Court Opinion

ID: 1057769
Source: CourtListenerOpinion
Date Created: 2013-10-09 18:26:54.491547+00
Date Added: 2024-06-11T12:38:28.157515
License: Public Domain

PRESENT:    All the Justices

GLASSER & GLASSER, PLC, TRUSTEE FOR
FIRST MORTGAGE BONDHOLDER, 2006 SERIES

v.   Record No. 120287                           OPINION BY
                                           JUSTICE DONALD W. LEMONS
                                              February 28, 2013
JACK BAYS, INC., ET AL.

CITIZENS BUSINESS BANK

v.   Record No. 120288

JACK BAYS, INC., ET AL.

CELTIC BANK

v.   Record No. 120289

JACK BAYS, INC., ET AL.

           FROM THE CIRCUIT COURT OF PRINCE WILLIAM COUNTY
                      Mary Grace O'Brien, Judge

     In this appeal, we consider the validity of various

mechanics' liens filed under Code § 43-4.

                     I.   Facts and Proceedings

      A.      New Life's Construction Project, Contractors,
                            and Financing

     Jack Bays, Inc. ("Jack Bays") is a commercial general

contracting firm with expertise in new church construction.

In 2004, the company's President, Lynn Bays Fuechsel

("Fuechsel"), met the Senior Pastor and Founder of New Life

Anointed Ministries International ("New Life"), Bishop Eugene

Reeves ("Bishop Reeves").      At the time, New Life was beginning

the process of building a church in Woodbridge, Virginia.
Jack Bays ultimately became the general contractor on the

project.

     On August 22, 2005, Jack Bays submitted a proposal for

the site work portion of the project.   Site work included

excavation and grading, utility installation, concrete and

asphalt paving, landscaping, and fencing.   New Life accepted

the proposal either contemporaneously or shortly thereafter by

signing an owner/contractor agreement form ("August '05

Agreement").   The agreement form stated that New Life would

pay Jack Bays a stipulated sum of $4,209,532 for initial work

at the project site.

     On September 29, 2005, Jack Bays began site work.     On

April 26, 2006, a new Agreement ("April '06 Agreement")

provided that New Life would pay Jack Bays a stipulated sum of

$12,016,000.   The April '06 Agreement incorporated the sum and

scope of work from the August '05 Agreement.

     On December 5, 2006, the parties increased the value of

the contract for the final time.    Change Order 13 required

construction on a preschool, sanctuary, lobby and corridors.

The cost of this project was $5,858,732, which brought the

total cost of the project to $17,874,732.   The contract

provided for payment of requisitions from Jack Bays based upon

percentage completion of the project.

                                2
     To perform work at the site, Jack Bays contracted with

several subcontractors, the following eleven of which are

parties to this action: Structural Steel, LLC ("Structural

Steel"), United Sprinkler Company, Inc. ("United Sprinkler"),

Virginia Paving Company ("Virginia Paving"), Sparkle Painting

Company, Inc. ("Sparkle Painting"), Scaffold Resource, LLC

("Scaffold Resource"), Miller Construction, Inc. ("Miller

Construction"), Adrian L. Merton, Inc. ("Adrian Merton"),

Century Contracting Corporation ("Century Contracting"),

Clover Contracting, Inc. ("Clover Contracting"), General Glass

Corporation ("General Glass"), and Becker Electric Company. ∗

     After briefly working with Branch Banking and Trust, New

Life sought additional funds for the project.   To obtain these

funds, New Life worked with Strongtower, a bonding company for

church financing.   This collaboration led New Life to obtain

additional financing, specifically in the amount of $13.6

million.   San Joaquin Bank (the predecessor to and hereinafter

"Citizens Business Bank"), 1st Centennial Bank (the

predecessor to and hereinafter "Celtic Bank"), and Glasser &

Glasser, PLC ("Glasser & Glasser") (collectively, "Lenders")

were listed as "Lenders" on the Deed of Trust for the new

financing, while Stewart Title Guaranty Company ("Stewart

     ∗
       When referring to the general contractor and the
subcontractors we will use the term "Contractors."

                                3
Title") was designated "Trustee."     Glasser & Glasser was also

designated Trustee for "First Mortgage Bondholders, 2006

Series" ("Bondholders").     Citizens Business Bank obtained a

note evidencing the debt in the principal amount of

$8,962,000.    Celtic Bank obtained a note in the principal

amount of $4,491,000.     Additionally, the Deed of Trust

incorporated a $13,453,000 Trust Indenture "for the benefit of

certain Bondholders," with Glasser & Glasser as Trustee, and

Reliance Trust Company as the trust company and disbursement

agent.    The Lenders recorded their Deed of Trust on June 27,

2006.

        On September 29, 2005, Jack Bays issued its first

requisition for payment to New Life.     New Life paid in full,

and continued to pay its requisitions in full each month

through March 2007.     New Life paid part of Jack Bays' April

2007 requisition, falling $141,498.70 short of total payment.

Thereafter, New Life made no payments to Jack Bays from May

through October 2007, because funding for the project was

exhausted.

