April 21, 2019

Colorado Court of Appeals: Notice of Mechanics’ Lien Sufficient when Amended Lien Filed Same Day as Original Lien

The Colorado Court of Appeals issued its opinion in Sure-Shock Electric, Inc. v. Diamond Lofts Venture, LLC on Thursday, August 28, 2014.

Property—Mechanics’ Lien—Contract—Foreclosure—Notice—Equitable Apportionment—Prevailing Party—Costs.

Diamond Lofts Venture, LLC (DLV) was the developer and owner of a building project at 2210 Blake Street in Denver (Blake Street property). Sure-Shock Electric, Inc. (Sure-Shock), as the primary electrical contractor on the project, installed the electrical work throughout the building. Thereafter, Sure-Shock filed a mechanics’ lien for the unpaid contract price. Pursuant to their contract, DLV and Sure-Shock participated in arbitration. The arbitrator determined that Sure-Shock had proved its claims, and awarded it the principal amount claimed in the amended lien statement. The trial court affirmed the arbitrator’s award and entered a decree of foreclosure authorizing the sale of the DLV units to satisfy Sure-Shock’s lien.

On appeal, DLV contended that the trial court erred in allowing Sure-Shock to foreclose on its lien because Sure-Shock failed to comply with the statutory requirements necessary to perfect the lien. The Court of Appeals disagreed. Sure-Shock provided DLV proper notice more than ten days before filing the original lien statement. Sure-Shock was not required to provide an additional notice before it filed its amended lien statement the same day as the original lien to correct the amount claimed. Additionally, although DLV only owned seven of the twenty-nine units in the Blake Street property at that time, Sure-Shock’s lien statement sufficiently identified the property by listing the entire Blake Street property and naming only DLV as the property owner. Finally, Sure-Shock was not required to apportion the unpaid contract price according to the amount due for work on the DLV units, rather than claiming the full amount due.

In its cross-appeal, Sure-Shock contended that the trial court abused its discretion in apportioning the lien. A court may equitably apportion a blanket lien. Here, the trial court determined that an equitable apportionment should be based on the actual benefit enjoyed by each unit. Therefore, Sure-Shock was awarded 33.1% of the lien amount, which corresponded to the total square footage of the DLV units relative to the square footage of the entire Blake Street property. Because Sure-Shock’s electrical work benefited the entire Blake Street property, and Sure-Shock chose to encumber only the DLV units, Sure-Shock may not recover the entire unpaid amount of the contract. Therefore, the trial court’s apportionment was not an abuse of its discretion.

In addition, because Sure-Shock’s lien was determined to be valid, Sure-Shock succeeded on a “significant issue in the litigation.” Therefore, the trial court did not abuse its discretion in concluding that Sure-Shock was the prevailing party and awarding it costs. The judgment was affirmed.

Summary and full case available here, courtesy of The Colorado Lawyer.

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