claim that [p]rior to May 1, 2007, Jack Bays had clearly not billed New Life for all of the work Miller Construction had performed to date. In the following months, Jack Bays' requisitions to New Life accounted for these previous shortcomings, and thus included sums attributable to work performed prior to May 1, 2007. Therefore, because the liens were based on these later billings, they too included sums for work done prior to May 1, 2007. The Lenders offered the testimony of Thomas Chappell as an expert witness in construction accounting to support their argument before the Commissioner. Chappell testified that between December 2006 and April 2007 Miller Construction billed $424,624 to Jack Bays, and Jack Bays billed only $327,362 to New Life for work that Chappell believed was attributable to Miller Construction. Jack Bays subsequently charged New Life amounts varying from the monthly value invoiced to it by Miller Construction through July 2007. According to Chappell, Jack Bays' May 2007 billing appears to be a catch-up for the under-billing in the prior months which would mean that costs incurred, labor and materials incurred in the prior period are now being drawn into the May requisition by Jack Bays, which is also included as part of the basis for the mechanic[s'] lien. 22 It is true that Jack Bays invoiced New Life different values for masonry work – Miller Construction's job – than Miller Construction invoiced Jack Bays a month prior. Jack Bays argues that the discrepancy exists because it billed New Life under a stipulated sum agreement, rather than a cost-plus contract. Semon Samaha (Samaha), the project architect, described before the Commissioner the difference between the two billings: Well, the cost-plus is somewhat open-ended, I mean the contractor is providing a fee basically to do the work and then whatever costs are incurred plus that fee is what the owner pays, so part of the problem is trying to determine which cue [sic] the costs go in. And I know that one of the projects that we did a while back, there was a dispute, for example, about whether a saw that the contractor purchased should be part of the cost or part of the contractor's fee and whether it should have just been a rental charge, and so it becomes much more cumbersome, where a stipulated sum, the amount is agreed upon ahead of time and from then on, it's just based on how much of the work gets done as a percentage of that amount. Chappell also acknowledged that differences exist between stipulated sum agreements and cost-plus agreements. Fuechsel, who qualified before the Commissioner as an expert witness in commercial general contracting with a subspecialty in new church construction, testified that requisitions were prepared around the 25th of each month and projected through the end of that month. Jack Bays 23 reasonably assume[d] progress made in various construction areas as compared to the prior billing period, with the percentage increase serving as the basis for the requisition. This process is consistent with the April '06 Agreement and the AIA A201-1997 General Conditions (General Conditions) incorporated therein. Fuechsel testified that subcontractor billings were used to confirm our percent complete at the time of each monthly invoice. Additionally, all requisitions were submitted to and approved by Samaha. Samaha could only approve requisitions for payment based on the value of work completed beyond the prior month's performance, not by a subcontractor's individual billing. Commissioner Zelnick was persuaded by Jack Bays' argument, finding that its monthly requisitions were not formulated based on costs incurred from the subcontractors and suppliers, but rather were the product of Jack Bays' reasonable estimation of the value added to the project with that billing period. He also found that Chappell's testimony was unpersuasive due to the differences between his testimony and the nature of a stipulated sum agreement. The circuit court reviewed and accepted these findings without qualification. Whether Jack Bays proved that it did not include in its lien Miller Construction's sums due prior to May 1 was a 24 factual inquiry. Although the Lenders offered expert testimony and cross examined Jack Bays' witnesses regarding the relationship between subcontractor billings and Jack Bays' requisitions, the Commissioner found that Jack Bays did not include charges for Miller Construction's work in its lien. The circuit court accepted these findings. Based upon the record, we cannot say that these findings were plainly wrong or without evidence to support them. The Lenders also argue that the trial court erred in its conclusion that no charges for labor or material provided before May 2, 2007, were included in Jack Bays' lien. Fuechsel testified regarding how Jack Bays calculated the proper value for the 150-day period between May 2, 2007, and September 28, 2007. This process involved using the requisitions from May to September to ascertain the value of the lien. However, because May 1, 2007, was included in the May requisition but was not validly part of the lien, Fuechsel stated that Jack Bays omitted this day from its calculation. The company did so by taking the total number of work days in May and dividing by the total amount invoiced to come up with a per-day value of labor performed or materials furnished, and then subtracted a per-day value in an effort to comply with Code § 43-4. Referring to May 1, Fuechsel testified: 25 Looking at the daily reports, there wasn't, you know, it was kind of business as usual, it wasn't a big delivery day, no major activities or unusual activities happened, so we took the number of work days in May, which was twenty- one, divided it into the total May invoice, and deleted what essentially mathematically came out to one day. . . . Commissioner Zelnick found that testimony on this point was offered without contradiction. The circuit court concurred with his assessment. This factual determination was not plainly wrong or without evidence to support it. Jack Bays sufficiently proved to both the Commissioner and the circuit court that it did not include sums due for labor provided or material furnished before May 2, 2007, nor did it perform labor or furnish material after September 28, 2007. Accordingly, we hold that Jack Bays properly perfected its lien under Code § 43-4. It may appear inconsistent to use September 30, 2007, as the relevant date from which to analyze Jack Bays' compliance with Code § 43-4 for purposes of the 90-day calculation, and September 28, 2007, as the relevant date from which to analyze Jack Bays' compliance with Code § 43-4 for purposes of the 150-day calculation. These distinct dates are used because Code § 43-4 provides that in the circumstances presented by this case, the proper date to use when evaluating compliance with the 90-day rule is the end of the relevant month where a 26 contractor last works on a structure, when that structure is not fully completed. The 150-day rule, on the other hand, requires that courts calculate time based on when the contractor last performs labor or furnishes material – not necessarily at the end of a month.