Opinion
Nos. FST CV 06 5002656
June 26, 2007
MEMORANDUM OF DECISION ON APPLICATIONS TO DISCHARGE MECHANICS LIENS
This matter, concerning the validity of various mechanics liens, raises, inter alia, issues as to whether certain excavation work falls within the provisions of the Home Improvement Act or the New Home Construction Contractors Act.
Before the court are three applications to discharge three mechanic's liens, which all relate to a set of undisputed facts which were presented to the court at an evidentiary hearing. The plaintiffs, Roman Banka and Halina Banka (Bankas), own real property located at 75 Wild Duck Road in Stamford. On September 12, 2005, the Bankas entered into a written agreement with Call Peter, Inc. (Call Peter), for a demolition project on their property. The contract called for Call Peter to demolish the entire structure and foundation, including the footings, for $15,000, which the Bankas paid Call Peter.
After the demolition, the Bankas entered into an oral agreement with Call Peter for an excavation project that entailed excavation of land and tree removal. This project was intended to accommodate a foundation for a new home. Call Peter rented equipment and received labor from the second defendant, United Rentals. Upon completion, Call Peter presented the Bankas with an invoice for $38,172.57. This figure gave rise to a dispute between Call Peter and the Bankas, and prompted Call Peter to file a mechanic's lien on the Bankas' property for invoiced and disputed amounts, plus running interest. Part of that amount, specifically, $13,319.84, reflects the amount that Call Peter allegedly owes to United Rentals. Thus, United Rentals also filed its own mechanic's lien on the Bankas' property for the amount of $13,319.84.
Following the completion of the excavation project, the Bankas contracted with a different company, Reyes Construction (Reyes), to complete the next phase of construction, which involved concrete foundation work for the new home. Their contract was in writing for the amount of $43,000. To complete the foundation project, Reyes orally contracted with a subcontractor, the third defendant, GPG Construction Modular Homes, LLC (GPG), to lay the concrete foundation and perform other related work, including construction of foundation walls, footing, wall insulation and waterproofing. The Bankas paid Reyes $34,000 in two installments; the first for $15,000 on December 15, 2006, and the second for $19,000 on December 31, 2006. GPG claims, and the Bankas do not dispute, that GPG provided $36,000 worth of work and materials to Reyes pursuant to their oral agreement, but that Reyes only paid GPG $6000. These events prompted GPG to file a mechanic's lien on the Bankas' property in the amount of the $30,000 difference.
Reyes is not a party to these matters.
The Bankas have filed three separate applications for the discharge or reduction of Call Peter's lien, United Rentals' lien, and GPG's lien. The Bankas have appended affidavits to each application attesting to the invalidity of each lien. The court has held an evidentiary hearing, and has received and reviewed several briefs.
Banka v. Call Peter, Inc., Superior Court, judicial district of Stamford, Docket No. CV 06 5002656.
Banka v. United Rentals, Superior Court, judicial district of Stamford, Docket No. CV 06 5002658.
Banka v. GPG Construction Modular Homes, LLC, Superior Court, judicial district of Stamford, Docket No. CV 06 5002657.
Connecticut General Statutes § 49-35b sets forth the standards for deciding an application to discharge or reduce a mechanic's lien. Section § 49-35b(a) provides: "Upon the hearing held on the application or motion set forth in section 49-35a, the lienor shall first be required to establish that there is probable cause to sustain the validity of his lien. Any person entitled to notice under section 49-35a may appear, be heard and prove by clear and convincing evidence that the validity of the lien should not be sustained or the amount of the lien claimed is excessive and should be reduced." General Statutes § 49a-35b(b) further provides: "Upon consideration of the facts before it, the court or judge may: (1) Deny the application or motion if probable cause to sustain the validity of the lien is established; or (2) order the lien discharged if (A) probable cause to sustain its validity is not established, or (B) by clear and convincing evidence its invalidity is established; or (3) reduce the amount of the lien if the amount is found to be excessive by clear and convincing evidence; or (4) order the lien discharged or reduce the amount of the lien conditioned upon the posting of a bond, with surety, in a sum deemed sufficient by the judge to indemnify the lienor for any damage which may occur by the discharge or the reduction of amount."