        Throughout the May-October 2007 period, New Life

attempted to obtain additional financing.     Jack Bays

understood from Bishop Reeves that new funding would be

obtained to cover the cost of the project.     On July 27, 2007,

Monika Taylor, an underwriter for Quest Capital Funding, wrote

                                  4
to Fuechsel to "inform [Fuechsel] that we are going through

final approval for a $20,000,000.00 (Twenty Million Dollar)

loan for New Life Anointed Church."       From her conversations

with Bishop Reeves, Fuechsel expected to be paid for Jack

Bays' prior, ongoing, and future work on or around August 3,

2007.    After the anticipated loan from Quest Capital Funding

did not close, Fuechsel was told that financing would instead

be in place by the end of August.       However, no further

financing was obtained.       Jack Bays continued construction work

at the site from May through September 28, 2007.

               B.      Contract Work and Demobilization,
                    Mechanics' Liens, and Termination

        On September 28, 2007, Jack Bays sent a memorandum to its

subcontractors.       The memorandum detailed New Life's efforts to

obtain financing, and informed the subcontractors that delays

in the approval process caused Jack Bays to immediately

"stop[] active work on the site until all payments are

current."    The letter asked the subcontractors to consider

waiting until November 2007 to file a mechanics' lien so that

title could remain clear and enable New Life to "have the best

opportunity to obtain financing."

        After September 28, 2007, Jack Bays began to shut down

active work on the project by collecting equipment and

rectifying unsafe conditions on the premises.       Jack Bays

                                    5
maintained a log of site work during this time and issued a

requisition for October 2007 work it classified as

"demobilization."

     According to Jack Bays, subcontractors continued work at

the site through October 11, 2007.   However, United Sprinkler

performed "normal course of business" work through at least

October 18, 2007.   Sparkle Painting had an employee working on

site through at least October 1, 2007, and possibly through

October 9, although information supporting the latter date was

inconclusive.   Scaffold Resource entered the premises on

October 1 to remove scaffolding provided, completing this work

– which was provided for in its contract with Jack Bays – on

October 16.   Becker Electric continued contract completion

work on the project by performing wiring work related to pulls

and terminations at electrical panel locations and rooftop

units through October 16, although this was primarily in an

effort to address safety concerns associated with exposed live

electrical wires.

     Jack Bays alleged that its activity at the project site

between October 1 and November 16, 2007, was a necessary part

of its demobilization efforts, and that any contract work

performed by subcontractors during that time was at the

subcontractors' own risk.   However, Jack Bays increased the

percentage by which it evaluated the completeness of the

                                6
project's work between its September and October 2007

requisitions by 2%, from 92% to 94%.   Whether Jack Bays'

actions and the actions of the subcontractors in October and

November 2007 constitute continuing contract work or

demobilization is disputed by the parties to this action.

     On December 28, 2007, Jack Bays recorded its Memorandum

of Mechanic[s'] Lien against New Life in the amount of

$5,942,487.48 in the Circuit Court of Prince William County.

The following table summarizes the dates on which

subcontractors recorded their memoranda of mechanics' liens,

and the value of those liens:

       Subcontractor        Date             Value
              Clover      12/20/07        $60,814.37
         Contracting
           Adrian L.      12/20/07       $323,165.20
              Merton
       General Glass      12/20/07       $50,544.00
             Century      12/20/07       $134,303.00
         Contracting
             Capital     12/21/2007      $217,575.00
         Contracting
            Virginia      12/27/07       $423,583.27
              Paving
             Sparkle      12/27/07        $13,950.00
            Painting
          Structural      12/27/07       $139,922.00
               Steel
              Miller      12/28/07        $99,654.00
        Construction
            Scaffold      1/11/08         $75,867.80
            Resource
              Becker      1/22/08        $549,545.00
            Electric
              United      1/29/08         $97,664.40
           Sprinkler

                                7
      On May 8, 2008, Jack Bays sent a letter to New Life

terminating the April 26, 2006 construction contract.   Between

June 19 and July 14, 2008, all Contractors timely filed

complaints in the Circuit Court of Prince William County

("circuit court") against the Lenders and Stewart Title.

 C.    Proceedings before the Commissioner of Accounts and the
                          Circuit Court

      By Decree of Reference and Order of Consolidation and

Reference entered by the circuit court in late 2008 and early

2009, Prince William County Commissioner in Chancery Robert J.

Zelnick ("Commissioner Zelnick") held a proceeding from

January 11-15, 2010, to address "only issues concerning

enforceability" of the mechanics' liens.   The issues of

valuation and priority were "deferred to a subsequent hearing,

if needed."

      On May 31, 2011, Commissioner Zelnick filed his report.

He found that:

  •   All necessary parties were made defendants in the
      Contractors' suits to enforce their mechanics' liens;
  •   Jack Bays did not violate the 90-day rule embodied in
      Code § 43-4;
  •   Jack Bays complied with the 150-day rule embodied in Code
      § 43-4;
  •   The other Contractors complied with the 150-day rule
      embodied in Code § 43-4;
  •   Jack Bays did not include charges for labor and materials
      prior to May 1, 2007;
  •   Jack Bays acted reasonably in waiting until September 28,
      2007 to recommend ceasing current work on the New Life
      project, and therefore did not fail to mitigate damages;

                                8
  •   The mechanics' liens of Century Contracting, Adrian L.
      Merton, Scaffold Resource, Becker Electric, United
      Sprinkler, General Glass, Miller Construction, Structural
      Steel, Sparkle Painting, Virginia Paving, and Clover
      Contracting were valid and enforceable;
  •   Capital Contracting's mechanics' lien was extinguished;
  •   The liens of Samaha Associates, Loudoun Sheet Metal
      Company, and Phillip C. Clarke, Incorporated, were not
      enforceable;
  •   A priority of liens existed, with the subcontractors
      holding top priority, Jack Bays second priority, the
      Lenders third priority, and a September 2008 Jack Bays
      Deed of Trust and Trustee for General Mortgage
      Bondholders holding fourth priority; and
  •   The property should be sold to satisfy the outstanding
      liens.

