Court Opinion

ID: 9578183
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:42:31.607158+00
Date Added: 2024-06-11T13:25:04.064529
License: Public Domain

HODGES, Justice,
dissenting.
I cannot agree with the majority opinion that the filing of a lien statement under the Oklahoma Mechanics’ and Materialmen’s lien statutes constitute only a de minimis interference with the use and enjoyment of real property1 or that it does not approach a taking of a significant property interest requiring the protection of state and federal due process. Nor am I persuaded that because the original landowner in this case was “in fact able to sell the Broken Arrow property to appellee, PRCCC, notwithstanding the existence of the very lien statement complained of here” that the filing of the lien statement was not detrimental, and that the statutes are not unconstitutional. The decision in this case has a sweeping effect throughout the state and the building industry. Reliance on the facts in this particular case exemplifies the old saw, “bad facts make bad law.”
I
The effective statutory provisions permit a general contractor to file a lien statement *598within four months after the date upon which the last labor is performed, or materials supplied to the job in the office of the clerk of the county where the land is situated. The statement needs only to divulge: the amount claimed and the items thereof as nearly as practicable; the names of the owner; the contractor and the claimant; and a legal description of the property.2 The statute which is the subject of this appeal contains no provision for notice to the landowner.3 There is no protective legislation to prevent the filing of an exaggerated or inflated claim, nor is there a provision which requires the posting of a bond to indemnify the landowner for costs and expenses he might incur in clearing title to his property.

