Court Opinion

ID: 9608644
Source: CourtListenerOpinion
Date Created: 2023-08-22 03:15:18.636916+00
Date Added: 2024-06-11T18:02:46.765592
License: Public Domain

Justice ENOCH
filed a dissenting opinion, in which Justice JEFFERSON joined.
Because I agree with the court of appeals that Structural Wood was not required to file its lien until thirty days after the work contemplated under the original Sepolio contract was actually completed, I respectfully dissent.
I
Structural Wood Components, Inc. was a subcontractor who provided supplies to Mark Sepolio. Sepolio was a general contractor who agreed to do some remodeling work for Herman C. Page. Following a payment disagreement, Page terminated Sepolio’s contract on April 14, 1998, and hired other contractors to finish the work he had originally contracted with Sepolio to do. The work was finally completed on July 21, 1998. Because Sepolio never paid Structural Wood for the materials and labor it provided, Structural Wood filed a mechanic’s and materialman’s lien on May 15, 1998. In compliance with statutory *727requirements,1 Structural Wood sent Page notice of its claim on May 15, 1998, and a copy of the filed lien affidavit on May 18, 1998. Page claims that Structural Wood did not timely file its hen affidavit because when Page terminated Sepolio’s contract on April 14, 1998, the work was deemed completed by that termination. Page contends that the hen affidavit should have been filed on or before May 14, 1998.2 Structural Wood asserts that the work was not actually completed until July 21, 1998, and therefore, its hen affidavit was timely filed.
II
The Texas Property Code requires that an owner retain ten percent of the contract amount during the time the work contemplated under an original contract is in progress, and for thirty days after the completion of the work.3 The retainage statute requires that these funds be set aside specifically to ensure that subcontractors, artisans, mechanics, and others who supply material and perform labor are paid.4 To have a vahd hen against the retained funds, a subcontractor must meet only two requirements: “(1) send[] the notices required by this chapter in the time and manner required; and (2) file[ ] an affidavit claiming a hen not later than the 30th day after the work is completed.”5
The statute defines “work” as “any part of construction or repair performed under an original contract.”6 An original contract is completed when the work is actually completed, “including any extras or change orders reasonably required or contemplated under the original contract, other than warranty work or replacement or repair of the work performed under the contract.”7
When called upon to interpret the Texas mechanic’s and materialman’s hen statutes, recognizing that they “are not exactly a model of clarity,”8 we hberahy construe them to protect the artisan, the laborer, and the materialman.9 But here, the language of the statutes in question is clear and unambiguous, and we need do no more than ascribe to them their ordinary meaning.10 The words of this statute support Structural Wood’s claim that it timely filed its hen affidavit, because it filed its affidavit well before the work was actually completed on July 21.
Page argues that the Legislature’s “definition of “work’ clearly mandates that work under an original contract is completed when that original contract is abandoned or terminated,” but he offers no authority to support this “clear” mandate. Instead, he cites statutory language that reads as follows:
Indebtedness to an original contractor accrues: (1) on the last day of the month in which a written declaration by the original contractor or the owner is received by the other party stating that the original contract has been terminat*728ed; or (2) on the last day of the month in which the original contract has been completed, finally settled, or abandoned.11
This provision does not in any way refer to when work is completed; it merely establishes the point in time from which the owner’s indebtedness to the original contractor accrues. The provision is not definitional. Furthermore, the mechanic’s and materialman’s lien statute does provide a definition of completion of work contemplated under a contract. And the Legislature’s definition of “completion” does not include any reference to whether a contract is abandoned or terminated. It simply defines “completion” as “actual completion.”12
The Eleventh Court of Appeals considered this same issue — when work is considered completed for purposes of perfecting a retainage hen — in TDIndustries, Inc. v. NCNB Texas National Bank.13 In that case, a subcontractor filed a retainage lien against the bank. The bank claimed that the hen had not been timely filed. The court of appeals, however, held that even though an architect certified completion at the beginning of January, the work was not actually completed until the end of February when a pocket door required under the original construction contract was finally installed.14 Because the term “completion” was both legislatively defined and unambiguous, the court of appeals literally construed the term “ ‘actual completion,’ ... according to the rules of common usage.”15 Installation of the pocket door was work required under the original contract, and therefore, the work was not actually completed until that pocket door was installed.16
The Eleventh Court of Appeals’ reasoning is persuasive. Defining “actual completion” to mean “actual completion” is the only way to ensure that every subcontractor under an original construction contract is protected:
If, for example, the subcontractor who had installed the pocket door were [sic] not paid for his work, he should be entitled to the security of a ten percent retainage fund measured by the full contract price of the original contract. Yet, if the time for filing his lien affidavit had already run at the time when he completed his work, he would have been divested of his rights ... through no fault of his own. There is no escaping the conclusion that “completion” means the performance of the last item of com-pensable and lienable work that is contemplated by the original contract.17
