Opinion
Civil Action No: 00L-06-018.
Date Submitted: October 19, 2000.
Date of Decision: December 15, 2000.
Julie G. Bucklin, Esquire, Sergovic, Ellis Shirey, P.A., Georgetown, Delaware, attorney for Atlantic Millwork Corporation;
Cliff Seibert, American Custom Homes Corporation, American Affordable Homes. Inc., Berlin, Maryland;
Mary Robin Schrider, Esquire and Heidi A. Balliet, Esquire, Tunnell Raysor, P.A., Georgetown, Delaware, attorney for Bernard J. and Ann C. Nolan.
MEMORANDUM OPINION
INTRODUCTION
The Court is called upon to determine if Bernard J. and Ann C. Nolan's (the ("Nolans") motion to intervene in the case of Atlantic Millwork v. Custom Homes should be granted. The Nolans contend that their interest in the subject property will not be adequately protected if the Court does not admit them as a party to the action.
FACTUAL BACKGROUND
On June 23 2000, building supplier Atlantic Millwork Corporation ("Plaintiff") filed a mechanics' lien claim against property known as 13 Blue Heron Drive, Pilottown Village, Lewes, Delaware ("the Property"), the then owner of the Property, American Custom Homes Corporation ("Owner-Defendant"), and the general contractor for the property, American Affordable Homes ("Contractor-Defendant"). Plaintiff seeks reimbursement for $4,972.75 plus interest and attorney's fees allegedly owing to it for materials supplied to Contractor-Defendant pursuant to a credit contract. Demand letters were issued to both Owner-Defendant and Contractor-Defendant on May 25, 2000, but payment was never received. On June 23, 2000, Plaintiff filed its mechanics' lien claim in the Office of the Prothonotary, Sussex County, Georgetown, Delaware, and on June 28 2000, notice of the lien was posted by the Sheriff on the Property itself. The Nolans entered into a contract with Owner-Defendant to buy the Property A title search, and subsequent "bring down" failed to alert the Nolans of Plaintiffs lien. They went to
The record does not disclose the date of this contract.
settlement on the Property on June 29, 2000, after receiving a Waiver and Release of Mechanics' Lien from Owner-Defendant, but without addressing or satisfying Plaintiff's lien of record.
To date, no answer or response to Plaintiff's mechanics' lien claim has been filed by either Owner-Defendant or Contractor-Defendant. As a result, Plaintiff seeks a default judgment, pursuant to 25 Del. C., § 2716 and Superior Court Civil Rule 12, against each Defendant in personam and against the Property in rem for the full amount of the claimed lien, plus interest and attorney's fees.
The Nolans argue that because they were the equitable owners of the Property at the time Plaintiff filed its lien, they should have been named as parties to the action. Because they were not so named, the Nolans now seek the Court's permission to intervene in this matter and protect their interest in the property.
DISCUSSION
I. Does the mechanics' lien statute require Plaintiff to name an equitable owner of property as a party to a mechanics' lien claim against that Property?
Because the mechanic's lien statute is in derogation of the common law, it must be strictly construed by this Court. Ianotti v. Kalmbacher, Del. Super., 156 A. 366 (1931).
The Nolans contend that their contract to purchase the Property from Owner-Defendant made them the equitable owners of the Property at the time Plaintiff filed its mechanics' lien and as such, they should have been named as parties to the action. They argue that they have a legitimate interest in the Property that requires the protection of due process. A vendee of land under a valid contract does acquire an interest in the land. An executory contract of the sale of land operates to transfer the estate of the vendor in the vendee. Ehrenstrom v. Phillips, Del. Ch., 77 A. 81 (1910).
The Nolans cite to First Florida Bldg. Corp. v. Robino-Ladd, Del. Super., 424 A.2d 32 (1980) (Robino-Ladd) as authority for their position. Robino-Ladd involved a transfer of title to the subject property between the date of Plaintiff's contract with the contractor and the date of the Plaintiff's filing of its lien. The property was sold before the mechanics' lien was filed, but the new owners (referred to in the opinion as "current" owners) were not named as defendants. The Court held that the new owners of the property were entitled to be named defendants so that they could protect their important interest. The matter sub judice materially differs from the facts presented in Robino-Ladd in that the Nolans were not the legal owners of the Property at the time the lien was filed. They did not become the legal owners of the Property until six days after the lien was filed. This Court finds significant factual differences between the situation presented in Robino-Ladd and the instant case. The Nolans also recognize that Robino-Ladd is not directly on point, but call upon this Court to extend the decision to require future plaintiffs to name equitable owners of property as defendants to mechanics' lien claims.
The Nolans argue that an equitable interest in property constitutes the type of significant property interest that falls under the umbrella of due process protection. Although they cite several cases in support of their assertion that they should be named parties to this mechanics' lien claim, they have not pointed to an instance where a Delaware court has required a plaintiff in a mechanics' lien claim to give notice of the lien to a person whose equitable interest was unrecorded, non-possessory, and not reasonably ascertainable until after the claim was filed. In Gelof v. First National Bank of Frankford, Del. Supr., 373 A.2d 206 (1977), and Hoffman v. Siegel, Del. Super., C.A. Nos. 90L-11-005, 90L-08-008, Graves, J. (June 13, 1991), the equitable titleholders' interest was of record. In Briz-Ler Corp. v. Weiner, Del. Supr., 171 A.2d 65 (1961), and McHugh Electric Co. v. Hessler Realty Development Co., Del. Supr., 129 A.2d 654 (1957), in addition to an equitable interest in the property, the defendants had possession and control of the property. The Nolans did not have possession of the Property at the time the lien was filed. In re Long, Del. Super., 84 A. 1030 (1912) differs from the instant matter in that there the plaintiff had actual notice of the equitable titleholder and had even contracted with him. In the instant case, Plaintiff had no knowledge of the Nolans' involvement with the Property and no reasonable means of discovering their interest.
