Opinion
C.A. No. 05L-04-107-JRS.
Submitted: March 9, 2006.
Decided: July 10, 2006.
Upon Consideration of Endowment Management, LLC's Motion to Dismiss DENIED.
ORDER
This 10th day of July, 2006, upon consideration of Endowment Management, LLC's motion to dismiss, it appears to the Court that:
Docket Item ("D.I.") 7, 15.
1. Endowment Management, LLC ("Endowment" leases the 15th floor ("the premises" of an office building located at 1105 North Market Street, Wilmington, Delaware 19801 ("the building". BR 1105, LLC ("BR" owns the building and Acorn Development Corporation ("Acorn" manages the building.
BR purchased the building from 1105 North Market Street, LLC ("1105 North") on February 15, 2005. 1105 North had owned the building since October 2003. D.I. 1, Ex. A.
Id. at ¶¶ 1-5; D.I. at 1-2.
2. On October 7, 2004, Rockland Builders, Inc. ("Rockland") entered into a construction contract with Endowment whereby Rockland agreed to provide a complete fit out of improvements to the premises. The amount of the contract was $474,265.00. Rockland also agreed to perform additional work in the amount of $4,049.58.
3. As of February 11, 2005, Rockland had performed all work and furnished all supervision, labor, materials, tools, equipment, supplies and other things necessary for the construction and completion of the work described in the agreement. Rockland, however, alleges it was not paid in full for its services and maintains that there is an outstanding balance of $139,481.58.
4. On March 18, 2005, after Rockland demanded payment of the outstanding balance, Endowment sent to Rockland a demand pursuant to DEL. CODE ANN. tit. 25, § 2705 ("section 2705") for a list of persons or entities furnishing labor and material to the premises. Rockland responded on March 28, 2005, informing counsel for Endowment that it would not be responding to its section 2705 request because the request did not come from the owner of the building and, therefore, did not conform to the statute. On April 7, 2005, Acorn, as the manager of the building and as authorized agent of the building's owner, BR, sent Rockland a letter reiterating Endowment's previous section 2705 demand.
Section 2705 provides: "The owner of any structure built, repaired or altered by any contractor or subcontractor may require such contractor or subcontractor from time to time to furnish and submit to him a complete and accurate list in writing of all persons who have furnished labor or material, or both, in connection therewith, and who may be entitled to avail themselves of the provisions of this chapter. Should any such contractor or subcontractor fail to furnish such list for 10 days after demand made therefor by such owner, he shall be entitled to receive no further payments from the owner until such list be furnished and shall not be entitled to avail himself of any of the provisions of this chapter."
D.I. 7 at 2, Exs. A, B, C.
5. On April 15, 2005, Rockland filed this action. It seeks an in rem judgment against Endowment, BR, 1105 North Acorn. Specifically, Rockland seeks an order placing a lien on the building, premises improvements, and land upon which the building is situated. Rockland also asserts breach of contract and quantum meruit claims. On April 26, 2005, after filing this action, Rockland responded to the section 2705 request by providing a list identifying the persons and entities who had furnished labor, material or both to the premises.
See D.I. 1; D.I. 7 at 2; D.I. 16 at 1.
6. Endowment has filed a motion to dismiss Count 1 (the mechanic's lien claim) of Rockland's Complaint. It argues that Rockland cannot avail itself of the mechanic's lien statute because its response to the section 2705 requests was untimely. That is, Rockland did not respond within 10 days of the demand as contemplated under section 2705 and, in fact, did not provide the required list to Endowment until 20 days after Acorn's demand and 40 days after Endowment's initial demand. Therefore, given Rockland's untimely response to the section 2705 demands, Endowment requests that the Court dismiss Rockland's mechanic's lien claim with prejudice.
D.I. 7 at 2, 4.