The statute requires actual completion of the work, work being “any part of construction or repair performed under an original contract.”18 The workers hired by Page were not hired to perform work different or unrelated to the remodeling work contemplated under the original contract. They were hired to complete the parts of construction or repair that were contemplated under Sepolio’s original contract but left unfinished.
*729Page has persuaded the Court to hold that “actual completion” doesn’t really mean “actual completion,” and that the meaning of the term should be enlarged to include abandonment or termination of a contract. But that we cannot do. We cannot define completion differently from the Legislature.19 As Page himself points out, we are bound by the statutory language: “[T]he courts, possessing no legislative powers, may not enlarge or alter the plain meaning of statutory language. Wording in statutes is to be given its literal interpretation when that wording is clearly unambiguous.”20 Our duty here is to apply the words of the statute. The Court today takes an unambiguous, ordinary phrase, alters its meaning, and turns it into a legal term of art. For no longer does “actual completion” mean “actually completed;” it now means “actually completed” — but not really because if the work is not actually completed, but is abandoned or terminated, that also means that it has been actually completed.21 This cannot be. The Legislature has provided the definition of completion in clear, unambiguous terms. This Court often complains of the lack of clarity in legislative pronouncements.22 In the face of legislative clarity, it is incomprehensible that today, the Court sabotages an ordinary, unambiguous phrase by infusing it with counterintuitive shades of meaning.
The original contractor, Sepolio, never completed the work required under the original contract. That work had to be finished by others. The other contractors were not doing warranty work, and they did not replace or repair the work Sepolio had already performed. They merely finished the job originally contemplated under Sepolio’s contract. The work was not actually completed when Page terminated Sepolio’s contract on April 14. The work was actually completed on July 21. Structural Wood timely filed its lien.
Ill
The Court points out that legislative history “demonstrates the Legislature’s intent to make retainage requirements dependent on individual contracts.”23 In Hayek v. Western Steel Co.,24 we held that the ten percent retainage requirement meant ten percent of the entire project. One year after Hayek was decided, the Legislature rejected the holding in that case, and amended the lien statutes so that the retainage requirement would apply to each individual contract, rather than the cost of the project as a whole.25
*730Besides the fact that Sepolio’s contract was the original contract and that all the work done was work contemplated under that contract, the amount of the retainage fund is not at issue here. Further, to the extent the amount of time the retainage fund is to be held by the owner is an issue, the statute tells us how long that must be — thirty days from the date the work is completed.26 The statute then defines for us when the work is considered complete — when it is actually completed. The work contemplated under Sepolio’s original contract was not completed until the substitute contractors were done.
The Court states that “Texas courts have long recognized that contract modifications — including termination — can change the amount of funds required to be retained under the contract. It is therefore consistent to say that contract modifications can also change the work contemplated by the contract, and, by implication, the retainage period.”27 What the Court fails to grasp is that there is no implication here. There are clear, unambiguous legislative directives concerning whether the owner must set aside an amount to ensure subcontractor payment, how much the owner must set aside, and for how long the owner must keep it set aside. The issue of the amount of the retainage is no more related to the question of how long an owner is required to retain the ten percent amount than it is to the question of whether the owner is required to retain the ten percent, even in the event the contract is terminated or abandoned.
The only thing that is affected by termination or abandonment is the amount the owner is required to retain:
The owner may use unearned funds not yet paid to an original contractor in order to complete construction after the original contractor’s abandonment ... But he is not relieved of his duties regarding statutory retainage. An owner cannot disregard a subcontractor’s right that he retain ... merely because of the abandonment or default of the original contractor.28
It is not difficult to understand that the amount would necessarily be adjusted because the agreed-to work is never completed.29 But termination or abandonment of a contract does not relieve an owner of the duty to retain ten percent of the contract price, nor does it change the owner’s obligation to retain that amount during the pendency of the work and for thirty days after the work is actually completed.30 Neither of those obligations is dependent upon the contract price; they are strict duties imposed by statute that cannot be altered or adjusted.
IV