*597

*598The relevant provisions relating to subcontractors are the same as for general contractors, except that the lien statement must be filed within ninety days from the date of the last work performed or supplies furnished by the subcontractor and notice of the filing of the lien must be served on the owner.4 There is no requirement that a foreclosure action be commenced for up to one year subsequent to the filing date.5 A landowner may clear title to his property by posting bond in a suitable amount6 or commencing a quiet title action. There is no other available remedy.
It is contended by the appellees that the Mechanics’ and Materialmen’s Lien Laws of the State of Oklahoma involve state action, and violate both the State and Federal Constitutions by depriving persons of property without due process of law because the statutes fail to provide for: any type of timely notice or hearing on the probable merits of the claim against the owners’ property; and judicial participation at an early state of the proceedings; or for any type of bond or security to protect the owner against a wrongful taking.
II
Before the due process clause of the United States Constitution can be invoked, it must be shown that state action is involved in the proceedings. Private action, however harmful, is not unconstitutional.7 The fact that a state legalizes an action does not automatically mean that there has been state action. Mechanics’ liens are created by the legislature. The filing of the lien involves a gamut of steps, all of which are mandated by state statutes. For a contractor to perfect his claim, he must file with the court clerk an affidavit stating the facts surrounding his claim which must be verified. The claim becomes a matter of public record, recorded by state employees in a state courthouse, and ultimately adjudicated in a state court. There can be no question but that the filing of the mechanics’ lien involves a substantial amount of state action, and invokes the due process clauses of the State and Federal Constitutions.8
III
This is a case of first impression in Oklahoma, and the United States Supreme Court has not decided specifically what the due process clause of the Fourteenth Amendment requires concerning mechanics’ liens. Resolution of the issue before us, consequently, turns not upon the application of specific precedent, but upon the general principles established by a line of decisions involving creditors’ remedies.
In Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969), the United States Supreme Court *599voided a Wisconsin prejudgment garnishment statute which permitted a creditor to freeze the wages of an alleged debtor, without prior notice or hearing, even though the creditor had no previous interest in the wages. The summons was issued by the court clerk, at the request of the creditor’s attorney, without any judicial participation. The court held that, absent extraordinary circumstances, this statutory scheme violated the fundamental principles of due process.
Three years later, in the case of Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), the court invalidated prejudgment replevin statutes in Florida and Pennsylvania, which allowed state agents to seize a person’s personal property upon the ex parte application of another person claiming a right in the property. There was no prior notice or hearing concerning the writ, nor was there any judicial participation in its issuance. The court reiterated that: except in unusual situations, notice and an opportunity to an adversary-type hearing must be provided before an alleged debtor can be deprived of his property; the fact that the deprivation may be temporary and non-final is irrelevant; and due process protection extends to any significant property interest.
There was some clarification by the court in Mitchell v. W. T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974). A Louisiana statute permitting sequestration of personalty to enforce the vendor’s lien of a creditor who had made an installment sale of goods was upheld. The sequestration was made without prior notice or hearing. However, to obtain the writ, the creditor had to specify in an affidavit the facts, not conclusions, which supported his claim. The affidavit was examined by a judge, and upon his determination that it was adequate, the writ was issued. The creditor was required to file a bond which would compensate the debtor if the sequestration was unjustified. The debtor was allowed a prompt post-seizure hearing, and if the creditor failed to substantiate his claim, the debtor recovered not only his property, but also damages and attorneys’ fees. The Court concluded that the judicial participation in these proceedings, and the protection afforded both sides, sufficiently accommodated the conflicting interests of the parties and satisfied the requirements of due process.
The Supreme Court’s most recent opinion dealing with prejudgment garnishment remedies and due process is North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975). In this case, the Court overturned, as contrary to due process, a Georgia statute authorizing garnishment in the form of freezing a commercial bank account. To obtain the garnishment, the claimant had to file an affidavit with the court clerk, stating the amount claimed, then post bond equal to twice that amount. The debtor could also dissolve the claim by filing a bond. The Court held this statutory scheme unconstitutional because it provided no prior notice or hearing, nor did it meet the Mitchell standard, which requires judicial participation in the proceedings, absent notice and hearing.
In analyzing these cases to determine the current due process standards for prejudgment garnishment statutes, it appears that in the absence of extraordinary circumstances, there are two avenues which are constitutionally permissible. Sniadach and Fuentes indicate that before a debtor can be deprived of a significant property interest, the creditor must provide him with prior notice and hearing on the probable merits of the creditor’s claim. If prior notice and hearing are not provided, Mitchell requires that: if an ex parte order is issued, there must be judicial participation in its issuance; the creditor must produce a sworn affidavit alleging specific facts entitling him to possession; there múst be a prompt post-seizure hearing; and the creditor must post bond to protect the debtor against any damages, including attorney fees which he might incur as a result of the wrongful taking of his property.
IV
Although the majority relies heavily on Spielman-Fond v. Hanson’s, Inc., 379 *600F.Supp. 997 (D.Ariz.1973); aff’d. 417 U.S. 901, 94 S.Ct. 2596, 41 L.Ed.2d 208 (1974),9 this case is of little assistance in interpreting the Oklahoma lien laws. The pertinent Arizona Statutes, A.R.S. § 33-981, et seq., provide procedural safeguards which the Oklahoma Statutes, 42 O.S.1971 § 141, et seq., lack. Actions to foreclose liens in Arizona must be brought within six months of filing, or the lien is discharged. The property owner may also dissolve the lien by posting a bond one and one-half times the amount claimed. If the lien is filed by one other than the contractor, the contractor must defend the action at his own expense. When the claim is filed, copies of the notice of the lien must be supplied to the county recorder where the property is located, and to the property owner, if he is within the county.
