Opinion
No. CV00-0804236 S
March 7, 2001
Memorandum of Decision
This case requires the court to address the import of newly-enacted General Statutes § 49-33 (h), which makes a leasehold interest subject to a mechanic's lien. The court holds that § 49-33 (h) allows contractors to attach a tenant's interest in property but does not create any new fights against landowners. Accordingly, the court enters judgment for the plaintiff landowner, Enfield Square, LLC.
BACKGROUND
The court finds the following facts after a hearing on February 5, 2001. The plaintiff owns a shopping mall in Enfield. On September 27, 1999, the plaintiff agreed to lease one of its numerous retail store units to Juice Kitchen, Inc. The lease provided for Juice Kitchen to construct a kiosk. The landlord, according to the lease, had the responsibility of designating the maximum size and the location of the kiosk. The tenant had the responsibility for construction and improvement of the kiosk at tenant's sole expense. The lease also provided for the tenant to keep the premises free from any liens arising out of work performed, materials furnished, or obligations incurred by the tenant.
In keeping with the lease, Enfield Square approved of Juice Kitchen's plans to construct a kiosk. The plaintiff was aware that Juice Kitchen had hired the defendant, S. Hecht Sons, Inc., to perform the work and spoke to Hecht about the plans. Enfield Square did not, however, agree to pay Hecht or to guarantee payment by Juice Kitchen.
On February 22, 2000, Hecht filed a mechanic's lien on the premises owned by Enfield Square in the amount of $41,218 due to nonpayment for work done. On or about April 7, 2000, Enfield Square had Juice Kitchen served with a notice to quit for nonpayment of rent and other violations of the lease. On or about November 24, 2000, Hecht brought suit against Enfield Square to foreclose the mechanic's lien. On December 28, 2000, Enfield Square filed suit against Hecht to discharge the lien.
DISCUSSION
Upon a hearing on an application to discharge a mechanic's lien, "the lienor shall first be required to establish that there is probable cause to sustain the validity of his lien." General Statutes § 49-35b(a). The applicant must then show "by clear and convincing evidence that the validity of the lien should not be sustained or the amount of the lien is excessive and should be reduced." Id.
Ordinarily, a mechanic's lien against the owner of land is valid if the underlying claim is "(1) by virtue of an agreement with or the consent of the owner of the land, or (2) by the consent of some person having authority from or rightfully acting for such owner in procuring labor or materials." (Internal quotation marks omitted.) Hall v. Peacock Fixture Electric Co., 193 Conn. 290, 293, 475 A.2d 1100 (1984). See General Statutes § 49-33 (a). However, "[t]he mere granting of permission for work to be conducted on one's property has never been deemed sufficient to support a mechanic's lien against the property." CT Page 3476Hall v. Peacock Fixture Electric Co., supra, 193 Conn. 295. "Nor does the owner's knowledge that the work is being done subject the property to a mechanic's lien." Centerbrook. Architects Planners v. Laurel Nursing Services, Inc., 224 Conn. 580, 591, 620 A.2d 127 (1993). "The consent meant by the statute must be a consent that indicates an agreement that the owner of at least the land shall be, or may be, liable for the materials or labor." (Internal quotation marks omitted.) Id. "Although an express contract is not necessary for such a consent, the services must be furnished under circumstances indicating an implied contract by the owner to pay for them." Id.
Section 49-33 (a) provides as follows:
If any person has a claim for more than ten dollars for materials furnished or services rendered in the construction, raising, removal or repairs of any building or any of its appurtenances or in the improvement of any lot or in the site development or subdivision of any plot of land, and the claim is by virtue of an agreement with or by consent of the owner of the land upon which the building is being erected or has been erected or has been moved, or by consent of the owner of the lot being improved or by consent of the owner of the plot of land being improved or subdivided, or of some person having authority from or rightfully acting for the owner in procuring the labor or materials, the building, with the land on which it stands or the lot or in the event that the materials were furnished or services were rendered in the site development or subdivision of any plot of land, then the plot of land, is subject to the payment of the claim.
In the present case, the landowner was aware of and approved the work, but did not agree to pay for it. Under the lease, payment for work done on the leased premises was the sole responsibility of the tenant. Accordingly, Hecht does not have a valid claim against Enfield Square based on the theory that the latter consented. Hecht argues alternatively that its lien is valid by virtue of § 7 of Public Act 99-153, which amended General Statutes § 49-33 to add a new section (h). General Statutes § 49-33 (h) now provides:
If any person has a claim for more than ten dollars for materials furnished or services rendered in the construction, raising, removal or repairs of any real property, and the claim is by virtue of an agreement with or by consent of the lessee of such real property or of some person having authority from or rightfully acting for such lessee in procuring the materials or labor, then the leasehold interest in such real property is subject to the payment of the claim. This subsection shall not be construed to limit any of the rights or remedies available to such person under subsection (a) of this section.
