Opinion
No. MMX CV-10-6003850-S
February 16, 2011
MEMORANDUM OF DECISION RE APPLICATION FOR DISCHARGE OR REDUCTION OF MECHANIC'S LIEN
The plaintiff MNZJ, LLC d/b/a Gristmill Country Market brought this application pursuant to Conn. Gen. Stat. § 49-35a to discharge or reduce two mechanic's liens filed by the defendant Q P Construction, LLC against property located at 311 Saybrook Road, Haddam, Connecticut. The plaintiff is a tenant in possession of a portion of the property wherein it operates the Gristmill Country Market.
The defendant provided various materials and construction services in connection with the development and construction of the Gristmill Country Market pursuant to a contract with plaintiff dated March 27, 2010. The defendant claims that it is owed $17,680.00 under the contract, plus interest, attorneys fees and costs.
The defendant filed two mechanic's liens against the property. The first is dated September 23, 2010 (the "First Mechanic's Lien"). The second is dated October 14, 2010 (the "Second Mechanic's Lien"). The mechanic's liens are for the same underlying claim. The Second Mechanic's Lien was filed by the defendant after it discovered that it had attached as an exhibit to the First Mechanic's Lien an incorrect property description.
In its Application for Discharge or Reduction of Mechanic's Lien, the plaintiff claims that the liens are defective because the First Mechanic's Lien identifies the wrong property and the Second Mechanic's Lien was not timely filed. The plaintiff also claims that both liens are excessive in amount and, if the court finds either to be valid, the plaintiff seeks to have the amount of the lien reduced.
I. Standard of Proof
In any action to discharge or reduce a mechanic's lien, the lienor must first establish that there is probable cause to sustain the validity of its lien. Conn. Gen. Stat. § 49-35b(a). "The standard of proof applicable in proceedings to discharge mechanic's liens is a modest one. For a lien to be upheld, a lienor must establish only that there is `probable cause to sustain the validity of the lien. Proof of probable cause is not as demanding as proof by a fair preponderance of the evidence.' Newtown Associates v. Northeast Structures, Inc., 15 Conn.App. 633, 636-37, 546 A.2d 310 (1988). `It is important to remember that the [lienor] does not have to establish that he will prevail, only that there is probable cause to sustain the validity of the claim . . . The legal idea of probable cause is a bona fide belief in the existence of the facts essential under the law for the action and such as would warrant a man of ordinary caution prudence and judgment, under the circumstances, in entertaining it . . . Probable cause is a flexible common sense standard. It does not demand that a belief be correct or more likely true than false.' (Internal quotation marks omitted.) Cadle Co. v. Gabel, 69 Conn.App. 279, 286-87, 794 A.2d 1029 (2002)." 36 DeForest Ave., LLC v. Creadore, 99 Conn.App. 690, 695, 915 A.2d 916, cert. denied, 282 Conn. 905, 920 A.2d 311 (2007).
Once probable cause is established, the burden of proof shifts to the party whose property has been liened to establish by clear and convincing evidence that the lien should be discharged or reduced. Conn. Gen. Stat. § 49-35b(a). "Clear and convincing proof is a demanding standard denot[ing] a degree of belief that lies between the belief that is required to find the truth or existence of the [fact in issue] in an ordinary civil action and the belief that is required to find guilt in a criminal prosecution . . . [The burden] is sustained if evidence induces in the mind of the trier a reasonable belief that the facts asserted are highly probably true, that the probability that they are true or exist is substantially greater than the probability that they are false or do not exist." (Internal quotation marks omitted.) Shelton v. Statewide Grievance Committee, 277 Conn. 99, 110, 890 A.2d 104 (2006). "[T]he clear and convincing evidence standard should operate as a weighty caution upon the minds of all judges, and it forbids relief whenever the evidence is loose, equivocal or contradictory." (Internal quotation marks omitted.) Miller v. Commissioner of Correction, 242 Conn. 745, 791, 700 A.2d 1108 (1997).
Pursuant to Conn. Gen. Stat. § 49-35b(b), upon the hearing held on the application and consideration of the facts before it, the court may: (1) deny the application if probable cause to sustain the validity of the lien is established; (2) order the lien discharged if probable cause is not established or by clear and convincing evidence the invalidity of the lien is established; (3) reduce the amount of the lien if the amount of the lien is found excessive by clear and convincing evidence; or (4) order the lien discharged or reduce the amount of the lien conditioned upon the posting of a bond with surety.