While the Oklahoma statutes do not contain some of the safeguards provided by the Arizona statutes, we would further disagree with the holding in Spielman-Fond that the deprivation caused by the filing of the mechanics’ lien was de minimis. The Arizona court reasoned that the lien deprived the owner of neither the possession, nor the use of his property, and that, although the ability to sell or obtain credit on the property might be curtailed, the owner was not legally deprived of his right to sell or encumber the land. The court followed the rationale of Cook v. Carlson, 364 F.Supp. 24 (D.S.D.1973) and ascertained that, although the lien may diminish the value of the land to the owner, the harm is often offset by the value added by the improvement upon which lien is based. The court also decided, even though securing a buyer might be difficult, the owner still had the right to alienate and that the lien did not deprive the owner of this right.
Even though the United States Supreme Court has had an opportunity to consider the constitutionality of statutorily created liens, it has failed to do so, and thus no clear precedent exists.10 While some courts have elected to adhere to the theory that the filing of a mechanics’ lien is a de minim-is taking of property not worthy of due process protection,11 I cannot do so. I am persuaded by the rationale adopted by other jurisdictions which holds that the imposition of a mechanics’ lien without any judicial assessment of its merits constitutes a significant taking of property and is violative of due process.12
*601The purpose of the due process clauses is to rest the rights of all persons upon the same rule under similar circumstances.13 The imposition of a mechanics’ lien without notice results in a significant taking of property. A great deal of time, effort and money is required to dislodge the cloud on the landowner’s title. While the lienor is not required to post a bond to protect the owner from losses he might incur from the lien, or bear any other expense in order to impose a possibly invalid lien; the landowner is required to post a bond equal to the amount of the claim, attorneys’ fees, court costs and interest.14 This does not provide equal protection to the debtor and the claimant.
The greatest advantage in owning land is often not the actual possession of the property, but the collateral benefits which are derived from ownership.15 These include the right to alienate, encumber, mortgage, lease, and acquire equity. A mechanics’ lien has a drastic effect on these privileges. It clouds the title to the property, making it extremely difficult or even impossible to sell or mortgage the land. Even if a willing buyer is found, the owner often has to accept much less than the actual value of the property, and may, in some instances, be forced to pay an invalid claim in order to clear title to his property in time for a pending transaction to be consummated. The fact that some improvements have been made on the land is little comfort to the owner whose property has suffered a substantial diminution in value, especially when the lien is invalid or was filed because the owner has refused to pay for improvements which have been done in a shoddy or unworkmanlike manner.
V
The Mechanics’ and Materialmen’s Lien Statutes of the State of Oklahoma, 42 O.S. 1971 § 141, et seq., violate both the State and Federal Constitutions because they deprive persons of a significant property interest without due process of law. The Oklahoma statutes fail to meet either Fuentes or Mitchell standards. There is no prior notice or hearing, nor is there any judicial participation in the process. Almost all of the state statutes which have been found constitutional contain safeguards that Oklahoma’s laws lack.16 The Arizona statutes which were held constitutional in Spielman-Fond provided for notice to the owner if he was in the county. The Oklahoma statute, in effect at the time of this litigation did not provide for any notice to the property owner by the contractor.
With the exception of lack of notice to the landowner, the most apparent deficiency in the Oklahoma Mechanics’ Lien Law is the absence of any provision for an immediate post-filing hearing to determine the validity of the lien. In Connolly Dev., Inc. v. Superior Court, 17 Cal.3d 803, 822, 132 Cal.Rptr. 477, 553 P.2d 637, 650 (1976), the California Supreme Court determined that the recordation of a mechanics’ lien deprived the property owner of a significant property interest, and constituted a taking within the meaning of the federal and state due process clauses. The court reasoned, however, that the California lien laws comported with due process requirements because twenty days before recording a mechanics’ lien the claimant was required to serve a preliminary notice upon the owner, *602the contractor, and the construction lender.17 By granting the owner twenty days advance notice of the lien, [a safeguard not provided by the sequestration law upheld in Mitchell], the California statutes permit the owner to investigate the basis of the lien, and seek a hearing before the lien becomes effective. This is a much greater protective device than the Mitchell right to ex parte judicial review of the application for a writ of sequestration. In California, upon receipt of the notice from one not entitled to claim a lien, the owner or lender may immediately file suit to enjoin the assertion of the lien.18 By utilization of a temporary restraining order if necessary,19 the property owner may secure a hearing before the lien is imposed, or he may seek immediate declaratory relief.20 Actions for declaratory relief in California may claim priority on the calendar of the trial court.21 The Oklahoma statutes do not provide for priorities on the court’s calendar, and a property owner seeking relief pursuant to 42 O.S.1971 § 177 would be subject to the same delays as in any civil action.
Because mechanics’ liens are imposed ex parte by the creditor and significantly affect the rights of the property owner, the imposition thereof poses a serious problem of procedural due process. The United States Supreme Court has clarified the requirements necessary to guarantee due process of law. In Fuentes, the Court held that due process requires prior notice, and an opportunity to be heard.22 Mitchell held that a reasonable alternative is judicial participation in the process, and the posting of a bond to insure against any damages and attorney fees incurred. Even if the due process clauses do not require notice and hearing prior to every deprivation of a significant property interest, they do require a hearing at a meaningful time in a meaningful manner.23 In failing to provide for an immediate post-perfection hearing, the mechanics’ lien law leaves the debtor at the mercy of his creditor without providing any additional protection for the interest of the debtor. The procedural deficiencies of the Oklahoma lien laws render them unconstitutional.

