follow up materialman's lien with small claim?

[stripedybird]

What is the name of your state (only U.S. law)?
Texas

I am a roofing contractor, and filed a lien on a home where we did a roof replacement. The job required more material than the scope agreed on by the insurer, contractor, and homeowner. This was anticipated, insurer said to go ahead with job and file a supplemental claim after completion (this is standard procedure, by the way). Homeowner was advised, verbally stated that he absolutely wanted to replace the entire roof (a porch had not been included in insurer's estimate). After job was complete, homeowner stated total satisfaction, praised us as an out-of-town company better than the local companies, and we filed the supplemental claim ($1.300) with documentation. The insurer approved, issued a supplemental report and additional payment to homeowner. Homeowner decided not to pay us (stated "I just think I've paid you enough").

We filed lien with the county (Lamar County, TX), sent certified notice (he refused delivery), and have written and faxed him asking for payment, but he will not respond or take phone calls.

This man holds a very prominent position in a smallish town. The town (where the subject property also is located) is 2 hours away. We are based in Collin County TX. Contract was signed by him in Lamar County and faxed to our office.

At this point, I am not sure whether out next step is to pursue a small claim or to try to take title to the house ($500K+ home), or what. I have hesitated because I really hoped he would change his mind and do the right thing, but I now believe the courts are my only option.

What is our proper next step?

What is the proper venue for any court filing?

 

[latigo]

I’m going to assume that you are thinking of small claims court because of the reduced costs of litigation.

However, a foreclosure action on a mechanic’s lien on real property exceeds the jurisdictional limits of a Texas small claims court. (In fact most likely true in all 50 states.)

With respect to the costs and on the positive side, keep in mind that on foreclosures of a mechanics lien the court is allowed to award the lien claimant’s attorney fees. (Section 53.16 of Chapter 53 of the Texas Property Code)

Because these lien rights are statutory and not recognized at common law, the courts place a narrow construction on them. Meaning that the claimant is held to strict compliance with the statutory procedures and time periods.

So DO NOT attempt to foreclose your lien without the services of a skilled and experienced attorney. The process is much too complicated and there are pitfalls you wouldn't recognize, much less avoid them.

Also note that your lien is inferior to existing mortgage liens and other prior encumbrances.

Inasmuch as this is residential property you have one year within which to institute a foreclosure action.

Unless the homeowner is judgment proof, your attorney may suggest that you waive the lien avoiding the complicated process of foreclosure and related additional expenses AND bring suit for the contract balance.

Either way - proper court venue will be in Lamar County.
(See Texas Civil Practice & Remedies Title 2, Chapter 15, Section 15.002(a)

Please understand that this is offered for information purposes only. Rely on the advice of your Texas attorney.

 

[stripedybird]

Thank you.

If I sue directly for the balance due, in small claims court, it is my understanding that attorneys are not allowed. The customer has plenty of money to hire an attorney. Even though I feel the case is clear and I would prevail (who doesn't, when bringing suit?), I would feel better knowing that he couldn't out-lawyer me and then I'd be liable for those costs.

I do have another question, related to the facts of the case which I stated originally.

Given that the only written contract with the customer has been paid in full, and that it is the extra work that needs to be paid for, I'd like to know the hurdles there. There was verbal agreement with the customer, and with the insurer, as to how it would be handled, but it was not written. The insurer reviewed our claim for the supplemental work, and paid the full amount. A reviewing adjuster at the insurer later looked over their records and said that it was perfecly clear that the check sent to the homeowner was intended to reimburse us for specific work required because there was more roof involved than the company's estimate.

This is all common practice, and I have no doubt that I could subpoena the reports and get a statement to that effect from the insurer. However, there is still no written agreement between us and the customer covering this situation. Is this a difficult or insurmountable hurdle, in a small claims suit?

 

[latigo]

I’m sure that you are correct about no attorneys in small claims.

However, if Texas is like most states when an appeal is made from small claims to a court of broader jurisdiction, the case is tried de novo and attorneys are of course permitted at any court level on up.

The point is that if this rich cat loses below he will surely take you up and then bring out his legal artillery.

Obviously I’m not able to analyze what evidence is out there to support your claim for the extra work. Nor am I qualified to comment on procedures in Texas small claims, but my guess is that pretrial discovery may be limited and 100% sure that you cannot foreclose a labor and material lien in that court.

As you will recall I simply mentioned that your attorney might deem it prudent to waive the lien and sue on the balance. I wasn’t suggesting it.

But don’t go with what I’ve said. Go with the attorney’s advice

Good luck

 

[latigo]

Adding.

In light of what you’ve recently indicated about needing witnesses and documents to support your claim - you should NOT attempt this case in small claims. And here’s why:

With no pretrial discovery available at that court level you would be subpoenaing those documents and witnesses blind.

That is, you would have no advanced knowledge of how the witnesses will testify or know the contents of the documents until they are brought to court. Nor would you be prepared to rebut any testimony or documentation adverse to your claim.

And my guess is that the small claims judge, who may not even be an attorney, will dismiss the case without prejudice and tell you to file it where it belongs.

Trial work is 90% preparation and a successful trial lawyer will know more about the opponent’s case than the opponent does.

Not after the case is tried. BEFORE THE CASE IS TRIED.

Bite the bullet and hire a good attorney. Most likely the court will award you the fees.

Sax

 

[Nevergrowup]

I have a question...if the homeowner was reimbursed by the insurance company and pocketed the money, wouldn't that be insurance fraud? The insurance company was reimbursing based on the information provided by the OP. Then the homeowner pocketed the money intended for the OP. Perhaps contacting the insurance company would be helpful?

I'm asking because it seems to me that the homeowner just received a $1300 windfall and additional work done on the home (so basically $2600 of value) for nothing, surely the insurance company would be interested that they paid out $1300 for nothing?