21. Two relevant cases:
PBI
Bank, Inc. v. Schnabel Found. Co., No. 2011-CA-001135-MR (Ky. App. Jan.
25, 2013) – equitable tolling applied to allow untimely lien statement to
relate back to a prior lien statement that the county clerk had wrongly refused
to file. **Case
is “to be published” but hasn’t been yet**
Schnabel
Foundation Company (“Schnabel”) provided labor and materials on the Harrods
Creek Overlook Condominiums project in Prospect, Kentucky (the
“Project”). The Project was owned by Premier Land Company
(“Premier”). Premier obtained a mortgage on the property from PBI Bank,
Inc. (“PBI”).
Schnabel’s
last day of work was August 27, 2007. On February 22, 2008, Schnabel’s
counsel mailed a lien statement to the Jefferson County Clerk for
recordation. The clerk refused to file the statement because Schnabel’s
counsel had not signed as the preparer of the statement.
When
Premier defaulted on its mortgage, PBI moved for foreclosure on May 20, 2008
and named Schnabel as a defendant. Nine days later, on May 29, 2008,
Schnabel recorded its Mechanic’s Lien (which included a signature by the
preparer).
Schnabel
and PBI moved for summary judgment on the enforceability of the lien. The
court first examined whether the February 22, 2008 lien statement was
improperly rejected by the Jefferson County Clerk. KRS 382.335(1)
requires that lien statements must include “the name and address of the
individual who prepared the instrument” and must be signed by the individual
who prepared them. The appellate court determined that Schnabel’s
attorney had signed the lien statement and had included a “‘prepared by
statement’ listing [the attorney’s] name and address” but had not signed
separately as the preparer. “KRS 382.335(1) does not require that the
preparer of the statement sign the instrument in a specific form or
location. It only requires that the person who prepared the instrument
execute his signature by ‘affixing a facsimile of his on the instrument.”
Id. at slip op. 4. Therefore, because Schnabel had signed the
first lien statement, the court determined that it had been improperly rejected
by the County Clerk.
The
court then examined whether equitable tolling would allow the untimely second
lien statement to relate back to the improperly rejected first lien statement
(the second lien statement was untimely because it was filed more than six
months after Schnabel’s last day of work, in violation of KRS 376.080).
As Schnabel “could not force the county clerk to perform official duties and
file the [first lien statement],” the Court of Appeals affirmed the application
of equitable tolling and thereby the lower court’s judgment in favor of
Schnabel. Id. at slip op. 5.
Dreamers,
LLC v. Don’s Lumber & Hardware, Inc., No. 2009-CA-000978-MR (Ky. App. Jan.
11, 2013) – examination of notice requirement **Opinion is not to
be published**
The
Dreamers, LLC (“Dreamers”) purchased materials from Don’s Lumber &
Hardware, Inc. (“DLH”) on credit and incorporated those materials into the
construction of a new house in Radcliff, Kentucky. Dreamers sold the
completed house to Appellant Glenda Hoffman.
When
DLH was not paid for its materials, it filed a Mechanic’s Lien against the
house and later sued to foreclose the lien. The case was before the Court
of Appeals on several grounds, including the Appellants’ claim that summary
judgment was improper because DLH had failed to comply with the notice
provisions of KRS 376.010(3) and (4). The Court of Appeals found no merit
in this argument, explaining that the record showed that DLH had given notice
to Hoffman within sixty days of last performing work on the property.
Therefore DLH had complied with the requirements of KRS 376.010(3) and
(4).
S2. Statutory discussion of Kentucky Fairness in
Construction Contracting Act applicable to mechanics liens
A.J. Manion (Contributing Author)
Manion Stigger LLP
