Summary
explaining that " summary motion that seeks a declaration that a lien is invalid [under Section 53.160] . . . seeks a summary adjudication of that claim and operates, in effect, as a motion for partial summary judgment"
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14-22-00067-CV
08-31-2023
ARREDONDO'S MECHANICAL SERVICES, LLC, Appellant v. ORTEGA MEDICAL BUILDING, LLC, Appellee
On Appeal from the 270th District Court Harris County, Texas Trial Court Cause No. 2019-48523A
Panel consists of Justices Wise, Jewell, and Poissant.
MEMORANDUM OPINION
MARGARET "MEG" POISSANT JUSTICE.
Appellant Arredondo's Mechanical Services, LLC ("AMS") appeals the granting of a summary motion to remove a lien filed by appellee Ortega Medical Building, LLC ("Ortega"). In one issue, AMS argues the trial court erred in granting Ortega's motion and removing AMS's lien as invalid because AMS perfected its lien against Ortega. We affirm.
I. Background
On July 17, 2019, AMS filed a lawsuit against Ortega and Trojan Global Construction, LLC ("Trojan"), alleging that it performed work on Ortega's property at the request of Trojan but that Ortega and Trojan refused to pay $23,326.93 that was outstanding for AMS's services performed in December 2018 and January 2019. AMS further alleged that it sent Ortega and Trojan a notice letter of its intent to file a mechanic and materialman's lien against Ortega's property and that it filed an affidavit claiming such a lien against the property. AMS asserted claims for breach of contract, quantum meruit, unjust enrichment, a claim for retainage, foreclosure of a lien, and a request for declaratory judgment, requesting the court declare AMS's mechanic and materialman's lien valid, allowing foreclosure on the lien, that AMS abided by all procedures to perfect the lien, and that AMS had not been fully compensated for its work performed on the property.
AMS's notice of claim and lien affidavit filing in the record states that the amount owed is $38,964.93.
Ortega filed a counterclaim against AMS seeking to remove the lien pursuant to Texas Property Code § 53.160. See Tex. Prop. Code Ann. § 53.160(a) ("In a suit brought to foreclose a lien or to declare a claim or lien invalid or unenforceable, a party objecting to the validity or enforceability of the claim or lien may file a motion to remove the claim or lien."). Ortega alleged that it hired Trojan Group Contractor, Inc. ("Trojan Group Contractor") not Trojan, as its general contractor for HVAC work on a new pediatric clinic and that Trojan Group Contractor subcontracted work to AMS.
Ortega then filed a motion for summary removal of the lien and requested attorney's fees. In relevant part, Ortega argued that notice of the claim was defective because AMS had mistakenly sent notice to Trojan when the general contractor was Trojan Group Contractor. Ortega further alleged that Trojan had ceased to do business on July 28, 2017, and thus, no work could have been performed by AMS because Trojan ceased to do business prior to labor and materials being furnished by AMS. Therefore, Ortega argued, AMS's lien was invalid. Ortega attached copies of the applications and certificates for payment for November and December 2018, and January and February 2019, from Ortega as the "Owner/Client" to Trojan Group Contractors as "Contractor" for the pediatric clinic project.
AMS supplemented its response and objected to Ortega's evidence; however, no ruling on AMS's objections appear in the record. see Tex. R. App. P. 33.1. AMS does not raise any argument on appeal based on these objections. See id. R. 38.1(i).
AMS filed a response and stated that it entered into an agreement with Trojan and that AMS believed it had worked for Trojan and not any other entity. AMS argued that a fact issue existed as to the identity of the general contractor that employed AMS and was hired by Ortega. AMS attached a quote and an invoice from AMS to Trojan for "Pediatrician" and a sworn affidavit from its president, Stephan Arredondo ("Arredondo"), stating that AMS performed worked at the request of Trojan.
Ortega supplemented its motion for summary removal of the lien and attached images of the checks paid to AMS by Trojan Group Contractor; copies of conditional waiver and release on progress payments from August 2, 2018, and September 28, 2018 signed by AMS as the lien claimant listing Trojan Group Contractor as the party issuing funds to AMS for labor, services, equipment, or materials furnished on the project for Ortega's pediatric clinic.
On December 17, 2019, the trial court signed an order granting Ortega's motion, declaring the lien invalid and unenforceable, removing the lien from the Harris County property records, and awarding attorney's fees to Ortega. On January 24, 2022, the trial court severed the claims between AMS and Ortega from the case and entered a final judgment, ordering that AMS take nothing from Ortega. This appeal followed.
