Builders and Contractors Exchange
Weekly Bulletin: 28 Nov 2005
How Reliable is Reliable?
By: S. Sadiq Gill
When the Virginia Supreme Court decided Reliable Constructors, Inc. v. CFJ Properties et. al 559 S.E.2d 681, 263 Va. 279 (2002), the court was attempting to clarify the issue that invariably surfaces with every mechanic's lien claim: Does an inaccuracy in the amount claimed entirely invalidate the lien? Unfortunately, the decision failed to provide a definitive answer and only served to refine the analysis.
Reliable involved a lien claim by a mechanical subcontractor who performed mechanical and plumbing work on a travel plaza building in Caroline County, Virginia. Having not been paid, Reliable filed a mechanic's lien. The lien apparently included $250 related to a VOSHA fine for failure to provide hand washing apparatus. The fine had been levied and paid some 212 days preceding the last day that Reliable had worked on the job. The property owners sought a dismissal of the lien as being violative of Virginia Code Section 43-4. This code section provides that a mechanic's lien can only reach back 150 days from the last day work or materials were provided preceding the filing of the lien. The Circuit Court judge concurred and dismissed the lien with prejudice.
On appeal, Reliable argued that the lien was saved by Virginia Code Section 43-15 which saves liens that contain errors so long as the memorandum substantially conforms to the statute and where the errors do not constitute willful falsehoods. The Virginia Supreme Court agreed with Reliable, in part, and held that Reliable ought to be allowed to present evidence as to how the inaccuracy occurred and that the inaccuracy was not willfully false. The case was then sent back to the Circuit Court for such a hearing to take place.
Effectively, the Virginia Supreme Court avoided the central issue. The Court could have held definitively that inclusion of the 212 day old hand washing fine was an error that rendered the lien unenforceable or that given the nature and magnitude of the error, the lien was saved by 43-15. The case certainly creates good arguments on both sides. In practice, we think that the decision places more of a burden on potential lien claimants to check and double check their numbers. The case certainly raises the specter that something as small as a $250 fine which constituted less than .01% of the overall claim might get your lien bounced.
We would certainly advise all lien claimants to scrutinize and scrub the numbers and make sure that the claim only includes amounts within the allowable time frame. The analysis and the fact that such an analysis took place should be carefully documented in case there is some need to show a judge that no 'willful falsehoods' occurred. Equally, we would advise entities seeking to remove liens, that the bigger and more obvious the error, both in terms of time and dollars, the more likely a court will be to strike the lien.
Questions?
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This article is meant to bring awareness to this topic and is not intended to be used as legal advice.