Osgood v. Kent et al
Filing
23
ORDER granting in part, denying in part 4 Objection to Ex Parte Attachment. So Ordered by Magistrate Judge Landya B. McCafferty.(jab)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Jeffrey Osgood d/b/a
JP’s Concrete
v.
Civil No. 11-cv-477-SM
George and Evelyn Kent
O R D E R
In a case that has been removed from the Grafton County
Superior Court, Jeffrey Osgood has sued George and Evelyn Kent,
asserting claims for breach of contract and quantum meruit.
Osgood seeks to recover money he claims to be owed for
demolition and construction work he performed for the Kents
under a contract the Kents terminated before the completion of
the work for which they hired him.
When Osgood filed his
complaint in state court, he also filed a petition/motion for
ex-parte attachment, to perfect a mechanics’s lien.
The
Superior Court granted the motion and awarded Osgood an
attachment in the amount of $35,750.
After the case was
removed, the Kents objected to the attachment and requested a
hearing, which was conducted on November 30, 2011.
For the
following reasons, $23,750 of the attachment ordered by the
Superior Court is discharged, but an attachment in the amount of
$12,000 remians in force.
Background
The following narrative is drawn from the materials
submitted by the parties and evidence presented at the hearing.
The Kents contracted with Osgood to perform three kinds of work
at Ogontz Hall, a building they own in Lyman, New Hampshire.
Specifically, they engaged Osgood to shore the building,
undertake selective demolition, and erect cast-in-place concrete
footings and walls.
Osgood poured concrete on December 17, but
the Kents were not satisfied with the quality of the concrete he
used.
The Kents’ architect and structural engineer concluded
that Osgood’s work needed to be redone.
Osgood disagreed, and
never returned to continue work on the construction site.
By letter dated May 6, 2011, the Kents terminated their
contract with Osgood.
Their letter stated, in pertinent part:
Notice is given that you are not to enter the
premises of Ogontz Camp for any reason without the
express permission of the owners or their
representatives. . . .
You are not to disassemble or move any of your
cribbing and support beams that are shoring the
building. They are to remain in place until the walls
poured on December 17 are replaced and the building is
able to sit on their replacements, or until
alternative arrangements are able to be made to shore
the building. At that time either the cribbing and
beams will be removed and made available to you to
2
pick up, or you will be contacted to disassemble and
remove them yourself.
Pl.’s Ex. 5, at 4.
The Kents have never notified Osgood that his cribbing and
beams are available to be picked up, nor have they contacted him
to remove those items.
On August 30, 2011, Osgood sent the
Kents a bill for $35,750, seeking payment for the following
items, characterized as extra work above the contract agreement:
(1) cutting a concrete floor; (2) recribbing all of the north
wall twice; (3) demential demolition of the north end of the
west wall; (4) removing the superior wall system at the car port
and replacing it with CIP (cast in place) concrete; (5) removing
the superior wall at the east side of the elevator pit and
cribbing; (6) winter heat in wall mix; (7) machine time to build
road for concrete truck and to plow snow; (8) plate compactor
rental; and (9) I-Beam and cribbing rental from May 6, 2011 to
September 6, 2011.
See Pl.’s Ex. 6.
At the hearing, Osgood
testified that while none of the “extra work” described above
was performed under a written change order, he received oral
permission from the Kents’ representative to perform some of
that work, and the remainder of it was so obviously necessary
that the Kents’ representative would have been aware of the need
for it.
The attachment ordered by the Superior Court is for
$35,750, the full amount of Osgood’s August 30 bill.
3
Discussion
The Kents argue that the court should discharge the
attachment because: (1) Osgood is not entitled to a mechanic’s
lien based on work he performed outside the contract, for which
he seeks to recover under quantum meruit; (2) Osgood failed to
perfect his lien within the 120 days required by N.H. Rev. Stat.
Ann. (“RSA”) 447:9; (3) Osgood is not entitled to a mechanic’s
lien for the use of his equipment after the termination of his
contract; and (4) Osgood has not been vigilant in protecting his
rights.