In applying § 49-35b, 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 [must also consider] the oft-stated directive that those provisions should be liberally construed in order to implement [their] remedial purpose . . ." (Citation omitted; internal quotation marks omitted.) 36 DeForest Ave., LLC v. Creadore, 99 Conn.App. 690, 695, 282 Conn. 905 (2007). "For a lien to be upheld, a lienor must establish only that there is probable cause to sustain the validity of the lien. Proof of probable cause is not as demanding as proof by a fair preponderance of the evidence . . . It is important to remember that the [lienor] does not have to establish that he will prevail, only that there is probable cause to sustain the validity of the claim . . . The legal idea of probable cause is a bona fide belief in the existence of the facts essential under the law for the action and such as would warrant a man of ordinary caution, prudence and judgment, under the circumstances, in entertaining it . . . Probable cause is a flexible common sense standard. It does not demand that a belief be correct or more likely true than false." (Citation omitted; internal quotation marks omitted.) Id., 694-95.
Section 49-35b(a) provides that the burden shifts to the plaintiff to prove the lien's invalidity by clear and convincing evidence once the lienor establishes that there is probable cause to sustain the lien's validity. "Clear and convincing proof is a demanding standard denot[ing] a degree of belief that lies between the belief that is required to find the truth or existence of the [fact in issue] in an ordinary civil action and the belief that is required to find guilt in a criminal prosecution . . . [The burden] is sustained if evidence induces in the mind of the trier a reasonable belief that the facts asserted are highly probably true, that the probability that they are true or exist is substantially greater than the probability that they are false or do not exist." (Internal quotation marks omitted.) Shelton v. Statewide Grievance Committee, 277 Conn. 99, 110, 890 A.2d 104 (2006). "[T]he clear and convincing evidence standard should operate as a weighty caution upon the minds of all judges, and it forbids relief whenever the evidence is loose, equivocal or contradictory." (Internal quotation marks omitted.) Miller v. Commissioner of Correction, 242 Conn. 745, 791, 700 A.2d 1108 (1997).
I
In the matters of Call Peter and United Rentals, the court must determine whether the Home Improvement Act (HIA), General Statutes § 20-418 et seq., or the New Home Construction Contractors Act (NHCCA), General Statutes §§ 20-417a through 20-417j, applies to the excavation of land later to be used to create a foundation for a new home. The parties do not dispute that the excavation project was subject to an oral agreement.
Because the validity of both Call Peter's lien and United Rentals' lien are dependent on the same issue and because United Rentals appears to have adopted Call Peter's arguments, the discussion pertaining to Call Peter's lien also applies to United Rentals' lien.
Which statute applies is material because General Statutes § 20-429 (a) provides in relevant part: "No home improvement contract shall be valid or enforceable against an owner unless it: (1) is in writing, (2) is signed by the owner and the contractor . . ." Our courts have determined that contractors cannot enforce oral agreements to perform services for homeowners that are governed by the HIA and that liens cannot be validly premised on such agreements. See Caulkins v. Petrillo, 200 Conn. 713, 720 (1986). On the other hand, although the NHCCA also requires that certain provisions must be in writing; see General Statutes § 20-417d; the Supreme Court has determined that a contractor's failure to comply with the requirements of this new home act does not preclude the contractor from enforcing his or her agreement with a homeowner or render his or her lien invalid. See D'Angelo Development Construction Co. v. Cordovano, 278 Conn. 237, 243-46, (2006).
The Bankas argue that their oral agreement with Call Peter is unenforceable pursuant to the HIA's requirement that an agreement must be in writing. Call Peter counters that the oral agreement is enforceable because the excavation project falls within the NHCCA. The Bankas also argue that the parties did not have a meeting of the minds regarding the contract price. Call Peter counters that the parties agreed to a fixed price.
The issue of whether the HIA or the NUCCA applies to the excavation of land for the purpose of constructing a foundation for a new home has not been decided by our appellate courts. The parties' claims raise a question of statutory interpretation. "When interpreting a statute, [the] fundamental objective is to ascertain and give effect to the apparent intent of the legislature . . . The meaning of a statute shall, in the first instance, be ascertained from 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." (Citation omitted; internal quotation marks omitted.) D'Angelo Development Construction Co. v. Cordovano, supra, 278 Conn. 243, quoting General Statutes § 1-2z.
