By JAMES R. KELLER
Missouri’s Eastern District Court of Appeals recently decided that an architectural firm filed its mechanic’s lien too late. Consequently, the lien was not enforceable.
The case is Bates & Associates, Inc. v. Providence Bank & Vision Ventures, LLC, 2019 WL 4419698, September 17, 2019.
Architects rarely file mechanic’s liens in Missouri. Their liens are against real estate.
Architects typically work for real estate owners. Liens tend to compromise such working relationships, both on current matters and future opportunities.
The architectural firm in this case is Bates & Associates Inc., a licensed architectural firm under Missouri law. The original owner of the real estate was Vision Ventures LLC.
Providence Bank became the owner through a non-judicial foreclosure. Bates sued both to enforce its mechanic’s lien.
While filing an architect’s lien is uncommon, the facts in this case, although somewhat complicated, are not that uncommon for architects and owners on construction projects.
In 2013, Bates entered into a contract with Vision for architectural design and construction services for a senior care facility. The project was located at 17655 Wild Horse Creek Road in Chesterfield.
Financing was involved to make the project a reality. There was an initial loan secured by a deed of trust for $2.48 million in 2008. An additional promissory note secured a modification to the deed of trust for an additional $1.37 million.
Vision defaulted on the loan and note by failing to make all of the payments when due. Vision also filed for Chapter 11 bankruptcy in March 2015, listing Bates as an unsecured creditor.
Bates filed its lien on July 15, 2015 for the work performed for Vision. By doing this, Bates obviously hoped to become a secured creditor in the bankruptcy estate.
Under Missouri law, a mechanic’s lien relates back to the first day of work, regardless of when the lien was filed – provided it was timely filed. This can provide a potential priority when there are several secured creditors.
Two days later, the non-judicial foreclosure took place. Providence obtained title to the property.
Bates filed a three-count petition against Vision and Providence. In Count II, the mechanic’s lien count, Bates sought $305,279 against both, asserting its lien was superior to Providence’s interest in the property.
Bates sued Vision in Counts I and III for breach of contract or in the alternative quantum meruit (for services rendered where there is no specific contract).
After a bench trial, the trial court awarded Bates $276,000 on its breach of contract claim. Expressly finding there was a contract, the court denied the claim for quantum meruit. Under Missouri law you can recover for one or the other, but not both.
The trial court also denied Bates’ claim to enforce its mechanic’s lien and granted Providence’s counterclaim to quiet title to the property. This gave Providence ownership over Bates.
The trial court concluded that the architectural services were not directly connected to any construction or other improvements to the property. It also concluded that Bates did not timely file its lien.
The appellate court focused on the timing issue.
What makes the facts of this case somewhat common is that the architect performed design services under an original 2013 contract. Then Bates did work later that it alleges was pursuant to this original contract. Architects often find themselves in this situation. If Bates was correct, its lien could have applied to all the work it did from the first day of work until the last.
The reason the timing is important is because a mechanic’s lien under Missouri law must be filed within six months of the last day of work performed by that party. Missouri law affords no grace period. A lien filed one day too late is the same as a lien filed one year too late.
Under the original contract, Bates’ last day of work was July 7, 2014. A lien for that work expired on January 7, 2015. Bates filed its lien on July 15, 2015.
Bates claimed that it performed additional work between January and March 2015 and this work was an extension of the original contract. Bates’ timesheets showed internal meetings about the project. In February 2015, Bates sent Vision a proposed contract for additional services in the amount of $70,000.
Bates’ proposal included removing kitchens from the second-floor apartments and a redesign on each floor to reduce overall square footage. This work did not advance beyond discussions in meetings.
There was a fact dispute as to whether Vision agreed to the additional services. Appellate courts defer to the trial court’s determination of fact questions. The trial court found there was an agreement for the original work, but it is unclear if the court’s judgment included any of the later work under the breach of contract claim.
Appellate courts decide for themselves legal questions. In this case, the legal question on appeal was whether the work from January through March 2015 was in accordance with the original 2013 contract and thus lienable according to Section 429.015 of the Revised Statutes of Missouri.
The contract between Bates and Vision required that any additional changes to the original scope of Bates’ work required written authorization. In this case, there was no written authorization.
The appellate court concluded for this reason alone, the later work was not within the original scope of the contract and thus not lienable.
In addition, the Eastern District also concluded that the additional work to develop and communicate its proposal was not necessary to complete the original contract. The drafting of a proposal for additional services, according to the court, did not constitute a lienable improvement upon the land.
The court concluded that a “proposal for a contract for additional services is not the same as a partial or complete set of designs.”
James R. Keller is counsel with Sandberg Phoenix & von Gontard P.C. where he concentrates his practice on construction law, complex business disputes, real estate and ADR. He is also an arbitrator and a mediator. Keller can be reached at (314) 446-4285 or jkeller@sandbergphoenix.com.