Opinion ID: 1742950
Heading Depth: 1
Heading Rank: 5

Heading: Surfpac's Failure to Perfect the Lien

Text: The record reveals that Surfpac failed to serve its complaint on MSD within the thirty-day time limit of KRS 376.250(4): service was required as of June 27, 1994, but did not occur until June 28, 1994. According to the statute, the lien should have been automatically released and the funds withheld should have been paid to 3D. MSD did not, however, pay the lien funds to 3D. The matter is complicated, though, by the fact that 3D did not raise this failure to the trial court, but proceeded with the action for three more years. Despite this failure, we conclude that the lien was automatically released upon Surfpac's failure to strictly comply with the statute's procedural requirements. In Kentucky, liens are created by statute, and therefore the operation, extent, and rights created by the lien must be determined by the language of the statute. Kentucky adheres to the rule that the statutory provisions for perfecting a lien must be strictly followed. Laferty v. Wickes Lumber Company, 708 S.W.2d 107, 108 (Ky.App.1986) (construing mechanic's lien statutes). Moreover, this Court has specifically rejected arguments that the lien statutes should be liberally construed: While it may be argued that the mechanic's lien statutes may be liberally construed, we recognize ... that the better rule is to require strict adherence to the statutory provisions for perfecting a lien. Middletown Engineering Company v. Main Street Realty, Inc., 839 S.W.2d 274, 276-77 (Ky.1992) (construing mechanic's lien statutes). KRS 376.250(4) clearly and unequivocally states that a lien is automatically released if the procedural requirements are not met. In Jim Skaggs, Inc. v. Smith, 799 S.W.2d 585 (Ky.App. 1990), a general contractor filed its written protest two days after the KRS 376.250(2) deadline, though the matter proceeded nonetheless and the contractor was permitted to present defenses to summary judgment on the merits. The Court of Appeals determined that all of the contractor's defenses were precluded by its failure to strictly comply with the statute's time limitations. See also In re Excel Engineering, Inc., 224 B.R. 582 (Bankr. W.D.Ky.1998) (subcontractor's failure to strictly comply with requirements of KRS 376.250 by filing complaint two days late was fatal to its claim that a valid lien existed). Therefore, as Surfpac failed to timely serve its complaint on MSD, the lien was automatically released as of June 28, 1994. The fact that the action proceeded does not operate to waive the requirement or somehow resurrect the lien. Thus, 3D was entitled to the $184,214.28 lien amount on June 28, 1994. Accordingly, we need not address 3D's additional arguments regarding the validity of the lien, as we have determined that the lien was released prior to both the settlement agreement and the dismissal of Surfpac's lien action.