Tyson v. Masten Lumber & Supply, Inc.

Gilbert, C. J., delivered the opinion of the Court. INTRODUCTION. It is written that: “Nothing in the world lasts Save eternal change.” ( 1 ) This appeal, arising under the Mechanic’s Lien Law is illustrative of the wisdom of those words. The settled law of Maryland was jolted when the Supreme Court, in a series of cases, Sniadach, 2 Fuentes, 3 Mitchell, 4 and North Georgia Finishing, 5 tolled the death knell for this State’s former Mechanic’s Lien Law.

Md. Real Prop. Code Ann. §§ 9-101 to 9-111 (1974). It was not until seven years after Sniadach, and one year after North Georgia Finishing, however, that the Court of Appeals, in Barry Properties v. Fick Bros., 277 Md. 15 , 353 A.2d 222 (1976), presided over the interment on procedural due process grounds of the then Mechanic’s Lien Law. In laying to rest a statute that traced its roots to 1838, 6 Judge Digges, writing for the majority 7 in Barry, said: “We ... hold that under the current statute [then Md. Real Property Code Ann. §§ 9-101 to 9-111( 8 )] ²⁹⁵ there can be no existing lien on property until and unless the claimant prevails either in a suit to enforce the claimed lien or in some other appropriate proceeding providing notice and a hearing (i.e., a declaratory judgment action).” 277 Md. at 37 , 353 A.2d at 235 .

THE LAW. The legislative reaction to Barry was to enact an emergency law, effective May 4,1976, eighty-three days after the Barry decision. 9 The new law was designed to avoid the procedural due process denial found in the former statute. Prior to Barry, the statute permitted a lien to attach to a building and the land covered by it for material furnished or work done for or in or about the building. Mervin L. Blades and Son, Inc. v. Lighthouse, 37 Md. App. 265, 267 , 377 A.2d 523, 525 (1977).

The lien, which attached as soon as the work was done or the materials were furnished, took priority over other liens which attached subsequent to the start of the building, except other mechanics’ liens, provided an action was filed to enforce it within 180 days. The mechanics’ liens shared equality. Id. In order to preserve the lien past the 180 day period, it had to be filed in the appropriate circuit court within 180 days next following the performance of the work or the furnishing of the materials.

Former section 9-105(e). If the laborer or material supplier was a subcontractor, that is, one who did not contract directly with the owner of the building, he was required to give notice to the owner within 90 days next following the performance of the work or delivery of the material of an intention to claim a lien. Former section 9-103(a); Barry v. Fick, 277 Md. at 19-20 , 353 A.2d at 226 ; Recent Legislation, 6 U. of Balt. L. Rev. 181, 184 (1976).

The girth of the lien, as soon as the work was performed or the material supplied, immediately created a cloud on the ²⁹⁶ title of the property concerned for the owner. Id. 277 Md. at 23 , 353 A.2d at 228 . That cloud, the Court of Appeals decided, deprived the owner of a “ ‘significant property interest’ ... and thus, the limitations of due process” were held applicable. 277 Md. at 24 , 353 A.2d at 228 . The former Maryland law allowed “an owner to be deprived of a significant property interest without notice or a prior hearing.” 277 Md. at 31 , 353 A.2d at 232 .

The denial of notice or the prior hearing conflicted with the rationale of Sniadach, Fuentes, Mitchell, and North Georgia Finishing, supra. The present law, as we have previously stated was enacted to cure the ills of the former statute. Under the current act a lien does not automatically attach to the owner’s building upon the performance of work or the supplying of materials. It is only when a building is “erected ... repaired, rebuilt or improved to the extent of 25 per cent of its value” 10 that a mechanic’s lien may be established.

A person claiming a lien must file a proceeding in the circuit court for the county where the land or any part of it lies, within 180 days after the completion of the work or the furnishing of the materials. * 11 When, however, the petitioner is a subcontractor, he is not entitled to a lien, unless “within 90 days after doing the work 0* furnishing the materials, he gives written notice of his intention to claim a lien____” Md. Real Prop. Code Ann. § 9-104(a) (1979). The new law requires that the notice be given in substantially the following form: “Notice to Owner or Owner’s Agent of Intention to Claim a Lien Subcontractor did work or furnished material for or about the building generally designated or briefly described as The total amount earned under the subcontractor’s undertaking to the date hereof is $............ ²⁹⁷ of which .......is due and unpaid as of the date hereof. The work done or materials provided under the subcontract were as follows: (insert brief description of the work done and materials furnished, the time when the work was done or the materials furnished, and the name of the person for whom the work was done or to whom the materials were furnished).

I do solemnly declare and affirm under the penalties of perjury that the contents of the foregoing notice are true to the best of the affiant’s knowledge, information, and belief. (Individual) on behalf of ............... (Subcontractor) (insert if subcontractor is not an individual)” “The notice,” the statute provides, “is effective if given by registered or certified mail, return receipt requested, or [is] personally delivered to the owner by the claimant or his agent.” § 9-104(c). Notice to one of several owners is notice to all. § 9404(d).

