Opinion
No. LLI CV 10 6002884S
October 25, 2011
MEMORANDUM OF DECISION
Before the court is a motion for summary judgment (#119) filed by Southern Connecticut Financial Services on the ground that there is no genuine issue of material fact that the plaintiff's foreclosure of its mechanic's lien is barred by a duly executed and valid waiver of mechanic's liens. For the two reasons given, the motion for summary judgment must be denied.
I FACTS
On August 3, 2010, the plaintiff, Milone MacBroom, Inc., filed a five-count complaint against the defendants, Winchester Estates, LLC ("Winchester Estates"), Anthony Silano, Silano Investment Corporation ("Silano Investment"), Tissa Funding Corporation, Capital Source Finance, LLC, Southern Connecticut Financial Services, Inc. ("Southern Connecticut Financial") and Pension Services, LLC. Count one seeks foreclosure of a mechanic's lien against all defendants. The complaint alleges the following relevant facts. On or about July 23, 2009, Winchester Estates was the owner and in possession of property in Winchester, Connecticut. From on or about August 3, 2005, through approximately May 27, 2009, the plaintiff furnished materials and performed services in the construction, repairing or improvement of the land and/or buildings, and provided surveying and engineering design services for proposed development of the property, pursuant to agreements with Anthony Silano, Silano Investment and Winchester Estates. The plaintiff billed Anthony Silano and Silano Investment the balance due for labor and materials in the sum of $311,638.67, plus interest with additional interest accruing from May 27, 2009, all of which remains unpaid. On July 23, 2009, to secure the unpaid balance due to it, the plaintiff filed a certificate of a mechanic's lien, which was duly recorded in the Winchester, Connecticut land records.
Count one is the only count relevant to the current motion for summary judgment.
The plaintiff alleges that taxes, sewer and water charges, if any, are the only liens which are prior in right to the plaintiff's mechanic's lien. The plaintiff seeks to foreclose several encumbrances which are allegedly subsequent in right to its mechanic's lien, including a commercial mortgage deed from Winchester Estates and Aurora Rosa to Southern Connecticut Financial, in the amount of $1,780,000, dated December 1, 2005, and recorded on that date.
On December 20, 2010, Southern Connecticut Financial filed an answer and a special defense, asserting that the "[p]laintiff waived its lien rights in the property to the extent that it may have had any, which [the] defendant denies . . ." Attached to the answer and special defense is a document entitled "Waiver of Mechanics' Liens."
On June 30, 2011, Southern Connecticut Financial filed the present motion for summary judgment along with a supporting memorandum of law and evidentiary support. Southern Connecticut Financial contends that it is entitled to summary judgment because there is no genuine issue of material fact that the plaintiff's foreclosure of Southern Connecticut Financial's lien is barred by the waiver of mechanic's lien. On September 16, 2011, the plaintiff filed an objection to the motion for summary judgment along with a supporting memorandum of law and evidentiary support.
The matter was heard on the September 19, 2011 short calendar.
II DISCUSSION A Summary Judgment Standard
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Sherman v. Ronco, 294 Conn. 548, 553-54, 985 A.2d 1042 (2010). "[T]he `genuine issue' aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred . . . A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case." (Citation omitted; internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).
"In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17-45]." (Internal quotation marks omitted.) Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10-11, 938 A.2d 576 (2008).
B Background
On or about December 1, 2005, Winchester Estates entered into an agreement for the purchase of various parcels of land owned by Robert Perol, Trustee, on which the plaintiff had furnished materials and performed services, beginning on or about August 3, 2005. Financing for the purchase was provided by Southern Connecticut Financial. For purposes of obtaining a mortgagee title insurance policy, on November 30, 2005, the plaintiff was asked by Winchester Estates to sign a waiver of mechanics' liens, such waiver to be provided by Southern Connecticut Financial's attorney. The plaintiff signed the waiver on November 30, 2005. Southern Connecticut Financial recorded its mortgage in the land records on December 1, 2005.