7. Rockland responds by arguing that Endowment has applied an overly broad construction of section 2705 which is contrary to well established law that the mechanic's lien statute must be strictly construed. Specifically, Rockland contends that, when strictly construed, section 2705 will not deprive a party of a mechanic's lien unless the party making the demand for a list of contractors or materials meets two requirements. First, the demanding party must show that the list requested was not furnished within 10 days of the request. Second, the demanding party must demonstrate that the mechanic's lien was not filed within 10 days of the request (April 7, 2005). Rockland concedes that it did not furnish the list within 10 days. It contends, however, that because it filed the mechanic's lien within eight days of Acorn's request (April 15, 2005), the 10 day time limit had not yet expired and, as such, section 2705 does not prevent Rockland from maintaining its mechanic's lien action. Further, Rockland states that it has complied with section 2705 because it provided the list as requested on April 26, 2005.
D.I. 16 at 3.
8. Before the Court addresses the substantive merits of Endowment's motion, it must first address the standard of review. In advancing their respective arguments, both parties appear to rely upon matters outside of the pleadings. Each party cites to the numerous written communications between counsel for Endowment, Acorn, and Rockland regarding the section 2705 demands. Endowment has also attached the demand letters as exhibits to its motion. The Court, therefore, must determine whether the motion to dismiss should be adjudicated as presented or whether it must be adjudicated under the summary judgment standard set forth in Rule 56.
See D.I. 7 at 2; D.I. 16 at 1.
See D.I. 7, Exs. A, B, C, D.
Mell v. New Castle County, 835 A.2d 141, 144 (Del.Super.Ct. 2003).
9. In determining whether to convert a motion to dismiss to a motion for summary judgment, the "critical questions . . . are whether the extraneous matters are integral to and have been incorporated within the complaint and whether they have been offered to the court to establish the truth of their contents. If the extraneous matters have been offered to establish their truth, the court must convert the motion to dismiss to a motion for summary judgment." Here, as stated, both parties have relied upon matters beyond the pleadings. The letters between counsel in reference to the section 2705 demands were presented for the first time in the motion papers and responses. These letters have been offered to the court to establish the truth of their contents as is evidenced by the parties reliance upon the letters in determining the timing of Endowment's and Acorn's section 2705 demands and Rockland's response, or lack thereof, to such demands. Accordingly, the Court must consider the motion in the context of Rule 56's standard of review.
Id. (citations omitted).
See id.
10. The Court's function when considering a motion for summary judgment is to examine the record to determine whether genuine issues of fact exist. Summary judgment will be granted if, after viewing the record in a light most favorable to the non-moving party, no genuine issues of material fact exist and the party is entitled to judgment as a matter of law. If, however, the record indicates there is a material fact in dispute, or if judgment as a matter of law is not appropriate, then summary judgment will not be granted.
Oliver B. Cannon Sons, Inc. v. Dorr-Oliver, Inc., 312 A.2d 322, 325 (Del.Super.Ct. 1973). See also Super. Ct. Civ. R. 56.
Id.
Ebersole v. Lowengrub, 180 A.2d 467, 470 (Del. 1962).
11. To reiterate, section 2705 provides:
The owner of any structure built, repaired or altered by any contractor or subcontractor may require such contractor or subcontractor from time to time to furnish and submit to him a complete and accurate list in writing of all persons who have furnished labor or material, or both, in connection therewith, and who may be entitled to avail themselves of the provisions of this chapter. Should any such contractor or subcontractor fail to furnish such list for 10 days after demand made therefor by such owner, he shall be entitled to receive no further payments from the owner until such list be furnished and shall not be entitled to avail himself of any of the provisions of this chapter.
12. "A mechanic's lien proceeding is entirely statutory in origin and has been repeatedly held to be in derogation of the common law which requires that the mechanic's lien statute be strictly construed and pursued." Strict construction, however, "does not mean unreasonable or unwarranted construction." "[S]ettled authorities have cautioned that . . . courts should not be overly technical or excessively strict" despite the requirement that the statute be strictly construed.