The Texas mechanic’s and materialman’s lien statutes do not focus on who does the work; they focus on whether and when the work is actually completed. The Court asserts that “[fjocusing on the work initially contemplated may give a subcontractor more time to perfect a lien,” but that doing so creates hardship for both the general contractor and other lien claimants because it might delay payment for a long *731period of time.31 The Court misses the point. We must not forget that the mechanic’s and materialman’s hen statutes are meant to protect the subcontractor, not the general contractor. The subcontractor is a derivative claimant,32 and the provisions governing the claims of derivative claimants, including the retainage hen provisions, are specifically distinguished from the provisions governing the rights and remedies of original contractors.33 There is a reason for this. A leading expert on Texas mechanic’s and material-man’s hens points out that “[p]roperly characterizing the claimant as an original contractor or subcontractor is important because a subcontractor is not entitled to a constitutional lien, and it is relatively difficult for him to perfect a statutory hen.”34 There are other provisions in place to protect the general contractor.35 “[A]n original contractor often has a constitutional hen automatically, and the manner of perfecting his statutory hen is relatively simple.”36
The Court gives as an example the foundation contractor who cannot get paid until the painting contractor finishes the painting. In the worst case scenario, if the foundation contractor and the painting contractor each had their own original contract, they would both be an original contractor, and would be entitled to their own rights and remedies.37 Additionally, each would only have to wait thirty days after the work contemplated under his own original contract was completed to receive full payment, as long as each original contractor paid his subcontractors, and the subcontractors were not forced to file retain-age hens.
If, on the other hand, the foundation contractor and painting contractor were sub contractors, hired by a general contractor, then they would both have thirty days from actual completion of the contract to file their hens if the general contractor did not pay them, just as the retainage statute contemplates. It is difficult to envision a scenario where the general contractor would be paid in full in any event before he completely finishes the work he agreed to do under the original contract. And once that work is actually completed, the general contractor only has to wait thirty days before he is paid in full — and that will happen as long as he has paid his subcontractors, and there are no outstanding retainage hens. Again, the retainage hen statute was enacted to protect the unpaid sub contractor, not the general contractor.
The Court’s concern over owners’ and original contractors’ hardship is misplaced, or at the very least, skewed in the wrong direction, considering the purpose of the statute. Requiring a subcontractor to know if the particular original contract under which he has been supplying materials or labor has been terminated or aban*732doned works a terrible inequity against the very persons the statute is intended to protect, particularly because the hen statute does not require the owner to notify the subcontractor of the termination or abandonment of the contract. The provision governing notification of completion is merely permissive.38
Moreover, particularly because the owner is in the best position to know the status of his or her own contract, placing the burden of risk on the subcontractor to know if the contract has been terminated creates the potential for an unscrupulous owner to terminate the contract without notice to the subcontractor, let the thirty days run, and then contract the work out to someone else to finish, thereby relieving himself of the otherwise valid encumbrance. As we pointed out above, the purpose of the mechanic’s and materialman’s hen statute is to protect laborers and ma-terialmen, not to increase their burden and risk.
The Court suggests that a subcontractor can best protect himself by filing a hen affidavit within thirty days of the completion of his own work.39 But it is not for this Court to legislate new requirements, particularly requirements that would expose owners to the risk of having an otherwise good title clouded with numerous, and largely unnecessary, lien claims. The Legislature has not required subcontractors to file their lien affidavit within thirty days of the completion of their own work; nor has the Legislature required owners to notify subcontractors if the contract with the general contractor is terminated. Absent such requirements, subcontractors must comply only with the current requirements of the statute. Those literal requirements direct lien claimants to file their liens within thirty days of actual completion of the work contemplated under the original contract.
Finally, it is ironic that the Court justifies its position — that “completion” implicitly includes “non-completion” — by pointing to additional and express statutory language used in a separate legislative enactment covering residential construction contracts.40 First, this express language does not appear anywhere in the definition section of the mechanic’s and material-men’s lien statutes,41 or in the retainage lien statute itself,42 which is a rather obvious point of distinction. Second, it is rather bold for the Court, nevertheless, to assert that this additional and express language in section 53.255 demonstrates that the Legislature intended that non-completion by abandonment and termination be implied within the definition of completion in section 58.001. To the contrary, it is undeniably more certain that the Legislature recognized that “completion” did not cover non-completion of the contract, and that it had to, therefore, expressly reference abandonment or termination in addition to actual completion in section 53.255. And tellingly, the Legislature only included this express language in the residential construction provisions, and not anywhere else in the retainage hen provisions. Most assuredly, had the Legislature intended non-completion to count anywhere else besides the residential construction retainage provisions, it would have expressly done so.
Because the Texas mechanic’s and mate-rialman’s lien statute requires retainage lien claimants to file their lien affidavits *733within thirty days of actual completion of the work contemplated under the original contract, I would affirm the court of appeals.