II. Validity of Mechanic's Lien
Conn. Gen. Stat. § 49-34 sets forth the requirements for a mechanic's lien. Within ninety (90) days after a person has ceased performing services or furnishing materials a certificate of lien must be filed with the town clerk where the subject property is located. Conn. Gen. Stat. § 49-34. Among other requirements, the mechanic's lien must contain a recitation "describing the premises, the amount claimed as a lien thereon, the name or names of the person against whom the lien is being filed and the date of the commencement of the performance of services or furnishing of materials." Id.
The plaintiff argues that the First Mechanic's Lien is invalid because it identifies the wrong property. In fact, the First Mechanic's Lien correctly states in the text of the document that it is filed against "premises located at 311 Saybrook Road, Haddam, Connecticut, more particularly described below." The issue presently before the court has arisen, however, because Schedule A attached to the First Mechanic's Lien erroneously describes property located in North Haven, Connecticut, rather than the property in Haddam where the materials and construction services were actually provided. The defendant concedes that the Schedule A is incorrect. However, it argues that this mistake does not render the First Mechanic's Lien invalid.
The plaintiff does not dispute that the First Mechanic's Lien was timely filed or that it was properly served.
The appellate courts of Connecticut have not demanded strict compliance with the mechanic's lien statutes, but rather favor the use of an equitable standard in order to achieve the remedial purposes of the statute. This is particularly true in cases involving a mistake made in good faith with no prejudice resulting therefrom. In First Constitution Bank v. Harbor Village, L.P., 230 Conn. 807, 815-17, 646 A.2d 812 (1994), the Supreme Court summarized the law as follows:
It is well established that a mechanic's lien "will not be valid unless the person having such claim shall, within a stated time, lodge with the town clerk of the town in which said building is situated a certificate in writing, describing the premises, the amount claimed as a lien thereon, and the date of the commencement of the services or the furnishing of materials. General Statutes §§ 4135, 4136." Tramonte v. Wilens, 89 Conn. 520, 523, 94 A. 978 (1915). We also have repeatedly stated, however, that, although a mechanic's lien is in derogation of the common law, we do not compel a strict construction of its requirements. Wilcox v. Woodruff, 61 Conn. 578, 585, 24 A. 1056 (1891). "We have long endorsed a policy favoring liberal construction of claimed inadequacies in certificates of mechanic's liens in order to achieve the remedial purposes of the mechanic's lien statutes." J.C. Penney Properties, Inc. v. Peter M. Santella Co., 210 Conn. 511, 514, 555 A.2d 990 (1989). We recognize that the remedial purpose of mechanic's lien law is "to furnish security for a contractor's labor and materials" and that this beneficent purpose requires "a generous construction." Seaman v. Climate Control Corp., 181 Conn. 592, 597, 436 A.2d 271 (1980); see J.C. Penney Properties, Inc. v. Peter M. Santella Co., supra, 210 Conn. at 514, 555 A.2d 990 (generous construction requires only reasonable compliance with statutory provisions).
"In accordance with this policy, our courts have been liberal in validating liens despite claimed errors on the face of the lien certificate where the mistake was made in good faith and no resulting prejudice was claimed. See, e.g., H S Torrington Associates v. Lutz Engineering Co., [ 185 Conn. 549, 555-56, 441 A.2d 171 (1981)] (copy of certificate served on owner by a subcontractor failed to state its intent to file a lien); Morici v. Jarvie, 137 Conn. 97, 102, 75 A.2d 47 (1950) (misstatement of amount due); Pierce, Butler Pierce Mfg. Corporation v. Enders, 118 Conn. 610, 615, 174 A. 169 (1934) (subcontractor mislabeled as contractor and agent); Burque v. Naugatuck Lumber Co., 113 Conn. 350, 353, 155 A. 414 (1931) (defect in description); Peck v. Brush, 89 Conn. 554, 556-57, 94 A. 981 (1915) (inclusion of extra land in certificate); Westland v. Goodman, 47 Conn. 83, 86 (1879) (erroneous date of completion of work)." J.C. Penney Properties, Inc. v. Peter M. Santella Co., supra, 210 Conn. at 515, 555 A.2d 990; see also Halsted Harmount Co. v. Arick, 76 Conn. 382, 387, 56 A. 628 (1904); Nichols v. Culver, 51 Conn. 177, 180 (1883); Marston v. Kenyon, 44 Conn. 349, 356 (1877). As we have reasoned many times, "we do not think a court of equity can be called upon to declare [a] lien utterly void upon the motion of persons who have lost nothing by [the] mistake." Marston v. Kenyon, supra, at 356.