Osgood disagrees, categorically.
The court begins by
outlining the relevant law and then turns to each of the Kents’
four arguments.
A. The Law of Mechanic’s Liens
In federal court, “[p]re-judgment attachments are available
to secure satisfaction of judgments ‘under the circumstances and
in the manner provided by the law of the state where the
district court is held.’”
H.E. Contr. v. Franklin Pierce Coll.,
360 F. Supp. 2d 289, 290 (D.N.H. 2005) (quoting Fed. R. Civ. P.
64).
Under New Hampshire law, a mechanic’s lien is a
statutory right that arises automatically upon the
provision of labor or materials. See N.H. Rev. Stat.
Ann. (“RSA”) Chapter 447:2. The lien provides
security against the property owner for the value of
the labor or materials rendered. Pine Gravel, Inc. v.
Cianchette, 128 N.H. 460 (1986).
4
H.E. Contr., 360 F. Supp. 2d at 290-91. (footnote and parallel
citations omitted).
The New Hampshire Supreme Court has
recently described the mechanics of the mechanic’s-lien statute:
Under RSA 447:2, a person who performs labor or
furnishes material, “to the amount of $15 or more,”
for building or repairing a house, has “a lien on any
material so furnished and on said structure, and on
any right of the owner to the lot of land on which it
stands.” RSA 447:2 (2002). The lien continues for
120 days after the services are provided or the
materials are furnished, RSA 447:9 (2002), and may be
secured in accordance with RSA 447:10, which provides:
“Any such lien may be secured by attachment of the
property upon which it exists at any time while the
lien continues, the writ and return thereon distinctly
expressing that purpose.” RSA 447:10.
Alex Builders & Sons, Inc. v. Danley, 161 N.H. 19, 22-23 (2010).
Regarding the application of those statutes, “[f]ailure to
comply with the specific statutory provisions of perfecting a
mechanics lien is usually fatal.”
Alex Builders, 161 N.H. at 23
(quoting Rodd v. Titus Constr. Co., 107 N.H. 264, 266 (1966);
citing Gen. Insul. Co. v. Eckman Constr., 159 N.H. 601, 609
(2010)).
This is because “[t]he remedy of attachment is in
derogation of the common law.”
Alex Builders, 161 N.H. at 23
(quoting Maine Nat’l Bank v. Baker, 116 N.H. 185, 186 (1976)).
On the other hand, however, “strict compliance with a statute
does not equate to strict construction of its terms.”
Alex
Builders, 161 N.H. at 24 (quoting Impact Food Sales, Inc. v.
Evans, 160 N.H. 386, 399 (2010) (Hicks, J., dissenting)).
5
This is especially true where “[t]he purpose of the
mechanics’ lien law is remedial, to guarantee
effective security to those who furnish labor or
materials which are used to enhance the value of the
property of others.” Innie v. W & R, Inc., 116 N.H.
315, 317 (1976). The general rule is to construe
remedial statutes liberally in favor of the person the
statute is intended to benefit. See, e.g.,
Stankiewicz v. City of Manchester, 156 N.H. 587, 594
(2007).
Alex Builders, 161 N.H. at 24 (parallel citations omitted).
After an attachment is made to secure a mechanic’s lien,
the party against whom the attachment has been made is entitled
to a prompt hearing.
See RSA 511-A:8.
The scope of such a
hearing is limited:
[T]he content and focus of a post-attachment hearing
on a mechanic’s lien is whether the plaintiff has met
its burden under RSA 511-A:8, which defendant may
rebut. [Consol. Elec. Distrib., Inc. v. SEC Concord
Co., No. 89-C-171/179 (Merrimack Cty. Super. Ct. Nov.
21, 1989).] The defendant may challenge the
plaintiff’s basic right to recovery under RSA 447, the
lien amount, or notice provisions. Id.; see also West
Side Dev. Group, LLC v. D’Amour, No. 04-C-018,
(Carroll County Superior Ct., March 24, 2004) . . .
