Massachusetts: Containing the Massachusetts Mechanics' Lien Statute: Subcontractors and Their Counsel Can't Recover for Contractual Interest or Attorneys' Fees
 
December 16, 2004
 
Jeff D. Bernarducci- Boston

In National Lumber Co. v. United Casualty & Surety Ins. Co., Inc.¹ the Supreme Judicial Court of Massachusetts (SJC) held that contractual interest on unpaid balances and contractual legal fees were not within the ambit of the mechanics’ lien statute, G.L. c. 254 § 4, and could not be recovered in addition to “labor and materials.” The SJC employed a plain reading of the statute, legislative intent and traditional canons of statutory construction in its decision.

Specifically, a construction company owned property upon which it was acting as its own general contractor in order to construct a house. The owner/general contractor (prime contractor) subcontracted with the National Lumber Company (National) for the purpose of procuring lumber and other construction materials. The subcontract included terms by which the prime contractor would pay National 18 percent annually on any delinquent contract balance as well as any reasonable attorneys’ fees.

Following the prime contractor’s failure to pay, National sought to file and perfect a mechanics’ lien on the property. Accordingly, National duly filed its Notice of Contract² and Statement of Account.³ National’s Statement of Account only included amounts due for labor and materials and not any bargained-for interest or attorneys’ fees.

Before the lien was perfected, however, the prime contractor sold the house. The subsequent owner, in order to dissolve National’s lien and clear the title, procured a lien bond⁴ from United Casual and Surety Insurance Company, Inc. (United). The lien bond’s penal sum matched National’s claim for labor and materials in its Statement of Account.

National sought to enforce United’s lien bond to satisfy its mechanics’ lien for labor, materials and the interest and attorneys’ fees described in the subcontract. As such, National moved to either strike the lien bond as insufficient or, alternatively, to increase its penal sum to include the 18 percent interest and attorneys’ fees it bargained for under the subcontract. The trial court held that G.L. c. 254 limits a mechanics’ lien to the Statement of Account and thereby only enforced the lien bond to satisfy National’s claims for labor and materials as outlined in its Statement of Account.

In affirming the trial court’s decision, the SJC in National Lumber relied on a plain reading of the statute and traditional canons of statutory construction. The SJC reasoned that a plain reading of G.L. c. 254, § 4 limits a mechanics’ lien to amounts due for labor and materials only. The Court noted that, “nowhere in this detailed statutory framework is there a reference to interest or attorneys’ fees.” The Court rejected National’s argument that the legislature’s use of the terms “interest,” “cost,” and “discretion” in other provisions of c. 254 reveal an intent to construe the statute broadly. To the contrary, the Court applied an age-old canon of statutory construction: where a specific term in one statutory provision is noticeably absent from another, such absence is deemed an affirmative omission by the legislature. Therefore, because § 4 – unlike other sections of c. 254 – makes no mention of “interest” or “attorney fees,” the SJC refused to read these terms into this provision of the statute.

Although the trial court ruled that the contractual interest and attorneys’ fees at bar were not included in the mechanics’ lien because they were not listed in the Statement of Account, the SJC framed the issue more broadly and considered whether any amount other than that derived from labor and materials was within the ambit of c. 254. The SJC seemed to close any future attempt to distinguish National Lumber on its facts when it reasoned that “[c]ontractual interest and attorneys’ fees are not ‘labor and material,’ nor can they be part of the ‘amount due’ at the time the statement of claim is filed because they have not yet been determined.” The Court noted that the design of c. 254 “ensures that a person searching the records of the registry of deeds can determine with certainty the amount due.” Finally, the Court reasoned that interpreting the statute to include amounts other than those from labor and materials would contradict the legislature’s unambiguous intent that an interested person may dissolve a mechanics’ lien by supplanting the property with a surety bond whose penal sum equals the amount claimed for labor and materials.

In sum, the SJC ruled that the amount of the mechanics’ lien is limited to labor and materials, despite contractual rights to interest and attorneys’ fees.

For more information, e-mail John W. DiNicola II or Jeff D. Bernarducci at john.dinicola@hklaw.com or jeff.bernarducci@hklaw.com, respectively, or call toll free, 1-888-688-8500.

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1.  2004 LEXIS 27 (Mass. 2004).

2.  A subcontractor’s mechanics’ lien is created by filing a Notice of Contract within the earlier of: 60 days from the filing of a Notice of Substantial Completion, 90 days after the recording of a Notice of Termination, or 90 days after the last day in which the general contractor furnished labor or materials on the project. G.L. c. 254, § 4. The Notice of Contract must also be served upon the owner by certified mail, return receipt requested. Id.

3.  A subcontractor’s mechanics’ lien is perfected in the following manner. First, the subcontractor must file a Statement of Account. G.L. c. 254, § 8. The Statement of Account must include an amount due or become due for labor and materials furnished. Id. Next, the subcontractor must bring a civil action to enforce the claim within 90 days of filing the Statement of Account. G.L. c. 254, § 11. Finally, the subcontractor must record an attested copy of the civil complaint at the registry of deeds within 30 days of commencement. G.L. c. 254, § 5.

4. G.L. c. 254, § 14. The lien bond, a.k.a. “target bond,” enables an owner, whose property is subject to a mechanics’ lien, to supplant the property with the bond. This “bonds off” the lien and dissolves it as to the property, thereby clearing the title. The owner must then serve notice upon the lien claimant via service of process. Id.