      On June 10, 2011, Citizens Business Bank, Celtic Bank,

and Glasser & Glasser filed exceptions to the report.   The

Lenders filed a Joint Brief in Support of Exceptions to the

report.   Their exceptions primarily focus on the

Commissioner's interpretation of Code § 43-4 concerning filing

procedures and lien value.   Additionally, the Lenders asserted

that the Contractors failed to mitigate damages during their

October 2007 work and that they also did not include necessary

parties to their action to enforce the liens.   Finally, the

Lenders disputed the validity of some of the subcontractors'

liens.

      The circuit court issued a final order on November 18,

2011, rejecting the Lenders' arguments in their entirety.     The

circuit court incorporated its October 14, 2011 letter opinion

                                9
into its final order.     The circuit court further ordered that

the property be sold at public auction to the highest bidder,

with proceeds of the sale to be applied in satisfaction of the

mechanics' liens in the order of priority established by

Commissioner Zelnick.     Lenders timely filed notices of and

petitions for appeal, raising fourteen assignments of error.

We awarded an appeal.

                            II.   Analysis

                     A.     Standard of Review

     In their first assignment of error, the Lenders assert

that "[t]he trial court lacked subject matter jurisdiction as

necessary parties were not joined in any of the lawsuits which

are the subject matter of this appeal."      This assignment

involves a question of law and is reviewed de novo.       Conyers

v. Martial Arts World of Richmond, Inc., 273 Va. 96, 104, 639
S.E.2d 174, 178 (2007).

     For the remaining assignments of error, the Lenders

challenge the circuit court's conclusion that Commissioner

Zelnick properly determined issues related to the Contractors'

liens.   "When a circuit court approves a report by a

commissioner in chancery who heard evidence ore tenus, we will

affirm the court's decree unless it is plainly wrong or

without evidence to support it."       Amstutz v. Everett Jones

Lumber Corp., 268 Va. 551, 558, 604 S.E.2d 437, 441 (2004)

                                  10
(citing Shepherd v. Davis, 265 Va. 108, 117, 574 S.E.2d 514,

519 (2003); Snyder Plaza Props., Inc. v. Adams Outdoor Adver.,

Inc., 259 Va. 635, 641, 528 S.E.2d 452, 456 (2000)).       "[W]e

look at the commissioner's conclusions, as approved by the

circuit court, and determine whether the conclusions are

supported by credible evidence."      Id. (citing Chaney v.

Haynes, 250 Va. 155, 158, 458 S.E.2d 451, 453 (1995)); see

also Code § 8.01-610.     However, this standard "is not

applicable to pure conclusions of law contained in the

report," which are reviewed de novo.      Hill v. Hill, 227 Va.
569, 577, 318 S.E.2d 292, 296 (1984) (citations omitted).

                     B.     Necessary Parties

     Suits to enforce mechanics' liens must name all necessary

parties within the time set forth by Code § 43-17, and a

failure to name a necessary party as defendant requires

dismissal.   Mendenhall v. Douglas L. Cooper, Inc., 239 Va. 71,

72, 75, 387 S.E.2d 468, 469-70 (1990).

     Citing James T. Bush Constr. Co. v. Patel, 243 Va. 84,

87-88, 412 S.E.2d 703, 704-05 (1992), the Lenders contend that

"[i]n the context of mechanic[s'] lien litigation, necessary

parties include the owner of the property, and both the

trustee and beneficiaries of a deed of trust secured by the

property."   The beneficiaries here, the Lenders assert, are

the Bondholders under the Trust Indenture.      Because the

                                 11
Contractors did not name the Bondholders, their suits must be

dismissed, according to the Lenders.

     The Contractors rejoin that this Court stated otherwise

in Michael E. Siska Rev. Trust v. Milestone Development, LLC,

282 Va. 169, 181, 715 S.E.2d 21, 27 (2011), where we held that

"the necessary party doctrine does not implicate subject

matter jurisdiction."   They also allege that "[p]arties filing

mechanic[s'] liens are entitled to rely on the land records,"

citing Blue Ridge Constr. v. Stafford Dev. Grp., Ltd., 244 Va.
361, 365, 421 S.E.2d 199, 201 (1992) in support.    The

Contractors finally assert that Glasser & Glasser, as Trustee

for the Bondholders, is in position to protect the

Bondholders' interests.

     In their Reply, the Lenders argue that Siska "does not

address statutorily created causes of action such as

mechanics' liens, or modify the clear line of authority of

Bush v. Patel."   The Lenders also claim that the rule

concerning whether parties may rely on land records is not the

law in Virginia, citing a 1956 case, Chavis v. Gibbs, 198 Va.
379, 94 S.E.2d 195, in support.     Finally, the Lenders state in

a footnote that "[the Contractors'] reliance upon the powers

of the Trustee under the Trust Indenture to take action to

prevent any impairment of the Trust Estate is misplaced as

                               12
they are no different in kind than the power any trustee has

to take action to protect the Trust property."

