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Arizona Court Weighs in on Equitable Subrogation in Lien Case
September 5, 2014
The Arizona Supreme Court has weighed in on the use of equitable subrogation in a mechanic’s lien case. In The Weitz Company, LCC v. Nicholas Heth, et al, the state's high court ruled that a lien filed by a contractor does not automatically take priority over other liens recorded after work has already begun.
The court held that state statute does not preclude assignment by equitable subrogation of a lien that attached before construction began on the project at issue. It continued, “additionally, although a third party generally must discharge the entire lien obligation to qualify for equitable subrogation, when a single mortgage burdens multiple parcels, a third party may be entitled to equitable subrogation when that party has paid a pro rata amount of the obligation and obtained a full release of the parcel at issue from the mortgage.”
In the case, the general contractor in a mixed-use project in Phoenix stopped paying a general contractor after many of the condominium units within the structure had been sold to consumers. A trial court previously sided with the contractor’s argument that it had lien priority and the motion to seek foreclosure.Read more...
Nevada Rules on ‘Work of Improvement,’ Delivery Location in Pair of Cases
September 5, 2014
A pair of Nevada Supreme Court decisions that intend to clarify lien law could be of help to suppliers, subcontractors and materialmen. In Byrd Underground, LLC v. Angaur LLC, the Nevada Supreme Court clarified that some pre-construction work on a structure, such as clearing and grading, could be considered a "work of improvement" under existing state mechanic’s lien statutes. The court deemed it a fact question for another court, a bankruptcy court, to consider what constitutes “work of improvement” in this specific case. Much of that comes down to whether the work is visible, said Nathan Kanute, an associate at Snell & Wilmer LLP.
Some previous rulings on lien claims on work like erecting an architect’s sign took an opposing stance regarding clearing and grading. However, “nothing in these provisions excludes preconstruction activities from the definition of ‘work of improvement,’” the Byrd ruling read. The court also found that construction contract and permit issue dates “are irrelevant” when evaluating delivery of materials, performance of work and/or visible commencement of construction, though judges noted the dates may be helpful in assisting the determination of the scope of the work performed.Read more...
Texas Ruling Regarding Judgments on Mechanic’s Liens Reversed
September 3, 2014
The Court of Appeals for the Fifth District of Texas in Dallas recently ruled in Crawford Services, Inc. v. Skillman International Firm, LLC that a lower court erred when it denied a lienholder a judgment in a case involving a mechanic’s lien for 0,000 for work provided on an air conditioning system. The lower court came to the disputed conclusion even though it had ruled that Crawford Services was owed the money for the work. The Appeals court essentially slammed the door on allowing trial judges the discretion to deny a judgment of foreclosure and order of sale on a property subject to the perfected lien. The case was remanded on August 22 to the trial court “with instruction to render a judgment of foreclosure of Crawford’s mechanic’s lien and order of sale of the property.”Read more...