A Texas Court
of Appeals reversed a trial court’s statutory interpretation of Texas’s
Mechanic’s Lien foreclosure statute, holding that a trial court must foreclose
on a mechanic’s lien if the lienholder is entitled to recover damages for
unpaid labor and materials and has properly perfected the lien. Crawford Services, Inc. v. Skillman Intl.
Firm, L.L.C., 444 S.W. 3d 265 (Tex. App.—Dallas 2014, pet. filed).
The dispute arose
out of a breach of contract claim by a subcontractor, Crawford (the “Subcontractor”), against a general
contractor, Skillman (the “General
Contractor”). The Subcontractor contracted with the Subcontractor to
replace and repair the air-conditioning system in the General Contractor’s
building. After the General Contractor breached by failing to pay the
Subcontractor approximately $140,000, the Subcontractor sued the General
Contractor for breach of contract and sought to foreclose on their mechanic’s
lien.
After a bench
trial, the trial court found that the Subcontractor was entitled to damages for
unpaid work and materials, and that it had followed all of the proper
procedures to perfect the lien. Having properly perfected, the Subcontractor
sought a judgment foreclosing on its lien. However, the trial court refused,
interpreting the lien statute to grant it discretion to deny the request. Texas Prop. Code § 53.154.
On appeal, the
Subcontractor argued that the lien statute did not grant any discretion to deny
foreclosure of a properly perfected mechanic’s lien. Specifically, the
Subcontractor asserted that the language “may be foreclosed” should be
understood as part of the phrase “may only.” When read in context of the lien
statute, “may” means that the only way to foreclose a mechanic’s lien is
through a court order. Further, Texas courts have liberally construed the lien
statutes to protect laborers and materialmen. See Strang v. Pray, 35
S.W. 1054, 1055 (Tex. 1896) (reaffirmed by the Dallas Court of Appeals).
The Dallas
Court of Appeals agreed, reasoning that “may” in the mechanic’s lien statute
was purposefully constructed in the passive voice to show that the legislature
did not intend for the trial court to be the implied actor. Simply, the only
way a lienholder may foreclose a mechanic’s lien is through a judgment of a
court of competent jurisdiction foreclosing the lien and ordering a sale of the
party subject to the lien. See Lippencott
v. York, 24 S.W. 2d 275, 280-81 (Tex. 1983). Thus, once the subcontractor
had proven that it was entitled to a judgment for damages and that its lien was
perfected, the trial court had to issue a judgment awarding the damages and
foreclosing on the lien.
The general
contractor filed a petition for review with the Texas Supreme Court, which is
pending as of the date of this post.
No comments:
Post a Comment