H.E. Contracting v. Franklin Pierce College, No. CIV.04-484-PB.

• Decision Date: 17 March 2005
• Docket Number: No. CIV.04-484-PB.
• Citation: 360 F.Supp.2d 289
• Parties: H.E. CONTRACTING v. FRANKLIN PIERCE COLLEGE
• Court: U.S. District Court — District of New Hampshire

Page 289

360 F.Supp.2d 289

H.E. CONTRACTING v. FRANKLIN PIERCE COLLEGE

No. CIV.04-484-PB.

United States District Court, D. New Hampshire.

March 17, 2005.

William J. Edwards, Thomas J. Pappas, Wiggin & Nourie PA, Manchester, NH, for Plaintiff.

Joseph S. Hoppock, Goodnow Arwe Ayer Prigge & Hoppock, Keene, NH, Stanley A. Martin, Holland & Knight LLP, Boston, MA, for Defendant.

ORDER

MUIRHEAD, United States Magistrate Judge.

H.E. Contracting (Plaintiff or "HEC") filed a complaint against Franklin Pierce College (Defendant or "FPC") on December 21, 2004 asserting claims based on, inter alia, breach of contract and quantum meruit (document no. 1). HEC concurrently filed a Petition for Ex Parte Attachment to Secure Mechanic's Lien (document no. 4). The Court granted HEC permission to attach certain real estate held by the Defendant in the amount of $600,000.00 on December 23, 2004 (document no. 5).

Before the Court for consideration is the Defendant's objection to Plaintiff's petition for ex parte attachment and to this Court's order of December 23, 2004 (document no. 13). The Court held a hearing on the objection on February 4, 2005 and March 7, 2005. For the reasons set forth below, the Court finds that the amount of Plaintiff's attachment should be reduced from $600,000.00 to $146,360.42.

Standard of Review

Pre-judgment attachments are available to secure satisfaction of judgments "under the circumstances and in the manner provided by the law of the state where the district court is held." Fed.R.Civ.P. 64. Under New Hampshire law, a mechanic's lien is a statutory right that arises automatically upon the provision of labor or materials. See N.H.Rev.Stat. Ann. ("RSA") Chapter 447:2.¹ The lien provides security against the property owner for the value of the labor or materials rendered. Pine Gravel, Inc. v. Cianchette, 128 N.H. 460, 514 A.2d 1282, 1285 (1986).

Under the statute, a labor and materials lien continues for 120 days after the services are performed or the materials are furnished. RSA 447:9. The lien may be secured by attachment of the property upon which it exists at any time while the lien continues. RSA 447:10. The lien holds a favorable priority position with respect to other creditors in that it takes precedence over all prior claims except tax liens. RSA 447:9.

RSA 511-A, which governs procedures for pre-judgment attachments, applies to proceedings to secure liens under RSA 447. Chagnon Lumber Co., Inc. v. Stone Mill Constr. Corp., 124 N.H. 820, 474 A.2d 588, 589 (1984). "RSA chapter 511-A was enacted in 1973 to conform the law of this State to standards of due process." Id.

RSA 511-A generally requires notice and an opportunity to be heard before a pre-judgment attachment is made. See RSA 511-A:1 and A:2. Under RSA 511-A:8, however, courts may grant certain attachments without prior notice to the defendant "if the plaintiff establishes probable cause to the satisfaction of the court of his basic right to recovery and the amount thereof." A specific exemption from the prior notice requirement is provided in cases where the plaintiff seeks to perfect a labor and materials lien under RSA 447. See RSA 511-A:8(III); see also Chagnon Lumber, 474 A.2d at 589. After an ex parte attachment is granted, the defendant is given notice and is entitled to a prompt hearing upon request. See RSA 511-A:8.

In Judge Manias' convincing and well-written opinion in Consolidated Elec. Distrib., Inc. v. SES Concord Co., No. 89-C-571/579 (Merrimack Superior Ct., Nov. 21, 1989) (copy attached to Plaintiff's Reply to Defendant's Objection as Exhibit 1), the court held that the provisions of RSA 511-A:3, which require a plaintiff to demonstrate a likelihood of success on the merits to obtain an attachment, and permit a defendant to avoid an attachment by establishing that its assets are sufficient to satisfy a judgment, do not apply in a proceeding on a mechanic's lien under RSA 447. The court found that applying RSA 511-A:3 to mechanic's lien proceedings "would frustrate the underlying purpose and design of the mechanics lien statute" in that it could cause a plaintiff to lose its statutory entitlement to an attachment and priority status in bankruptcy. Id. at 5-8. Accordingly, notwithstanding Defendant's argument to the contrary, I find that the provisions of RSA 511-A:3 do not apply to the determination of whether the ex parte attachment granted to the Plaintiff in this case was appropriate.