The operative language of this new provision makes a "leasehold interest in [the] property . . . subject to the payment of the claim." A "leasehold" is "an estate in real property held by leasee/tenant under a lease" and "[t]he asset representing the right of the lessee to use leased property." Black's Law Dictionary (6th ed. 1999). A leasehold interest has been described as an "entitlement to occupancy." United States v. A Leasehold Interest in Property Located at 850 South Maple, Ann Arbor, Washtenaw County, Michigan, 743 F. Sup. 505, 510 n. 7 (E.D.Mich. 1990). From these definitions, and others, it is clear that a leasehold interest is primarily an interest of the tenant or lessee, rather than of the landowner or lessor. See Housing Authority v. Lamonthe, 225 Conn. 757, 768 n. 13, 627 A.2d 367 (1993); See also General Statutes § 47-300 (h) (defining a "Leasehold interest" as "the real property interest of a lessee in a ground lease with a community land trust."). Thus, the language of § 49-33 (h) making a "leasehold interest in [the] property . . . subject to the payment of the claim" renders property of the tenant, not the landlord, subject to a mechanic's lien.
In some cases, placing a lien on a leasehold interest may provide no added security to the mechanic. That appears to be the case here, because the service of a notice to quit on Juice Kitchen terminated the tenancy at will by operation of law. See Federal Home Loan Mortgage Corp. v. Van Sickle, 52 Conn. App. 37, 44-45, 726 A.2d 600 (1999). In other cases, particularly those in which the lessee can sublet the premises, a leasehold may represent a valuable property right. See Housing Authority v. Lamothe, supra, 225 Conn. 768 n. 13 (leasehold interest is a "property interest in the premises deserving of constitutional protections"); Bradley Facilities, Inc. v. Burns, 209 Conn. 480, 491, 551 A.2d 746 (1988) (a leasehold interest is subject to condemnation);Barnini v. Sun Oil Co., 161 Conn. 59, 64, 283 A.2d 217 (1971) (Internal quotation marks omitted.) (value of a leasehold interest is determined "by subtracting the rent provided for under the lease from the fair market value of the lease.")
This conclusion finds support in the statutory scheme. The language making a leasehold "subject to the payment of the claim" parallels the language in paragraph (a) making "the plot of land . . . subject to payment of the claim." See footnote 1. It thus appears that paragraph (a) provides for liens against landowners and paragraph (h) provides for liens against tenants. Indeed, the last sentence of paragraph (h) states that it "shall not be construed to limit any of the rights or remedies available to such person under subsection (a) of this section," thus assuring that mechanics who have a valid claim against both a tenant and a landowner can file mechanic's liens against both their interests under both subsections. However, to construe paragraph (h) to apply directly to landowners, as does the defendant here, would make paragraph (h) largely superfluous, contrary to the rules of statutory construction. See Packer v. Board of Education, 246 Conn. 89, 111, 717 A.2d 117 (1998). Thus, the proper interpretation of paragraph (h) is that it creates a new remedy against the property interests of leaseholders only.
The legislative history, while somewhat vague, tends to affirm the conclusion that paragraph (h) was not intended to create a new remedy against landowners. The sponsor of the bill stated the following:
Thank you, Madam President. This amendment basically does three basic things . . . And three, is to explain what a lessee is, if an owner were to allow a lessee to go out and have some construction work done on their particular building and they are not held responsible, you can submit a mechanics liens [sic] to the lessee's business. That protects the owner.
(Emphasis added.) 42 5. Proc., Pt. 4, 1999 Sess., pp. 1178-79, remarks of Senator Colapietro.
[I]t also modifies the mechanic lien laws by allowing liens to attach to leaseholders' interest. That is, if a leaseholder gets the owner off the hook, if he decides to rebuild something in that building that the owner owns, that the owner will no longer be liable unless he's the one who orders it and pays for it. You can lease the lessee's business or equipment, or whatnot.
(Emphasis added.) 42 5. Proc., Pt. 6, 1999 Sess., pp. 2132-33, remarks of Senator Colapietro.
In this case, because Enfield Square did not consent to pay Hecht for any work done, and because paragraph (h) does not apply to landowners, Hecht does not have a valid lien against Enfield Square. Accordingly, Hecht has failed to show that "there is probable cause to sustain the validity of [its] lien." General Statutes § 49-35b(a).
CONCLUSION
The court grants the application to discharge the mechanic's lien. Judgment shall enter for the plaintiff.
It is so ordered.
Carl J. Schuman Judge, Superior Court