Desai v. A. R. Design Grp., Inc.

• Decision Date: 01 June 2017
• Docket Number: Record No. 160814
• Citation: 799 S.E.2d 506
• Parties: Ulka DESAI, Executrix of the Estate of Lakshmi Desai, and as the Successor Trustee of the Revocable Trust Agreement of Lakshmi Desai as Amended v. A. R. DESIGN GROUP, INC.
• Court: Virginia Supreme Court

293 Va. 426

799 S.E.2d 506

Ulka DESAI, Executrix of the Estate of Lakshmi Desai, and as the Successor Trustee of the Revocable Trust Agreement of Lakshmi Desai as Amended

v.A. R. DESIGN GROUP, INC.

Record No. 160814

Supreme Court of Virginia.

June 1, 2017

Jerome P. Friedlander, II (Friedlander, Friedlander & Earman, on brief), McLean, for appellants.

Marla J. Diaz (Whiteford Taylor & Preston, on brief), Falls Church, for appellee.

PRESENT: Lemons, C.J., Goodwyn, McClanahan, Powell, Kelsey, and McCullough, JJ., and Millette, S.J.

OPINION BY JUSTICE STEPHEN R. McCULLOUGH

Ulka Desai challenges the validity of a mechanic's lien filed by A.R. Design Group.

The trial court upheld the lien. We conclude that the memorandum for mechanic's lien either complied with the statute outright or was substantially compliant and, therefore, we affirm the judgment of the circuit court.

BACKGROUND

A.R. Design Group recorded a mechanic's lien for work done on two properties. The properties are both located in McLean, Virginia: one is on Towlston Road, and the other is on Woodside Drive. Both properties have been placed in a trust. Lakshmi Desai originally served as trustee. Following Lakshmi's death, Lakshmi's niece Ulka was named as trustee and she became trustee before the filing of the memorandum of mechanic's lien.

A.R. Design employed a form from the Virginia judiciary's website, Form CC-1512, for its memoranda. The memorandum for the Woodside Drive property identifies "Ulka D. Desai & Ulka D. Desai as executor of Estate of Lakshmi Desai" as the owner. It does not specifically state that Ulka Desai is the trustee. The memoranda for both the Woodside Drive and the Towlston Road liens were both signed by "Abbas Rouhani VP." Rouhani filled in the blank space provided for the "claimant." A line is drawn through the blank space provided for the "agent" to sign. Rouhani completed the affidavit as follows:

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Neither memorandum indicates a date from which interest is claimed or specifically states when payment is due. The memoranda state that the "owner is justly indebted to the claimant in the sum of" $39,332.00 for work on the Woodside Drive property and $183,609.05 for work on the Towlston Road property "for the consideration stated in the foregoing memorandum, and that the same is payable as therein stated."

Desai filed a petition challenging the validity of the liens. Desai argues that the memoranda are defective for the following reasons:

(1) For the Woodside Drive property, the failure to specifically name Desai as "trustee" constituted a fatal omission because, as a consequence, the memorandum never listed the owner of the property.

(2) For both properties, the memoranda improperly identify Rouhani, who is an agent, as the claimant.

(3) For both properties, the memoranda fail to list either a date from which interest is claimed or a date on which the debt is due.

The trial court sustained the validity of the liens. This appeal followed.

ANALYSIS

Mechanic's liens are creatures of statute. Wallace v. Brumback , 177 Va. 36, 39, 12 S.E.2d 801, 802 (1941) (citing Cain v. Rea , 159 Va. 446, 452, 166 S.E. 478, 480 (1932) ). We review de novo the trial court's construction of the statutes at issue. Eberhardt v. Fairfax Cnty. Emps. Ret. Sys. , 283 Va. 190, 194, 721 S.E.2d 524, 526 (2012).

Code § 43-3(A) provides in relevant part that

[a]ll persons performing labor or furnishing materials of the value of $150 or more ... for the construction, removal, repair or improvement of any building or structure permanently annexed to the freehold ... shall have a lien, if perfected as hereinafter provided.

A mechanic's lien serves "to insure to ... laborers the certain and speedy rewards of their labor, and to prevent the fruits of their daily toil, when matured, from being reaped by others." Merch. & Mech. Sav. Bank v. Dashiell , 66 Va. (25 Gratt.) 616, 621 (1874).

Code § 43-4 specifies the steps necessary to perfect a mechanic's lien: when it must be filed, where to file it, and what must be included in the memorandum of mechanic's lien. As relevant to this appeal, Code § 43-4 requires the claimant to

show the names of the owner of the property sought to be charged, and of the claimant of the lien, the amount and consideration of his claim, and the time or times when the same is or will be due and payable, verified by the oath of the claimant, or his agent.

A number of other provisions also inform our analysis. Code § 43-5 specifies that:

[t]he memorandum and affidavit required by § 43-4 shall be sufficient if substantially in form and effect as follows:

Name of owner: __________

....

5. Date from which interest on the above amount is claimed:

Date: __________

....

