Clearail, Inc. v. Mardirossian Family Enterprises

BISHOP, Judge. Clearail, Inc. (“Clearail”) appeals the dismissal by the Circuit Court for Montgomery County of its petition to establish and enforce a mechanics’ lien on property of appellee, Mardirossian Family Enterprises (“MFE”), a general partnership. The court found that appellant had not complied with the notice requirements of Md.Real Property ⁴⁹⁹ Code Ann. § 9-104. Since this case is proceeding under the expedited appeal procedures of Maryland Rule 8-207, the parties have filed an agreed statement of the case and essential facts.

ISSUE The issue is whether appellant’s written notice of intention to claim a mechanics’ lien, sent within the statutory period by certified mail, return receipt requested, but not received by appellee until served by personal service after the statutory period, satisfies the requirements of Md.Real Property Code Ann. § 9-104. FACTS The following is the agreed statement: Pursuant to a subcontract with a general contractor, Clearail, Inc. (“Clearail”) supplied labor and materials for the installation of clear glass block railings during construction of an office building at 18757 North Frederick Road, Gaithersburg, Montgomery County, Maryland. The owner of the property was Mardirossian Family Enterprises (“MFE”), a general partnership. In a petition to establish and enforce a mechanics’ lien filed in the Circuit Court for Montgomery County, Clear-ail alleged that it supplied the labor and materials from April 20, 1989 through July 19, 1989.

MFE filed an answer to the petition denying, among other things, that Clearail gave timely notice of its intention to claim a lien under Md.Real Property Code Ann. § 9-104. A hearing was held on March 7, 1990. At the hearing, Clearail’s attorney proffered that within 90 days of July 19, 1989, he mailed two notices dated October 5, 1989 of Clearail’s intention to claim a mechanics’ lien by certified mail, return receipt requested, to MFE at the property address and to MFE’s previous office address. The certified mail receipts were postmarked October 12, 1989.

Both of the notices were returned with the envelopes ⁵⁰⁰ unopened to Clearail’s attorney, and were marked by the U.S. Postal Service as “unclaimed”. On the post office receipts attached to the envelopes were the following notations: Date 10/U 1st Notice 10/20 2nd Notice 10/S0 Return [1] After the unclaimed notices were returned to him, Clearail’s attorney engaged a private process server to serve the notice personally on a partner in MFE. On December 11, 1989, more than 140 days after Clearail stopped its work, the process server personally delivered the notice to Aris Mardirossian, a general partner in MFE. It was undisputed that Clearail did not post a notice of intent to claim a lien on the building.

It was also undisputed that MFE did not receive Clearail’s notice of intention to claim a lien until December 11, 1989, when a copy of the notice was personally served on Aris Mardirossian. Based upon the above facts, the Circuit Court for Montgomery County dismissed Clearail’s petition on the ground that Clearail had not complied with the notice requirements of § 9-104. Clearail appeals from the dismissal of its petition. DISCUSSION A. Mechanics’ Liens in Maryland In 1791 Maryland was the first state to enact a mechanics’ lien statute. 1791 Md.Laws, Ch. 45, § 10.

This statute ⁵⁰¹ was enacted to protect workers engaged in the construction of the nation’s capital. 2 In 1838 a mechanics’ lien statute was enacted for Baltimore City and gradually the remedy was extended to other jurisdictions within the State. 1838 Md.Laws, Ch. 205. See also, 36 Md.L.Rev. 733,736 (1977). Although mechanics’ liens were unknown at common law 3 , they exist “by virtue of a Damoclean statutory remedy within the precise ambit of which [a] claimant must place himself.” Frederick Contractors, Inc. v. Bel Pre Medical Center, Inc., 274 Md. 307, 313 , 334 A.2d 526 (1975) (citations omitted). This statutory remedy functioned in approximately the same fashion for nearly two hundred years, until the Maryland Court of Appeals decided Barry Properties, Inc. v. Fick Brothers Roofing Co., 277 Md. 15 , 353 A.2d 222 (1976).

