Missouri’s Construction Lien Law, like the lien laws in every state, specifically sets forth what must be included within a filed mechanics lien statement to have effect. One unique requirement within the Missouri statutes is the need for a “just and true account” of the claimed amount.
What does this “just and true account” mean? That is an question confronted by the Missouri Court of Appeals Western District in a case published last week, R.K. Matthews Inv., Inc. v. Beulah Mae Hous., LLC.
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The requirement for a “just and true account” stems from Missouri’s Construction Lien Law §429.080, which provides that every lien statement must include “a just and true account of the demand due him or them after all just credits have been given.”
In the R.K. Matthews case, a mechanics lien was invalidated by a trial court because it failed to contain such an account. The lien claimant challenged these findings on appeal, arguing that the statutes are not clear as to what exactly must be within the lien statement to qualify as a “just and true account,” and that it’s account was not insufficient merely because it lacked a detailed accounting or itemization.
I think this appeals court opinion is interesting because of how it handled this question, shedding a great deal of light on the “just and true account” requirement.
“Just And True Account” Requirement Does Not Require Itemization From General Contractors
The appeals court agreed with the lien claimant in this matter that the “just and true account” requirement did not have any amount of detail mandated within it, such that a statement of the amount due as a lump sum may qualify. It appears the “lump sum” statement of account was acceptable only because the claimant was a general contractor.
Consider the court’s discussion of the “just and true account” standard:
The statute requires a lien statement to provide a property owner with sufficient information to investigate whether the material and labor described in the lien has actually been used to improve the property and whether the amount charged is reasonable and proper…In practice, the statute imposes distinct requirements depending on a claimant’s status as a general contractor or a subcontractor. “‘An ‘original’ [general] contractor may make a ‘just and true account’ if his lien statement simply states his account in a lump sum, without itemization…A subcontractor, on the other hand, must ‘include in his lien account an itemized statement of the labor and materials furnished.” The rationale for the distinction is grounded in the fact that the property owner deals directly with a general contractor, and is thus deemed to know what materials and labor were provided to benefit the property…
We thus agree with RKMI that the trial court erroneously indicted the lien statement for its failure to include an itemized statement of material and labor provided as it is uncontested the RKMI contracted directly with BMH and was a general contractor.
General contractors, therefore, need only provide a lump sum within the mechanics lien statement to meet the “just and true account” requirement. Subcontractors and those who do not contract with the property owner, however, are required to provide “an itemized statement of the labor and materials furnished.”
Since the claimant in the R.K. Matthews case was a general contractor an itemization was not required and the statement did meet this component of the statute. But…
But Statement Must Be “Just” and “True”
The lien claimant’s statement was satisfactory with a lump sum instead of an itemization of furnishings and work, but the court went on to analyze whether the lump sum represented a “just” and “true” account of the amount due. The trial court found it did not, and the appeals court agreed. The mechanics lien, therefore, was ultimately found invalid making the small victory discussed above interesting to construction lawyers but of very little utility to the allegedly unpaid general contractor.
The appeals court agreed with the trial court that the mechanics lien contained some troubling defects that rendered it “unjust” or “untrue,” such as: (i) Inclusion of charges for items for which it was undisputed that the general contractor received payment; and (ii) Inclusion of charges for work that did not pass inspection or was not satisfactory performed.
Could the inclusion of these amounts have been inadvertent or in good faith? It is true, for example, that the inclusion of errors within a lien statement does not mean the claimant is presumed to have an “intent to defraud.” Missouri case law provides that “A lien statement may be regarded as just and true if it contains mistakes or errors of omission, as long as those inaccuracies are unintentional and are the result of honest inadvertence, accident, or oversight, and do not result from deliberate intention or design.” Dave Kolb Grading, Inc. v. Lieberman Corp., 837 S.W.2d 924, 933 (Mo. App. E.D. 1992).
The courts, however, found that there was some type of malicious intent:
…[F]rom the evidence as a whole that the lien statement’s shortcomings are the type that demonstrate intentional and knowing misstatements that should invalidate the lien altogether.