C Parties' Arguments
Southern Connecticut Financial contends that it is entitled to summary judgment because there is no genuine issue of material fact that the plaintiff's foreclosure of Southern Connecticut Financial's lien is barred by the waiver of mechanics' lien duly signed and executed by the plaintiff. According to Southern Connecticut Financial, in connection with the closing of the mortgage from Southern Connecticut Financial to Winchester Estates, the plaintiff executed a waiver of mechanics' liens on November 30, 2005. Southern Connecticut Financial argues that the plaintiff waived its right to file a mechanic's lien for work performed through November 30, 2005, and, thus, the waiver operates to preclude the plaintiff's interest in the property from being prior in right to Southern Connecticut Financial's interest.
In support of its motion, Southern Connecticut Financial submits the affidavit of Janine Becker, the attorney for Southern Connecticut Financial in connection with the closing of the mortgage loan made to Winchester Estates. Becker attests that, "[i]n the normal course of . . . closing . . . mechanic lien waivers are obtained and required in connection with any work performed on the property within ninety (90) days of the closing." Becker also attests to the copy of the lien waiver attached to her affidavit. Southern Connecticut Financial also submits the affidavit of Perley H. Grimes, the attorney for Winchester Estates in connection with the purchase of the property, financing for which was provided by Southern Connecticut Financial. Grimes attests that "[p]rior to the closing, [his] office forwarded a waiver of mechanic's lien to [the plaintiff] for signature" and attests to the attached copy of the waiver.
Southern Connecticut Financial directs the court's attention to General Statutes § 49-33 which provides the statutory basis for and the priority of a mechanic's lien, and specifically to General Statutes § 49-33(d) which states that "[i]f any lienor waives or releases his lien or claim of precedence to any such encumbrance, that lien shall be classed with and have no priority over liens originating subsequent to that encumbrance." Southern Connecticut Financial also directs the court's attention to the relevant provision in the lien waiver, which states that the plaintiff waives its right to seek a mechanic's lien for work performed "which [it] may have, up to the date signed (JMM), on the above-mentioned lot . . . by virtue of said services rendered, work performed or materials furnished, heretofore and hereafter, upon said lot . . . whether completed or still in the process of construction." The waiver was signed on November 30, 2005.
The parties cross out "or may hereafter have" and wrote in, by hand, "up to the date signed." The change was initialed by "JMM," and the waiver was signed by John M. Milone, President, Milone MacBroom, LLC.
Southern Connecticut Financial argues that the mechanic's lien waiver is clear and unambiguous; that it commences from the beginning of time until the date on which it was signed, i.e., November 30, 2005; and that there is no allegation that the plaintiff performed work on December 1, 2005, the date on which Southern Connecticut Financial's mortgage was dated and recorded. Southern Connecticut Financial contends, therefore, that the plaintiff waived all liens it may have had for work which was performed prior to the recording of the Southern Connecticut Financial's mortgage, and there was no work performed by the plaintiff which could be prior in right to Southern Connecticut Financial's mortgage.
In opposition, the plaintiff argues that summary judgment is not appropriate because a genuine issue of material fact exists regarding whether the waiver is void, pursuant to General Statutes § 42-158 l, which provides in relevant part: "(a) Any provision in a construction contract or any periodic lien waiver issued pursuant to a construction contract that purports to waive or release the right of a contractor, subcontractor or supplier engaged to perform services, perform labor or furnish materials under the construction contract to (1) claim a mechanic's lien, or (2) make a claim against a payment bond, for services, labor or materials which have not yet been performed and paid for shall be void and of no effect." According to the plaintiff, under General Statutes § 42-158 l, a mechanic's lien waiver is void and of no effect if, at the time it is signed, the party has not been paid in full for the work it has already performed. The plaintiff submits that, as of November 30, 2005, there existed an outstanding balance due to the plaintiff for services, labor and materials which had been performed and/or provided, in the amount of $7,950. Consequently, according to the plaintiff, the waiver is void, has no effect, and does not remove the priority of its mechanic's lien to Southern Connecticut Financial's mortgage.
At oral argument, the plaintiff conceded that it was paid the outstanding balance three weeks later.
