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According to Virginia Code § 43-4, a mechanic’s lien claimant’s
recovery is limited to the contract value of labor and
material furnished “150 days prior to the last day on which
labor was performed or material furnished to the job preceding
the filing” of the memorandum of lien, although there are
exceptions to this “150-day rule,” including, for example,
retainage. Virginia courts strictly construe this statutory provision,
invalidating liens which include claims for labor and
material beyond the 150-day limitations period. One reason
for this requirement is to protect owners from stale claims.
Section 43-15 of the Virginia Code, however, provides that,
No inaccuracy in the memorandum filed, or in the
description of the property to be covered by the lien,
shall invalidate the lien, if the property can be reasonably
identified by the description given and the
memorandum conforms substantially to the requirements
of §§ 43-5, 43-8 and 43-10, respectively, and is
not willfully false.
(Emphasis added.) A potential issue arises, therefore, when a
lien claimant mistakenly includes amounts earned outside of
the 150-day limitations period in its memorandum of lien.
Should a court strictly construe § 43-4 of the Virginia Code
and invalidate the lien or apply § 43-15 and treat such a mistake
as an inaccuracy and allow the lien claimant to pursue
enforcement of its lien rights? In Smith Mountain Building
Supply, LLC v. Windstar Properties, LLC, 227 Va. 387
(2009), the Virginia Supreme Court held that the inclusion of
charges for materials supplied outside the 150-day limitation
period in § 43-4 of the Virginia Code renders such a lien invalid
and unenforceable.
In Smith Mountain Building Supply, a material supplier furnished
materials to the general contractor on two projects
from June 24, 2005 to March 9, 2006, with March 9, 2006
being the last day on which the material supplier furnished
materials to the two residential projects. Applying the 150-
day limitation period prescribed by § 43-4 of the Virginia
Code, the material supplier could lien the projects for work
performed from October 10, 2005 through March 9, 2006,
i.e., 150 days prior to the last day of work. The material supplier
timely filed two memoranda of mechanic’s liens, though
mistakenly included charges for materials furnished to the
projects prior to October 10, 2005.
The owner of the property filed a motion for summary judgment,
asserting that the material supplier’s inclusion of sums
due for materials furnished prior to October 10, 2005 rendered
the memoranda of mechanic’s liens invalid. The material
supplier argued that any such inclusion was a mistaken
inaccuracy and that, under § 43-15 of the Virginia Code, such
inaccuracy could be excused by the court.
The material supplier directed the Court’s attention to its decision
in Reliable Constructors, Inc. v. CFJ Properties, 263
Va. 279 (2002), in which the court found that a lien claimant’s
inclusion of a fine in its memoranda of liens constituted
an inaccuracy within the meaning of § 43-15 and that the
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inaccuracy was not willfully false. The material supplier argued
that the inclusion of charges for materials furnished to
the projects prior to October 10, 2005 was an equivalent inaccuracy.
The court rejected the lien claimant’s argument, distinguishing
Reliable Constructors from the instant appeal on the basis
that, in Reliable Constructors, the court focused on the nature
of the sum erroneously included in the memorandum of lien.
The court reasoned that a fine is not a sum due for labor performed
or materials furnished and, therefore, could not be
recovered in a mechanic’s lien action regardless of the 150-
day rule. In Smith Mountain Building Supply, by contrast, the
inaccuracy in the material supplier’s lien was the sum
claimed for materials furnished to the projects, an issue directly
addressed in § 43-4 of the Virginia Code. Accordingly,
this inaccuracy violated the express requirements of § 43-4 of
the Virginia Code.
The lesson to be learned from Smith Mountain Building Supply
is that, in pursuing a mechanic’s lien, a lien claimant risks
total invalidation of its lien if it claims sums due from beyond
the 150-day limitations period. Lien claimants should be
careful in preparing a memorandum of lien, cognizant of the
effect that including sums due for stale work may have on
their lien rights.
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In Virginia, the running of the statute of limitations is considered
to be a right enjoyed by defendants. The Virginia Supreme
Court has stated that “[t]he immunity from suit that
arises by operation of the statute of limitations is as valuable
a right as the right to bring the suit itself.” Consequently, the
protection of the statute of limitations is considered a “right”
which the subcontractor enjoyed under the flow down provision
of the prime contract between Skanska and DRMC.
Moreover, any language in the prime contract regarding the
statute of limitations becomes part of the subcontract by virtue
of the subcontract’s incorporation of all prime contract
documents into the subcontract. As a result, any act or omission
on the part of the subcontractor is treated the same for
statute of limitations purposes as an act or omission on the
part of the general contractor. In this case, the statute of limitations
began to run on the substantial completion date,
August 19, 2002.
The general contractor, who brought a claim against the subcontractor
more that five years after August 19, 2002, argued
that the statute of limitations should not have begun to run
until the general contractor sent the subcontractor a letter
formally rejecting the subcontractor’s work. However, Judge
Kiser found no ambiguity in the flow down provision, and
applied the statute of limitations to the subcontract as it was
specified in the prime contract. The lesson to be learned,
therefore, is that all parties to construction contracts and subcontracts
in Virginia must be aware of any potential flow
down provisions and must recognize that contractual provisions
affecting their rights may not necessarily be found in
the subcontract itself.
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