Gwinnett-Club Assoc. v. SOUTHERN ELEC. SUP. CO. INC.
| Decision Date | 11 February 2000 |
| Docket Number | No. A99A1641.,A99A1641. |
| Parties | GWINNETT-CLUB ASSOCIATES, L.P. v. SOUTHERN ELECTRIC SUPPLY COMPANY, INC. |
| Court | Georgia Court of Appeals |
OPINION TEXT STARTS HERE
Rachelson & White, Ira L. Rachelson, Atlanta, for appellant.
Dock H. Davis, Franklin, for appellee.
Gwinnett-Club Associates, L.P. (Gwinnett-Club) appeals from the trial court's judgment entered after a bench trial, finding that Southern Electric Supply, Inc. (Southern Electric) had fully complied with OCGA § 44-14-361.1 of Georgia's Materialman's Lien Statute and granting it a judgment in rem against the real property owned by Gwinnett-Club. Because we conclude that Southern Electric was required to file a notice of commencement of suit against the contractor and failed to do so, we reverse.
The parties agreed to allow the trial court to decide this case on stipulated facts. A review of those facts shows that the case arose when Gwinnett-Club contracted with Cajun Electric (Cajun) to furnish improvements for an apartment project. Cajun bought materials from Southern Electric totaling $70,997.23 but failed to pay for them. Southern Electric filed a materialman's lien against the improved property in Gwinnett County for the $70,997.23 on January 30, 1996, in accordance with OCGA § 44-14-361.1. On May 6, 1996, Southern Electric filed a complaint against Cajun in Clayton County State Court in accordance with OCGA § 44-14-361.1(a)(3). But, Southern Electric did not comply with the requirement of OCGA § 44-14-361.1(a)(3) that it file a notice of commencement of the action with the Superior Court of Gwinnett County, the county in which the lien was filed. Southern Electric claimed that it did not file the required notice because it received notice that Cajun had filed bankruptcy and the automatic stay provisions were in effect. The notice sent to all creditors stated that creditors were prohibited from taking certain actions against the debtor, among which were taking action against the debtor to collect money owed or starting or continuing foreclosure actions or repossessions.
Then, in accordance with OCGA § 44-14-361.1(a)(4), Southern Electric filed this complaint in Cobb County against the property belonging to Gwinnett-Club. Southern Electric did file a notice of commencement of suit against Gwinnett-Club with the clerk of Superior Court of Gwinnett County.
Gwinnett-Club argued below and now argues on appeal that Southern Electric's failure to file a notice of commencement of the suit against Cajun precludes it from now enforcing its materialman's lien against Gwinnett-Club's property. We agree.
Once a lien has been filed, the lienholder must file suit against the account debtor within 12 months. OCGA § 44-14-361.1(a)(3). Southern Electric filed suit against Cajun within the 12 months. Then, within 14 days of filing suit, the lienholder must file a notice of commencement of suit in the records where the lien is recorded. OCGA § 44-14-361.1(a)(3). Southern Electric failed to do this.
OCGA § 44-14-361.1(a)(4) provides that if the account debtor is adjudicated bankrupt and no final judgment can be obtained against it, then the lien claimant may file an action in rem against the property. This section also provides that the lien claimant must file a notice with the clerk of the superior court in the county where the lien was filed. There is no dispute that Southern Electric complied with the provisions for filing the in rem action.
We note first that a materialman's lien effectively permits the transfer of liability from the person who actually contracted with the materialman for materials to be used in improving real estate to the owner of the improved property, even though that property owner usually will have no relationship with the materialman, contractually or otherwise. Consequently, we have long recognized that the statutes involving materialman's liens must be strictly construed in favor of the property owner and against the materialman. Palmer v. Duncan Wholesale, 262 Ga. 28, 29-30, 413 S.E.2d 437 (1992). Further, the materialman's statute requires strict compliance. Womack Indus. v. B & A Equip. Co., 199 Ga.App. 660, 661, 405 S.E.2d 880 (1991). Before a materialman's lien can be allowed, the lien claimant must show compliance with all conditions of the statute. Kwilecki v. Young, 180 Ga. 602, 604, 180 S.E. 137 (1935); Allied Elec. Contractors v. Kern & Co., 184 Ga.App. 747, 748, 362 S.E.2d 452 (1987). OCGA § 44-14-361.1(a). Filing the notice of commencement of the action is a prerequisite to the enforceability of the lien, and at the time the lienholder fails to file the notice, the lien becomes unenforceable. Palmer, supra at 30-31, 413 S.E.2d 437; Eurostyle v. Jones, 197 Ga.App. 188, 397 S.E.2d 620 (1990).
Southern Electric claims that the automatic stay entered in Cajun's bankruptcy case prohibited the filing of the notice of commencement. We find nothing in Section 362 of the Bankruptcy Code which forbids the filing of the notice of commencement.
Section 362 operates as a stay in pertinent part as follows: any action or proceeding to recover a claim against the debtor or the property of the estate is stayed, as is the enforcement of any claim against the debtor or the property of the estate; also, any act to create, perfect or enforce any lien against the property of the debtor or the estate,...
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