Alternatively, the plaintiff contends that there is a genuine issue of material fact as to whether the plaintiff signed a partial waiver applying only to a portion of the work, rather than a blanket waiver of its right to file a mechanic's lien. The plaintiff submits the affidavit of John Milone, president of the plaintiff, who attests that he "understood and agreed to sign the waiver of mechanic's lien form as it was used to document a partial lien waiver, and that [the plaintiff] would not lien the Aurora Estates Residential Development project to the extent of the work that was paid for. [Milone] signed only pending payment of good funds. As of November 30, 2005, there remained a balance of . . . $7,950.00 to the plaintiff for services rendered to date."
Southern Connecticut Financial did not file memorandum of law replying to the plaintiff's arguments, but, at oral argument on its motion, Southern Connecticut Financial argued that General Statutes § 42-158 l applies only to "up-front lien waivers" or prospective lien waivers, for work not yet performed and not paid for. In the present case, the plaintiff signed the lien waiver after the work was performed and, although Southern Connecticut Financial conceded that the plaintiff had not been paid at the time the lien waiver was signed, Southern Connecticut Financial contends that the existence of that outstanding balance is irrelevant. According to Southern Connecticut Financial, the statute does not render the waiver invalid because it applied to work that the plaintiff had already performed.
D Analysis
The parties do not dispute that the lien waiver was signed. The issue before the court is whether the waiver is void pursuant to General Statutes § 42-158 l because, at the time the plaintiff signed the waiver, it had not been paid in full for work that it had already performed.
In 1999, General Statutes § 42-158i to § 42-158r codified Public Act 99-153, entitled "An Act Concerning Fairness in Financing in the Construction Industry." General Statutes § 42-158 l provides: "(a) Any provision in a construction contract or any periodic lien waiver issued pursuant to a construction contract that purports to waive or release the right of a contractor, subcontractor or supplier engaged to perform services, perform labor or furnish materials under the construction contract to (1) claim a mechanic's lien, or (2) make a claim against a payment bond, for services, labor or materials which have not yet been performed and paid for shall be void and of no effect. (b) Notwithstanding any provision of subsection (a) of this section, this section shall not be construed to prohibit (1) the subordination of a mechanic's lien to the lien of a mortgage or security interest, or (2) the enforcement of an agreement to subordinate a mechanics lien to the lien of a mortgage or security interest."
Several courts in Connecticut have addressed General Statutes § 42-158 l. Based on these cases and the plain meaning of the statute, prospective lien waivers, i.e., an agreement in which one party waives its right to file a mechanic's lien prior to commencement of work, are void and unenforceable. See Alstrom Power, Inc. v. Balcke-Durr, Inc., 269 Conn. 599, 849 A.2d 804 (2004); Lindade Construction, Inc. v. Continental Casualty Co., Superior Court, complex litigation docket at Waterbury, Docket Nos. X10 CV 50 08768, X10 CV 50 08767 (February 25, 2009, Scholl, J.) ( 47 Conn. L. Rptr. 323); Harwill Homes, Inc. v. Plainbridge, LLC, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 05 4002685 (November 4, 2005, Dooley, J.) ( 40 Conn. L. Rptr. 311). It appears, however, that no Connecticut court has examined the statutory provision at issue under the same or similar circumstances as the present case. As such, the issue before the court is one of first impression.
In Alstrom Power Inc. v. Balcke-Durr, Inc., supra, 269 Conn. 599, our Supreme Court affirmed a trial court's determination that a prospective waiver of mechanic's lien was void and of no effect because it was dated after the effective date of General Statutes § 42-158l.
In Lindade Construction, Inc. v. Continental Casualty Co., supra, 47 Conn. L. Rptr. 323, two subcontractors alleged that they were not paid for work performed, and sought payment under a payment bond. The general contractor asserted, as a defense, that the subcontract contained a provision indicating that payments to the subcontractors were contingent on payments to the general contractor by the owner, and that the subcontractors assumed the risk that the general contractor might not get paid by the owner. Id. The issue before the court was whether that provision provided a valid defense to the action on the payment bond or was void pursuant to General Statutes § 42-158 l. The court found that the provision did not provide for either a waiver of the subcontractors' rights to file a mechanic's lien or a bond claim, and, in fact, the provision make no mention of the right to lien. Id. The court rejected the subcontractors' argument that General Statutes § 42-158 l requires only that the language of the contract purport to waive the right to file a mechanic's lien. Id.
