Opinion ID: 777777
Heading Depth: 2
Heading Rank: 1

Heading: Priority Under Nebraska's Construction Lien Statutes

Text: 17 The first issue on appeal pits Dapec's construction lien against the deeds of trust the Money Store took to secure the A loan and the B loan. The deed of trust for the A loan is still held by the Money Store, while the deed of trust for the B loan has been assigned to the SBA. 18 Under Nebraska law, as a general rule, a construction lien has priority over subsequent advances made under a prior recorded security interest if the subsequent advances are made with knowledge that the lien has attached. Neb.Rev.Stat. § 52-139(2). In order to obtain priority under this statute, Dapec must show that the Money Store made its cash advances with knowledge that Dapec's construction lien had attached. The bankruptcy court found that the Money Store did not know about Dapec's construction lien until after December 11, 1998, when it finished making future advances under the A and B loans. 19 In an attempt to overcome this finding, Dapec relies on the notice of commencement filed on June 17, 1998. Under Nebraska law, [i]f a lien is recorded while a notice of commencement is effective as to the improvement in connection with which the lien arises, the lien attaches as of the time the notice is recorded. Neb.Rev. Stat. § 52-137(2). Dapec argues that since section 52-137(2) relates its lien back to June 17, 1998, when the notice of commencement was recorded, it also imputes knowledge of the lien to the Money Store as of that date. 20 Dapec's argument fails because the relevant statute — section 52-139(2) — requires actual knowledge of a competing lien. In the absence of anything to the contrary, statutory language is to be given its plain and ordinary meaning. Rodriguez v. Monfort, Inc., 262 Neb. 800, 635 N.W.2d 439, 445 (2001). Under section 52-139(2), the priority of a construction lien does not turn on imputed knowledge that a lien has attached or the knowledge that a lien might attach. It turns, rather, on the lender's knowledge that the lien has attached. See Neb.Rev.Stat. § 52-139(2). In its ordinary use, the term knowledge means being cognizant, conscious, or aware of something, Webster's Third New International Dictionary 1252 (1993), and we see no reason why the Nebraska Legislature would have intended a different meaning here. As explained above, the Money Store did not actually know about Dapec's construction lien when it was making advances. Accordingly, under the construction lien statutes, Dapec's construction lien is subordinate to the deeds of trust filed by the Money Store. 3