Last week I wrote about two court decisions released in April 2012, one out of California (Montgomery Sansome LP v Rezai) and one out of Idaho (Stonebrook Construction v. Chase Home Finance). These cases presented almost identical circumstances, yet the courts reached opposite results.
Summary of Idaho v. California Cases
Idaho and California are two states which prohibit anyone who is required to have a contractor license from filing a lien unless they possess that license. We’ve written about this rule in the past, see the Contractor License tag. When you get a contractor license in these states (and most states), you must actually do business in that name, and not some other name.
What happens in these two cases is the mechanics lien claimants do have a construction license, but they contract and file a mechanics lien in a slightly different name.
In California, the lien and contract was in “Montgomery Sansome Ltd., LP,” but the license was in “Montgomery Sansome Ltd.” In Idaho, the lien and contract was as “Stonebrook Construction, LLC” but the license was in “Stonebrook Construction.”
Idaho invalidated the mechanics lien claim completely, but California upheld the lien claim.
Conflicting Mechanics Lien Decisions Are Frustrating
As a lawyer, these types of situations are very frustrating.
When companies come to a lawyer to ask for legal advice, they want an answer and an useful opinion, and lawyers get a bad reputation for compiling opinions full of words and discussion, but void of any solid answer.
The conflicting decisions from Idaho and California is an example of why its so difficult to get a straight answer from a lawyer: because, sometimes, there isn’t a straight answer.[pullquote style="right" quote="dark"]The conflicting decisions from Idaho and California is an example of why its so difficult to get a straight answer from a lawyer: because, sometimes, there isn’t a straight answer.[/pullquote]
Idaho and California have virtually identical contractor registration laws, and the public policy reasons behind these laws are identical. So how is there room for the law to be applied one way in Idaho, and the complete opposite way in California?
A law school professor of mine (who is also a federal judge in Louisiana) used to declare in class that “fairness is something they teach you in Kindergarden.” With a number of years in litigation under my belt, this sentiment is unfortunately very true. The only lesson to really take out of this statement and the conflicting cases in Idaho and California is that your company is best to avoid ambiguities at all costs. Once there is an ambiguity, it’s game on for expensive legal fees and uncertainty.
Filing a mechanics lien can be very complicated. There are a lot of issues that come up when filing, such as how to identify yourself, how to identify the property being liened, how much to make the dollar value of your claim, what costs can you include in the lien claim, what work actually qualifies for a lien filing, etc. etc.
The best bet is to take the most conservation posture possible on every question, because if you overstep and make a tiny error, you’ll leave your claim in the hands of lawyers and judges…and that’s never predictable, inexpensive, or any good.