A mechanics lien is a powerful legal remedy for contractors to ensure payment. But with great power comes great responsibility, and unfortunately, there are some that misuse the legal system to gain an unfair advantage. Those who are victims of such misuse can file a claim for abuse of process to recover damages. But how does that work in relation to mechanics lien claims? A recent Virginia Circuit Court tackled this issue and held that a lien claimant must file an enforcement action to be liable for abuse of process.
Virginia court defines the ‘lien process’ for abuse of process claims
The case in question is Central Radio Company, Inc. v. Warwick Builders, LLC.
- Central Radio Company, Inc. (Central Radio)
- Warwick Builders, LLC (Warwick)
There’s not too much information available on this case, as it is still ongoing. But there was a particularly intriguing holding in this dispute that’s worth noting.
A dispute arose on the project between Warwick and Central Radio, which ended in Warwick filing a mechanics lien against the project.
In response, Central Radio filed a lawsuit against Warwick, the third count of which, alleged Warwick’s lien filing was an “abuse of process.” More specifically, Central Radio claimed that Warwick filed the claim knowing that it was meritless, and was therefore using the lien process improperly. So the issue the court was faced with, was:
Does the filing of a memorandum of mechanic’s lien, without the institution of an enforcement suit, constitute a “process” to support a right of action for abuse of process?
First and foremost, the court cited a 1988 VA Supreme Court case which stated “To sustain a cause of action for abuse of process, a plaintiff must plead and prove: (1) the existence of an ulterior purpose and (2) an act in the use of the process not proper in the regular prosecution of the proceedings.”
However, the issue remained, what constitutes “process” under the mechanics lien laws. After a lengthy discussion regarding how to define “process” (outside the realm of service), the court essentially landed on the rationale that “legal process” requires something “supported by the authority of a court.”
Using this rationale, the court turned to the “mechanics lien process” itself. The filing of a mechanics lien is a “non-judicial action” that doesn’t constitute a process. But rather it is a prerequisite to legal action. Or, to use the words of the court,
“In absence of a suit to enforce, as in this case, where a claimant has not served the other party with a complaint and summons, the mere filing of a mechanic’s lien alone does not constitute ‘process’.”
You must enforce a lien claim to be liable for abuse of process
This is an interesting holding. Although a Virginia mechanics lien can still be declared fraudulent or invalid, this decision essentially precludes claims for abuse of process when it comes to lien filings in Virginia — which would warrant additional damages.
“The enforcement of mechanic’s lien rights in Virginia is a two-step process. The first step is the recording of a properly-timed memorandum of lien…The second step is a suit to enforce that memorandum of lien filed in Circuit Court.”
“In short, the mere recording of a lien, meritorious or otherwise, does not invoke the power of the Court to the point that such a recording can be the basis of an abuse of process cause of action.”