The Barry case involved a mechanics’ lien obtained by Fick Brothers Roofing Co. (“Fick”), a subcontractor, on a building owned by Barry Properties, Inc. (“Barry”). Although Fick complied in all respects with the mechanics’ lien procedure then in force, Barry argued that the lien statute was incompatible with the due process clauses of Article 23 of the Maryland Declaration of Rights 4 and the ⁵⁰² Fourteenth Amendment of the United States Constitution 5 because it unconstitutionally deprived Barry of its property without procedural due process of law. The Court preliminarily determined that “mechanics’ liens involve state action since they are created, regulated and enforced by the State.” Barry, supra, at 22 , 353 A.2d 222 (citations omitted). After examining four analogous Supreme Court decisions involving prejudgment creditor remedies 6 , the Court concluded that the imposition of a mechanics’ lien deprived an owner of a significant property interest without due process of law and, therefore, the Maryland statute was unconstitutional.

The Court refrained from striking down the entire act, however, finding that the act’s provisions were severable. Instead, the Court resolved the constitutional problems by excising certain portions of the statute. As a result of the Barry case the General Assembly passed emergency legislation to correct the constitutional defects found by the Court. Senate Bill 998 7 repealed and reenacted with amendments sections 9-101 through 9-113 of the Real Property Article of the Annotated Code and provided owners of real property with notice and an opportunity for a hearing prior to subjecting their property to a mechanics’ lien.

Section 9-104 currently provides in part: § 9-104. Notice to owner by subcontractor. (a) Notice required to entitle subcontractor to lien.— (1) A subcontractor doing work or furnishing materials or ⁵⁰³ both for or about a building other than a single family dwelling being erected on the owner’s land for his own residence is not entitled to a lien under this subtitle unless, within 90 days after doing the work or furnishing the materials, the subcontractor gives written notice of an intention to claim a lien substantially in the form specified in subsection (b) of this section. * * * * * * (c) Notice by mail or personal delivery. — The notice is effective if given by registered or certified mail, return receipt requested, or personally delivered to the owner by the claimant or his agent. * * * * sic * (e) Notice by posting. — If notice cannot be given on account of absence or other causes, the subcontractor, or his agent, in the presence of a competent witness and within 90 days, may place the notice on the door or other front part of the building. Notice by posting according to this subsection is sufficient in all cases where the owner of the property has died and his successors in title do not appear on the public records of the county.

(f) Payments by owner to contractor after notice; limitation on lien against certain single family dwellings. — (1) On receipt of notice given under this section, the owner may withhold, from sums due the contractor, the amount the owner ascertains to be due the subcontractor giving the notice. (2) If the subcontractor giving notice establishes a lien in accordance with this subtitle, the contractor shall receive only the difference between the amount due him and that due the subcontractor giving the notice. B. Notice The general purpose of the mechanics’ lien statute is to protect labor and material suppliers in the construction industry. Riley v. Abrams, 287 Md. 348, 357 , 412 A.2d 996 ⁵⁰⁴ (1980).

The notice provided by § 9-104, however, is required for the protection of the property owner because of the significant property interest that is at stake. Barry, supra, 277 Md. at 36-37 , 353 A.2d 222 . The notice required by § 9-104 informs the property owner of the nature and amount of the claim intended to be fixed as a lien upon his property aiid allows him an opportunity to retain in his hands, out of the money payable to the general contractor, the amount claimed by the subcontractor. District Heights Apts. v. Noland Co., 202 Md. 43, 51 , 95 A.2d 90 (1952).

This sum of money may then be applied by the owner to the payment of the lien which may be filed against his property. 8 Section 9-104 clearly indicates several methods by which subcontractors may effectively give notice of intention to claim a lien. Pursuant to § 9-104(c), subcontractors have the option of using certified mail. During passage, Amendment 19 to Senate Bill 998 gave subcontractors the option of using registered mail as well. According to a note accompanying Senate Amendment 19, the purpose of the amendment was to allow subcontractors “to use registered mail instead of certified mail to obtain better evidence of compliance with the notice requirements.” It should be noted that § 9-104(c) does not specify that notice must be given only by registered or certified mail, or whether notice would be effective if actually received albeit by regular mail.

