Saks Associates, LLC v. Southeast Culvert, A06A1606.
| Decision Date | 09 November 2006 |
| Docket Number | No. A06A1606.,No. A06A1608.,No. A06A1607.,A06A1606.,A06A1607.,A06A1608. |
| Citation | 282 Ga. App. 359,638 S.E.2d 799 |
| Parties | SAKS ASSOCIATES, LLC v. SOUTHEAST CULVERT, INC. Southeast Culvert, Inc. v. Saks Associates, LLC (two cases). |
| Court | Georgia Court of Appeals |
Bret Thrasher, Taylor Mehrtens, Thompson, O'Brien, Kemp & Nasuti, P.C., Norcorss, for Saks Associates.
Neil Moskowitz, Cohen, Goldstein, Port & Gottlieb, Atlanta, for Southeast Culvert.
On December 2, 2003, Southeast Culvert, Inc., a supplier of corrugated pipe and other drainage goods, filed a materialman's claim of lien for $91,824 against a seven-acre parcel of property in Gwinnett County. In the claim of lien, Southeast identified Five Star Builders as the contractor that had requested the materials in question, and Southeast named SAKS Associates, LLC, as the owner of the property upon which its materials had been used.
A week later, on December 9, 2003, Satish A. Poddar, the sole member and manager of SAKS, sent a letter to the president of Southeast. Writing on paper bearing the SAKS letterhead, Poddar acknowledged that the lien was against SAKS' property. He further stated that he had dismissed Five Star Builders as contractor and guaranteed future payment of $67,175 to Southeast in order to continue the project, which involved developing medical offices on the property.
Three months later, in March 2004, SAKS, Poddar and Southeast entered into an agreement which provides that SAKS owns the property that has been improved, that Southeast has not been fully paid for materials and services supplied to the property, that SAKS will pay Southeast $26,573 for the prior materials and services, that SAKS will pay Southeast $69,004 for new materials and services, and that Poddar personally guarantees SAKS' obligations under the agreement. Poddar signed the agreement both in his individual capacity and as SAKS' manager.
Southeast eventually received the promised payment of $26,573. Pursuant to the parties' agreement, Southeast reduced its claim of lien by that amount, filing an amended claim of lien to reflect a new amount of $65,280. The amended claim of lien once again identified SAKS as the property owner and Five Star Builders as the contractor that had requested the materials.
In the meantime, some five months after the first claim of lien had been filed, the contractor filed a bankruptcy petition. Thereafter, on November 12, 2004, Southeast filed the instant action against SAKS to foreclose the materialman's lien. In its complaint, Southeast asserted that SAKS is the owner of all the property in question, that SAKS has been developing the property as buildings for lease or sale to medical or healthcare providers, and that SAKS had entered into an agreement with Five Star Design & Builders to act as the contractor for the development and improvement of the property. SAKS timely filed its answer, expressly admitting the above factual assertions made in the complaint.
SAKS later moved for summary judgment on the ground that the contractor identified in the claim of lien, Five Star Builders, is not the same contractor identified in the complaint, Five Star Design & Builders, and therefore Southeast had not complied with the requirement that it sue the contractor named in the claim of lien before seeking recovery against the property owner. The trial court denied the motion for summary judgment, and the case proceeded to a bench trial.
At trial, Southeast presented evidence that Five Star Design & Builders had applied for credit with it. But on the application, the company did not use its full name, and instead identified itself only as Five Star Builders. Southeast approved the contractor for a line of credit and subsequently provided it with materials worth more than $100,000 for use on the medical office project. Five Star, however, made only one payment of $10,844 to Southeast, using a check drawn on an account bearing the name Five Star Builders.
In its defense, SAKS, for the first time, claimed that it was not the sole owner of the property in question. Over objections by Southeast, the trial court allowed SAKS to present evidence indicating that less than two months before the claim of lien was filed, it had conveyed 1.4 acres of its seven-acre parcel to S.A.P. Associates, LLC, of which Poddar is the controlling majority member and Erchna Poddar is a minority member.