(finding that the provisions of RSA 511-A:3 specifying
the “reasonable likelihood of success test” and the
“sufficiency of assets test” do not apply to a
mechanic’s lien proceeding under RSA 477).
H.E. Contr., 360 F. Supp. 2d at 291.
B. Work Outside the Contract
The Kents’ first argument is that because the work giving
rise to Osgood’s lien is described by Osgood himself as “Extra
Work Above Contract Agreement,” Pl.’s Ex. 6, that work
6
necessarily falls outside the ambit of the mechanic’s-lien
statute, which is limited to work “for erecting a house or other
building . . . by virtue of a contract with the owner thereof.”
RSA 447:2.
The problem with the Kents’ argument is that it
conflates compliance with the statutory provisions for
perfecting a mechanic’s lien, which must be strictly enforced,
see Alex Builders, 161 N.H. at 23, with statutory construction
which should be liberal, see id. at 24.
Here, the question is
whether the work for which Osgood received an attachment was
undertaken “by virtue of a contract” with the Kents.
Construing
that phrase liberally, as the court must, Osgood’s extra work
was undertaken by virtue of his contract with the Kents; it is
only by direct reference to that contract that Osgood’s work was
“extra.”
Moreover, it cannot seriously be argued that Osgood
would have undertaken his “extra” work if not for the work under
the contract that preceded it.
Finally, the court notes that in
Alex Builders, in which the New Hampshire Supreme Court reversed
the trial court’s discharge of the plaintiff’s mechanic’s lien,
“the plaintiff sued the defendants under theories of breach of
contract, quantum meruit and unjust enrichment.”
short, the Kents’ first argument is without merit.
7
Id. at 21.
In
C. Failure to Timely Perfect
The Kents’ principal argument is that Osgood failed to
perfect his mechanic’s lien in a timely manner.
While they do
not say when the 120-day period for perfecting the lien created
by RSA 447:9 began, they argue that whenever it began, it had
run its course by the time Osgood moved the state court for an
ex-parte attachment.
Osgood, on the other hand, argues that the
statutory time period commenced on August 30, 2010, the date on
which he submitted his bill to the Kents or, at the very
earliest, on May 6, the date on which the Kents terminated their
agreement with him.
Neither party is entirely correct.
The court begins with the language of the statute, which
provides that “[t]he lien created by RSA 447:2-7, inclusive,
shall continue for 120 days after the services are performed, or
the materials, supplies or other things are furnished, unless
payment therefor is previously made.”
RSA 447:9.
“In the
absence of waiver[,] failure to comply with the statutory
provisions for perfecting the mechanic’s lien is usually fatal.”
Tolles-Bickford Lumber Co. v. Tilton Sch., 98 N.H. 55, 57 (1953)
(citing Couillard v. O’Connor, 97 N.H. 89 (1951); Ferns v. Am.
Moore Peg Co., 81 N.H. 283 (1924)); see also Alex Builders, 161
N.H. at 23.
8
Osgood’s argument that the time period for perfecting his
lien began to run on May 6, because that day marked the
termination of his contract with the Kents, is incorrect.
None
of the three cases he cites to support that argument is on
point.
In Pike v. Scott, 60 N.H. 469 (1881), the issue was when
the time period began to run against a plaintiff who had
supplied lumber to the defendant in several lots.
The central
holding of that case is this:
If the materials were furnished under one entire
contract, one indivisible lien for the whole was
created thereby. Phil. Mech. Liens, s. 324.
Each
lot of lumber furnished was not a separate cause of
action, but a continuous dealing, and the right of
securing it was not barred until ninety days after the
delivery of the last lot.
Id. at 471-72.
In Pike, it was not the termination of the
contract that started the clock ticking, but the performance of
the last in a series of identical obligations under the
contract, i.e., the last delivery of materials.
In Boulia-
Gorrell Lumber Co. v. East Coast Realty Co., the New Hampshire
Supreme Court explained:
It thus appears that the contractor’s lien is
created as soon as any work or materials are furnished
under the contract, increasing in amount according to
the progress of the work until performance is
completed and subject to no impairment from
intervening changes of the owner’s title.