To begin, the court consults the text of the HIA in relation to that of the NHCCA. Section 20-419(4) of the HIA provides, in relevant part, that a "home improvement" includes, but is not limited to, "the repair, replacement, remodeling, alteration, conversion, modernization, improvement, rehabilitation . . . or addition to any land or building or that portion thereof which is used or designed to be used as a private residence, dwelling place or residential rental property, or the construction, replacement, installation or improvement of driveways, swimming pools, porches, garages, roofs, siding, insulation, sunrooms, flooring, patios, landscaping, fences, doors and windows and waterproofing in connection with such land or building or that portion thereof which is used or designed to be used as a private residence, dwelling place or residential rental property . . . in which the total cash price for all work agreed upon between the contractor and owner exceeds two hundred dollars." It further provides in relevant part: "'Home improvement' does not include: (A) The construction of a new home . . . Inasmuch as an excavation involves the alteration of a portion of the land that is used as a private residence, it is a "home improvement," unless the excavation occurs in connection with the construction of a new home. We now turn to the NHCCA. Section 20-417a(3) of the NHCCA defines "contract" as "any agreement between a new home construction contractor and a consumer for the construction or sale of a new home . . ." Section 20-417a(5) defines "new home construction contractor" as "any person who contracts with a consumer to construct or sell a new home or any portion of a new home prior to occupancy . . ." Section 20-417a(6) defines "new home" as "any newly constructed (A) single-family dwelling unit, (B) dwelling consisting of not more than two units, or (C) unit, common element or limited common element in a condominium, as defined in section 47-68a, or in a common interest community, as defined in section 47-202 . . ."
Significantly, the NHCCA does not define the term "new home construction." Therefore, it remains unclear whether the statute applies to the excavation of land that will be used for a new home. "When a statute is not plain and unambiguous, [the court must] 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.) Cogan v. Chase Manhattan Auto Financial Corp., 276 Conn. 1, 7 (2005).
The legislative history of the NHCCA does not provide any guidance as to the type of work that could constitute a new home construction. Furthermore, neither the statute's general purpose, which was to extend consumer protection against unscrupulous home improvement contractors to the victims of unscrupulous new home construction contractors, nor the relevant circumstances surrounding the statute's enactment shed light on the particular issue before the court. See Conn. Joint Standing Committee Hearings, General Law, Pt. 1, 1999 Sess., pp. 11-13, 14-15, 16-18, 20-23, 33, 34, 59, 64-67, 70-73. (Emphasis added).
The courts have, however, addressed the closely related issue of whether pool work that is performed in connection with the construction of a new home comes under the HIA. Specifically, in Rizzo Pool Co. v. Del Grosso, 232 Conn. 666 (1995), the plaintiff contractor brought an action for breach of contract when the defendant homeowners refused to permit the plaintiff to install a swimming pool on the property where they were building a new home. The defendants filed a special defense in which they asserted that the agreement was a home improvement contract, unenforceable because it did not contain a starting or completion date and was not signed by both defendants. The defendants filed a motion for summary judgment on this ground, which the court denied on the ground that the HIA did not apply because the statute exempted activities that are connected with new home construction. At trial, the court prohibited the defendants from introducing any evidence of this special defense. The jury returned verdicts in favor of the plaintiff on its complaint as well as on the defendants' counterclaim. The defendants appealed on the ground, inter alia, that the trial court improperly precluded them from establishing their special defense.
The Supreme Court agreed with the defendants and reversed that portion of the trial court judgment. The court engaged in the following statutory construction. "Our starting point is the broad language of § 20-419(4), which defines 'home improvement' to include the installation of a swimming pool for use at a private residence. Although construction of the defendants' new home had not been completed at the time the parties contracted for the installation of the pool, it is undisputed that the new dwelling was designed and intended for use as the defendants' private residence. Thus, the pool to be constructed by the plaintiff constituted a 'home improvement' as defined by § 20-419(4) unless its installation represented '[t]he construction of a new home' under § 20-419(4)(A) . . ."
"In the circumstances of this case, we conclude that the planned pool installation was not a part of '[t]he construction of a new home.' The pool installation contract was completely separate and distinct from the defendants' home construction contract, and the two contracts were to be performed by entirely different and unrelated contractors. Moreover, the documents that comprise the contract for the construction of the swimming pool contain no indication that the pool was to have been installed at any particular stage of the new home construction, or even that it was to have been installed prior to the completion of the new home. In fact, the contract documents make no reference whatsoever to the construction of the defendants' new home. Thus, although the defendants anticipated that the swimming pool would be installed prior to the completion of their new home, the record does not support the conclusion that the swimming pool installation and the new home construction were so interrelated, temporally or otherwise, that the installation of the pool constituted an integral part of "[t]he construction of a new home under § 20-419(4)(A)." Rizzo Pool Co. v. Del Grosso, supra, 232 Conn. 677-78.