     In Siska, we stated that "the necessary party doctrine

does not implicate subject matter jurisdiction. If the

doctrine involved subject matter jurisdiction, the absence of

a necessary party would, by definition, deprive the court of

the power to render a decree. There could not logically be

exceptions."   282 Va. at 177, 715 S.E.2d at 25.   We observed

that questions of personal jurisdiction and the ability to

"render complete relief" guide the decision whether to

exercise subject matter jurisdiction.   Id.

     However, Siska's rule is not applicable in the present,

limited context.   As "purely a creature of statute," Wallace

v. Brumback, 177 Va. 36, 40, 12 S.E.2d 801, 802 (1941), a

mechanics' lien must be "perfected within the proper time and

in the proper manner, as outlined by the statute, [or] it is

lost."   American Standard Homes Corp. v. Reinecke, 245 Va.
113, 119, 425 S.E.2d 515, 518 (1993) (internal quotation marks

omitted).

     The Lenders are correct that both trustees and trust

beneficiaries to a deed of trust are necessary parties to a

mechanics' lien suit.   See Bush, 243 Va. at 87, 412 S.E.2d at

704; Walt Robbins, 232 Va. at 47, 348 S.E.2d at 226.     Although

Bush did not concern the question whether a beneficiary of a

                               13
trust indenture was a necessary party, its principles remain

clear: a party must name a beneficiary to the deed of trust

because that beneficiary has "a substantial interest in being

given the opportunity to challenge the validity of the

mechanic[s'] lien, or otherwise to litigate the elements of

the lien."   243 Va. at 88, 412 S.E.2d at 705.   Because this

purpose is fulfilled by the deed of trust beneficiaries, it

follows that the beneficiaries of a trust indenture are not

necessary parties.   As a named beneficiary of the Deed of

Trust and as a Trustee for the Bondholders, naming Glasser &

Glasser is sufficient to comply with the requirements of Bush.

     Also, we note that there is little evidence supporting

the Lenders' contention that the Contractors were aware of the

Bondholders' identity or that the Contractors could have

inquired to determine it.   The Trust Indenture states that

Reliance Trust Company would maintain in Georgia a bond

register containing names, addresses, bond numbers, and

amounts of purchase of all issued bonds.   However, Reliance

had no obligation to keep the list accurate.     ("[Reliance]

shall be under no responsibility with regard to the accuracy

of [the bond registration] list.").   Nor could the Contractors

have obtained the information on the list without the express

written consent of another entity, California Plan of Church

Finance, Inc.   Even without regard to the Bush precedent, the

                               14
Contractors could not be expected to accurately ascertain the

identity of bondholders under these circumstances.     A rule to

the contrary would render compliance with the statute

effectively impossible.

                           C.   Code § 43-4

                      1.   The Ninety-Day Rule

        In relevant part, Code § 43-4 provides:

             A general contractor, or any other lien
        claimant under §§ 43-7 and 43-9, in order to
        perfect the lien given by § 43-3, provided such
        lien has not been barred by § 43-4.01 C, shall
        file a memorandum of lien at any time after the
        work is commenced or material furnished, but not
        later than 90 days from the last day of the
        month in which he last performs labor or
        furnishes material, and in no event later than
        90 days from the time such building, structure,
        or railroad is completed, or the work thereon
        otherwise terminated.

Therefore, each contractor had ninety days from the end of the

last month in which it last performed labor or furnished

material to file a lien, unless work on the church was

complete or "otherwise terminated."

        It is not disputed that as of the date of Jack Bays'

September 28, 2007 letter, the church was incomplete.      Nor is

it disputed that Jack Bays recorded its lien on December 28,

2007.    The Lenders allege that although work was not complete,

Jack Bays' September 28 letter "otherwise terminated" work on

the church, beginning the ninety-day filing limitation.     If

                                  15
this is true, then we must dismiss Jack Bays' suit: The

difference between September 28 and December 28 is ninety-one

days.    If it is not, then Jack Bays earns the benefit of

starting the ninety-day clock on the last day of September,

two days later.    Importantly, the difference between the last

day in September and December 28 is eighty-eight days.

Accordingly, in order for Jack Bays to have timely filed its

lien, its letter of September 28, 2007, cannot have operated

to "otherwise terminate[]" work on the church, as the Lenders

insist.

        The Lenders cite to Mills v. Moore's Super Stores, Inc.,

217 Va. 276, 279, 227 S.E.2d 719, 722 (1976) and Northern

Virginia Savings and Loan Ass'n v. J.B. Kendall Co., 205 Va.
136, 135 S.E.2d 178 (1964), in support of their argument.    In

the latter case, they allege, this Court found that a

contractor's work had "otherwise terminated" when work on the

project came to a "standstill" due to the property owner's

lack of financing and the contractor's failure to provide

labor or material to the job.     See J.B. Kendall Co., 205 Va.

at 147-48, 135 S.E.2d at 186.    The Lenders conclude that J.B.

Kendall Co. should apply here because work came to a

standstill after September 28, 2007.

        Jack Bays argues that September 30, 2007, is the proper

date to use for the 90-day deadline imposed by Code § 43-4,

                                 16
because the statute gives a claimant "90 days from the last

day of the month in which he last performs labor or furnishes

material."   Jack Bays claims that Virginia law on the matter

is contrary to the Lenders' assertion; "the law provides that

all activity must have come to an end in order for the work to

be deemed terminated as of September 28, 2007[,] which plainly

did not occur here."   See Mills, 217 Va. at 276, 227 S.E.2d at

719; J.B. Kendall Co., 205 Va. at 148, 135 S.E.2d at 187.