Affidavit.

State of Virginia,

County (or city) of __________, to wit:

I, __________ (notary or other officer) for the county (or city) aforesaid, do certify that __________ claimant, or __________, agent for claimant, this day made oath before me in my county (or city) aforesaid that __________ (the owner) is justly indebted to claimant in the sum of __________ dollars, for the consideration stated in the foregoing memorandum, and that the same is payable as therein stated.

Finally, Code § 43-15 provides that

No inaccuracy in the memorandum filed, or in the description of the property to be covered by the lien, shall invalidate the lien, if the property can be reasonably identified by the description given and the memorandum conforms substantially to the requirements of §§ 43-5, 43-8 and 43-10, respectively, and is not wilfully false.

I. OMISSION OF THE WORD "TRUSTEE" IN SPECIFYING THE OWNER OF THE PROPERTY

Code § 43-4 provides that the memorandum of mechanic's lien must list "the names of the owner of the property sought to be charged." The memorandum for the Woodside Drive property states that the property is owned by "Ulka D. Desai & Ulka D. Desai as executor of Estate of Lakshmi Desai."

"Owner" is a word of general purport, but its primary meaning, as applied to land, is "one who owns the fee and who has the right to dispose of the property" and includes "one having a possessory right to land."

Loyola Fed. Sav. & Loan Ass'n v. Herndon Lumber & Millwork, Inc. , 218 Va. 803, 805, 241 S.E.2d 752, 753 (1978) (quoting Black's Law Dictionary 1259 (rev. 4th ed. 1968)). Furthermore, "a mechanic's lien may be perfected on an equitable as well as on a legal estate." Wallace v. Brumback , 177 Va. 36, 44, 12 S.E.2d 801, 804 (1941) (citing Feuchtenberger v. Williamson , 137 Va. 578, 583, 120 S.E. 257, 259 (1923) ).

Lakshmi Desai originally served as the trustee for the Woodside Drive property. Following Lakshmi's death, Ulka D. Desai was appointed as the successor trustee in August of 2015, approximately three weeks prior to the recording of the lien against the Woodside Drive property. Legal title to the Woodside Drive property vested in Ulka D. Desai when she was appointed successor trustee. See, e.g., Curtis v. Lee Land Trust , 235 Va. 491, 494, 369 S.E.2d 853, 854 (1988). The trust affords wide latitude to Desai as trustee, including the right to sell or encumber the property. The memorandum properly identified Desai, as the trustee with legal title and the person holding the right to sell or encumber the property, as the "owner" of the property. Adding the word "trustee" was not necessary for a valid memorandum of mechanic's lien.

Moreover, from a functional perspective, designating Ulka D. Desai as the owner satisfied the purpose of placing subsequent purchasers on notice of the mechanic's lien. See Wallace , 177 Va. at 44, 12 S.E.2d at 803. A person purchasing the property from her would be on notice of the lien, which would be recorded under the general index of deeds under her name. As the appellee notes, the absence of the word "trustee" after her name would not have negatively impacted an index search.

II. SIGNATURE ON THE LIEN

Code § 43-4 requires that the memorandum must be "verified by the oath of the claimant, or his agent." Desai argues that Rouhani improperly signed the memoranda as a claimant rather than as the agent of A.R. Design and, as a consequence, both memoranda are defective. Desai points to our decision in Clement v. Adams Bros.-Paynes Co ., 113 Va. 547, 553, 75 S.E. 294, 296 (1912), where we held that the signature of the corporation's president on an affidavit for a mechanic's lien did not by itself suffice to establish that the president had the authority to act as the agent of the corporation. The discrete issue addressed in Clement , however, is not before us here.¹ Desai does not argue that Rouhani lacked the authority to act as an agent; rather, she argues that Rouhani incorrectly signed the memoranda as the claimant. The question we must resolve is whether the memoranda containing Rouhani's signature under the line reserved for a claimant rather than an agent, and his crossing out of the space reserved for the signature of an agent, means that the memoranda are not substantially compliant under Code §§ 43-5 and 43-15.

Code § 43-5 provides that a memorandum "shall be sufficient if substantially in form and effect as follows." Code § 43-15 expressly provides that the lien will not be invalidated if the memorandum reasonably identifies the property by the description given and it "conforms substantially to the requirements of §§ 43-5, 43-8 and 43-10, respectively, and is not wilfully false." We have held that the word "inaccurate," as used in Code § 43-15, is defined as " ‘not accurate: as ... containing a mistake or error: incorrect, erroneous.’ " Reliable Constructors v. CFJ Props. , 263 Va. 279, 281-82, 559 S.E.2d 681, 682 (2002) (quoting Webster's Third New International Dictionary 1139 (1993)). We have not defined what constitutes "substantially in form and effect" or "substantial conformity" in this context. The word "substantial" simply means "something of moment: an important or material matter, thing, or part." Webster's Third, at 2280.² We hold that a defect in a memorandum of mechanic's...