In Harwill Homes, Inc. v. Plainbridge, LLC, supra, 40 Conn. L. Rptr. 311, the court held that a "no lien" provision in a contract was prospective in nature and, therefore, void and unenforceable pursuant to General Statutes § 42-158l.
In their respective memoranda of law, the parties fail to cite any Connecticut cases on point and independent research failed to reveal any such cases.
"Statutory interpretation is a question of law." Hibner v. Bruening, 78 Conn.App. 456, 458, 828 A.2d 150 (2003). "The process of statutory interpretation in no way implicates the fact-finding function of the jury but, rather, presents a pure question of law. Consequently, it is a matter within the sole province of the court." State v. Reynolds, 264 Conn. 1, 86, 836 A.2d 224 (2003). "[Q]uestions of statutory interpretation and legislative history present legal questions properly resolved by summary judgment . . . Where the issues are purely legal and there is no disputed issue of fact, summary judgment is appropriate." (Internal quotation marks omitted.) Palmer v. New Britain General Hospital, Superior Court, judicial district of New Haven, Docket No. CV 05 4011575 (July 20, 2011, Wilson, J).
"When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature . . . In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply . . . In seeking to determine that meaning, General Statutes § 1-2z directs us first to consider the text of the statute itself and its relationship to other statutes . . . If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered . . . When a statute is not plain and unambiguous, we also look for interpretive guidance to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement and to its relationship to existing legislation and common law principles governing the same general subject matter." (Internal quotation marks omitted.) Friezo v. Friezo, 281 Conn. 166, 181-82, 914 A.2d 533 (2007).
Courts are also "guided by the principle that the legislature is always presumed to have created a harmonious and consistent body of law . . . [T]his tenet of statutory construction . . . requires us to read statutes together when they relate to the same subject matter . . . Accordingly, [i]n determining the meaning of a statute . . . we look not only at the provision at issue, but also to the broader statutory scheme to ensure the coherency of our construction." (Internal quotation marks omitted.) Hartford/Windsor Healthcare Properties, LLC v. Hartford, 298 Conn. 191, 198, 3 A.3d 56 (2010).
In evaluating the parties' arguments, "the court must remain cognizant of the remedial purpose of our mechanic's lien statutes, i.e., to give one who furnishes materials or services the security of the building and land for the payment of his claim by making such claim a lien thereon . . . and the oft-stated directive that those provisions should be liberally construed in order to implement [that] remedial purpose . . . In this state, a mechanic's lien is a creature of statute and gives a right of action which did not exist at common law . . . The purpose of the mechanic's lien is to give one who furnishes materials or services the security of the building and land for the payment of his claim by making such claim a lien thereon . . . Moreover, [t]he guidelines for interpreting mechanic's lien legislation are . . . well established. Although the mechanic's lien statute creates a statutory right in derogation of the common law . . . its provisions should be liberally construed in order to implement its remedial purpose of furnishing security for one who provides services or materials . . . [The court's] interpretation, however, may not depart from reasonable compliance with the specific terms of the statute under the guise of a liberal construction . . . The statute is designed to furnish security for a contractor's labor and materials and . . . is remedial in nature." (Citations omitted; internal quotation marks omitted.) Lindade Construction, Inc. v. Continental Casualty Co., supra, 47 Conn. L. Rptr. 323; see Intercity Development, LLC v. Andrade, 286 Conn. 177, 183-84, 942 A.2d 1028 (2008).
General Statutes § 49-33 provides for the priority of the mechanic's lien as well as the right to waive the right to file a lien. General Statutes § 42-158 l provides restrictions upon the waiver of a mechanic's lien, but does not usurp the right of a lienor to elect to waive its right to file a mechanic's lien. Any other interpretation of General Statutes § 42-158 l would put it in conflict with General Statutes § 49-33, counter to the well established precepts of statutory construction.
