Following the construction industry and related legal topics in the United States.

Monday, June 5, 2006

An Owner by any Other Name...

The Georgia Court of Appeals has denied lien rights to a roofing material supplier because the supplier failed to issue Notices to Contractor when it began providing roofing materials to a project. Roofing Supply of Atlanta, Inc. v. Forrest Homes, Inc., A06A0166 (Ga.App. May 23, 2006).

In that case, an owner-developer hired a roofing contractor to build roofs on its properties. The roofing contractor, in turn, purchased materials from the roofing supplier. Although the owner timely filed statutory Notices of Commencement (in which it listed itself as both "owner" and "contractor"), the supplier failed to provide any Notices to Contractor. For that reason, the trial court declared the supplier's liens invalid, and granted the owner's motion for partial summary judgment. [Under Georgia law, once an owner timely files a Notice of Commencement (and posts a copy on-site), lien rights are cut off to lower-tier subcontractors and suppliers (those without a direct contract with the owner) except for those subs and suppliers who timely provide a written Notices to Contractor and send copies to the owner.]

On appeal, the supplier argued, in effect, that it was excused from providing Notices to Contractor because: (1) another part of Georgia's lien statute defines a "contractor" as someone in privity with an owner; (2) an owner cannot logically be in privity with itself; (3) by listing itself as both "owner" and "contractor", the owner invalidated its Notices of Commencement; and (4) an invalid Notice of Commencement cannot trigger a supplier's obligation to issue a corresponding Notice to Contractor.

The court of appeals disagreed. Noting that lien statutes are to be strictly construed, the court found no language in the statute to prohibit an owner from listing itself as both "owner" and "contractor" in Notices of Commencement; and, on that basis, it held that the owner's Notices of Commencement were valid, and the supplier's lien rights were lost when it failed to issue Notices to Contractor.


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