Similarly, in Weber's Nursery, Inc. v. Prior, 71 Conn.App. 433, 437 (2002), the Appellate Court decided that the trial court properly determined that the HIA applied to the plaintiff's landscaping work at the site of the defendants' new house because the work was not "an integral part of [t]he construction . . ." (Internal quotation marks omitted.) Id. The Appellate Court explained: "In this case, the [trial] court found, relying on the reasoning set forth in Rizzo Pool Co. v. Del Grosso, 232 Conn. 666, 678 (1995), that the landscaping work was not 'so interrelated, temporarily or otherwise, that [it] constituted an integral part of "[t]he construction of a new home.'" The court concluded that the work performed was a home improvement to which the act applies . . ."
"The court had before it the fact finder's report, which contained the finding that nothing in the proposal referenced new home construction or specified performance at a certain stage of the home construction . . . In support of its conclusion that the landscaping was not an integral part of the construction of a new home, the court considered the fact that a certificate of occupancy was issued before the landscaping was begun and the fact that the plaintiff was not the general contractor building the house, nor was the plaintiff working for the general contractor." Weber's Nursery, Inc. v. Prior, supra, 71 Conn.App. 437.
Although the NHCCA was not enacted until 1999, four years after Rizzo was decided, it is reasonable to conclude that the reasoning used therein should also be applied in determining whether excavation work is covered by the NHCCA or HIA. Thus, when excavation work is "so interrelated, temporally or otherwise, that [it] constitute[s] an integral part of '[t]he construction of a new home,'" the work is not a home improvement to which the HIA applies; Rizzo Pool Co. v. Del Grosso, supra, 232 Conn. 678; but may come under the NHCCA.
The process of statutory interpretation also involves some ancillary considerations. "There is a presumption that the legislature, in enacting a law, does so with regard to existing relevant statutes so as to make one consistent body of law . . . In construing a statute, common sense must be used and courts must assume that a reasonable and rational result was intended." (Citation omitted; internal quotation marks omitted.) Board of Education v. State Board of Education, 278 Conn. 326, 337 (2006). General Statutes § 1-1(a) provides: "In the construction of the statutes, words and phrases shall be construed according to the commonly approved usage of the language; and technical words and phrases, and such as have acquired a peculiar and appropriate meaning in the law, shall be construed and understood accordingly."
Thus, in determining whether the Banka excavation in question is more akin to new home construction than to a home improvement, the court must presume that the legislature intended a rational result. The most logical conclusion is that the excavation is closer to new home construction because, during the excavation, no home existed. The excavation work contemplated a new home, whereas an improvement assumes that a home already exists, or at least that construction of a home has already commenced. The term "improvement" is commonly defined as "[a] valuable addition made to property (usually real estate) or an amelioration in its condition, amounting to more than mere repairs or replacement, costing labor or capital, and intended to enhance its value, beauty or utility or to adapt it for new or further purposes. Generally has reference to buildings, but may also include any permanent structure or other development, such as a street, sidewalks, sewers, utilities, etc." Black's Law Dictionary (6th Ed. 1990), p. 757. Because an improvement requires the existence of something that is being improved upon, and no home existed during this excavation, it follows that the excavation, without more, cannot be a home improvement. Furthermore, those Superior Courts that have considered the issue have all reached the same conclusion, either explicitly or implicitly.
In Rizzo Pool Co. v. Del Grosso, supra, 232 Conn. 677 n. 17, the court noted: "We do not agree that an improvement is exempt from the requirements of the HIA solely because the construction of the home to which the improvement is contemplated has not been completed. In circumstances where, as here, the new home construction had already commenced by the date on which the contract for the installation of the improvement was signed, it would be contrary to the remedial purpose of the HIA to deprive the consumer of the otherwise applicable protections of the act."
