Peyton Manning and Russell Wilson are just hours away (It starts at 5:30pm CT, on Fox) from their battle to hoist the Lombardi trophy, but a battle between Taylor Turf Installation, Inc. and the operators of MetLife Stadium has been on-going for months, as the stadium’s turf installers claim they are owed more than $292,000 from the installation work they performed last summer.
Hearing this news, Alabama construction attorney Burns Logan (@BurnsLogan) tweeted me wondering whether the turf installers could have filed a mechanics lien on the Super Bowl venue.
@ levelset it Wonder if they could have put a lien on this project?
– Burns Logan (@BurnsLogan) January 31, 2014
Regardless of whether a mechanics lien filing is or is not allowed under New Jersey law, it turns out that Taylor Turf Installation did file a lien and a lawsuit to enforce the lien. The matter is now pending before a Bergen County Superior Court.
This turf tale presents three very important lessons to contractors everywhere about financial risk, getting paid, and mechanics liens.
Lesson 1: Your Lien Rights Depend Greatly On Where You Are
Let’s first address Mr. Logan’s original question: Can Taylor Turf Installation file a mechanics lien on this project? The project itself seems pretty substantial, and the stadium is definitely benefiting from the “improvement.”
As we’ve explored in the past, however, state law can be very picky about what qualifies for lien protection and what doesn’t, with the answer typically hinging on whether the materials and labor were “incorporated” into the immovable property. During the Super Bowl last year, we debated whether a mechanics lien could be claimed for the expensive and intricate temporary broadcast sets pitched up during a Super Bowl.
The question here is interesting because it involves the installation of turf, and reasonable minds could debate whether such installation is “temporary” or not, and further, whether such work is properly categorized as construction or landscaping (See: Can Landscapers File A Mechanics Lien?)
We started tackling the question, at first answering it on the social media platform as if the stadium was in New York (sorry, New Jersey!).
Had the stadium been in New York, mechanics lien protection would have been quite clear, as New York’s mechanics lien statute specifically provides full protection to “landscape gardener[s], nursery[men]” and other similar providers. New Jersey’s statute, however, is a bit more complicated.
It is clear in New Jersey that landscapers have some mechanics lien protection. The lien statute’s Definitions section defines “Improvement” to include “land clearance, grading or landscaping.” Accordingly, even if the turf work was considered to be landscaping and not true construction services, the statute would still contemplate some protection.
However, a specific statute related to the “attachment of liens for improvements” complicates things for Taylor Turf if their work is determined to be landscaping services. That provisions, N.J.S.A. §2A: 44A-4, provides:
In the case of an improvement involving excavation, drainage, dredging, landfill, irrigation work, construction of banks, making of channels, grading, filling, landscaping or the planting of any shrubs, trees or other nursery products, the lien shall be on the land to which the improvements are made, and shall not be upon the adjoining lands directly or indirectly benefited from the improvements.
New Jersey lacks any clear case law interpreting this provision, and accordingly, this could put a small legal wrinkle in Taylor Turf’s case. Nevertheless, in the case of MetLife Stadium, which has enormous worth, I can’t imagine an interpretation of this provision that would jeopardize Taylor Turf’s payment.
Lesson 2: Payment Problems Happen On Projects Big and Small
An AP article quotes Taylor Turf’s President, Kelly Taylor:
All along, (chief contractor UBU Sports) kept saying, ‘The payment’s coming, but keep on working…There should have been red flags from the beginning. At some point we should have stopped. It doesn’t matter how big or important this job is, we’ve got to get paid. But we didn’t stop.
This quote will hit subcontractors and suppliers across the country like a ton of bricks, because this situations plays out over-and-over again everyday on construction projects.While the decision to “just stop” may seem easy to make, it never is.
But the lesson to “just stop” is not the lesson for contractors to learn from this situation. Instead, contractors and suppliers should take note that payment problems can occur on the biggest of projects, with the most credit-worthy participants.
Too frequently, we see contractors and suppliers forego their mechanics lien rights based on the “relationship” with their customer or the credit worthiness of a customer. Even though sending preliminary notices will not scare a customer and will, in fact, help the relationship succeed, many in the construction industry are very shy about utilizing these rights.
The result can be catastrophic in a non-payment event, and as this situation teaches contractors, non-payment events can come from any circumstance.
It doesn’t matter how big or important this job is, we’ve got to get paid. But we didn’t stop. Metlife Stadium is certainly credit worthy. UBU Sports has solid credit. From a credit perspective, there aren’t any real red flag indicators that this project needs any extra or unusual protection.
Nevertheless, Taylor Turf got stiffed. They are a small family business now forced to fight for their nearly $300,000.
Last week, we wrote an article in Construction Executive’s Risk Management asking whether the construction industry had a “Payment Abuse or Payment Fraud” problem. I guarantee that Taylor Turf believes the industry has a payment fraud problem, and that they are a victim of it.
Nevertheless, so long as the company properly protected their lien rights, I believe they will come out as victors at the end of this dispute…and the third lesson explores why.
Lesson 3: Mechanic Liens Get Important Parties Involved With Your Debt And Put You In The Best Collection Position
What happens if Taylor Turf Installation doesn’t file a mechanics lien?
Taylor Turf would be stuck litigating a contractual claim with the contractor that directly hired them, UBU Sports, and only them. Do you think UBU Sports has $300,000 laying around? Maybe they do and maybe they don’t, but Taylor Turf would be in a much more vulnerable position from a security perspective.
The mechanics lien filing, however, puts Taylor Turf into a much more secure position. Not only is UBU Sports liable to them, but Taylor Turf has a claim against the underlying property itself – the entire Meadowlands Stadium. The difference in position is clear.
Representatives from Metlife Stadium issued a statement to the news outlets covering this story. Depending on the validity of Taylor Turf’s mechanics lien rights, however, the statement could be completely wrong.
The representatives claim that since they do “not have a contractual relationship with Taylor Turf…they are not responsible for any financial obligations.” This could not be further from the truth. The very point of a mechanics lien claim is to shift financial obligations directly upon them.
A story from NewJersey.com quotes Taylor Turf’s attorney, Lee Tesser, responding to MetLife’s position, stating that if UBU doesn’t pay the bill, he “expects that New Meadowlands, a joint venture of Jets Stadium Development LLC and Giants Stadium LLC, will legally be on the hook to pay the installer.”
Tesser is right. UBU and Taylor Turf may have a contract, but now that a mechanics lien is filed, it’s the stadium’s problem. It’s a big problem, too, as New Jersey’s construction lien law empowers lien claimants to seek their full costs of attorney fees from defendants (including the stadium).
While Taylor Turf is going through a lot of pain right now waiting for their payment and launching this legal battle, their mechanics lien claim will protect them and insure that their fortunes will soon change.