Plaintiff could not have detected the Nolans' interest in the Property through reasonable means. When the Court considers who should bear the burden of discovery in this matter, it seems clear that the Nolans were in the best position to avoid the problem that now faces them. A proper title search and subsequent "bring down" should have revealed Plaintiff's claim against the Property, the same having been filed in the Office of the Prothonotary six days prior to the Nolans' pttrchase of the Property. The Nolans then could have made an informed decision whether they still wished to proceed to settlement. It is unfortunate that Plaintiff's lien was not discovered by the Nolans' title search, but this is no fault of Plaintiff. The Supreme Court has held that liens are "entered of record" and considered filed and indexed to provide notice to those persons conducting title searches when they have been received, time stamped, and placed in the basket of incoming judgments in the Prothonotary's Office. Lawyers Title Ins. Co. v. Wolhar and Gill, Del. Supr., 575 A.2d 1148 (1990).
The Nolans make two additional claims in their reply memorandum. First, that the title search for the Property was properly conducted, but that the Prothonotary's filing tray did not contain the newly filed mechanics' lien action. Second, that Plaintiff did, in fact, have knowledge of the upcoming sale and that the Nolans were the equitable owners of the subject Property at the time it filed this action. However, neither of these assertions are supported by affidavit or any evidence in the record, and the Court declines to consider them in rendering a decision on this matter.
As per the mechanics' lien statute, Plaintiff properly noticed the contractor and the owner of the Property at the time the lien was filed. Plaintiff had no notice of the- Nolans' interest in the Property and no reasonable means of ascertaining such interest. This Court is unwilling to require future mechanics' lien claimants to name as parties to the action persons whose interests in the property are only discoverable after the lien has been filed.
II. Although the Nolans are not indispensable parties to the action and were not entitled to notice from Plaintiff, should the Court exercise its discretion to allow the Nolans to intervene as a matter of right in this matter?
Superior Court Civil Rule 24(a)(2) reads as follows:
Intervention of Right. Upon timely application anyone shall be permitted to intervene in an action . . . when an applicant claims an interest relating to the property or transaction which is the subject matter of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.
Rule 24(a)(2) requires a movant to assert a significant, legally protectable interest which relates to the property which forms the subject matter of the main action. The movant also must assert that the disposition of the pending litigation may impede or impair his ability to protect that interest. Furthermore, the movant must show that the existing parties to the lawsuit are not adequately protecting the intervenor's interest. Allstate Ins. Co. v. Speight, Del. Super., C.A. No. 92C-03-031, Graves, J. (November 10, 1992). Whether the particular facts of a case require the application of a party's right to intervene is a matter in the discretion of the court. Bramble Transp., Inc. v. Sam Senter Sales, Del. Super., 294 A.2d 97 (1971), aff'd, Del. Supr., 294 A.2d 104 (1972). For an intervention of right, there is no requirement that the movant assert his defenses to the action. It is only required that he assert an interest in the property that is the subject of the action.
In the instant case, there is no question that the Nolans have a significant interest in the Property that is the subject matter of the pending litigation. They are now the legal titleholders of Property against which an in rem action has been filed. It is also clear that. inasmuch as neither the Owner-Defendant nor the Contractor-Defendant has filed an answer to Plaintiff's claim, the Nolans' interest is not merely being inadequately protected. but is not being protected at all. The Defendants have exposed the Nolans' Property to a default judgment in the mechanics' lien action and, absent this Court's permission to intervene, they have left the Nolans with no means of protecting their interest in the Property.
Plaintiff has not suggested that it will suffer prejudice if the Court permits the Nolans to intervene. Plaintiff only argues that the Nolans should have discovered the timely filed lien before setting on the Property, and therefore, Plaintiff is entitled to a default judgment sooner rather than later. The Court declines to sacrifice justice for expedience and will allow the Nolans to assert any defenses that may be available to them to protect their interest in the subject Property by granting their Motion to Intervene.
CONCLUSION
The Nolans' assertion that they are necessary parties to the mechanics' lien action filed by Plaintiff is not supported by case law, and places an undue burden of discovery upon Plaintiff. Forcing a plaintiff to continually search for unrecorded, non-possessory. equitable titleholders after a lien has been filed against a subject property is an unreasonable imposition. Plaintiff recorded the lien, gave notice to Owner — Defendant and Contractor-Defendant, and posted notice on the Property. The Court finds that Plaintiff fully met the notice requirements established by the mechanics' lien statute.
However, the Court will allow the Nolans to intervene in this matter because they meet the three-part test set forth in Superior Court Civil Rule 24(a)(2). They have claimed an interest in the Property that is the subject of the pending litigation. They claim that disposition of the litigation will impair or impede their ability to protect that interest, and their interests are not being protected by those already a party to the action. Under theses circumstances, the Court grants the Nolans' Motion to Intervene.
IT IS SO ORDERED.
E. Scott Bradley