In several cases, our Superior Court has concluded that work involving excavation for a new home is not a home improvement and is, thus, not subject to the HIA's requirements for an enforceable contract. For example, recently in Capp Industries, Inc. v. Schoenberg, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket Nos. CV 02 0191496, CV 03 0197250 (July 21, 2006, Lewis, J.T.R.), the court determined that an excavation project similar to the one in this matter was not a home improvement. The plaintiff contractor in Capp sought to foreclose on a lien based on work done for the defendant homeowners that included "demolition of an existing house, excavation for a new foundation, and moving a large tree and some shrubs . . ." Id.
See also T.M. Builders, LLC v. Boles, Superior Court, judicial district of New London, Docket No. CV 03 0565545 (December 3, 2003, Martin, J.) (genuine issue of material fact exists as to whether contract to excavate around front and side of home because "agreement could be construed as a contract for 'home improvements' or 'new home construction'"); Brzozowski v. Technical Excavation Co., LLC, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 02 0279675 (August 27, 2002, Gilardi, J.) (lien valid because services performed by plaintiff "were not subject to the Home Improvement Act"); Claywell v. Moon, Superior Court, judicial district of Hartford, Docket No. CV 01 0812959 (May 20, 2002, Corrigan, J.T.R.) (same); Shay, Jr. v. Gallagher, Superior Court, judicial district of Fairfield, Docket No. CV 93 0302341 (January 23, 1995, Levin, J.) (judgment for contractor because excavation and other related work not home improvement); Dovitski v. Gagnon, Superior Court, judicial district of Hartford-New Britain at New Britain, Docket No. CV 91 0448005 (January 21, 1992, Allen, J.) [6 Conn. L. Rptr. 611] (7 C.S.C.R. 296, 296) (lien valid because excavation of real property in order to construct modular home not home improvement).
It is noted that the definition of the phrase "home improvement" in the HIA also includes the "replacement . . . of . . . any . . . building . . . which is used . . . as a private residence . . ." General Statutes § 20-419(4). Nevertheless, in several cases, judges of the Superior Court have determined that the HIA did not apply to a contractor's work that included excavation for a foundation for a new home to replace an existing house, in that the work "involved the construction of a new house, not improvements to an existing house." Capp Industries, Inc. v. Schoenberg, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket Nos. CV 02 0191496, CV 03 0197250 (July 21, 2006, Lewis, J.T.R.); see also Claywell v. Moon, Superior Court, judicial district of Hartford, Docket No. CV01 0812959 (May 20, 2002, Corrigan, J.T.R.). On the other hand, if the excavation was for foundation work in connection with adding or remodeling an existing home, the court has decided that HIA does apply. See Bakish v. Donnelly, Superior Court, judicial district of Danbury, Docket No. CV 03 0039634 (January 26, 2004, Comerford, J.).
Call Peter's excavation project is therefore not a home improvement and the parties' oral agreement is thus not unenforceable by the contractor due to its failure to comply with the HIA. There is probable cause found in favor of sustaining the validity of the lien.
The burden would now shift to the Bankas to demonstrate the lien's invalidity by clear and convincing evidence. The Bankas argue that the contract is unenforceable pursuant to the NHCCA because Call Peter is not a licensed new home construction contractor under General Statutes § 20-417j and is, therefore, not exempt from the act's registration requirements.
General Statutes § 20-417j(a)(3) exempts from registration "any . . . person holding a professional or occupational license, registration or certificate issued pursuant to the general statutes, provided such person engages only in the work for which such person is licensed, registered or certified . . ."
The issue of a lienor's noncompliance with the NHCCA was recently addressed in D'Angelo Development Construction Co. v. Cordovano, supra, 278 Conn. 237. The sole issue in D'Angelo was whether a contract that failed to comply with the registration, disclosure and contract language provisions of the statute was unenforceable. The trial court ruled against the defendant homeowners, who argued that the plaintiff contractor's noncompliance rendered the contract between them unenforceable and the contractor's subsequent lien invalid. The Supreme Court affirmed the trial court's denial of the application to discharge the lien. Based on its review of NHCCA's language and legislative history, and HIA's contrasting penalty provisions, the court concluded that "the legislature did not intend to render noncomplying contracts unenforceable under the New Home Construction Contractors Act." Id., 248. D'Angelo, thus teaches that the Bankas cannot sustain their burden of proving the invalidity of Call Peter's and United Rentals' liens. In addition, whether the parties assented to the same contract price is an issue for the court to address later at trial. Therefore, the court must deny the Bankas' application to discharge or reduce the liens of Call Peter, Inc. and United Rentals because there remains probable cause to sustain them.