Therefore, "[w]here the misstatement of the claim is intentional, that is, where the statement of the claim is intentionally false, or where it is fraudulent, the lien will be void; but where it is the result of a mistake, the misstatement of the claim will not invalidate the lien. We apprehend that it would be impossible to differentiate between the mistake in the statement of the claim and the mistake in the description of the property claimed to be covered by the lien." Tramonte v. Wilens, supra, 89 Conn. at 524, 94 A. 978; see also Rose v. Persse Brooks Paper Works, 29 Conn. 256, 266 (1860) (mistake as to claim will be treated like mistake as to description of property). Where, however, there has been "no attempt to give an accurate and true description, then . . . the certificate ought to be held void, as no better than a total omission to attempt to comply with its provisions." (Emphasis added; internal quotation marks omitted.) Tramonte v. Wilens, supra, 89 Conn. at 525, 94 A. 978.
Applying these principles to the facts of this case, the court finds that the defendant's failure to append the correct Schedule A to the First Mechanic's Lien does not invalidate the lien. As evidenced by the text of the First Mechanic's Lien, the defendant complied with the statute in the first instance by properly reciting the correct address of the premises to be liened in the body of the lien. The defendant's subsequent mistake in appending the wrong Schedule A to the First Mechanic's Lien appears to have been made in good faith. There was no evidence presented to the court at the hearing on the plaintiff's application that the defendant's conduct was intentional or fraudulent or that the plaintiff or the property owner was injured or prejudiced by the defendant's mistake.
"Reasonable compliance with statutory requirements has been routinely measured by whether the lienor's mistake was made in good faith and by whether prejudice resulted from the mistake. See J.C. Penney Properties, Inc. v. Peter M. Santella Co., supra, 210 Conn. at 515, 555 A.2d 990. The certificate of mechanic's lien will be held invalid `where the certificate is either intentionally false, or so grossly inaccurate as to show that there was no attempt to give an accurate and true description . . . ` Rose v. Persse Brooks Paper Works, supra, 29 Conn. at 266. If neither deficiency exists, we express satisfaction that the statute has been substantially complied with and reject the argument that the lien should be invalidated. See Tramonte v. Wilens, supra, 89 Conn. at 526, 94 A. 978; Shattuck v. Beardsley, 46 Conn. 386, 387-88 (1878)." First Constitution Bank v. Harbor Village, L.P., supra, 230 Conn. at 818, 646 A.2d 812.
The First Mechanic's Lien is not intentionally false. Nor is it so grossly inaccurate as to demonstrate that the defendant made no attempt to give an accurate and true description of the property to be liened. Because the defendant's mistake appears to have been made in good faith and no prejudice resulted from that mistake, the court finds that the defendant substantially and reasonably complied with the statutory requirements of Conn. Gen. Stat. § 49-34. Accordingly, the court rejects the plaintiff's claim that the First Mechanic's Lien is defective because the incorrect Schedule A is attached to the lien. See also First Constitution Bank v. Harbor Village, L.P., supra, 230 Conn. at 818, 646 A.2d 812 (certificate of mechanic's lien held valid where street address of property was not described in body of lien and property description was not attached to the recorded lien because the exhibit became detached prior to recording).
III. Amount of Mechanic's Lien
The plaintiff next argues that the amount of the First Mechanic's Lien is excessive and should be reduced. At the hearing on the plaintiff's application, the defendant proffered the testimony of Ronald Muizulis, a partner in and co-owner of the defendant. Muizulis testified that pursuant to the defendant's contract with the plaintiff, the defendant commenced work at the Gristmill Country Market on May 9, 2010 and completed that work on August 2, 2010. Muizulis also testified that throughout the term of the contract, the plaintiff orally requested various changes to the work to be performed under the contract and that the defendant complied with those requests.
The original contract price was $64,730.00. The plaintiff paid the defendant $67,000 by various checks dated from May 3, 2010 to July 6, 2010 and made payable to the order of the defendant. The plaintiff also made an additional payment in the amount of $1,120.00 by check dated July 17, 2010 and made payable to the order of Muizulis. The July 17, 2010 check contains a reference that the check is for additional "Q P" work.
The plaintiff argues that the July 17, 2010 check was not paid to the defendant, but rather to Muizulis individually for side work performed by Muizulis in his individual capacity rather than on behalf of the defendant. Muizulis testified that the July 17, 2010 check was made payable to him as reimbursement of monies he paid on behalf of the plaintiff, but that at all times he performed the work on behalf of the defendant and not in his individual capacity. The court finds that July 17, 2010 check was paid to the defendant and not to Muizulis individually. Accordingly, the court finds further that the total amount paid by the plaintiff to the defendant under the contract was $68,120.00.
The defendant prepared two invoices for services rendered to the plaintiff. Muizulis testified that he gave the first invoice to the plaintiff on July 7, 2010 and the second and final invoice to the plaintiff on August 2, 2010. On both occasions, Muizulis testified, he handed the invoices to Mohammed Nasir, the representative of the plaintiff who executed the original contract on the plaintiff's behalf. The final invoice reflects a balance due the defendant of $17,774.40.