The trial court entered judgment in favor of Southeast, ruling that the lien in the amount of $65,280 is deemed perfected and that Southeast is also entitled to $7,235 as interest, for a total judgment of $72,515. SAKS appeals from the final judgment in Case No. A06A1606. Southeast cross-appeals in Case No. A06A1607, and also appeals in Case No. A06A1608 from the denial of its motion to dismiss SAKS' appeal due to a delay in the filing of the trial transcript.
1. SAKS contends that the contractor identified in the claim of lien, Five Star Builders, is an entirely different entity from the project contractor identified in the complaint, Five Star Design & Builders. Claiming that the instant case is identical to and controlled by the case of Brockett Road Apts. v. Ga. Pacific Corp.,1 SAKS argues that Southeast's failure to commence suit against the contractor named in the claim of lien is fatal to its action and therefore the trial court erred in entering judgment in favor of Southeast. The argument is without merit.
OCGA § 44-14-361.1(a) sets out the provisions for perfecting a lien. These provisions require a materialman who has substantially complied with the contract for materials to (a) file a claim of lien in the county where the property is located within three months of furnishing the materials; (b) send a copy of the lien claim to the property owner; (c) commence an action against the contractor to recover the amount of the claim within 12 months of when the claim became due; and (d) file a notice of the action with the superior court clerk of the county where the lien was filed so that the clerk can enter information about the lawsuit in county records.2
Under certain circumstances, including the bankruptcy of the contractor, the materialman need not commence an action against the contractor and may instead bring an action directly against the property owner.3
OCGA § 44-14-361.1(a)(4) provides, in part, that where a contractor is adjudicated bankrupt or, if after an action is filed, no final judgment can be obtained against the contractor because of his adjudication in bankruptcy, the materialman need not file an action or obtain judgment against the contractor before enforcing a lien against the improved property. This subsection further provides that the materialman may enforce the lien directly against the property by filing an action against the owner within 12 months from the time the lien becomes due.4
In the instant case, it is undisputed that approximately five months after the claim of lien was filed, the contractor filed a bankruptcy petition. It has been held that the filing of a bankruptcy petition brings a contractor within the meaning of the "adjudicated a bankrupt" language of OCGA § 44-14-361.1(a)(4).5 Since the contractor filed a bankruptcy petition, Southeast did not even have to file an action or obtain judgment against it as a prerequisite to filing the instant action against SAKS.6
That fact alone distinguishes the instant case from the Brockett Road Apts. case, which did not involve a bankrupt contractor. In that case, the plaintiff identified one entity as the contractor in its materialman's lien, but then identified a completely different entity as the contractor in its complaint.7 On appeal, this court held that because the plaintiff was relying on the lien as the basis for its suit, the facts shown in the copy of the lien attached to the complaint must prevail over the allegations in the complaint, and thus the plaintiff was bound to commence suit against the contractor named in the lien as a condition precedent to foreclosure.8
In the instant case, as noted above, Southeast was not bound to commence suit against the bankrupt contractor. Moreover, SAKS' contention that the contractor identified in the claim of lien is different from the contractor that in fact worked on the project and that Southeast identified in the complaint is disingenuous and disproved by the record.
The evidence establishes that throughout its dealings with Southeast, the contractor for the project, Five Star Design & Builders, identified itself to Southeast as Five Star Builders. When first contacted by a Southeast salesman, the owner of the contracting company identified his business as Five Star Builders. On its written application for credit with Southeast, the contractor identified itself as Five Star Builders. And when it made its lone payment to Southeast, it did so on a check bearing the name Five Star Builders. In fact when Five Star Design & Builders sought bankruptcy protection, it filed a document with the bankruptcy court that listed two other trade names it had used in the past six years, the first of which was Five Star Builders.
Furthermore, after the claim of lien was filed, Poddar acknowledged in the letter he sent on behalf of SAKS to Southeast that the contractor named in the lien was the same contractor for the medical office project. Indeed, in that letter, Poddar himself twice referred to the contractor as "Five star builders." Moreover, Poddar and SAKS again acknowledged that the contractor named in the claim of lien is the same contractor that had worked on the project when they entered into the agreement guaranteeing payments to Southeast.
It is true that SAKS has shown there is another company in Georgia called Five Star Builders, Inc., which is not the same company as Five Star Design & Builders. But the evidence unequivocally establishes that Five Star Builders, Inc., is not the same entity...
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