     The Commissioner concluded that

     [t]he Supreme Court has recognized that the 90-
     day time period "begins to run from the time
     the entire building is completed or work
     thereon is otherwise terminated, and not
     necessarily from the time the general
     contractor has completed his specific contract
     to furnish labor or materials, or both." [J.B.
     Kendall Co., 205 Va. at 144, 135 S.E.2d at
     184]. In light of the uncontroverted fact that
     the building was never completed, and that
     several subcontractors, such as Becker Electric
     and Scaffold Resources, Inc. continued to work
     on the Project in October, 2008, your
     Commissioner finds that Jack Bays' lien does
     not violate the 90-day rule.

The circuit court "agree[d] with the Commissioner that the

evidence established that Jack Bays properly used the last day

of September, 2007, to begin calculating the ninety-day filing

deadline."

     We held in Mills that "otherwise terminated" under Code

§ 43-4 meant when work under the contract ceased.   217 Va. at

279, 227 S.E.2d at 722.   There, the contract ceased upon the

                               17
combination of several factors: financial difficulties

encountered by the general contractor, uncontroverted evidence

that neither the general contractor nor any subcontractors

worked at the site after the termination date, and the owner's

firing of the general contractor.     Id.   Here, unlike in Mills,

work did not stop at the construction site; several

subcontractors remained and performed contract work through

October.    Jack Bays also terminated its involvement in May

2008.    Therefore, it cannot be said that "work [on the

structure was] otherwise terminated" under Code § 43-4, and

the circuit court was not plainly wrong in upholding the

Commissioner's ruling that Jack Bays complied with the ninety-

day rule.

                        2.   The 150-day Rule

        In relevant part, Code § 43-4 provides:

        The lien claimant may file any number of
        memoranda but no memorandum filed pursuant to
        this chapter shall include sums due for labor or
        materials furnished more than 150 days prior to
        the last day on which labor was performed or
        material furnished to the job preceding the
        filing of such memorandum.

Accordingly, whether Jack Bays offered sufficient proof to

conform to the 150-day rule prescribed by Code § 43-4 is a

factual inquiry.    If a claimant violates this rule, their

mechanics' lien is unenforceable.     Carolina Builders Corp. v.

Cenit Equity Co., 257 Va. 405, 411, 512 S.E.2d 550, 553 (1999).

                                 18
          i. Does the Rule Provide for a Unitary Date
                   Range for all Contractors?

     The Lenders first claim that the 150-day rule has a

unitary date range for all contractors.

     As we stated in Carolina Builders, 257 Va. at 409, 512

S.E.2d at 551, the 150-day rule

     specifies that "[t]he lien claimant may file any
     number of memoranda but no memorandum . . .
     shall include sums due for labor or materials
     furnished more than 150 days prior to the last
     day on which labor was performed or material
     furnished to the job preceding the filing of
     such memorandum."

Id. (quoting Code § 43-4) (emphasis added);    see also Smith

Mt. Bldg. Supply, LLC v. Windstar Props., LLC, 277 Va. 387,

390-91, 672 S.E.2d 845, 846 (2009).    The Lenders' argument

that the 150-day rule does not apply separately for each

claimant ignores the language of the statute, which plainly

states that the period is calculated according to the actions

of the lien claimant.   Code § 43-4.   Because time is

calculated in this fashion, it cannot be "unitary" for all

lien claimants.

       ii. Propriety of the September 28, 2007 End Date

     The Lenders allege that, even if the 150-day rule is not

unitary, Jack Bays failed to comply with the rule because it

used the wrong end date, September 28, 2007, from which it

looked back.   Because the circuit court agreed with

                               19
Commissioner Zelnick's conclusion that Jack Bays complied with

the 150-day rule prescribed by Code § 43-4, the Lenders must

show that the decision was plainly wrong or without evidence

to support it.    Amstutz, 268 Va. at 558, 604 S.E.2d at 441.

     Jack Bays' Site Superintendent for the New Life project,

Steven Wise ("Wise"), supervised the work site during the

September-November 2007 period.      The same day that Jack Bays

informed its subcontractors to cease work via mail and fax,

September 28, 2007, Wise began making phone calls to all

subcontractors to inform them that, per instructions from

Fuechsel, Jack Bays was "shut[ting active work on the project]

down."   The afternoon of September 28, 2007, Wise made no

fewer than nine phone calls to various subcontractors,

explaining to them that Jack Bays was "demobilizing" and that

the subcontractors should not return to the work site the

following week and that if they did so, it would be at their

own risk.

     Wise also vividly recounted his interaction with

subcontractors and efforts related to Jack Bays' work at the

site from October 1 through November 16, 2007, none of which

work involved labor performed "to the job" – that is,

construction of the church.   Fuechsel's testimony supported

Wise's account.   The Lenders offered no controverting

evidence, instead asserting that "value" was added to the

                                20
project through Jack Bays' labor after September 28, 2007, and

that this added value precluded Jack Bays from using September

28 as the end point for purposes of the 150-day rule.

     The Lenders' arguments to both Commissioner Zelnick and

the circuit court on this issue were rejected.      Although

several subcontractors added value to the project after

September 28, 2007, the Commissioner concluded that the same

was not true for Jack Bays.

