Daily Development for Tuesday, February 8, 2005
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
MECHANIC’S LIENS; CLAIM; REQUIREMENT OF WRITTEN AGREEMENT: Affidavits of completion of work, executed by owner and contractor in support of construction loan advances, do not make out the necessary writing to support a mechanic’s lien claim.
Patock Construction Co., Inc. v. GVK Enterprises, LLC, 858 A.2d 1148 (N.J. Super. A.D. 2004).
In 1997, the defendant approached plaintiff regarding a construction project that required plaintiff to perform carpentry and to renovate an abandoned building. The plaintiff agreed to perform the work, but no price was agreed upon, no hourly rate for work was discussed, and no written contract for the work was ever executed. The defendant subsequently terminated the plaintiff because the plaintiff was not performing quality work and was behind schedule.
After being terminated, the plaintiff sent the defendant a bill for $85,985.00 for the balance of unpaid work and followed that up with a mechanic’s lien claim for $85,985.00. Plaintiff’s view was that the job was a “time and materials” contract, and that the fact that the parties had not agreed upon a fixed price was irrelevant. Plaintiff produced its own records showing time and materials costs (plus a markup) supporting the claimed amount. But the court found these records to be “unreliable.”
The court invalidated the lien and dismissed the plaintiff’s breach of contract claim, finding that there was no written contract based on the evidence presented. Under the New Jersey lien law, only a contractor who performs services pursuant to a written contract is entitled to file a lien. The amount of the lien is to be limited to the contract price, or any unpaid portion thereof, whichever is less, of the claimant’s contract for the work, services, materials, or equipment provided. The court reasoned that the purpose of the written contract is to provide tangible evidence that will reduce the factual proof problems in litigated matters and provide a sound basis for third parties to evaluate the merits of a lien claim.
The court concluded that the only “writings” executed by the parties were in the form of affidavits signed by the property owner, which he used to obtain construction loans from the bank. These affidavits listed the carpentry work as separate items and were signed by the contractor and the owner, indicating that work in the stated amounts had been completed. The two affidavits showed a total of $46,000 in work completed. The court concluded that these affidavits were not enough to constitute a contract because they did not explain what work was to be done or how it was to be billed.
“[T]he affidavits do not establish the essential responsibilities between Klodin and Patock. Indeed, the affidavits show little other than that Patock performed services for Klodin. They provide no basis for third parties to assess the merits of Patock's lien.”
As there was no contract, the plaintiff was entitled only to quantum meruit relief. The court did conclude that the testimony supported a payment in addition to that already given to the plaintiff, but far less than the $87,000 claimed.
The court then determined that the plaintiff willfully overstated the amount listed on the construction lien, as the only amounts for the job that were contained in writing were $46,000, as shown by the two affidavits.
The lien law also provides for the award of attorney’s fees incurred in the defense of a claim that is “without basis” or “willfully overstated.” Because the court found that the plaintiff had willfully overstated his construction lien claim for services rendered, the court awarded the defendant attorney’s fees and costs incurred in defending the suit. The net of the additional amounts awarded to plaintiff and the attorney’s fee award to defendant resulted in a judgment against plaintiff for about $7500.
Comment 1: What the editor found interesting here was the court’s unwillingness to accept the construction loan draw request as a sufficient writing to support a lien claim. Although these documents did not have the specificity, in and of themselves, to support a mechanic’s lien claim alone, there were other records showing the work that the contractor performed, and indeed there was apparently no dispute that the contractor did perform work for which it was not paid. The court says that the affidavits lacked specificity. But how much specificity ought to be required? Clearly the owner drew down $46,000 from the lender based upon his assertion that he owed this amount to the contractor. What more was necessary? The actual quantum meruit award to the contractor was only about a third of that amount.
Comment 2: Note that even if the court had credited a $46,000 contract claim, the plaintiff contractor still would have been hung on the “willful overstatement” claim, since it had liened the property for substantially more than that.
Items reported here and in the ABA publications
are for general information purposes only and
should not be relied upon in the course of
representation or in the forming of decisions in
legal matters. The same is true of all
commentary provided by contributors to the DIRT
list. Accuracy of data and opinions expressed
are the sole responsibility of the DIRT editor
and are in no sense the publication of the ABA.
Parties posting messages to DIRT are posting to a
source that is readily accessible by members of
the general public, and should take that fact
into account in evaluating confidentiality
DIRT is an internet discussion group for serious
real estate professionals. Message volume varies,
but commonly runs 5 15 messages per work day.
Daily Developments are posted every work day. To
subscribe, send the message
subscribe Dirt [your name]
To cancel your subscription, send the message
signoff DIRT to the address:
for information on other commands, send the message
Help to the listserv address.
DIRT has an alternate, more extensive coverage that
includes not only
commercial and general real estate matters but also focuses specifically upon
residential real estate matters. Because real estate brokers generally find
this service more valuable, it is named “BrokerDIRT.” But residential
specialist attorneys, title insurers, lenders and others interested in the
residential market will want to subscribe to this alternative list. If you
subscribe to BrokerDIRT, it is not necessary also to subscribe to DIRT, as
BrokerDIRT carries all DIRT traffic in addition to the residential discussions.
To subscribe to BrokerDIRT, send the message
subscribe BrokerDIRT [your name]
To cancel your subscription to BrokerDIRT, send the
signoff BrokerDIRT to the address:
DIRT is a service of the American Bar Association
Section on Real Property, Probate & Trust Law and
the University of Missouri, Kansas City, School
of Law. Daily Developments are copyrighted by
Patrick A. Randolph, Jr., Professor of Law, UMKC
School of Law, but Professor Randolph grants
permission for copying or distribution of Daily
Developments for educational purposes, including
professional continuing education, provided that
no charge is imposed for such distribution and
that appropriate credit is given to Professor
Randolph, DIRT, and its sponsors.
DIRT has a WebPage at:
Your e-mail address will only be used within the ABA and its entities. We do not sell or rent e-mail addresses to anyone outside the ABA.
To change your e-mail address or remove your name from any future general distribution e-mails you can call us at 1-800-285-2221, or write to: American Bar Association, Service Center, 321 N Clark Street, Floor 16, Chicago, IL 60610
If you are an ABA member, log in to the ABA Web site at http://www.abanet.org/abanet/common/MyABA/home.cfm to edit your member profile. Otherwise, complete the form located at https://www.abanet.org/members/join/coa2.html
To review our privacy statement, go to http://www.abanet.org/privacy_statement.html.
If you have any problems, please contact the list owner at