As regular readers of Construction Law Musings are well aware, I like to discuss mechanic’s liens. Whether it is their picky nature, the way court’s treat them or the soon to take effect changes in the form, mechanic’s liens are a topic near and dear to my heart as a construction attorney.
This past month the Fairfax Circuit Court took on the intersection of mechanic’s lien priority under Virginia Code section 43-21 (the lien priority statute) and what constitute necessary parties that must be named in any enforcement suit. In Marines Plumbing, LLC v. Durbin, et al., the Court discussed an all too typical scenario. Marines Plumbing performed repair work on the defendants’ property and the defendants did not pay for the work. Marines Plumbing recorded a memorandum of lien and subsequently sued to enforce that lien. In filing its suit, Marines Plumbing failed to name the trustees and lender on a deed of trust securing the loan on the property. Needless to say, the Defendants moved to dismiss the action for failure to name necessary parties (lender and trustees).
Marines Plumbing argued against the motion to dismiss on two grounds, the first (and unsuccessful) ground was that Marines Plumbing was not seeking sale of the land and therefore the trustees and lender were not necessary parties. The second and more interesting ground was that because the mechanic’s lien is inferior to that of the trustees and lender it therefore does not threaten these parties’ property interest rendering these parties unnecessary.
The Court initially denied the motion to dismiss and then a subsequent motion to reconsider. The Court agreed with Marine Plumbing that its lien, one for repairs, was not a superior lien on the improvements and therefore the trustees and lender on the antecedent deed of trust were not necessary. The Court first held that under the priority statute (43-21):
As a matter of law, therefore, [Marines Plumbing’s] lien is ‘subject to’ the lien of the two trustees and the lender. The result is that, as a matter of law, the interest of the two trustees and the lender is not ‘likely either to be defeated or diminished’ [Marines Plumbing’s] lien. Thus, the two trustees and the lender are not necessary parties.
The Court further discussed the statute set out and linked above along with several cases cited by the defendants that discussed priorty and necessary parties and distinguished them from the case before it. I recommend this discussion for your reading as I won’t lay it out here. After distinguishing the cases cited by the defendants, the Court determined that based upon the “nature of the particular interest involved” and the statutory authority found in Va. Code 43-21 making Marine Plumbing’s lien “subject to” the lien of the deed of trust, the defendants motions to dismiss and to reconsider must be denied. In short, the Court did not simply rest on the timing of the various liens, but upon statutory authority to make its holding.
My takeaway? The facts are key when discussing a mechanic’s lien and its enforcement. Further, Courts will be willing to dive into the weeds to make fine tuned determinations on priorty for the particular construction involved. As always, I recommend that you read the opinion yourself and that you let me know your thoughts.
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