It is possible that there would be compliance if the notice were sent by regular mail. “In such a case, the notice, to be sufficient, must be reasonably certain to apprise those affected.” 58 Am.Jur.2d Notice § 28 (1989). The burden of proving actual receipt, therefore, rests squarely on the sender. Compare, Border v. Grooms, 267 Md. 100 , 297 A.2d 81 (1972); Compania de Astral, S.A. v. ⁵⁰⁵ Boston Metals Company, 205 Md. 237 , 107 A.2d 357 (1953). Subcontractors also have the option of personally delivering notice to an owner or his agent pursuant to § 9-104(c).

If notice cannot be given on account of absence or other causes, subcontractors may give notice by posting pursuant to § 9-104(e). Although the lien statute clearly permits a variety of methods for delivery of notice, the issue of timeliness is less clear. The statute provides that subcontractors must give notice of intention to claim a lien within 90 days after doing the work or furnishing the materials. In Riley, supra, the Court of Appeals addressed the issue of whether notice of intention to claim a mechanics’ lien mailed within the 90 day statutory period, but received beyond the 90 day period, was effective.

The Riley case involved a subcontractor who, on the 85th day after doing work or furnishing materials, mailed notice to an owner by certified mail, return receipt requested. The notice was in fact received on the 92nd day. The Court held that because the object of the mechanics’ lien law is to protect those who furnish labor and materials in construction, “registered mail notice under § 9-104, sent within 90 days and received thereafter, is effective.” Id. 287 Md. at 357 , 412 A.2d 996 (Emphasis added). As a result of this holding, an owner who does not receive notice within the statutory period will be placed in a position, for some period of time, of not knowing whether he may pay a contractor without fear of being bound by demands of subcontractors, mailed earlier but received after the statutory period. 9 Presumably, this period of uncertainty will be brief since the notice must be mailed, at the latest, on the last day of the statutory period.

It is important to note, however, that the Court in Riley expressly ⁵⁰⁶ declined to rule on the effectiveness of a subcontractor’s notice, mailed within the statutory period but not received. In Riley the Court concluded: “Since the notice from the Subcontractor in this case was received by Owner, we do not reach the interpretation of Real Property Article, § 9-104 if it were found as a fact that the Subcontractor’s notice was mailed within the statutory period but was not received.” Id. at 357, 412 A.2d 996 (emphasis in original). It should also be noted that in Riley the registered mail notice was sent within the 90 day period and it was the specific document that had been mailed which was received shortly thereafter. In the case sub judice, the specific document that was mailed by the subcontractor was not received by the owner as a result of that mailing but rather the document, presumably the same one that was mailed, was later personally served on the owner.

There was a break in the continuity between the mailing and the actual delivery of the document. The distinctions between Riley and the case sub judice are that the actual delivery in Riley occurred within two days of the end of the ninety day period and the delivery resulted from the original mailing and in the case now before us, the actual service arrived fifty days after the statutory period or 140 days after completion of the work. We presume from what followed that, on or about October 30th, the sub-contractor was notified of the “unclaimed” status. He did not, however, effect actual service until December 11th, 44 days later.

In deciding Riley the Court examined Montgomery County v. Glassman, 245 Md. 192 , 225 A.2d 448 (1967), which involved a payment bond statute. Although Glass-man was decided in 1967, prior to the Barry case, the bond statute involved was similar to Maryland’s current mechanics’ lien statute. Its purpose was to protect subcontractors and materialmen on State or other public projects where they have no lien on the work done or material provided. Id. at 201, 225 A.2d 448 .

Comparable to the mechanics’ lien statute, the claimant was required to come within the plain ⁵⁰⁷ meaning and obvious purpose of the statute. Id. (citations omitted). The Glassman case involved a subcontractor on a school construction project who sent notice to the contractor by certified mail, return receipt requested, on either Friday or Saturday, the 89th or 90th day.

The notice was received on the following Monday, the 91st day. The bond statute provided that a claimant must give “ ‘written notice to the contractor within 90 days from the date’ the last of the labor was performed or the last of the material furnished or supplied.” 10 Id. The statute did not specifically provide that the contractor must receive the notice within the 90 day period, but it did require that notice be served by either registered or certified mail, postage prepaid. Id.

Not only was ordinary mail insufficient under this statute, but the Court in Glassman found that “[t]he Legislature ha[d] eliminated claims of alleged oral notice as fulfilling the 90 day requirement and ha[d] provided, in effect, that receipt of the written notice