The COVID-19 pandemic caused many jurisdictions to take measures to quell the spread of the virus. A fair amount of these measures included extending certain court deadlines to reduce in-person proceedings. But with uncertainty surrounding the pandemic came uncertainty about these deadline extensions.
The importance of deadlines came as a hard lesson for a Massachusetts contractor when they attempted to file a mechanics lien. A recent Massachusetts Supreme Court case released a decision declaring that the contractor’s late notice filing was not covered under their court deadline extension orders.
MA Supreme Judicial Court orders
In response to the pandemic, the Massachusetts Supreme Judicial Court issued a series of orders regarding “court operations under the exigent circumstances created by the COVID-19 (coronavirus) pandemic.” These orders tolled (read extended) any deadline “set forth in statutes or court rules, standing orders, or guidelines.”
Massachusetts mechanics liens: 3-step process
Before we dive into the case, let’s do a quick recap of the Massachusetts mechanics lien process. There’s essentially three steps for direct/general contractors. The claimant must complete all steps within the required timeline to perfect and enforce a lien claim in Massachusetts.
- Notice of Contract: This notice must be filed in the county registry of deeds office no later than 90 days from the claimant’s last date of furnishing labor or materials to the project or a Notice of Termination is filed, or 60 days from the date a Notice of Substantial Completion is filed, whichever is earlier.
- Statement of Account: This statement operates as the lien claim itself and should be filed in the same Registry of Deeds office no later than 120 days from the claimant’s last date of furnishing labor or materials to the project or a Notice of Termination is filed, or 90 days from the date a Notice of Substantial Completion is filed, whichever is earlier.
- Enforcement action: Lastly, an enforcement action must be filed within 90 days from the date the Statement of Account was filed.
For a full breakdown of the process see: How to File a Massachusetts Mechanics Lien | A Step-by-Step Guide
Again, any mistake in the process can be fatal to a claimant’s lien rights.
Now, let’s get into the case. The issue before the MA Supreme Court was whether the aforementioned court orders also extended the deadlines for filing documents with the Registry of Deeds.
Graycor Construction v. Pacific Theaters
The case in question is Graycor Construction Co., Inc. v. Pacific Theaters Exhibition Corp. et al.
- Owner: Podium Owner, LP & Podium Developer, LLC (collectively “Podium”)
- Tenant: Pacific Theaters Exhibition Corp. (Pacific)
- General Contractor: Graycor Construction Co., Inc. (Graycor)
In November of 2018, Graycor was hired by Pacific to construct a cinema complex on the land owned by Podium. The land was part of a mixed-use development made up of multiple parcels owned by separate entities.
One thing to note: The contract between the parties listed the wrong parcel owned by an unrelated entity Office Tower Owner, LP (Office Tower).
The project progressed up until March 4, 2020, when Graycor ceased work due to nonpayment. Graycor claimed they were owed over $3.5 million for labor, materials, and equipment furnished on the project. In response, Graycor filed a Notice of Contract and a Statement of Account in the Suffolk County Registry of Deeds on April 27, 2020, both of which incorrectly identified the property and named Office Tower as the owner.
Almost two months later, an Amended Notice of Contract and Statement of Account were filed, also with the incorrect parcel and property owner named. It appears that the only amendment was to include that the work contracted by Pacific was done”on behalf of or with the consent of” the owner.
Superior Court declares Notice of Contract deadline was tolled by the COVID orders
In July of 2020, Graycor filed a complaint with the Superior Court to enforce their lien claim; the complaint similarly did not name Podium.
A few months later (September 9), a second amended Notice of Contract and Statement of Account were filed which correctly identified the parcel and Podium as the owner. Subsequently, an amended complaint was also filed to name Podium as the defendant. Podium responded by filing a motion to discharge the lien claim for failure to meet the statutory deadline for filing a Notice of Contract.
Under Mass. Gen. Laws ch 254 § 2, the deadline to file a Notice of Contract is 90 days after the claimant last furnished labor and/or materials to the project. Since Graycor ceased work on March 4, the typical deadline to file would be June 2, 2020.
Graycor responded by arguing that the deadline had been tolled due to the “Supreme Judicial Court extended statutory deadlines due to the COVID-19 pandemic.” The court agreed with Graycor, and declared that the September 9 Notice of Contract was timely filed. Podium appealed.
Supreme Court reverses: Registry of deeds filings not covered under court deadline extensions
On appeal, both parties agreed that the original Notice of Contract filed in April 2020 was defective for incorrectly identifying the property and owner. They also agreed that if the court orders effectively extended the deadline to file a Notice of Contract in the registry of deeds, then the September filing would be timely.
So the ultimate issue was whether the deadline extension orders applied to recording deadlines in the registry of deeds.
Graycor’s argument was that the orders unambiguously applied to all statutory deadlines. Their rationale was that “the registry of deeds is sufficiently intertwined with the judicial system subject to this court’s superintendence.”
Podium, on the other hand, argued that the orders only applied to courts of inferior jurisdiction, not executive agencies such as the registry of deeds.
The court, however, pointed out that Graycor had read the phrase “all deadlines set forth in statutes” in isolation, as opposed to in context with the stated purpose of the orders, which was to address how court operations would be conducted safely while abiding by public health restrictions in response to the pandemic:
“The topics of the court’s four orders were narrow in scope. The orders required almost all pleadings and other documents to be filed electronically, required proceedings in nonemergency matters to be conducted virtually, and severely limited the individuals who could enter a court houses for purposes of emergency, in-person proceedings.”
They went on to state that “while an entity seeking to perfect a mechanic’s lien might eventually turn to the courts to enforce that lien, perfecting the lien itself merely requires filing a Notice of Contract in the registry of deeds — an executive agency charged with keeping land records.”
Thus, the court concluded that given the narrow focus of the orders, it was clear that each order tolled only those statutory deadlines that affect court operations. The Superior Court judge’s order denying the discharge of Graycor’s lien was reversed.
Obviously, this is an unfortunate result for Graycor, who ended up losing their $3.5M lien claim.
Granted, their other claims for breach of contract, unjust enrichment, and quantum meruit still remain intact, but a security interest in the property itself through a lien claim is always the best-case scenario.
So what should Massachusetts contractors take away from this case?
The first is fairly apparent: The extended deadlines were only applicable to court proceedings. Any deadlines for lien filings in MA have remained intact since the first order was issued.
Second, is the matter of “amended notices.” As you could see from the facts of the case, the first Notice of Contract was filed within the deadline. However, it’s the third amended Notice of Contract that properly named all the parties and the property. That’s why it’s crucial to ensure all your information is accurate before filing. An “amended” Notice of Contract does not retain the filing date of the previous notice, but rather sets a new date — which in this case was far too late.
Mechanics lien laws are meticulous, and since it’s your money on the line, ensuring the accuracy of your project info and taking actions early is the best way to ensure you get paid what you’ve earned.