After the petition to establish the lien has been filed, the court is charged with the duty of reviewing the “pleadings and documents on file and may require the petitioner to supplement or explain any of the matters” set out in the petition. § 9406(a)(1). If the court, following the required review, believes that a lien should attach, “it shall pass an order that directs the owner to show cause within 15 days from the date of service on the owner ... why a lien upon the land or building” ought not attach. Id. In addition, the order must inform the owner that he may (1) appear at the designated time stated in the order and present evidence in his own behalf as to why the lien should not attach; or (2) file a counter-affidavit on or before the time he is to appear. § 9406(a)(l)(i).

If the owner fails to appear or to file a counter-affidavit, the statute mandates that “the petitioner’s ²⁹⁸ claim shall be deemed admitted and a lien may attach to the land or buildings described in the petition.” §§ 9-106(a)(l)(ii). The owner is at liberty to controvert statements of fact in the petitioner’s claim, but to do so, he must support his answer to the show cause order issued pursuant to section 9-106(a)(l) by an affidavit. § 9406(a)(2). The failure to file such an affidavit constitutes an admission of the truth of facts contained in the affidavit supporting petitioner’s claim. Id Whenever an answer is filed to a show cause order, the court is directed to set the matter “for hearing at the earliest possible time.” 12 § 9406(a)(3).

If the pleadings and allied papers, together with the evidence, if any, demonstrate “that there is no genuine dispute as to any material fact and that the lien should attach as a matter of law,” the court shall enter a final order establishing the lien. § 9406(b). Even when the pleadings, affidavits, admissions, and evidence, if any, show no genuine dispute as to a material fact, the court is not justified in permitting the lien if the petitioner fails to establish his lien as a matter of law. § 9406(b)(2). 6 U. of Balt. L. Rev., supra at 188. The court is empowered by section 9406(b)(3) when it finds “probable cause” to believe the petitioner is entitled to a lien ²⁹⁹ to pass an interlocutory order that establishes the lien, describes the boundaries of the land or building to which the lien attaches, states the amount of the claim, the amount of bond necessary to release the property from the lien, and assigns a date for trial, actionable up to six months from the date of the order.

Additionally, the court may require the claimant to file a bond in a sum sufficient to satisfy damages, including reasonable counsel fees. § 9-106(b)(3)(i)-(vi). Any interested person may at any time move the court to dissolve or modify the interlocutory order, 6 U. of Balt. L. Rev. supra at 189; § 9-106(b)(3)(vi), or ask for additional bond. § 9-106(c). Money, of course, in equal amount may be used instead of a bond. § 9-106(c).

No final order establishing the lien should be entered until and unless the petitioner prevails in an appropriate proceeding. Residential Industrial Loan Co. v. Weinberg, 279 Md. 483, 487-88 , 369 A.2d 568 , 566 cert. denied, 434 U.S. 876 , 98 S.Ct. 227 , 54 L.Ed.2d 156 (1977). THE INSTANT CASE Masten Lumber & Supply, Inc., the appellee, asserted that it had furnished lumber and other materials to Brick Homes, Inc., at the property of the appellants, Wesley A. Tyson, Sr., and Eleanor M. Tyson, his wife, in Cecil County, Maryland, on May 22,1978. The date of delivery, although controverted by the Tysons, was found by the trial judge to be that stated by the appellee’s location manager, Morris G. Jones and by its truck driver, Dale H. Biederman.

Payment not having been received, the appellee, through its counsel, sent a letter to the appellants. The letter read: “August 9, 1978 Mr. and Mrs. Wesley A. Tyson, Sr. Post Office Box 282 R. D. 2 North East, Maryland 21901 Dear Mr. and Mrs. Tyson: This letter is to advise you that I represent Masten ³⁰⁰ Lumber & Supply, Inc., of Milford, Delaware. They furnished lumber and materials for the construction of your home on Lot 4, Hance’s Point Manor, Cecil County, Maryland, for Brick Homes, Inc., and have not been paid the balance due them by Brick Homes, Inc. The outstanding balance due Masten Lumber & Supply, Inc. is $6,737.10, and this letter will serve as notice to you that we intend to file Mechanic’s Line [s/e] on the property in order to ensure payment due our client. I would suggest you turn this letter over to your attorney and/or the Bank that is financing you to ensure they withhold enough funds to pay off Masten Lumber & Supply, Inc., because the lien would be against your property and collectible through court action.

Very truly yours, v S/ Edward D. E. Rollins, Jr. EDER, jr/mb REGISTERED MAIL." No reply was made to the letter, whereupon a “Petition to Establish Mechanic’s Lien” was filed in the Circuit Court for Cecil County on October 11,1978. An affidavit in support of the petition and exhibits was filed simultaneously. The court signed a “show cause order” and directed the