84 N.H. 174, 177 (1929).
As in Pike, the key event identified
in Boulia-Gorrell is not the termination of the contract, but
9
rather, the completion of performance under the contract.
Finally, notwithstanding Osgood’s argument to the contrary,
Tolles-Bickford does not stand for the proposition that the
statutory time period begins to run at the time a supplier bills
a property owner; what started the clock in that case was the
invoice included with the bill which announced the delivery of
certain materials.
See 98 N.H. at 57-58.
Again, the key event
was performance by the supplier, not the date on which the
contract between the supplier and the property owner terminated,
or the date on which the supplier submitted a bill.
To sum up,
a mechanic’s lien arises when a person performs labor or
furnishes materials, see RSA 447:2, and that is when the time
allotted for perfecting such a lien begins to run, see RSA
447:9.
Based on the foregoing, the court ordinarily would have no
trouble concluding that in this case, the time for perfecting a
mechanic’s lien had run long before September of 2010, given the
undisputed fact that Osgood did no work at Ogontz Hall after the
allegedly unsuccessful pour on December 17, 2009.
Indeed, as to
the first eight items listed in Osgood’s bill, his attempt to
perfect his lien is time-barred; none of that work was performed
any later than December 17, which gave Osgood until late April
to perfect.
He did not do so, and that is fatal to his lien.
10
See Alex Builders, 161 N.H. at 23; Tolles-Bickford, 98 N.H. at
57.
The one exception is the rental fee for Osgood’s I-beams
and cribbing.
As to that item, and that item only, there is one
additional fact that significantly alters the legal landscape.
On May 6, the Kents not only terminated their agreement with
Osgood, but they also forbade Osgood from retrieving his I-beams
and cribbing.
That substantial alteration of the relationship
between the Kents and Osgood was enough to give Osgood a
mechanic’s lien to secure payment for the Kent’s rental of his
I-beams and cribbing.
When Osgood first delivered and installed
those materials, a mechanic’s lien arose by operation of
statute,1 and Osgood’s time for perfecting that lien expired
sometime in April of 2010, at the latest.
But once the Kents
terminated their contract with Osgood and exerted dominion and
control over Osgood’s I-beams and cribbing, those items were no
longer at Ogontz Hall pursuant to the original contract; they
were there pursuant to some sort of quasi-contractual lease
created by the Kents’ effort at self-help.
Once the Kents
exerted control over Osgood’s material, under a new legal
relationship – whatever that relationship might be – Osgood got
1
As the court explains in Section D, infra, Osgood’s Ibeams and cribbing fall outside the general rule that a
mechanic’s lien does not arise to secure payment for the rental
of equipment.
11
a 120 days to perfect his new mechanic’s lien.
Because he
attempted to perfect that lien within 120 days of the Kents’
exercise of control over his material, his attachment was
timely, but only as to the I-beams and cribbing.
There is another way to look at things that also makes
Osgood’s attachment timely.
As the court explains in the next
section, Osgood’s I-beams and cribbing are an unusual kind of
material in the context of the mechanic’s-lien statute.
If
Osgood and the Kents were fighting over a lien to secure payment
for a load of concrete that became a part of the foundation of
Ogontz Hall, that material would have been furnished on one
specific date, the day it was poured.
Here, however, Osgood did
not furnish his I-beams and cribbing with the idea that once
delivered, they would become a part of Ogontz Hall forever.
Rather, both he and the Kents understood that Osgood’s equipment
would stay in place, supporting Ogontz Hall, only until work on
the building had progressed to the point where the building
could stand on its own.
Given that mutual understanding, it
makes sense to see those particular materials as being furnished
not just on the date of their delivery but, rather, for so long
as they remain in place doing service as structural support for
Ogontz Hall.
That is, on every single day that his I-beams and
cribbing have been in place at Ogontz Hall, Osgood has furnished
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materials to the Kents.