. The mischief which may be wrought by frivolous, malicious, or fraudulent lien claimants is graphically illustrated by an article which appeared in The Daily Oklahoman in 1979.

. 42 O.S.1971 § 142.

. The statute was amended in 1977 to provide for notice by mail to the landowner. See 42 O.S.Supp.1977 § 143.1.

. 42 O.S.1971 § 143.

. 42 O.S.1971 § 172, 177.

. 42 O.S.1971 § 147.

. Shelley v. Kraemer, 334 U.S. 1, 13, 68 S.Ct. 836, 92 L.Ed. 1161 (1948).

. See Barry Properties, Inc. v. Fick Bros. Roofing Co., 277 Md. 15, 353 A.2d 222 (Md.1976); Connolly Development, Inc. v. Superior Court of Merced Co., 553 P.2d 637 (Cal.1976).

. To file a mechanics’ lien in Arizona, the claimant must file the claim with the county recorder, and serve a copy of this claim with the property owner if he is within the county where the property is located. If the owner is not in the county, it is not necessary to provide him with notice. The claim must include a description and location of the property, the name of the owner, name of the claimant, the amount due and the date the work was completed. The claim is made under oath. The original contractor must file the lien within ninety days of completion of the work, all others have sixty days. The lien stays in effect for six months unless an action is brought within that time to foreclose. The owner can discharge the lien by posting bond in the amount of one and one-half times the amount of the claim.

. See majority opinion, note 4.

. Jurisdictions upholding the constitutionality of their mechanics’ lien statutes on the grounds that the filing of a mechanics’ lien does not constitute the taking of a significant property interest include:
Spielman-Fond v. Hanson’s, Inc., 379 F.Supp. 997 (D.Ariz.1973) aff’d. 417 U.S. 901, 94 S.Ct. 2596, 41 L.Ed.2d 208, (1974); B & P Development Co. v. Walker, 420 F.Supp. 704 (W.D.Penn.1976); In re Thomas A. Cary, Inc., 412 F.Supp. 667 (E.D.Va.1976); Cook v. Carlson, 364 F.Supp. 24 (D.S.D.1973); Home Building Corp. v. The Ventura Corp. and Housing Authority of the City of Nevada, Missouri, 568 S.W.2d 769 (Mo.1978); Keith Young & Sons Construction Co. v. Victor Senior Citizens Housing, Inc., 262 N.W.2d 554 (Iowa 1978); Bankers Trust Co. v. El Paso Pre-Cast Co., 560 P.2d 457 (Colo.1977); Carl A. Morse, Inc. v. Rentar Industries Development Corp., 56 A.D.2d 30, 391 N.Y.S.2d 425 (N.Y.1977); Silverman v. Gossett, 553 S.W.2d 581 (Tenn.1977); Nelson-American Developers, Ltd. v. Enco Engineering Corp., 337 So.2d 729 (Ala.1976); Tucker Door & Trim Corp. v. 15th St. Co., 235 Ga. 727, 221 S.E.2d 433 (1975).

.Jurisdictions declaring their mechanics’ lien statutes unconstitutional on the grounds that they are violative of due process include:

Roundhouse Construction Corp. v. Telesco Masons Supplies Co., Inc., 168 Conn. 371, 362 A.2d 778 (1975), vacated 423 U.S. 809, 96 S.Ct. 20, 46 L.Ed.2d 29, on remand 179 Conn. 155, 365 A.2d 393, cert. den. 429 U.S. 889, 97 
*601
S.Ct. 246, 50 L.Ed.2d 172 (1976); Barry Properties, Inc. v. Fisk Bros. Roofing Co., 277 Md. 15, 353 A.2d 222 (1976).

Jurisdictions upholding the constitutionality of their mechanics’ lien statutes on the grounds that they contain procedural safeguards sufficient to satisfy due process include:

Ruocco v. Brinker, 380 F.Supp. 432 (S.D.Fla.1974); Connolly Development, Inc. v. Superior Court of Merced County, 17 Cal.3d 803, 132 Cal.Rptr. 477, 553 P.2d 637, appeal dismissed 429 U.S. 1056, 97 S.Ct. 778, 50 L.Ed.2d 773 (1976).

. Frost v. Corp. Comm’n., 278 U.S. 515, 522, 49 S.Ct. 235, 238, 73 L.Ed. 483 (1929).

. See 42 O.S. 1971 § 147.

. D. F. Lowry, Jr., “Creditors’ Rights: The Constitutionality Of Oklahoma’s Mechanics’ Lien Law,” 31 Okla.L.Rev. 148, 159 (1978).

. See note 11, supra.

. CaI.Civ.Code §§ 3097, 3114, 3160.

. Cal.Code Civ.Proc. § 526.

. Cal.Code Civ.Proc. § 527.

. Cal.Code Civ.Proc. § 1060.

. Cal.Code Civ.Proc. § 1062a(a).

. See Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306, 313-315, 70 S.Ct. 652, 656-657, 94 L.Ed. 865, 872-874 (1949); and Bomford v. Socony Mobil Oil Co., 440 P.2d 713, 719 (Okla.1968).

.Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 1191, 14 L.Ed.2d 62 (1965). See also J. P. Ward, “The Constitutional Validity of Mechanics’ Liens Under The Due Process Clause — A Reexamination After Mitchell and North Georgia, 55 B.U.L. 263 (1975).