Furthermore, noting that the act exposes a person who violates its provisions to a private lawsuit under the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., the court also observed that "[t]he act's existing scheme of multiple, cumulative and qualitatively different penalties well serves the underlying public policy of the act to protect consumers against unscrupulous new home construction contractors." D'Angelo Development Construction Co. v. Cordovano, supra, 278 Conn. 250-51.
"In order for an enforceable contract to exist, the court must find that the parties' minds had truly met . . . If there has been a misunderstanding between the parties, or a misapprehension by one or both so that their minds have never met, no contract has been entered into by them and the court will not make for them a contract which they themselves did not make." (Internal quotation marks omitted.) Electrical Wholesalers, Inc. v. M.J.B. Corp., 99 Conn.App. 294, 302, 912 A.2d 1117 (2007). "It bears reemphasis, however, that the burden of proof at a probable cause hearing is a low one, and the court in evaluating the evidence must weigh both factual and legal probabilities . . . The probable cause hearing is not a full-scale trial on the merits and the defendant [does] not have to establish that he ultimately will prevail, only that there is probable cause to sustain the validity of the claim." (Citation omitted; emphasis added.) 36 DeForest Ave., LLC v. Creadore, supra, 99 Conn.App. 698. Thus, whether Call Peter will be able to prove its claim at trial by a preponderance of the evidence is not before the court at this time.
II
In the matter between the Bankas and GPG, the Bankas argue that GPG has no lien rights against them because they paid $34,000 to Reyes prior to receiving GPG's notice of its lien, and that GPG has not sustained its burden of proving that it filed its lien within ninety days of the date on which it completed its foundation work, as required by General Statutes § 49-34. In opposition, GPG argues that its lien is valid and, regarding timeliness, that the evidence it submitted at the hearing and subsequent thereto demonstrates that it timely filed the lien.
General Statutes § 49-34 provides: "A mechanic's lien is not valid unless the person performing the services or furnishing the materials (1) within ninety days after he has ceased to do so, lodges with the town clerk of the town in which the building, lot or plot of land is situated a certificate in writing, which shall be recorded by the town clerk with deeds of land, (A) describing the premises, the amount claimed as a lien thereon, the name or names of the person against whom the lien is being filed and the date of the commencement of the performance of services or furnishing of materials, (B) stating that the amount claimed is justly due, as newly as the same can be ascertained, and (C) subscribed and sworn to by the claimant, and (2) not later than thirty days after lodging the certificate, serves a true and attested copy of the certificate upon the owner of the building, lot or plot of land in the same manner as is provided for the service of the notice in section 49-35."
The issue of whether GPG's lien is valid in that the Bankas have already paid Reyes $34,000, implicates General Statutes § 49-36(c), which provides in relevant part: "In determining the amount to which any lien or liens may attach upon any land . . . the owner of the land . . . shall be allowed whatever payments he has made, in good faith, to the original contractor or contractors, before receiving notice of the lien or liens." See also General Statutes § 49-33(f). These statutes are pieces of mechanic's lien legislation and "[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." (Citations omitted; internal quotation marks omitted.) Ceci Bros., Inc. v. Five Twenty-One Corp., 51 Conn.App. 773, 777 (1999).
The issue of whether GPG's lien is valid in this case also implicates General Statutes § 49-33(f), which applies to subcontractors, and provides: "Any such subcontractor shall be subrogated to the rights of the person through whom the subcontractor claims, except that the subcontractor shall have a mechanic's lien or right to claim a mechanic's lien in the event of any default by that person subject to the provisions of sections 49-34, 49-35 and 49-36, provided the total of such lien or liens shall not attach to any building or its appurtenances, or to the land on which the same stands or to any lot or to any plot of land, to a greater amount in the whole than the amount by which the contract price between the owner and the person through whom the subcontractor claims exceeds the reasonable cost, either estimated or actual, as the case may be, of satisfactory completion of the contract plus any damages resulting from such default for which that person might be held liable to the owner and all bona fide payments, as defined in section 49-36, made by the owner before receiving notice of such lien or liens."
