The Virginia Circuit Courts made a couple of interesting rulings published this month that I thought you should know about. They both emphasize the need to carefully read and analyze statutes and contracts.
The first, Meeks Disposal Corp. v. Circle South, LLC, comes from the Norfolk Virginia Circuit Court and discusses one of Construction Law Musings’ favorite topics, mechanic’s liens. In Circle South, Meeks Disposal filed a mechanic’s lien memorandum and sent proper notice to Circle South. This one seems easy, right? Wrong.
The twist here is that the Norfolk clerk’s office did not record the lien at the time it was filed. Because the Virginia mechanic’s lien statute requires such recordation, Circle South moved for summary judgment arguing that the lien was invalid. The Norfolk court disagreed in part and denied the motion for summary judgment. The Court stated that the lien was perfected as to the defendant, Circle South, though not to the “whole world” because Circle South had notice. However, the lien was not perfected as to the entire world because without recording no other party aside from Circle South could be deemed to have notice.
In short, the court refused to punish Meeks Disposal (a party that had properly performed its statutory duty) for the failure of the clerk in performing his or her duties under the mechanic’s lien statute. For once the Courts used some reason in determining a mechanic’s lien case and did not merely read the plain language of the statute and apply it by wrote.
The second case emphasizes the power of contractual language and the weight that Virginia courts will give to the language used in written construction contracts.
In L. White and Company, Inc. v. Culpeper Memorial Hospital, Inc., the Culpeper, Virginia Circuit Court dismissed a claim by the contractor because the contractor did not follow the notice provisions of the AIA General Conditions for the project. These conditions required that, prior to litigation, any claim relating to the contract had to be submitted to the architect for review. Because the contractor did not take this simple step, its case was dismissed.
n.b. The case was dismissed with leave to re-file so where this case will end up is still up in the air.
The takeaway from both of these cases is that courts will look at statutes and contracts, and enforce them. Be sure to get the advice of and experienced construction attorney before entering into contracts with which you are unfamiliar or taking legal action relative to a mechanic’s lien or construction contract.
As always, I welcome your comments below. Also, I encourage you to subscribe to keep up with the latest Construction Law Musings.
Would not be surprised to see that Meeks case get reversed …
.-= Timothy R. Hughes´s last blog post ..Virginia’s Economic Loss Rule: Products Liability, Part 1 =-.
I’m not sure that it will (though nothing with liens surprises me any longer) because this was not a mistake by the filer, but the fact that the Clerk didn’t perform a ministerial duty. I would think that at the very lease, Meeks will just fade away.
Always scares me doing those filings remotely – I always try to get someone to hand off in person and get a file stamped copy back. Unusual that there is no other party there, generally there are other lien claimants and potentially a lender, and if there is anyone else at the dance, it seems like the lien might get tossed. Isn’t there a code section dealing with the clerk failing to do a ministerial act? Maybe clerk has liability?
I had a chance to read the other case too, interesting – surprised to not see that argument used more, especially if the suit is filed close to limitations period as that might jam the claim permanently on a limitations argument.
.-= Timothy R. Hughes´s last blog post ..Virginia’s Economic Loss Rule: Products Liability, Part 1 =-.
I don’t know about clerk liability, but I agree with the remote filing paranoia.
The Meeks decision is interesting. Do you know whether it is being taken up on appeal? I would like to see the Va. S. Ct. address it.
The decision appears results based. The Court ruled using the notice on Circle South to circumvent strict construction of the statutory language. It is a departure from the idea that mechanic’s liens are disfavored and strictly construed. The only entity that you are usually interested in will be served a copy of the lien – so the carve out made by the Court here as to the rest of the “world” sounds more impressive than it is. I am surprised that the Court did not rule in favor of Circle South.
Either way – the lesson here is pick up the phone and call the clerk’s office to make sure they record the lien.
Good post – thanks.
Thanks for the comment Josh! I appreciate your interest. As to your question, I don’t know if this case was taken up on appeal. However, I actually like this decision because the Clerk’s Office did not perform it’s duty to record despite what looks like proof that Meeks did everything right. Most of the other strict construction cases punish errors by the lienor and not by the Court itself. While it may be result driven, it certainly came to a (surprisingly) reasonable result.
PS- Your twitter link does not work! (just thought you’d like to know)
.-= Christopher G. Hill´s last blog post ..Rejection’s a Bear- Particularly in Construction =-.
Wow this makes sense. I appreciate the court requiring accountability of its clerks.
Its obviously results driven, but its a good place for an exception to strict construction.
Thanks for the article Chris.
Best,
Doug
Yep. The clerk should be accountable, but at the same time, lien filers need to be careful that they can show that they did everything right. Also, since it was never recorded, had the property changed hands, who knows what would have happened.
.-= Christopher G. Hill´s last blog post ..Quick Primer on Virginia Mechanic’s Lien Law =-.
Yes – I do not disagree with you guys. It is a reasonable result, but a little surprising because the Courts have been so strict in the past.
Although – Meeks Disposal’s lawyers still should have called the clerk’s office to confirm that the lien had been recorded.
You’ll get no argument here, that’s for sure
The power of contractual language plays an important role and critical success factor for contract management include starting from a set of well-defined contract terms and conditions, understood by the parties negotiating the transaction that clearly articulates respective roles and responsibilities and proper administrative controls.