To Lien or Not to Lien

In about 1600, William Shakespeare wrote the play “The Tragedy of Hamlet, Prince of Denmark,” known more simply as “Hamlet.” The play involves treachery, revenge and corruption, which is not too different from a construction job gone bad. In fact, builders and those around the construction industry know that construction is its own theater, and every job is simply a different play with a new story line. Some jobs are comedies, some are histories, some are melodramas and, unfortunately, some are tragedies. Hamlet is a tragedy, your construction job does not have to be.

This article discusses construction theater from the perspective of the protagonist/contractor, and whether he should file a mechanic’s lien in face of a refusal to pay for goods supplied and services rendered.

One of the most famous lines from Hamlet, indeed all of theater, is: “To be, or not to be: that is the question . . . ,” which Hamlet says as he speaks out loud to himself. Hamlet’s full statement is thus:

To be, or not to be: that is the question:
Whether ‘tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles,
And by opposing end them?

Hamlet Act 3, scene 1, 55–87.

A widely accepted interpretation of this passage is that Hamlet is wondering whether he should live a tortured life because of the injustices wrought against him, or simply commit suicide and avoid them all together. A less accepted interpretation is that this passage is about whether Hamlet should live and simply accept the injustices, or fight them and possibly end them. Were Hamlet a construction contractor, this passage would be about whether he should lien a job or not. To this question, Hamlet finds no easy answer, nor will the typical contractor. Instead, a contractor has to make a case by case decision, based upon the plot of his particular play.

Whether to lien a job is first and foremost a business decision not a legal one. From a business perspective, money is king. So liening a job is a matter of economics; said differently, does liening the job or taking some other affirmative legal action make overall economic or business sense. Unfortunately, too many lawyers forget this, and focus on whether they can lien a job, rather than whether they should. Secondary to the business decision is the legal decision of what strategy to employ to further the client’s interests.

Essentially, when the protagonist/contractor is faced with nonpayment, he has three (3) options: 1) Try to negotiate a resolution with the antagonist in good faith; 2) file a mechanic’s lien; and 3) file for a prejudgment remedy attachment (“PJR”).

Negotiation
Conflicts that end poorly — like tragedies (theatrical or construction) — have several parts:

1)         The protasis — the setting up the situation.
2)         The epitasis — the complication of the action.
3)         The catastasis — the main body of the action.
4)         The catastrophe — the ending or unwinding.

In theater, if part four — the catastrophe – does not occur, then the play is not a tragedy but merely a melodrama;[1] the same is true for construction. If a dispute arises and catastrophe is avoided by resolving the problem without resort to legal process, the conflict was merely melodrama. The parties frequently walk away basically satisfied, and often willing to act with each other in another play or job.   In contrast, experience has shown that after some legal process has begun, parties to a construction dispute are often more hostile toward one another, their respective positions become more polarized and definite, and resolution through negotiation is exceedingly difficult if not impossible. Negotiation prior to filing a mechanic’s lien or seeking a PJR is never a sign of weakness; after all, it does not in any way alter your legal rights.

Whether in your particular construction play you have the role of the lawyer or the contractor, the first order of business should always be to try to negotiate with the antagonist in good faith. This is called: “Giving a guy the chance to do the right thing.” Too often in construction tragedies the characters despise one another. Their emotions, often hubris, get the better of them, and they (like their theatrical counterparts) make poor decisions that lead to — tragedy.  Although theater patrons enjoy a good tragedy, construction contractors do not.

Often a formal meeting – or “sit down” as it is called in the construction industry – with the senior bosses on both sides of the dispute can resolve a problem. Typically, although not always, payment disputes arise through field personnel who have an emotional stake in the outcome of the dispute and, therefore, do not have the proper mindset to objectively mediate and negotiate a resolution. The bosses, however, often do not have such emotional barriers to resolution and are better able to objectively evaluate the dispute and reach accord.

It should be stressed that the negotiation should be done through a formal meeting, not a simple phone call or threatening demand letter. Most people will behave better in a face to face meeting, than when securely behind a long phone line or postage stamp. Also, a formal meeting causes the parties to prepare, evaluate their positions, and often discuss their relative strengths and weaknesses with members of their company. It is through those processes that parties become more reasonable, and more likely to propose or accept a resolution.