     This Court "look[s] at the commissioner's conclusions, as

approved by the circuit court, and determine[s] whether the

conclusions are supported by credible evidence."      Amstutz, 268

Va. at 558, 604 S.E.2d at 441.    Whether Jack Bays showed it

complied with the 150-day rule was a factual inquiry for

Commissioner Zelnick to decide.       Based on the testimony of

Wise and Fuechsel, Jack Bays sufficiently demonstrated to the

Commissioner and the circuit court that the last day it

performed labor or furnished material to the job was September

28, 2007.

      iii. Propriety of Fees Included in Jack Bays' Lien

     Jack Bays must also show that it did not include in its

lien "sums due for labor or materials furnished" before May 2,

2007, the date 150 days prior to September 28, 2007.      Code

§ 43-4.

                                 21
     The Lenders argue that Jack Bays' lien is invalid because

it includes sums for work performed prior to May 2, 2007, the

beginning of the 150-day period.

     First, the Lenders claim that

          [p]rior to May 1, 2007, Jack Bays had
     clearly not billed New Life for all of the work
     Miller Construction had performed to date. In
     the following months, Jack Bays' requisitions
     to New Life accounted for these previous
     shortcomings, and thus included sums
     attributable to work performed prior to May 1,
     2007. Therefore, because the liens were based
     on these later billings, they too included sums
     for work done prior to May 1, 2007.

     The Lenders offered the testimony of Thomas Chappell as

an expert witness in construction accounting to support their

argument before the Commissioner.    Chappell testified that

between December 2006 and April 2007 Miller Construction

billed $424,624 to Jack Bays, and Jack Bays billed only

$327,362 to New Life for work that Chappell believed was

attributable to Miller Construction.   Jack Bays subsequently

charged New Life amounts varying from the monthly value

invoiced to it by Miller Construction through July 2007.

According to Chappell, Jack Bays' May 2007 billing

     appears to be a catch-up for the under-billing
     in the prior months which would mean that costs
     incurred, labor and materials incurred in the
     prior period are now being drawn into the May
     requisition by Jack Bays, which is also
     included as part of the basis for the
     mechanic[s'] lien.

                              22
     It is true that Jack Bays invoiced New Life different

values for masonry work – Miller Construction's job – than

Miller Construction invoiced Jack Bays a month prior.   Jack

Bays argues that the discrepancy exists because it billed New

Life under a stipulated sum agreement, rather than a cost-plus

contract.   Semon Samaha ("Samaha"), the project architect,

described before the Commissioner the difference between the

two billings:

     Well, the cost-plus is somewhat open-ended, I
     mean the contractor is providing a fee
     basically to do the work and then whatever
     costs are incurred plus that fee is what the
     owner pays, so part of the problem is trying to
     determine which cue [sic] the costs go in. And
     I know that one of the projects that we did a
     while back, there was a dispute, for example,
     about whether a saw that the contractor
     purchased should be part of the cost or part of
     the contractor's fee and whether it should have
     just been a rental charge, and so it becomes
     much more cumbersome, where a stipulated sum,
     the amount is agreed upon ahead of time and
     from then on, it's just based on how much of
     the work gets done as a percentage of that
     amount.

Chappell also acknowledged that differences exist between

stipulated sum agreements and cost-plus agreements.

     Fuechsel, who qualified before the Commissioner as an

expert witness in commercial general contracting with a sub-

specialty in new church construction, testified that

requisitions were prepared around the 25th of each month and

projected through the end of that month.   Jack Bays

                               23
"reasonably assume[d]" progress made in various construction

areas as compared to the prior billing period, with the

percentage increase serving as the basis for the requisition.

This process is consistent with the April '06 Agreement and

the AIA A201-1997 General Conditions ("General Conditions")

incorporated therein.   Fuechsel testified that subcontractor

billings were used to "confirm our percent complete at the

time of each monthly invoice."    Additionally, all requisitions

were submitted to and approved by Samaha.   Samaha could only

approve requisitions for payment based on the value of work

completed beyond the prior month's performance, not by a

subcontractor's individual billing.

     Commissioner Zelnick was persuaded by Jack Bays'

argument, finding that its monthly requisitions "were not

formulated based on costs incurred from the subcontractors and

suppliers, but rather were the product of Jack Bays'

reasonable estimation of the value added to the project with

that billing period."   He also found that Chappell's testimony

was unpersuasive due to the differences between his testimony

and the nature of a stipulated sum agreement.   The circuit

court reviewed and accepted these findings without

qualification.

     Whether Jack Bays proved that it did not include in its

lien Miller Construction's sums due prior to May 1 was a

                                 24
factual inquiry.   Although the Lenders offered expert

testimony and cross examined Jack Bays' witnesses regarding

the relationship between subcontractor billings and Jack Bays'

requisitions, the Commissioner found that Jack Bays did not

include charges for Miller Construction's work in its lien.

The circuit court accepted these findings.   Based upon the

record, we cannot say that these findings were plainly wrong

or without evidence to support them.

     The Lenders also argue that the trial court erred in its

conclusion that no charges for labor or material provided

before May 2, 2007, were included in Jack Bays' lien.