In addition, our Supreme Court has stated: "No mechanic's lien may exceed the price which the owner has agreed to pay for the building being erected or improved, and the owner is entitled, furthermore, to credit for payments made in good faith to the original contractor before receipt of notice of such a lien or liens." Seaman v. Climate Control Corp., 181 Conn. 592, 596 (1980). "Under Connecticut law, a subcontractor's right to enforce a mechanic's lien against a property owner is based on the doctrine of subrogation . . . The theory of subrogation allows the [subcontractor] to recover only to the extent the general contractor could recover from the [homeowner]." (Citation omitted.) W.G. Glenney Co. v. Bianco, 27 Conn.App. 199, 201 (1992). "Subrogation is consistent with, and an integral part of, our statutory provisions limiting the totality of mechanic's liens to the unpaid contract debt owed by the owner to the general contractor." Seaman v. Climate Control Corp., supra, 181 Conn. 601-02. Subrogation "protect[s] the owner from double payment . . ." Id.
At the hearing, GPG stated that its lien is valid because it is not relying on Reyes' lien rights, if any, and, in its memorandum, GPG appears to suggest that the Bankas made the payments to Reyes in bad faith. The evidence lends no factual support to these assertions. The evidence does show, however, that the Bankas paid Reyes $34,000, and that GPG does not dispute that such payment occurred. Thus, the narrow issue before the court is whether a subcontractor (GPG) has lien rights against homeowners (the Bankas) who have paid the general contractor (Reyes) prior to receiving notice of the subcontractor's (GPG's) lien.
At the hearing, GPG's attorney stated: "I'm not suggesting improper payments." Transcript of February 5, 2007 hearing (Transcript), p. 138. In its memorandum, however, GPG states: "[GPG] is of the opinion that Mr. Banka is 'not an innocent' — he has done houses before and he knows what he is doing. The fact that there are at least two other lawsuits against the Bankas before this court does not speak well for Banka. In fact, it indicates that they either have financial problems and/or are not living up to their financial obligations . . ."
In Rene Dry Wall Co. v. Strawberry Hill Associates, 182 Conn. 568 (1980), the plaintiff subcontractor sought to foreclose on a mechanic's lien against the landowner whose property it improved. Our Supreme Court concluded: "If . . . a general contractor receives progress payments that are not turned over to those who have done the work represented by the progress payments, and ultimately defaults entirely, the owner making such payments and completing such a job is protected as long as the owner acts in good faith and reasonably, as defined by the statutes. In determining whether the owner has met the statutory requirements of good faith and reasonableness, the trial court is making a finding of fact." Id., 573. "Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive . . . Bad faith means more than mere negligence; it involves a dishonest purpose." (Citation omitted; internal quotation marks omitted.) Habetz v. Condon, 224 Conn. 231, 237 (1992).
Thus, it is clear that GPG does not have lien rights against the Bankas unless GPG can show that the Bankas made payments to Reyes in bad faith. GPG has not satisfied that burden under § 49-36(c) or the applicable case law. Nor has GPG proven by probable cause that its lien was filed within ninety days of work completion, as required by General Statutes § 49-34. GPG filed its lien on June 23, 2006. In its notice of lien, GPG stated that it ceased providing services on April 4, 2006. Kai Young, the individual who filed GPG's lien and worked on the foundation project, testified at the hearing. The transcript reveals the following colloquy:
Although GPG has submitted an invoice from Paramount Concrete indicating that it delivered materials to the Bankas on GPG's behalf on March 30, 2006, the evidence and the testimony presented at the hearing did not establish the date of completion.
"Q Mr. Young, do you have any records which indicate the last day worked on this project was?
"A Right here with me now?
"Q Yes.
"A No."
* * *
"Q Do you recall when the last day was that you did substantive work on this project?
"A I don't — I don't recall that, no." Transcript, p. 202.
When the court asked Young "What's the last date of your work," he replied: "The last date of my work — I'd have to go by those tickets, whatever the concrete tickets were." Transcript, p. 191.
The court received the aforementioned "concrete tickets" — namely an invoice from Paramount Concrete — after the conclusion of the hearing. Assuming, arguendo, that the invoice clearly indicated that the period of work completion was prolonged, which it did not do, GPG would still have failed to meet its statutory burden with regard to showing bad faith on Banka's part in paying Reyes.
Consequently, the court is constrained to conclude that GPG has failed to meet its burden and, as a result, its lien must be discharged.