. Tex. Prop.Code §§ 53.055, 53.056.

. See id. § 53.101.

. Id.

. Id. § 53.102.

. Id. § 53.103.

. Id. § 53.001(14).

. Id. § 53.001(15).

. First Nat’l Bank v. Sledge, 653 S.W.2d 283, 286 (Tex.1983).

. See Indus. Indem. Co. v. Zack Burkett Co., 677 S.W.2d 493, 495 (Tex.1984) (per curiam): First Nat’l Bank, 653 S.W.2d at 288.

. See State v. Gonzalez, 82 S.W.3d 322, 327 (Tex.2002).

. Tex. Prop.Code § 53.053(b).

. Id. § 53.001(15).

. 837 S.W.2d 270 (Tex.App.-Eastland 1992, no writ).

. Id. at 272.

. Id.

. Id.

. 1 Eldon L. Youngblood, Youngblood on Texas Mechanics’ Liens, § 803.6[a] (1996) (emphasis added).

. Tex. Prop.Code § 53.001(14).

. See Ryan v. Travelers Ins. Co., 715 S.W.2d 172, 175 (Tex.App.-Houston [1st Dist.] 1986, writ ref’d n.r.e.) (stating that when a statute substantially modifies common law rights, the statute entirely controls the rights and obligations of the parties to an action brought under that statute).

. Conn, Sherrod & Co. v. Tri-Elec. Supply Co., 535 S.W.2d 31, 34 (Tex.Civ.App.-Tyler 1976, writ ref d n.r.e.).

. See 102 S.W.3d at 725.

. See Lawrence v. CDB Servs., Inc., 44 S.W.3d 544, 549 (Tex.2001); Kerrville State Hosp. v. Clark, 923 S.W.2d 582, 584 (Tex.1996); Salcedo v. El Paso Hosp. Dist., 659 S.W.2d 30, 32 (Tex.1983); Lowe v. Tex. Tech Univ., 540 S.W.2d 297, 301 (Tex.1976) (Greenhill, C.J., concurring); see also Chief Justice Thomas Phillips, State of the Judiciary Address (March 4, 2003), available at http:// www. supreme.courts.state.tx.us/Adviso-ry/SOJ.pdf.

. 102 S.W.3d at 723.

. 478 S.W.2d 786, 793 (Tex.1972).

. See House Comm. on Judiciary, Bill Analysis, Tex. H.B. 1059, 63rd Leg., R.S. (1973); see also McKalip v. Smith Bldg. & Masonry Supply, Inc., 599 S.W.2d 884, 889 (Tex.Civ.App.-Waco 1980, writ ref’d n.r.e.) ("In our opinion the Legislature’s Amendment of [the statute] was intended to and does have the effect of *730limiting the retainage fund ... to 10% of a particular original contract, in situations where there are multiple original contracts executed for the construction of a single project.”).

. Tex. Prop.Code § 53.101.

. 102 S.W.3d at 725-26 (citations omitted).

. Youngblood, supra, § 803.1 [b].

. Id.

. Id.

. 102 S.W.3d at 724.

. See Eldon L. Youngblood, Mechanics’ and Materialmen’s Liens in Texas, 26 Sw. LJ. 665, 670-71 (1972).

. See, e.g., Tex. Prop.Code § 53.056 (notice requirements for derivative claimant to original contractor or owner); § 53.057 (derivative claimant’s notice for contractual retainage lien); § 53.024 (limitation on subcontractor’s lien).

. Youngblood, supra, at 671 (citations omitted).

. See, e.g., Tex. Prop.Code § 53.053 (accrual of indebtedness to original contractor).

. Youngblood, supra, at 671 (citations omitted).

. See supra notes 29-33 and accompanying text.

. See Tex. Prop.Code § 53.106.

. 102 S.W.3d at 725.

. 102 S.W.3d at 726.

. See Tex. Prop.Code § 53.001.

. See id. § 53.101.