Under this liberal interpretation of
the statute, the furnishing continues until Osgood’s materials
are removed from Ogontz Hall.
Such an expansive view of the
term “furnish” is not without precedent; it builds on the spirit
of Pike, in which an attachment to secure payment for a quantity
of wood was timely when obtained within ninety days after the
delivery of the final shipment, under the theory that multiple
shipments of the same material constituted “continuous dealing.”
Pike, 60 N.H. at 471.
Here, Osgood has continuously furnished
his I-beams and cribbing, albeit involuntarily, for the purpose
of supporting Ogontz Hall.
Pike, however, goes only so far.
In that case, where the
court found a unified contract for a certain amount of wood,
seeking an attachment within ninety days after delivery of the
final load was sufficient to support an attachment securing
payment for the entire amount of wood, even loads delivered more
than ninety days before the plaintiff sought to perfect his
lien.
Nothing in Pike, however, would support a similar “look-
back” in this case that would pull in the other eight items in
Osgood’s August 30 bill.
Those items are for eight different
services, not eight deliveries of the same material, as in Pike,
or eight performances of the same service.
Beyond that, while
the Kents’ May 6 letter gave Osgood a second mechanic’s lien to
13
secure the cost of the Kents’ use of his I-beams and cribbing,
nothing in that letter changed the legal relationship between
the Kents and Osgood vis-à-vis the other eight items on his
bill.
To summarize, while not for the reasons advanced by Osgood,
the Kents’ May 6 letter gave him 120 days to perfect a
mechanic’s lien to secure the rental fee for his I-beams and
cribbing from that date forward.
Thus, his motion to attach
constitutes timely perfection of his mechanic’s lien to the
extent of the $12,000 in rent he claims for the I-beams and
cribbing.
However, Osgood’s motion in the Superior Court came
too late to perfect a mechanic’s lien based on the other eight
items on his August 30 bill.
D. Inapplicability to Equipment Rental
The Kents next argue that Osgood is not entitled to a
mechanic’s lien based on their use of his I-beams and cribbing
because there is no rental agreement for those items2 and
because, even if there were, the mechanic’s-lien statute does
not apply to the rental of equipment to a property owner.
The
Kents concede that there is no New Hampshire case on point, but
2
The court has already rejected the argument that for work
to be done “by virtue of a contract,” it must be specifically
identified in and called for by the language of a written
agreement. See Section B, supra.
14
argue that the majority rule is that a mechanic’s lien does not
arise from the rental of equipment that is not consumed or used
in construction unless the applicable statute specifically
authorizes it.
For that proposition, the Kents rely on one case
from Rhode Island and another from Idaho.
Osgood contends that
the I-beams and cribbing for which he charged the Kents a rental
fee fall within the New Hampshire statute, as materials he
furnished “for consumption or use in the prosecution” of the
construction of Ogontz Hall.
RSA 447:2.
Osgood has the better
argument.
To start, the court has little difficulty concluding that
the I-beams and cribbing that Osgood supplied qualify as
“materials . . . for consumption or use in the prosecution” of
the construction of Ogontz hall.
RSA 447:2 (emphasis added).
If the statute did not draw a distinction between materials
consumed in the process of construction and those used therein,
the Kents would have a stronger argument, given that a load of
concrete, for example, would be “used” very differently from the
way a cement mixer would be used on the same construction
project.
Given the well-understood purpose of the mechanic’s-
lien statute, it could reasonably be argued that a statute that
spoke only of “use” intended to define “use” to mean something
along the lines of permanent incorporation into the final
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product.
But here, where the statute speaks of materials
consumed, like concrete poured into a foundation, as well as
materials otherwise used, the statute could well contemplate
that the category of materials otherwise used would include
equipment rented to a property owner.
However, even if New Hampshire were to adopt the majority
rule that the provision of rental equipment falls beyond the
scope of the mechanic’s-lien statute, that rule, at least as
expressed in the case on which the Kents principally rely, would
not exclude the equipment rental at issue in this case.