II. Discussion
In its sole issue, AMS argues the trial court erred in granting Ortega's summary motion and removing AMS's lien as invalid because AMS perfected its lien against Ortega.
A. Standard of Review
A summary motion that seeks a declaration that a lien is invalid, as AMS's motion did, seeks a summary adjudication of that claim and operates, in effect, as a motion for partial summary judgment. In re M & O Homebuilders, Inc., 516 S.W.3d 101, 107 (Tex. App.-Houston [1st Dist.] 2017, orig. proceeding); see, e.g., Ibarra v. Nicholes, No. 01-06-00762-CV, 2007 WL 2214889, at *3 (Tex. App.-Houston [1st Dist.] Aug. 2, 2007, pet. denied) (mem. op.).
We review a trial court's grant of a traditional summary judgment de novo. Provident Life & Accident Ins. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). A summary judgment under Rule of Civil Procedure 166a(c) is properly granted only when a movant establishes that there are no genuine issues of material fact and that he is entitled to judgment as a matter of law. Tex.R.Civ.P. 166a(c); KPMG Peat Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). A plaintiff moving for summary judgment must prove that he is entitled to summary judgment as a matter of law on each element of his cause of action. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986). A defendant moving for summary judgment must either (1) disprove at least one of the essential elements of each of the plaintiff's causes of action or (2) conclusively establish all of the elements of an affirmative defense. Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995). In deciding whether there is a disputed material fact precluding summary judgment, evidence favorable to the non-movant will be taken as true, every reasonable inference must be indulged in favor of the non-movant, and any doubts will be resolved in its favor. Knott, 128 S.W.3d at 215. The movant must conclusively establish its right to judgment as a matter of law. See MMP, Ltd., 710 S.W.2d at 60. A matter is conclusively established if reasonable people could not differ as to the conclusion to be drawn from the evidence. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005).
B. Applicable Law
A subcontractor is a derivative claimant and, unlike a general contractor, has no constitutional, common law, or contractual lien on the owner's property. See First Nat'l Bank in Graham v. Sledge, 653 S.W.2d 283, 285 (Tex. 1983). As a result, a subcontractor's lien rights "are totally dependent on compliance with the statutes authorizing the lien." Id.; Indus. Structure & Fabrication, Inc. v. Arrowhead Indus. Water, Inc., 888 S.W.2d 840, 844 (Tex. App.-Houston [1st Dist.] 1994, no writ). The Texas Supreme Court has recognized, however, that substantial compliance with the statutes "is sufficient to perfect a lien . . . ." Sledge, 653 S.W.2d at 285.
Property Code § 53.056 sets out the notice requirement for lien claimants who are not general contractors. See Tex. Prop. Code Ann. § 53.056. This section provides that if the lien claim arises, as here, from a debt incurred by a subcontractor, the claimant must give the original contractor written notice of the unpaid balance not later than the fifteenth day of the second month following each month in which all or part of the claimant′s material was delivered. Id. § 53.056(b). The claimant must then give the same notice to the owner or reputed owner of the property and the original contractor not later than the fifteenth day of the third month following each month in which all or part of the claimant's material was delivered. Id. Section 53.056(f) provides that "[a] copy of the statement or billing in the usual and customary form is sufficient as notice under this section. " Id. § 53.056(f). The liberal construction of the materialman's liens statutes does not excuse failure to comply with the statutory requirement that the materialman provide timely written notice. Moore v. Brenham Ready Mix, Inc., 463 S.W.3d 109, 115 (Tex. App.-Houston [1st Dist] 2015, no pet.).
In 2021, the Legislature amended § 53.056. See Act of May 22, 2021, 87th Leg., R.S., ch. 690 (H.B. 2237), §§ 10, 11, 36(4), eff. Jan. 1, 2022. This case was decided under the previous version of the statute.
An original contractor is defined in the Property Code as "a person contracting with an owner either directly or through the owner's agent." See Tex. Prop. Code Ann. § 53.001(7). A subcontractor is defined as "a person who has furnished labor or materials to fulfill an obligation to an original contractor or to a subcontractor to perform all or part of the work required by an original contract." Id. § 53.001(13).
