Opinion ID: 2359920
Heading Depth: 1
Heading Rank: 13

Heading: Summary judgment against Hardy

Text: Hardy argues that NRS 108.245 only requires one owner to be given notice in order to affect the interest of all other interest holders. We disagree. Where a claimant is seeking to place and enforce a lien, NRS 108.245 requires that the claimant serve all parties whose interest it is seeking to affect. The service of one owner is not adequate to give notice to other owners of the potential claim. Therefore, while Hardy's pre-lien notice to O'Neil and Wickes is sufficient to affect their interest in the property, it is insufficient to affect SNMARK's interest in the property. Hardy also argues that, under NRS 108.229(3), a mistake in the property owner's name on a pre-lien notice does not invalidate the lien. Hardy argues that it had substantially complied with the statute despite the fact that it served the wrong entity. Even if we were to agree that NRS 108.229(3) is applicable to the pre-lien notice statute, substantial compliance is not applicable in this instance. Hardy has an affirmative duty of due diligence to ascertain the identity of the owner whose interest it is seeking to affect. This is not a case where Hardy served the right entity under the wrong name; instead, Hardy served an entirely different entity that holds an entirely different interest in the property. NRS 108.245 not only requires that the notice of right to lien contain certain information, but also requires that the notice be given to the right person or entity. A failure to serve the right person or entity cannot be cured by NRS 108.229(3). Hardy argues that SNMARK had actual knowledge of its potential lien claims. Hardy does not point to a contract or specific interactions between SNMARK and itself, but instead relies on SNMARK's general awareness of construction on the property in question. [12] Like the lien claimants in Fondren, Hardy claims that SNMARK knew of the improvements to its property and therefore had actual knowledge of Hardy's potential lien claims. However, an owner's actual knowledge is more than mere knowledge of construction occurring on its property. Actual knowledge requires that the owner have knowledge as to the identity of the third person with whom he has no direct contract. In cases of actual knowledge for mechanics' liens, it is a question of fact as to whether the owner had actual or constructive knowledge as to the existence of the third party and the third party's identity. Actual knowledge may be found where the owner has supervised work by the third party, reviewed billing statements from the third party, or any other means that would make the owner aware that the third-party claimant was involved with work performed on its property. In cases such as Fondren, we imputed the knowledge of the lessee as to the existence and identity of the parties with whom the lessee directly contracted because a relationship existed between the lessor and the lessee. The lessor, through its contractual relationship, would have been aware that the lessee had hired a contractor to perform work on the property. However, a lessor would not necessarily be aware of whether the lessee's contractor retained additional contractors and who those contractors may be. We will not impute knowledge when there is no evidence that either the lessee or the lessor knew of both the existence and the identity of additional third parties. The purpose of the pre-lien statute is to protect owners from hidden claims and the statute is meant to apply to subcontractors and materialmen. Matter of Stanfield, 6 B.R. at 269. This purpose would be frustrated if mere knowledge of construction is sufficient to invoke the actual knowledge exception against an owner by any contractor. Otherwise, the exception would swallow the rule. As noted in the discussion relating to O'Neil, a material issue of fact exists as to whether SNMARK had actual knowledge of O'Neil's claim. Likewise, an issue of material fact exists as to whether SNMARK had actual knowledge of Hardy's potential lien claim. Thus, we conclude that the district court erred in granting summary judgment.