Monday, July 23, 2012

Rhode Island Continues Strict Interpretation of Mechanics Lien Law

In the recent matter of GSM Industrial v. Grinnell Fire Protection Systems, the Rhode Island Supreme Court was called upon to interpret the Rhode Island mechanics lien law. A vendor from Pennsylvania recorded a Rhode Island mechanics lien notice but failed to sign it under oath as required by the Rhode Island lien law.

The court began its decision by stating that "This case requires us to don our miner’s helmets and once again descend into the subterranean labyrinth that is the Rhode Island mechanic’s-lien statute. The statute attempts to strike a delicate balance between the rights of contractors, craftsmen, artisans, and furnishers of materials on the one hand and often innocent landowners on the other when a general contractor, hired by the landowner, fails to pay its subcontractors. These circumstances result in a lien created in favor of the subcontractor that is imposed on the landowner’s property without a hearing and with minimal due process."

In the matter before the court, GSM Industrial, Inc., was a subcontractor that entered into an agreement with AirPol, Inc., a general contractor, to install an air-pollution-control mechanism on property owned by the defendant, Grinnell Fire Protection Systems Company, Inc. When AirPol failed to pay GSM the balance of its fee, GSM filed a mechanics lien claim and later a complaint to enforce its mechanic’s lien against Grinnell.

The particular issue before the court was whether a notarial acknowledgment in a subcontractor’s notice of intention satisfies the statutory requirement that such a statement be "under oath." The Rhode Island trial court ruled that a Pennsylvania notary public’s "acknowledgement" was insufficient to satisfy the oath requirement, and, as a result, the notice was fatally defective.

The crux of the matter was whether GSM complied with the statutory requirements for executing a notice of intention to enforce a mechanic’s lien. General Laws 1956 § 34-28-4(a). (the Rhode Island Supreme Court previously described the statute as "a single sentence of gargantuan length," Faraone v. Faraone, 413 A.2d 90, 91 (R.I. 1980)). The statute  sets forth a long series of prescriptions that control both the substance and procedure related to a notice of intention.

The next section of the statute, § 34-28-4(b), addresses the contents of the notice and sets forth the six elements that every notice of intention must contain, requiring that "[t]he notice of intention shall be executed under oath..."

GSM executed the notice in Pennsylvania. The notice’s notarial clause states, in relevant part, "The foregoing instrument was acknowledged before me this 13
th day of September, 2010..."  The primary bone of contention between the parties was whether the notice of intention was executed "under oath" in satisfaction of § 34-28-4(b). Grinnell argued that the notice contained an acknowledgement, not an oath, noting in particular that the document included no variation of the phrase "signed and sworn." The court agreed, holding that an acknowledgement was not an oath, and could not be interpreted as a sworn oath.  The acknowledgement was just a representation as to who was signing it, rather than what Rhode Island mechanics lien law requires: a statement that the document is sworn to under oath, which is in the power of a notary to do.

With that, the court dismissed the lien claim for failure to comply with the statute.

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