Ceritano Brickwork, Inc. v. Kirkwood Indus., Inc., 276 A.2d 267, 268 (Del. 1971). See also Builders' Choice, Inc. v. Venzon, 672 A.2d 1, 2 (Del. 1995) ("A mechanic's lien proceeding is entirely statutory in origin . . . Because such actions are in derogation of the common law, Delaware courts have consistently held that the mechanic's lien statute must be strictly construed and pursued."); Silverside Home Mart, Inc. v. Hall, 345 A.2d 427, 428 (Del.Super.Ct. 1975) ("Mechanics' liens are purely statutory remedies, and requirements under the statutes are to be strictly construed.").
In re Delaware Kumber Millwork, Inc. v. Spence, 1997 WL 528249, at *4 (Del.Super.Ct. July 42, 1997). See also Hall, 345 A.2d at 428 ("[A]n extreme requirement of compliance has been frowned upon.").
William M. Young Co. v. Ticor Title Ins. Co., 1994 WL 319131, at *2 (Del.Super.Ct. June 22, 1994). See also id. (quoting Active Korean Records, Inc. v. Formosa Plastics Corp., C.A. No. 85L-JA-24, Stiftel, J. (Del.Super.Ct. Dec. 29, 1987)) ("`[T]he Mechanic's Lien Statute should not be strictly construed to create an unreasonable or unwarranted result. . . . [T]he provisions of the Mechanic's Lien Statute embodying the conditions upon which a lien may be obtained must be substantially complied with.'"); Hall, 345 A.2d at 428 (quoting Warner Co. v. Leedom Const. Co., 97 A.2d 884 (Del. 1953)) ("`We must also deprecate the tendency to construe the mechanics' lien statute with excessive strictness on the ground that the statute is in derogation of the common law. This rule is of little aid to construction in modern times.'").
13. In applying these standards to the case sub judice, the Court finds that Endowment's construction of section 2705 is both unreasonable and unwarranted. The stated "purpose of [section 2705] is to permit an owner to learn the identity of the persons who may obtain mechanics' liens on the owner's property, and if the contractor does not supply the owner with a list of persons who may obtain mechanics' liens, then the contractor `shall not avail himself of any provisions' of the mechanic's lien statute." The language in the statute is not intended to forever bar the contractor from obtaining payment of amounts outstanding or a lien on the property, but rather stays the contractor's ability to receive payment or obtain a lien in order to provide an incentive to the contractor to provide such list to the owner. While a contractor "has no right of action or lien" until such list is provided (i.e. it "is a prerequisite to the attachment of the lien"), once the contractor does provide the requested list, it can once again avail itself of the mechanic's lien statute. The fact that the list is not provided "until after the lien claim is filed is not fatal, provided it is served before the expiration of the time for filing the claim." Here, Rockland filed this action on April 15, 2005 and provided the list requested under section 2705 on April 26, 2005. Because the list was furnished within the time for filing the claim (i.e. within the statute of limitations), Rockland may now avail itself of the mechanic's lien statute.
As previously stated, Endowment contends that Rockland should forever be barred from maintaining a mechanic's lien action because it did not respond within 10 days to Endowment's section 2705 request, even though Rockland did eventually provide the list 20 days after Acorn's request and 40 days after Endowment's initial request. See D.I. 7.
Hoffman v. Siegel, 1991 WL 113431, at *5 (Del.Super.Ct. June 13, 1991).
53 AM. JUR. 2D Mechanics' Liens § 177.
56 C.J.S. Mechanics' Liens § 132.
See DEL. CODE ANN. tit. 25, § 2711.
Cf. Bayside Builders v. Amoroso, 2002 WL 31818509, at *2 (Del.Super.Ct. Nov. 13, 2002) (owner made a section 2705 request on August 17, 2001 [before the statute of limitations deadline] and contractor did not respond until January 2, 2002; the Court ultimately held that contractor could not maintain its mechanic's lien action against owner because it did not "comply with the Mechanic's Lien statute" — specifically section 2711 [statute of limitations] and section 2705 ["the statute contains no indication that a property owner's right to this information is contingent upon full payment to the contractor"]).
14. Based on the foregoing, Endowment's Motion to Dismiss is DENIED.