Fuechsel testified regarding how Jack Bays calculated the

proper value for the 150-day period between May 2, 2007, and

September 28, 2007.   This process involved using the

requisitions from May to September to ascertain the value of

the lien.   However, because May 1, 2007, was included in the

May requisition but was not validly part of the lien, Fuechsel

stated that Jack Bays omitted this day from its calculation.

The company did so by taking the total number of work days in

May and dividing by the total amount invoiced to come up with

a per-day value of labor performed or materials furnished, and

then subtracted a per-day value in an effort to comply with

Code § 43-4.

     Referring to May 1, Fuechsel testified:

                               25
        Looking at the daily reports, there wasn't, you
        know, it was kind of business as usual, it
        wasn't a big delivery day, no major activities
        or unusual activities happened, so we took the
        number of work days in May, which was twenty-
        one, divided it into the total May invoice, and
        deleted what essentially mathematically came out
        to one day. . . .

Commissioner Zelnick found that testimony on this point was

offered without contradiction.     The circuit court concurred

with his assessment.     This factual determination was not

plainly wrong or without evidence to support it.

        Jack Bays sufficiently proved to both the Commissioner

and the circuit court that it did not include sums due for

labor provided or material furnished before May 2, 2007, nor

did it perform labor or furnish material after September 28,

2007.    Accordingly, we hold that Jack Bays properly perfected

its lien under Code § 43-4.

        It may appear inconsistent to use September 30, 2007, as

the relevant date from which to analyze Jack Bays' compliance

with Code § 43-4 for purposes of the 90-day calculation, and

September 28, 2007, as the relevant date from which to analyze

Jack Bays' compliance with Code § 43-4 for purposes of the

150-day calculation.     These distinct dates are used because

Code § 43-4 provides that in the circumstances presented by

this case, the proper date to use when evaluating compliance

with the 90-day rule is the end of the relevant month where a

                                 26
contractor last works on a structure, when that structure is

not fully completed.    The 150-day rule, on the other hand,

requires that courts calculate time based on when the

contractor last performs labor or furnishes material – not

necessarily at the end of a month.

                        3. Duty to Mitigate

     The Lenders contend that Jack Bays was obligated to

mitigate its damages from May 25, 2007 onward, when New Life

made its last payment to the contractor.      The Lenders also

argue that Jack Bays never requested assurances from New Life

that payments would be forthcoming, and instead accrued

millions in charges when it knew it would not receive payment.

     Jack Bays notes that "[t]he failure to mitigate defense

asserted by [the Lenders] apparently has never been applied in

the mechanic[s'] lien context – the Lenders have been

challenged to produce such authority, but it has never been

forthcoming."   It asserts that the defense is contractual in

nature, and that the Lenders have no grounds to assert the

mitigation defense because they were not parties to the

contract.   During oral argument, counsel for Jack Bays also

argued that Code § 43-4 already contains a "mitigation-like"

provision, the 150-day rule, which limits the fees a lien

claimant may request.   Finally, in the event the Lenders can

                                27
raise a mitigation defense, Jack Bays asserts that its actions

were reasonable under the circumstances.

     Assuming without deciding that the Lenders may raise the

defense of failure to mitigate, Jack Bays took reasonable

measures under the circumstances.   Specifically, Jack Bays

introduced during the Commissioner's hearing evidence stating

that in July 2007 New Life was in "final approval for a

$20,000,000.00 (Twenty Million Dollar) loan."   It was also

uncontroverted that Bishop Reeves told Fuechsel that New Life

would pay for Jack Bays' prior, current, and future work in

early August 2007, and if not then, shortly thereafter.    When

it became apparent that additional funding would not be

obtained, Jack Bays acted promptly and decisively.   The

Commissioner and the trial court did not err in holding that

Jack Bays properly mitigated its damages.

     Accordingly, the circuit court was not plainly wrong in

failing to rule that Jack Bays was required to mitigate its

damages.

                     4. Subcontractor Liens

     The Lenders argue that if this Court determines that work

on the structure "otherwise terminated" on September 28, 2007,

then Scaffold Resource, Becker Electric, and United Sprinkler

were untimely in filing their liens on January 11, 22, and 29,

2008 respectively.

                               28
     Because we find that the circuit court was not plainly

wrong in concluding that work on the church did not terminate

on September 28, 2007, and because we have held that the

ninety-day deadline applies to each individual contractor,

rather than the group collectively, United Masonry Inc. of Va.

v. Riggs Nat'l Bank of D.C., 233 Va. 476, 479, 357 S.E.2d 509,

511 (1987) ("the [ninety-day] filing deadline [is] dependent

upon each contractor's own activity"), the validation of the

mechanics' liens of Scaffold Resource, Becker Electric, and

United Sprinkler was not plainly wrong or without evidence to

support it.

     D.     The Stipulation, Lien Priority, and Sale of Land

                        1. The Stipulation

     The Lenders argue that at the January 2010 hearing before

Commissioner Zelnick, "all parties stipulated, and the

Commissioner ruled, that the hearing was confined to the issue

of the enforceability of the liens, and all other issues of

valuation and priority would be deferred to a subsequent

hearing."   Relying on Bauer v. Harn, 223 Va. 31, 36, 286
S.E.2d 192, 194 (1982), they contend that "[s]tipulations are

definitive of the issues" and are binding.   Unfortunately, the

Lenders omit from their argument that the Commissioner's

stipulation was contingent on future hearings being necessary.

