Rhode Island: Rhode Island Mechanics’ Liens Statute Under Constitutional Attack
 
June 2, 2003
 

The April 23, 2003, decision by Justice Silverstein of the Superior Court of Rhode Island may have a ripple effect beyond the Ocean State if it is upheld on the expected appeal to the Supreme Court of Rhode Island.  In Sells/Greene Building Company, LLC v. Robert V. Rossi and Linda A. Rossi, CA No-PB 02-1019 and Gem Plumbing & Heating Co., Inc. v. Robert V. Rossi and Linda A. Rossi, C.A. No. PB 02-2778¹, Justice Silverstein dismissed the mechanics’ lien claims of two contractors and held the Rhode Island Mechanics’ Liens statute, G.L. 1956 §§ 34-28-1 to -37, to be unconstitutional for its failure to provide due process rights prior to the taking of a property interest, as required by the Fourteenth Amendment of the United States Constitution and Article 1, Section 2 of the Rhode Island Constitution.

In reaching his conclusion, Judge Silverstein reviewed the legacy of cases from the United States Supreme Court, the U.S. Court of Appeals for the First Circuit, the United States District Court for the District of Rhode Island and the Supreme Court of Rhode Island that invalidated various prejudgment garnishment, attachment and lien statutes on the basis that they resulted in the unlawful taking of property rights from individuals without the procedural protections of a hearing.  Judge Silverstein was not persuaded by the distinctions raised by Sells-Greene and Gem, the Rhode Island Attorney General and various construction industry trade associations²  and found that the effect of the statute was to compromise and interfere with property interests without adequate procedural safeguards. 

The case arises from a “vanilla” dispute about the construction of a commercial office building in Smithfield, Rhode Island.  Sells/Greene was the general contractor for the project and Gem was a plumber that had contracted directly with the property owners, Robert and Linda Rossi, to install water and sewer lines to the project.  In accordance with G.L. 1956 §§34-28-4 and -5, Sells/Greene and Gem both filed the required notice of intention to do work or furnish materials or both in the land records for the Town of Smithfield.  Asserting that they had not been paid for work performed, Sells/Greene and Gem then both filed timely petitions to enforce their mechanics’ liens and notices of lis pendens pursuant to G.L. §§34-28-10 to -13.  In their respective petitions, Sells/Greene sought $129,808 and Gem sought $35,500 for unpaid labor and materials.  There were no procedural defects in the lien filings of either Sells/Greene or Gem noted by the Court.

Pursuant to G.L. 1956 §34-28-17, the Rossi’s paid the lien amounts plus costs into the registry of the Court and then filed motions to dissolve and discharge the mechanics’ liens and notices of lis pendens in each matter.  The motions were granted by the Court, “stating that the amounts being held on deposit by the registry of the Court are substituted to secure any valid mechanics’ lien claim of the Petitioners.”  The Rossi’s then challenged the constitutionality of the liens, arguing that G.L. 1956 §§34-28-1 to -37 provides for a taking of property without due process, in violation of both the United States Constitution and the Rhode Island Constitution, and the Court agreed.

In reaching its decision, the Court appears to have been troubled that the only remedy for a property owner to remove a lien, short of the full hearing and ultimate determination on the merits long after the initial lien filing, was posting a bond or depositing cash into the court registry as security for the amounts claimed by lien petitioners.  The Court reasoned that either option could have a negative impact on the financial interests of the owner that was incurable until a hearing on the merits was concluded.  The impairment of the owners’ interest was substantial enough, the Court found, to constitute a taking of a property interest that required due process protections. 

Although a decision from the Rhode Island Superior Court does not have precedential value, it suggests a path for challenging mechanics’ liens statutes in other states that do not currently provide a hearing scheme early on in the lien filing process.³  Thus, an appeal to the Supreme Court of Rhode Island (and perhaps even beyond) may trigger other states to examine their procedural requirements for obtaining a mechanics’ lien.  Even if the Sells/Greene decision is ultimately upheld on appeal, however, it is unlikely that the Rhode Island lien law will be abolished all together.  The Rhode Island Legislature will likely move quickly to amend G.L. §§28-34 to include a statutory scheme for an early hearing, either before or immediately after the filing of the lien, to meet the constitutional requirements.⁴  Other states facing similar constitutional lien challenges may follow the same course of action.   

For more information, call Mary Kaitlin McSally, toll free, at 1-888-688-8500.

[1] As noted by the Court, the Sells/Greene petition and the Gem petition were consolidated by agreement of the parties for consideration of the constitutional challenge to the Mechanics’ Liens statute.

[2}The Attorney General, major construction and industry trade associations were invited by the Court to file amicus curiae briefs on the constitutional challenge to the Mechanics’ Liens statute.

[3]If tested, the expedited hearing procedures of the Massachusetts Mechanics’ Liens statute set forth in M.G.L. c. 254 §15A might provide sufficient constitutional safeguard because it affords the owner a mechanism for an expedited review of the validity of the lien long before a full determination on the merits.  However, this process only applies to claims that the lien filings are facially deficient.  Absent a procedural defect, a Massachusetts lien can only be resolved by a trial on the merits.

[4]One such corrective option may be to follow the lead of the Maryland Mechanics Liens statute in which, prior to any lien encumbering the property, the Court issues a show cause order allowing the owner to dispute the validity of a lien petition, and provides for an expeditious show cause hearing within 45 days thereafter.  Md. Code Ann., Real Prop. §9-106.