Many posts on the lien blog have discussed the complexity of mechanic’s lien laws, and noted that the notice, lien, and bond claim laws throughout the country are constantly changing. [pullquote style=”left” quote=”dark”] If you are really not paying attention, like the judges hearing a recent Kentucky case, a change to the mechanic’s lien law made 19 years ago may sneak past you.[/pullquote] If you are not paying attention, a recent change to mechanic’s lien laws like those we recently talked about in North Carolina or Iowa may slip by. If you are really not paying attention, like the judges hearing a recent Kentucky case, a change to the mechanic’s lien law made 19 years ago may sneak past you.
Kentucky Court of Appeals’s Understanding of Lien Law is Not Current
In a recent unpublished opinion, Bramer Crane Servs., LLC v. Structure Builders & Riggers Mach. Moving Div., LLC, 2012 Ky. App. Unpub. LEXIS 909 (Ky. Ct. App. Nov. 30, 2012), the Court of Appeals of Kentucky displays a seriously outdated view of the mechanic’s lien law. While unpublished opinions are not to be used as binding precedent for other Kentucky courts, they may be cited for consideration if there is no published case that adequately addresses the issue in contention, which is a reason why the court’s lax inquiry into the actual law is concerning. In Bramer, one issue was the validity of a mechanic’s lien filed against property for the unpaid amount due for the rental of a bridge crane.
When considering that question, the court said the following:
This issue has been addressed by our court in Dirt & Rock Rentals, Inc. v. Irwin & Powell Const., Inc., 838 S.W.2d 412 (Ky. App. 1992). In that case, we held that mechanics’ liens are not enforceable when they are sought for the purpose of securing fees owed for the use of rental machinery – unless the party who provided the machinery also provided the labor. (emphasis in original)
This is wrong. While it may have been true in 1992 when the cited case was decided, the mechanics lien law at issue has since been amended twice.
KRS 376.010 Has Been Amended Twice Since 1992
Dirt & Rock Rentals, Inc., the case cited by the Kentucky Court of Appeals in Braden to justify the position that equipment lessors in Kentucky were only entitled to a mechanic’s lien if they also provided the labor, examined a version of KRS 376.010 two steps removed from the current version. In that version of the statute, “labor” is defined as including “all work done by teams, trucks, machinery, and mechanical equipment, whether the owner furnishes a driver or operator or not” but equipment rental is not specifically mentioned. [pullquote style=”right” quote=”dark”] In fact, it seems like it would always be a good idea to read a statute prior to basing a legal decision on it – if you don’t you end up with egg on your face, as a best case scenario.[/pullquote] At that time, the law regarding making a bond claim on a public project in Kentucky had been amended specifically to include equipment rental, precisely for the reason that it was determined not to be included by the preceding definition of labor. Because of this, the court in Dirt and Rock determined that in order to qualify for a mechanic’s lien, the equipment lessor must also provide actual labor to the project. This was clearly justified, and the correct interpretation of the law at that time.
This is no longer the case. The court in Dirt and Rock (again, the very case the current court cited) noted the discrepancy between the law for public and private projects, and even called on the legislature to address the issue, in the following passage:
It may be that logic favors that equipment and machinery rental charges should be lienable on private as well as public projects; however, this is a matter for legislative consideration.
In my opinion, it seems like this is a pretty clear indication that the current statute should be read to determine if it matches up. In fact, it seems like it would always be a good idea to read a statute prior to basing a legal decision on it – if you don’t you end up with egg on your face, as a best case scenario. In this case, KRS 376.010 was amended in both 1994 and 2002, and is no longer the same statute as that examined by the court in Dirt and Rock. The statute as it stands today is quite different.
Current KRS 376.010
The current statute clearly sets forth the right of equipment lessors to file a mechanic’s lien, whether or not they also provided the labor. Section 6, added in 1994, states that
“Supplies also includes the cost of labor, materials, and repair parts supplied or furnished for keeping all machinery and equipment used in the performance of the work in good operating condition; and shall include the agreed or reasonable rental price of equipment and machinery used in performing the work to be done” (emphasis added)
The statute sets forth requirements and limitations, but the ability to lien for amounts due for equipment rental is clearly set forth. If the Court of Appeals had bothered to read the statute instead of blinding quoting a 21 year-old case based on a since-amended statute it would have been simple to determine that lien rights existed. As it stands, however, the court instead followed the same analysis as the court in Dirt and Rock and determined that the only reason lien rights existed was because the equipment lessor also provided “labor”. [pullquote style=”left” quote=”dark”] The mechanic’s lien instrument is complicated enough without the added complexity of straightening out courts that are either apathetic towards the law, or ignorant of it. [/pullquote]
Just Read The Law
It’s frustrating, both as an attorney and as a member of zlien, that courts fail to read the law. The mechanic’s lien instrument is complicated enough without the added complexity of straightening out courts that are either apathetic towards the law, or ignorant of it. While the correct decision was reached in this case, it was reached by the wrong process, and had just one fact been different, the result would have been incorrect.
The take-away here is that it is imperative to closely monitor your lien rights, and to be aware of changes to the lien laws.