In
Logan Equipment Corp. v. Profile Const. Co., the Rhode Island
Supreme Court held that under a statute allowing mechanic’s
liens for “work done by any person . . . and for the materials
used” in the construction of any building, 585 A.2d 73, 74 (R.I.
1991) (quoting R.I. Gen. Laws § 34-28-1 (1984)), the plaintiff’s
rental of several pieces of excavation equipment to the
defendant did not qualify as the furnishing of materials, see
Logan, 585 A.2d at 74.
In so ruling, the court explained:
“It is generally held under applicable lien laws
that machinery not (a) totally depreciated by use on
the property or (b) incorporated into the improvement,
or (c) in connection with which labor was also
supplied could not be the basis of a valid lien.” Air
Service Co. v. Cosmo Investments, Inc., 155 S.E.2d
413, 414 ([Ga. Ct. App.] 1967). The excavation
equipment in question was not totally depreciated by
its use, nor was it incorporated into the improvement.
16
Therefore, it does not satisfy the definition of
materials.
Id. (parallel citations omitted).
Here, of course, the I-beams
and cribbing are incorporated – if only temporarily – into
Ogontz Hall, which is precisely why the Kents sent Osgood a
letter forbidding him from removing his property from their
premises.
Given the substantial differences between the
excavators in Logan and the materials at issue here, and the
nature of their respective uses, Logan is no obstacle to a
determination that Osgood is entitled to a mechanic’s lien based
on the Kents’ continuing use of his I-beams and cribbing.
The
Idaho case on which the Kents rely, Great Plains Equipment, Inc.
v. Northwest Pipeline Corp., 979 P.2d 627, 633-36 (Idaho 1999),
is very similar to Logan, and nothing in that case would bar a
lien based on a rental fee for Osgood’s I-beams and cribbing.
In Great Plains, the Idaho Supreme Court set aside the trial
court’s decision that the plaintiff could recover unpaid rental
charges for leased equipment, id. at 636, where “the leased
equipment was not incorporated into, or consumed and destroyed
by, the construction project,” id. at 635.
In this case, until
Osgood’s I-beams and cribbing are removed from Ogontz Hall, that
leased equipment is incorporated into the improvement.
In short, the I-beams and cribbing at issue here are not
like a load of concrete, destined to be a part of Ogontz Hall
17
for as long as the building shall stand, but neither are they
like a cement mixer that Osgood could have hitched to a truck
and hauled away at any time.
Given the New Hampshire Supreme
Court’s directive to construe the mechanic’s-lien statute
liberally, in order to effectuate its remedial purpose, see Alex
Builders, 161 N.H. at 24, the court concludes that for purposes
of that statute, Osgood’s I-beams and cribbing are materials he
furnished continuously for as long as they were (or are)
incorporated into Ogontz Hall.
Thus, the rental fees for those
materials may be secured by a mechanic’s lien.
E. Osgood’s Lack of Diligence
The Kents’ final argument is that Osgood should be denied a
mechanic’s lien, under the principles of equity, due to his lack
of diligence in seeking to protect his interests.
Osgood’s
diligence, or his lack thereof, is adequately measured by the
time limit stated in RSA 447:9, and there is no principle of
equity that would move the court to deny Osgood a lien he sought
to perfect within that time limit.
Thus, the Kents’ fourth
argument is not persuasive.
Conclusion
For the foregoing reasons, the Kents are entitled to some
but not all of the relief they seek in their objection to
18
Osgood’s attachment, document no. 4.
Specifically, Osgood is
entitled to an attachment against the Kents’ property, but only
for the amount he claims to be owed for the rental of his Ibeams and cribbing.
As to the remaining items on his August 30
bill, his motion to attach was not filed in time to perfect his
mechanic’s liens.
Accordingly, $23,750 of the attachment
ordered by the Grafton County Superior Court is discharged,
leaving in place an attachment in the amount of $12,000.
SO ORDERED.
__________________________
Landya McCafferty
United States Magistrate Judge
December 21, 2011
cc:
David P. Cullenberg, Esq.
Aaron H. Simpson, Esq.
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