In light of the remedial purpose of the statutory scheme and the plain language of the statute, General Statutes § 42-158 l may reasonably be interpreted to require that the validity of a periodic lien waiver be based on a two-part test. A periodic mechanic's lien waiver is effective only if it applies, retrospectively, for work already performed and paid for. Unless both conditions are met, i.e. performance and payment, the mechanic's lien waiver is void and of no effect. This interpretation is supported by case law recognizing the validity of periodic waivers of mechanic's liens where work has been performed and paid for. In Aronne Building Remodeling, LLC v. Ksiazek, 101 Conn.App. 472, 923 A.2d 757 (2007), our Appellate Court upheld a lower court's determination that a contractor waived the right to file a mechanic's lien where the contractor signed periodic lien waivers for work performed and paid for.
It appears that General Statutes § 42-158l was not at issue in either the lower court case or the Appellate Court case. Because the statute is not mentioned in either opinion, this court cannot speculate on whether it was brought to the attention of either of those courts.
In the present case, Southern Connecticut Financial does not dispute that, at the time the plaintiff signed the waiver of mechanic's lien, the plaintiff had performed the work but had not been paid in full. The plaintiff concedes that he was paid three weeks later. Nonetheless, at the time the waiver was signed, the conditions necessary to make the waiver valid were not met. As such, Southern Connecticut Financial has not demonstrated that there is no genuine issue of material fact that the plaintiff waived its right to file a mechanic's lien. Accordingly, Southern Connecticut Financial's motion for summary judgment must be denied for this first reason given.
Alternatively, the plaintiff argued that there is a genuine issue of material fact concerning the parties' intent when the waiver was signed. The court has determined that the waiver of mechanic's lien is invalid pursuant to General Statutes § 42-158 l, and, thus, there is no need to address this issue. Nonetheless, in an abundance of caution, the court will address this argument.
"Although ordinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact . . . [w]here there is definitive contract language, the determination of what the parties intended by their contractual communications is a question of law . . . In giving meaning to the terms of a contract, the court should construe the agreement as a whole, and its relevant provisions are to be considered together . . . The contract must be construed to give effect to the intent of the contracting parties . . . This intent must be determined from the language of the instrument and not from any intention either of the parties may have secretly entertained . . . [I]ntent . . . is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract . . . [Where] . . . there is clear and definitive contract language, the scope and meaning of that language is not a question of fact but a question of law." (Citations omitted; internal quotation marks omitted.) Schwartz v. Family Dental Group, P.C., 106 Conn.App. 765, 771, 943 A.2d 1122, cert. denied, 288 Conn., 911, 954 A.2d 184 (2008).
The relevant provisions in the lien waiver state that "in consideration of one dollar ($1.00) and other valuable consideration received by each of us to our full satisfaction, we, the undersigned, do hereby waive and release all of the several liens and claims of lien which we may have, up to the date signed (JMM), on the above-mentioned lot by virtue of said services rendered, work performed or materials furnished, heretofore and hereafter, upon said lot . . . whether completed or still in the process of construction." The language of the waiver does not reflect a clear intention to waive the plaintiff's right to file a mechanic's lien for work it had performed but for which it had not received payment. No such intention is clearly stated. Accordingly, what the parties intended is a question of fact, not law.
The plaintiff submits the affidavit of John Milone, as president of the plaintiff, who attests that he "understood and agreed to sign the waiver of mechanic's lien form as it was used to document a partial lien waiver, and that [the plaintiff] would not lien the Aurora Estates Residential Development project to the extent of the work that was paid for. [Milone] signed only pending payment of good funds. As of November 30, 2005, there remained a balance of . . . $7,950.00 to the plaintiff for services rendered to date." The affidavit is based on personal knowledge, contains facts that would be admissible at trial, and affirmatively shows that John Milone is competent to testify to the matters stated in the affidavit. See Barrett v. Danbury Hospital, 232 Conn. 242, 251, 654 A.2d 748 (1995). As such, the affidavit is sufficient to raise a genuine issue of material fact as to whether the plaintiff waived its right to file a mechanic's lien.
Accordingly, for this alternative reason, in addition to the first reason already discussed, Southern Connecticut Financial's motion for summary judgment is denied.
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