Disputing A Construction Lien

On July 26, 2008

How To Dispute a Construction Lien in Louisiana or Washington

Filing a construction lien is incredibly simple, and here is a secret: when filing, no one checks to ensure that the property owner actually owes the claimant any money.

In fact, anyone with the wherewithal can actually draft a lien document and file it against any property owner. Not only will the parish or county recorder file the instrument….they must file the instrument.

Every state has some mechanism within its laws to prevent an abuse of this process, and usually a property owner of aggrieved party can recover attorneys fees and penalties from the party making the improper filing. Practically speaking, however, utilizing these proceedings to remove a lien can cost thousands and take months…and while you may get the lien instrument removed, you just as well may not.

This post explores the disputing of a construction lien.

What Makes A Lien Improper Anyway?
Before discussing what you can do to remove an improper lien, it’s prudent to highlight what exactly makes a lien improper in the first place.

Some common things that make a construction lien invalid:

• Failure to adequately describe the property – i.e. filing without a legal property description;

• When required, failing to provide the proper notices. In both Louisiana and Washington, in certain circumstances a contractor, subcontractor or supplier must provide property owners with “notice” of lien rights. If the liening party fails to provide these notices, it may forfeit its lien rights.
• “Shooting for the Moon” – In the heat of the moment, a contractor may lien a project for an unreasonable sum (interests, attorneys fees, the cost of his time in dealing with the collection, etc., etc.). By “shooting for the moon,” the contractor weakens his claim as a whole.
• Failure to meet all of the content requirements. Washington and Louisiana lien statutes are specific about what must be contained within a lien document…and the absence of any one component can be fatal to the claim.
• Timeliness. In Louisiana and Washington and in virtually every state, a construction lien must be filed within a very specific timeframe. If the lien is filed just one day late, it is invalid.

What Does Not Make a Lien Improper? An Important Distinction

It’s important to distinguish between a dispute related to the construction lien itself and a dispute related to the underlying construction work addressed by the lien.

While both Louisiana and Washington provide mechanisms for property owners to dispute a construction lien as being improperly filed, these dispute proceedings will mostly only address the procedural appropriateness of the lien. It will not, in other words, consider whether the contractor’s work was done well or properly, whether the contractor “overcharged,” or decide any other substantive dispute between the contractor and the property owner.

In determining whether someone has abused the liening process, the courts will simply consider whether they had a right to file the instrument…not whether they will prevail in trial related to the underlying obligation or contract. In Washington, for example, court’s have even go so far as to state that “a lien is frivolous only if it presents no debatable issues and is so devoid of merit that it has no possibility of succeeding.” Intermountain Elec., Inc. v. G-A-T Bros. Constr., Inc., 115 Wn. App. 384, 62 P.3d 548 (2003).

That court goes on to sum up its findings with a phrase very applicable to this portion of our discussion, that “every frivolous lien is invalid, but not every invalid lien is frivolous.”

What to Do with an Improper Lien
The procedures for dealing with an improper lien are very similar in Louisiana and Washington.

In Louisiana, the procedure for disputing a lien is a two-step process, and is outlined within La. Rev. Stat. 9:4833. First, you are required to notify the other party of the lien defects and make a formal demand for its removal; and Second, if the lien isn’t removed, you file a petition requesting the court to compel its removal.

The “warning” letter is mandated by 9:4833 (A), and requires that you provide the liening party a period of ten (10) days to remove the inscription before proceeding against them. If the liening party fails to cancel the inscription within the 10-day warning period, you are directed to bring a “mandamus” action under La. Rev. Stat. 44:114(B) to compel the Parish Recorder to cancel the lien inscription.

According to Louisiana procedural rules, a mandamus action should be set for hearing within 2 to 10 days from service of the defendant. Unfortunately, however, the hearing is rarely that speedy as a practical matter. You should be prepared to wait for 20-75 days.

In Washington, the procedure for disputing a lien is outlined with R.C.W. 60.04.081, which labels improper liens as “frivolous claims.”

It’s a one-step proceeding in Washington, allowing an owner to immediately apply to the appropriate superior court by motion for an order directing the claimant to appear in court to show cause why the lien is proper. The hearing date according to §60.04.081 can be no earlier than 6 days and no later than 15 days following service of the motion.

A Washington lien is considered “frivolous” if it is made without reasonable cause or clearly excessive. The filed motion shall state the grounds upon which relief is asked, and shall be supported by the affidavit of the applicant or his or her attorney setting forth a concise statement of the facts upon which the motion is based.

Generally speaking, the laws in both Louisiana and Washington provide that a party disputing an improper lien may recover attorneys fees if they prevail in having the lien removed. Each state, however, has its own twist.

In Louisiana, attorneys fees may be recovered by the party challenging the lien if: (a) they sent the required 10-day notice as per La. R.S. 9:4833(C); (b) the lien is ordered invalid and removed; and (c) the claimant filed the lien with actual malice and in bad faith.

It is usually this third requirement that prevents a Louisiana litigant from being awarded attorneys fees, as it is quite difficult to show that the contractor was being purposefully malicious when filing the construction lien. In practice, Louisiana courts only grant attorneys fees when actual malice and bad faith can be demonstrated.

In Washington, on the other hand, there is no requirement that the lien be filed with actual malice or in bad faith, or that any “pre-litigation notice” be provided. However, §60.04.081 is interesting in that it grants attorneys fees and costs to the winner of the proceedings, regardless of whether that is the contractor or the property owner!

§60.04.081 seriously raises the stakes of lien dispute litigation in Washington. If an owner instigates the proceedings and loses, he or she may be stuck with the claimant’s a
ttorneys fees bill. As such, while a property owner can dispute a construction lien in Washington state, he or she should be very careful about taking that step – especially since Washington courts overturn liens only when they present “no debatable issues and [are] so devoid of merit that it has no possibility of succeeding.”