According to the court in Consolidated Elec., the content and focus of a post-attachment hearing on a mechanic's lien is whether the plaintiff has met its burden under RSA 511-A:8, which defendant may rebut. Id. at 6. The defendant may challenge the plaintiff's basic right to recovery under RSA 447, the lien amount, or notice provisions. Id.; see also West Side Dev. Group, LLC v. D'Amour, No. 04-C-018, (Carroll County Superior Ct., March 24, 2004) (copy attached to Plaintiff's Reply to Defendant's Objection as Exhibit 2) (finding that the provisions of RSA 511-A:3 specifying the "reasonable likelihood of success test" and the "sufficiency of assets test" do not apply to a mechanic's lien proceeding under RSA 477). The Court applies the standard of review employed in Consolidated Elec. in considering the Defendant's objection to Plaintiff's ex parte attachment.

Background

In April 2004, the Defendant invited Eric Lenardson, President of HEC, to bid on work related to the construction of athletic fields and associated facilities on land held by FPC. Plaintiff's initial bid for the entire project amounted to between $3,700,000 and $4,160,000 depending upon various options that could be chosen by FPC.

After reviewing the bids that it received, FPC determined that all of the bids exceeded its budget. FPC requested that certain contractors, including the Plaintiff, submit separate bids for portions of the project including the site work, artificial turf installations, site lighting, and the construction of press-boxes and dugouts. Plaintiff made a new proposal for "the clearing and grubbing of project site to prepare for design/build soccer field and baseball field." Pl.'s Ex. 10.² Plaintiff stated that its price to provide "base work, drainage and artificial turf (E-turf) was $1,189,000." Id. Plaintiff stated that its price "for Base work only" was $625,000. Id.

Defendant awarded Plaintiff a site work contract in May 2004 for which the parties agreed that Plaintiff would be paid $625,000. Pl.'s Ex. 11. Defendant paid Plaintiff $375,000, or sixty percent of the contract price, in advance. Id. Defendant issued a purchase order to HEC in connection with the $375,000 payment dated June 7, 2004 that stated that the payment was for "construction contract to provide all site work, as per contract to follow." Id. Although Plaintiff began working at the project site on June 2, 2004, the contract between the parties is dated June 9, 2004. Pl.'s Ex. 6.

In late July 2004, Plaintiff submitted nine change orders.³ Defendant requested that Plaintiff provide documentation to support those change orders. Plaintiff next submitted a requisition dated August 16, 2004, asserting that it had completed ninety percent of its work under the contract and was entitled to an additional payment of $187,500.00. Df.'s Ex. D. Defendant rejected the requisition.

At a meeting held on August 25, 2004 to discuss Plaintiff's change orders, Defendant approved Plaintiff's change orders numbered 4-6. Defendant rejected change orders numbered 1, 2, 3, 7, 8 and 9 contending that they covered work that was included within the Plaintiff's scope of work under the contract. The amount of the outstanding unpaid change orders is $409,359.50.⁴ Plaintiff pulled its people and equipment off the site later that same day. Plaintiff subsequently commenced this lawsuit.

Discussion

A. Percentage of Work HEC Completed

Eric Lenardson testified, and presented exhibits, supporting Plaintiff's allegation that it had completed ninety percent of its work under the contract at the time Plaintiff walked off the job. In contrast, Jeffrey Kevan testified that based on his assessment HEC completed only sixty percent of the work within its contractually-defined scope of work. For purposes of determining whether Plaintiff has demonstrated its basic right to recovery under RSA 447:2, the Court accepts the Plaintiff's evidence as sufficient to meet its burden under RSA 511-A:8.

B. Contract Accounting

Accepting the Plaintiff's allegation that it completed ninety percent of its work under the $625,000.00 contract, the Court finds that Plaintiff furnished labor and materials to Defendant worth $562,500.00. Since the Defendant paid Plaintiff $375,000.00 in advance, the balance owed on the contract at the time Plaintiff left the job was $187,000.00. On August 19, 2004, however, the parties executed a First Supplemental Agreement under which Plaintiff agreed that Defendant would make a direct payments to W.J. Graves, a stone contractor, of $77,069.58 for a pending invoice, and $85,000 for an anticipated future invoice. See Df.'s Ex. F. Plaintiff agreed that Defendant's payments to W.J. Graves would reduce Defendant's obligation to Plaintiff under the parties' contract. While Defendant paid the invoice for $77,069.58, the evidence showed that Defendant only paid $15,596.79 of the anticipated payment of $85,000.00. Therefore, taking into account the total of Defendant's direct payments to W.J. Graves, the adjusted balance owed to Plaintiff on the contract is $94,360.42.

C. Applicable Scope of Work

The Plaintiff asserted at the hearing that Plaintiff's scope of work under the contract is defined in Eric Lenardson's letter proposal dated May 6, 2004. See Pl.'s Ex. 10. Lenardson cited his use of the phrase "Base work only," in the May 6th letter, although that phrase is neither defined in the letter, nor in any other document in evidence. Plaintiff argued that he only used the site plans and...