A Few Days Late, and Many Dollars Short: Utah Court Of Appeals Reminds That Statutory Deadlines Matter, and Provides Clarity On What Is Lienable Work In Utah

Snell & Wilmer

Utah's lien statute is intricate, unique, and oft amended by the legislature. And how Utah courts have interpreted the definitions and deadlines in the lien statute are frequent subjects of trial court best efforts and, inevitably, appellate opinions. Staying current on the lien statute and the courts' rulings on the same is crucial for Utah contractors to preserve their lien rights. The Utah Court of Appeals’ recent ruling in Busico v. Carver, 2023 UT App 162, serves as a reminder of the consequences of failing to meet the technical requirements of the lien statutes. The statute at issue here is the requirement for a contractor to file a pre-lien notice on the subject property within 20 days of commencing work.

Busico, the owner of a condominium, contracted with Complete Construction to perform construction work after a sewer line backed up and flooded their home. Complete Construction submitted an estimate to the Busicos for the proposed project in early October, and after the Busicos' insurance provider agreed to pay for the repair work, the Busicos' directed Complete Construction to begin its work on November 2. On November 5, Complete Construction sent a subcontractor to the condo to "sanitize the floors." Between November 6 and 20, the subcontractor "pressure steam cleaned" some of the flooring in the condo and also used "hospital grade disinfectant" to sanitize the areas that had been impacted by the sewage backup. On November 20, Complete Construction purchased flooring materials for the project and began installing the new flooring the next day.

Between November 21 and November 30, the Busicos grew frustrated with Complete Construction’s work. On November 30, nearly two months after providing an estimate, Complete Construction filed a preliminary lien notice on the Utah State Construction Registry. Shortly thereafter, the Busicos terminated its contract with Complete Construction. After the Busicos declined to pay Complete Construction for some of the work it had performed, Complete Construction recorded a notice of construction lien. The Busicos filed a complaint a few months later, and Complete Construction counterclaimed to foreclose on the construction lien. Relevant here, the trial court ruled against Complete Construction on its lien foreclosure claim, finding that Complete Construction did not file its preliminary within 20 days of when it commenced "providing construction work on the real property" as required by Utah Code Ann. § 38-1a-501(1)(a). The trial court found that the "construction work" included the scheduling and estimating that occurred on October 4 and November 2. As a result, the preliminary notice that Complete Construction filed on November 30 was untimely.

On appeal of the question of the timeliness of the preliminary notice, the Court of Appeals upheld the lower court's ruling, but on different grounds. The Court of Appeals declined to rule on whether "scheduling" and "estimating" fit within the current definition of ‘construction work” because the preliminary notice was untimely filed under different language from the same statute that plainly applied. The legislature amended the lien statute in 2011 to expand the definition of "construction work" to mean "labor, service, material, or equipment provided for the purpose and during the process of constructing, altering, or repairing an improvement." Utah Code Ann. Section 38-1a-102(11)(a) (emphasis added). The Court of Appeals noted that the term "repair" in ordinary usage, means to "put something that is damaged, broke, or not working correctly, back into good condition or make it work again" or to "remedy" or "restore to sound condition after damage or injury." The Court of Appeals found that the cleaning and disinfection efforts that occurred beginning on November 5, which also included removing some of the affected carpet and flooring, qualified as construction work for purposes of the statute. "By removing damaged flooring and spraying various surfaces down with high-grade disinfectant, Complete Construction was attempting to ameliorate the damage done by the swage backup, thus putting the condo back into good condition and restoring it to is previously habitable state. By doing so, Complete Construction was therefore providing 'labor' and 'service' 'during the process of … repairing' the condo, which was enough to constitute work under Utah Code § 38-1a-102(11).” Thus, it did not matter to the Court of Appeals whether work had commenced in early October or early November. The pre-lien notice was filed more than 20 days after either event.

Complete Construction argued that this type of repair was "remedial" in nature, and that under Utah case law did not fit the definition of "construction work." The Court of Appeals noted that prior court opinions found that "ordinary maintenance," "minor repairs," and "cleanup work" are not lienable. But Complete Construction relied on cases that were interpreting versions of the statute that predated the 2011 amendment. The contractor was out of luck.

This case serves as a reminder for contractors and counsel alike: (1) the need to stay current on the latest updates on the deadlines and definitions in, and case law interpreting, the lien statutes, and (2) the uncompromising and sometimes harsh consequences of not meeting the intricate and unique requirements of the Utah lien statutes.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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