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construction lien due to cyber fraud

We are on a job for casework in progress, almost completed. We did a partial billing for 23,000. Sent the invoice. There was some type of bank cyberfraud that tricked the contractor into paying this amount, unbeknownst to us, to a Wells Fargo bank account in California via wire transfer. We tried to help the contractor stop it by calling every department we could at the banks, but due to rules and regulations, the bank was unable to freeze the funds so the money is gone. Our company has a Chase bank account. They still owe us the money and we are getting feedback they don't think they owe it because of the fraud. I need advice on whether that is grounds for filing a lien.

1 reply

Aug 9, 2018

I'm sorry to hear about that - and I'm fairly certain this is the first time cyberfraud has come up at the Construction Legal Center. Ultimately, the bottom line may be: Was payment received by the party entitled to it? While this certainly sounds like a stroke of bad luck for the contractor involved, the right to file a mechanics lien lies with the party who has performed work and is owed payment for that work. Thus, a party attempting to make payment and accidentally sending large sums to someone other than the party owed should have no effect on the unpaid party's lien rights. If the payment issue arose based on fault of the unpaid party, the situation could definitely get cloudier - especially if it came down to a lien enforcement action or an action to challenge a filed lien. But, where a contractor has made a payment to the wrong party due to their own mistake or some external force not involving the party failing to receive payment, that contractor (or potentially their bank or insurance) will likely have to shoulder the liability - and their unpaid subs' claims should not be affected by the contractor's mistake. Note, though, that this is an extremely unusual scenario - so it may be wise to reach out to a local attorney to evaluate the case - preferably one with experience in construction payment, banking, or both. They will be able to further review the circumstances as well as any relevant documentation or communications and advise you on how to proceed.

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