Q: Does a mechanics lien secure payment of attorneys’ fees and costs (in addition to the amount of improvements) incurred by a lien claimant under the Utah mechanic’s lien statute?
A: No.
In an earlier article (http://paulporvaznik.com/contractors-attorneys-under-illinois-mechanics-lien-law/502) I tried to harmonize some Illinois cases that discuss whether attorneys’ fees can be added to a mechanics lien amount. It’s an important question since mechanics’ lien attorneys’ fees often end up astronomical; especially where there’s multiple litigants and the case drags on for several years.
In Illinois, attorneys’ fees can only be assessed against a property “owner” but only after a finding that its failure to pay was “without just cause or right.” 770 ILCS 60/17. Today’s post features a case from Utah, a place I’ve never practiced. I deemed the case post-worthy because it highlights a lien issue likely to recur in mechanics’ lien cases.
2 Ton Plumbing, Inc. v. Thorgaard, 2015 WL 404592 (Utah 2015), involves the reversal of a contractor’s lien award of nearly $50K that included fees incurred over the course of a circuitous lien case involving multiple property owners and lenders. In reversing the lien judgment, the Court expands on Utah’s lien statute (Utah Code Section 38-1a101-804 (the “Lien Act”)), as well as the philosophy underpinning mechanics lien law.
Under Utah’s Lien Act, a lien attaches to the value of services, labor, materials or equipment furnished or rented on an improvement or structure. It also allows a “successful party” to recover a “reasonable attorneys’ fee” which the court taxes as “costs” on the losing party. The Lien Act also allows the successful claimant to recover “costs” of preparing and recording the lien including reasonable attorneys’ fees incurred in preparing and recording the lien notice.
In gutting much of the lien amount, the Utah appeals court held that attorneys’ fees are normally only allowed by statute or contract. If a lien claimant could always augment his lien amount with his attorneys’ fees, the amount claimed would be a “moving target” (the amount would keep going up indefinitely) and so frustrate the Lien Act’s purposes. ¶¶ 25, 35, 42.
The court also noted that since a party has no obligation to pay an opposite side’s attorneys’ fees in a lien case unless that party has lost the case, fees, by definition, can’t be included in a lien amount. Otherwise, it would be tantamount to putting the proverbial “cart before the horse” by allowing a lien claimant to tack on (future) fees before he was deemed a successful party. ¶¶ 38-42.
Afterword:
A decision worth noting for its universal applicability. Since lien case fees are often substantial, it’s important to know what amounts can and can’t be included in a lien claim. As 2 Ton shows, a failure to lien for the proper amount can have unfortunate fiscal ramifications.