Mechanic’s Liens and Prejudgment Remedies

The primary purpose of a lien or attachment is to fully secure the unpaid debt so that if and when you obtain a judgment you have a way to recover it. Strategically, however, you want to attach an asset on which the attachment poses a significant irritation to the antagonist. This is not unlike what Hamlet did when he had a group of traveling actors perform a scene closely resembling the sequence by which he envisioned his uncle, Claudius, to have murdered his father. Hamlet’s intent was force Claudius to react and expose his guilt.  The intent of the lien or attachment is to force the antagonist to react and pay, or at least come to the bargaining table.

Although a mechanic’s lien or PJR can generate a similar result, they are different procedures, and each has pros and cons. The fundamental legal difference between a lien and attachment is their bases; a lien is a statutory right that exists when you meet the statutory preconditions set forth in Conn. Gen. Stats. § 49-33, while a PJR requires a judicial order pursuant to Conn. Gen. Stats. § 52-278a, et seq. Their practical differences are, however, much more significant.

The preparation and filing of a mechanic’s lien is a relatively quick, simple and inexpensive procedure. It can be filed in a day or matter of hours with a little bit of hustle and hard work by both the attorney and client. Moreover, it is very uncomplicated and, therefore, inexpensive. Costs include the title search, the filing fee with the Town Clerk’s Office, and the attorney’s fee for no more than a couple of hours time. After the lien is filed, the lienor has one (1) year to foreclose or the lien expires and becomes invalid.

You never know what the landowner intends to do with the property. If they intend nothing, then a mechanic’s lien will have little effect.  If, however, they intend to sell or refinance — as is often the case in construction — then they will be forced to address the underlying unpaid debt. A lot can change in a year, and having the lien in place will put you at the bargaining table if changes occur.

Moreover, because liens are so inexpensive to prepare and file, from a cost benefit analysis they almost always make economic sense. Indeed, they can be a thorn in the landowner’s side for very little money, and you will have a year to decide what further action, if any, you want to take. That said, a mechanic’s lien can be attacked on numerous grounds through an application to discharge, which often entails an evidentiary hearing. In that event, the cost of defending the lien can become as significant as a PJR action.

In contrast to mechanic’s liens, PJR’s are generally more costly, and considerably more time consuming to prepare, file and obtain, unless there is a commercial waiver of notice and a hearing in the contract underlying the dispute. The application papers for a PJR are fairly extensive, although not necessarily complicated. Once filed, it can be 2-3 months before you get a hearing and subsequent order to attach anything, if not considerably longer. In addition to the time it takes to get the PJR, once you are successful you must file suit in thirty (30) days to preserve it. Thus, when you file a PJR you must be ready to invest in immediate litigation of the underlying debt.

PJR’s do have the very significant advantage of giving you the opportunity to conduct asset discovery, and attach an asset that is more meaningful to the antagonist/debtor. You may be able to attach a receivable account, a piece of valuable equipment, or an unencumbered piece of property different from the one where goods were supplied or services rendered. Moreover, you may be able to attach a bank account; nothing is likely to bring the antagonist/debtor to the bargaining table like a frozen bank account. Accordingly, a PJR may very well be the best strategic option, if it makes economic sense AND you are ready to pursue the main litigation.

Conclusion

Knowing the pros and cons of liens and attachments, we may now turn back to Hamlet and his question: “To lien, or not to lien?” In the event that you are beyond the 90 days for filing a mechanic’s lien, then there is no option but to file a PJR application. After all, it is somewhat foolish to go forward with a lawsuit without knowing that there is a source for recovering your judgment. Indeed, if is an unfortunate and often heard lament of some lawyers that, “I’ve got a great case, I just hope I can recover on the judgment.” Because the availability of liens and PJR’s that should never be an issue.

If the amount in dispute is relatively small, then a mechanic’s lien is likely the best option. By filing the mechanic’s lien you’ll have a year to decide what further action to take. Moreover, the cost and time of taking the PJR route would not make practical sense, since the cost of getting the PJR could easily outweigh the potential recovery. This is especially so when add in the considerably cost of the litigation to get a judgment. If the debt is large, then the PJR is likely the best option because it may gives you a greater range of available assets to attach.

And now, when your next construction play opens and the plot leads you to consider the question, “to lien or not to lien,” I leave you to ponder another musing from Hamlet:

Now, whether it’s

animal-like mindlessness, or the cowardly hesitation

that comes from thinking too much —

(thinking thoughts that are one part wisdom, three parts cowardice),

I don’t know why I’m still alive to say

“I have to do this deed” rather than having done it already.

I have the motivation, the willpower, the ability, and the means to do it.

Hamlet Act 4, scene 4, 39–46.

[1] It is generally recognized that the main difference between a tragedy and a melodrama is that a melodrama has a happy ending.