Upon delivery of the final invoice to the plaintiff, Muizulis testified that Mohammed Nasir did not object to the amount of the invoice or express any dissatisfaction with the work performed by the defendant, but rather told the defendant that the plaintiff was out of money and that he needed to get the store up and running for a few weeks before he could pay the defendant. Later, when payment was not forthcoming and Muizulis inquired of Mohammed Nasir's partner as to the status of the outstanding invoice, Mohammed Nasir told Muizulis that the plaintiff did not owe the defendant any money and that the defendant should put a lien on the property. The defendant thereafter filed the First Mechanic's Lien. Muizulis testified that after accounting for approximately $100 that was paid to an electrician, the total amount that remains due and owing from the plaintiff to the defendant is $17,680.00.
In contradiction to the evidence presented by the defendant, the plaintiff proffered the testimony of Imran "Chief" Nasir, son of Mohammed Nasir and part owner of the plaintiff. Chief Nasir testified that he never saw either of the invoices Muizulis claims to have submitted to his father and that he believed the defendant had been paid in full for all work performed under the contract with the check dated July 6, 2010. The July 6, 2010 check contains a reference that the payment is for "final labor." Muizulis testified that the defendant cashed the July 6, 2010 check.
The plaintiff argues that the July 6, 2010 check was offered as an accord, and that by negotiating the check, the defendant is deemed to have accepted the offer in full satisfaction of the plaintiff's claimed indebtedness to the defendant. In support of this position, the plaintiff cites to County Fire Door Corp. v. C.F. Wooding Co., 202 Conn. 277, 520 A.2d 1028 (1987).
In County Fire Door Corp., supra, there was substantial evidence before the trial court of a good faith dispute between the defendant and the plaintiff as to the existence and amount of the indebtedness claimed due from the defendant. There was also undisputed evidence that the plaintiff accepted the check tendered to it with full knowledge that the tender was made by the defendant as an offer of settlement in full satisfaction of the indebtedness claimed due. Based upon that evidence, the Court found that the parties entered into a valid contract of accord and satisfaction.
In the present case, there is no evidence before the court that either at the time the plaintiff tendered the July 6, 2010 check to the defendant or at the time the defendant cashed the check there was any dispute between the parties as to the existence or amount of the indebtedness claimed due under the contract. Moreover, there is no evidence that the defendant accepted the July 6, 2010 check with knowledge that it was tendered by the plaintiff as an offer of settlement in full satisfaction of the defendant's current claim. In the absence of any such evidence, the court finds that the parties did not enter into a valid contract of accord and satisfaction in connection with the tender by the plaintiff and acceptance by the defendant of the July 6, 2010 check.
Finally, the plaintiff claims that it is entitled to a setoff against the amount of the First Mechanic's Lien in accordance with a $500 a day delay in performance penalty provision under the contract. The plaintiff cites to paragraph 3 of the contract which provides in part that: "Time being of the essence of this contract, Q P will pay for each day or part of the day $500.00 as compensation to the Gristmill Country Market for the loss of their business for the delaying days after the completion time, in case the work is delayed." Paragraph 3 continues, however, as follows: "Any delays in payments except for insufficient progress will void this term. The total completion time will change for any modifications and changes."
As previously noted, Muizulis testified that throughout the term of the contract the plaintiff orally requested various changes to the work to be performed under the contract. The defendant advised the plaintiff that the changes would delay its performance. There was no evidence that the plaintiff raised any concerns with the defendant regarding the delay while the work was being performed or that the plaintiff made claim that money was due it under the penalty provision of the contract. Muizulis also testified that the plaintiff's payments to the defendant were delayed throughout the term of the contract.
Based upon the foregoing facts, and upon all of the credible evidence before the court, the court finds that the defendant has established that there is probable cause to sustain the validity of the First Mechanic's Lien in the amount of $17,680.00. The burden thus shifts to the plaintiff to establish by clear and convincing evidence that the validity of the lien should not be sustained or that the amount of the lien is excessive and should be reduced. The court finds that the plaintiff has not met its more demanding burden of proving by clear and convincing evidence that the First Mechanic's Lien is invalid or that it is excessive in amount.
Therefore, the court finds that based upon the testimony and documentary evidence presented during the hearing on this matter there is probable cause to sustain the validity of the First Mechanic's Lien in the amount of $17,680.00. The plaintiff's Application for Discharge or Reduction of Mechanic's Lien is denied with respect to the First Mechanic's Lien. Having found that the First Mechanic's Lien is valid, the court need not address the plaintiff's second claim that the Second Mechanic's Lien is invalid because it was not timely filed.
SO ORDERED.