                                29
     The parties agreed that Commissioner Zelnick could

address issues of priority and valuation at the January 2010

hearing, and that those issues would be "deferred to a

subsequent hearing, if needed."     The Commissioner reiterated

the conditional nature of future hearings on priority and

valuation by stating that a hearing on those matters would

occur only if necessary.   For this reason, the stipulation did

not require that further hearings be held.

                        2. Lien Priority

     The Lenders argue that no evidence concerning lien

priority was submitted to Commissioner Zelnick during the

five-day hearing.   Consequently, they claim, the Commissioner

and circuit court were plainly wrong in determining that the

Contractors' liens had priority over the Lenders' Deed of

Trust.

     Jack Bays argues that evidence of lien priority was

introduced.   Various subcontractors claim that because Jack

Bays commenced its contract work on the church before the Deed

of Trust was recorded, "any mechanic[s'] liens arising out of

that contract take priority over the Lenders' Deed of Trust."

     Commissioner Zelnick reviewed the validity of the liens

filed by each of the dozen-plus claimants and concluded that

"the Claimants' liens, with the exception of the lien filed by

Capital Contracting, are valid and enforceable, [and] have

                               30
priority over the . . . Deed of Trust."   The Commissioner

reasoned that "[p]ursuant to Virginia Code § 43-23, there is

no priority among mechanic[s'] liens, 'except that the lien of

a subcontractor shall be preferred to that of his general

contractor. . . .' "   Accordingly, the Commissioner gave

priority to subcontractor liens over Jack Bays' lien, and gave

priority to Jack Bays' lien over the Lenders' lien.    See Code

§ 43-23.

     In relevant part, Code § 43-21 states that

     [n]o lien or encumbrance upon the land created
     before the work was commenced or materials
     furnished shall operate upon the building or
     structure erected thereon, or materials
     furnished for and used in the same, until the
     lien in favor of the person doing the work or
     furnishing the materials shall have been
     satisfied; nor shall any lien or encumbrance
     upon the land created after the work was
     commenced or materials furnished operate on the
     land, or such building or structure, until the
     lien in favor of the person doing the work or
     furnishing the materials shall have been
     satisfied.

Of course, a "lien" or "encumbrance" upon land may include a

deed of trust.   See Bayview Loan Servicing, LLC v. Simmons,

275 Va. 114, 119, 654 S.E.2d 898, 900 (2008); see also

Woodington Electric, Inc. v. Lincoln Sav. & Loan Ass'n, 238
Va. 623, 630, 385 S.E.2d 872, 875 (1989) ("the mechanic[s']

lien 'leaps to the head of the class,' coming before virtually

every other lien.").   With the possible exception of priority

                               31
concerning the land (discussed infra), the Commissioner was

not plainly wrong or without evidence to support his

determination concerning priority.

                       3. Sale of the Land

     The Lenders also assert that, under Code § 43-3, a

mechanics' lien applies only to " 'so much land therewith as

shall be necessary for the convenient use and enjoyment

thereof.' "   See Code § 43-3.   They maintain that there was

"no basis for suggesting th[at] all of the land is necessary

for the use and enjoyment of the improvements."    They argue

that "[i]n the case of the property at issue, the uncompleted

church sits on approximately 22 acres of land.    The

uncompleted structure accounts for only 125,000 square feet

(or 2.8 acres)."

     Jack Bays suggests that objections to the sale of the

entire parcel of land were not preserved.    At the hearing on

exceptions to the Commissioner's report, counsel for Citizens

Business Bank stated to the circuit court, "I don't see how

the property can be sold at this point because it is clear

from the record that the way the hearing proceeded, those

issues were not determined, and by agreement they were not

determined.   They were deferred."    The question of objection

to the sale of the entire parcel was adequately preserved.

                                 32
     Because of the significant total sum of the mechanics'

liens, Commissioner Zelnick determined that a sale of the land

was necessary to satisfy the liens.   See Code § 43-3.     The

Commissioner stated that proceeds remaining after the sale and

satisfaction of the liens would be payable to New Life.

     Code § 43-3(A) states as relevant here that

     [a]ll persons performing labor or furnishing
     materials of the value of $150 or more,
     including the reasonable rental or use value of
     equipment, for the construction, removal, repair
     or improvement of any building or structure
     . . . shall have a lien . . . upon such building
     or structure, and so much land therewith as
     shall be necessary for the convenient use and
     enjoyment thereof.

(emphasis added).

     Commissioner Zelnick recommended the sale of the twenty-

two acre property because there were liens totaling

approximately $32,360,000, and sale of the entire parcel was

necessary to pay all of the liens.    However, not all of these

liens were mechanics' liens.   Additionally, sale of the

property to satisfy a mechanics' lien may only extend to "so

much [of the] land therewith as shall be necessary for the

convenient use and enjoyment thereof."   Code § 43-3.    The

record does not reflect evidence presented on this question.

Sale of the entire property may or may not be proper.

Determination of this question may affect priority

determination as it applies to the land.

                               33
                         III. Conclusion

     For the reasons stated, we hold that on this record,

Commissioner Zelnick and the circuit court erred in approving

the sale of the entire parcel of land to satisfy the

Contractors' liens, where no evidence was introduced to

support this decision.   Accordingly, we will affirm in part

and reverse in part the judgment of the circuit court and

remand for further proceedings consistent with this opinion.

                                               Affirmed in part,
                                               reversed in part,
                                                   and remanded.

                               34