The subcontractor may accomplish written notice either by (1) delivery of a writing in person; (2) certified mail; or (3) proving receipt of the notice (regardless of the method of delivery). Id. § 53.003(b), (c), (d). Delivery of "[a] copy of the statement or billing in the customary form" is sufficient to give notice of the debt. Id. § 53.056(f); Patriot Contracting, LLC v. Shelter Prods., Inc., 650 S.W.3d 627, 653 (Tex. App.-Houston [1st Dist.] 2021, pet. denied); see also Arias v. Brookstone, 265 S.W.3d 459, 464 (Tex. App.-Houston [1st Dist.] 2007, pet. denied) ("Because the person executing the lien affidavit must file the affidavit by the relatively short deadlines stated in [Texas] Property Code sections 53.052 and 53.056 . . ., the owner and original contractor can hardly claim to be hurt when they are notified in advance of the actual filing of the lien affidavit.").
C. Analysis
AMS argues in its sole issue that there was a fact issue as to who was the original contractor and that it is entitled to an award of attorney's fees as a matter of law. Ortega argued in its summary motion that Trojan Group Contractor was the original contractor instead of Trojan, that AMS failed to provide timely notice for work performed in December 2018 and January 2019, that the Secretary of State forfeited Trojan's right to do business in Texas in 2017, and that AMS did not substantially comply with the statute because its lien affidavit identified the incorrect original contractor.
1. Identity of Original Contractor
Here, AMS argues that there is a fact issue as to which party was the general contractor because of a quote for installation and materials and an invoice from AMS to Trojan dated February 8, 2018, and February 8, 2019, respectively, and because Arredondo's affidavit states that AMS performed work at the request of Trojan.
However, the record includes copies of the Application and Certificate for Payment between Ortega and Trojan Group for November 2018, showing that HVAC work was performed totaling $102,785.00, which AMS's live pleading states is the value of the work performed by AMS on the project. These copies also list Ortega as the "owner/client" and Trojan Group as the "contractor" for the "Pediatrician Clinic" project.
The record also includes copies of the conditional waivers and release on progress payments for August 2, 2018, and September 28, 2018-before the work for which AMS is seeking payment in this lawsuit, which was performed in December 2018 and January 2019-both of which are signed by AMS as the lien claimant and list Trojan Group as the party issuing funds to AMS for Ortega's pediatric clinic. Finally, Ortega introduced into the record a print-out of Trojan's profile from the Texas Secretary of State website stating "Franchise tax was involuntarily ended" and stating "Request tax clearance to reinstate entity." Ortega also introduced documentation from the Secretary of State showing that the Secretary of State forfeited Trojan's charter, certificate, or registration pursuant to Texas Tax Code § 171.309 on July 28, 2017. See Tex. Tax Code Ann § 171.309.All of this evidence, together with copies of the checks from Trojan Group to AMS paying AMS for work on the "Pediatric Clinic" conclusively proves that the general contractor for the project was Trojan Group.
A terminated filing entity continues in existence for limited purposes for three years following its termination. See Tex. Bus. & Org. Code Ann. § 11.356.
The quote and invoice relied on by AMS do not raise an issue of fact concerning whether Trojan was the general contractor, and Arredondo's affidavit does nothing more than raise a surmise or suspicion that Trojan was the original contractor. See Town of Shady Shores v. Swanson, 590 S.W.3d 544, 551 (Tex. 2019) ("The nonmovant may raise a genuine issue of material fact by producing 'more than a scintilla of evidence establishing the existence of the challenged element.'" (quoting Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004))); King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003) ("Less than a scintilla of evidence exists when the evidence is 'so weak as to do no more than create a mere surmise or suspicion' of a fact." (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983))). In other words, reasonable people could not differ as to the conclusion that Trojan Group Contractor was the original contractor based on the evidence. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005).
We thus conclude that the trial court did not err when it granted Ortega's summary motion to remove AMS's lien. See Knott, 128 S.W.3d at 215; MMP, Ltd., 710 S.W.2d at 60; In re M & O Homebuilders, Inc., 516 S.W.3d at 107.
We overrule AMS's sole issue on appeal.
AMS also argues in its first issue that it is entitled to attorney's fees because the trial court erred when it granted Ortega's motion. Because the disposition of AMS's argument concerning notice to the general contractor is dispositive, we need not address this argument. See Tex. R. App. 47.4.
III. Conclusion
The trial court's judgment is affirmed.