The South Carolina Supreme Court issued an opinion last week regarding mechanic’s liens and the notice of furnishing requirement.
In Ferguson Fire and Fabrication, Inc. v. Preferred Fire Protection, L.L.C., Immedion (owner) hired Rescon, L.L.C (general contractor) for improvements to a data center leased by Immedion. Rescon, L.L.C hired Preferred Fire (subcontractor) for fire sprinkler services. Ferguson Fire (materials supplier) provided materials to Preferred Fire for the project. Immedion also had a direct contract with Preferred Fire for $30,973.
While its deliveries were in progress, Ferguson Fire sent a “Notice of Furnishing Labor and Materials” to Immedion advising it that Ferguson Fire had been employed by Preferred Fire to deliver labor, services, or materials with an estimated value of $15,000 to Immedion’s premises. Immedion paid Preferred Fire $15,486.50 of the $30,973 contract price for installation of the system before receiving Ferguson Fire’s Notice of Furnishing. After receiving the Notice of Furnishing, Immedion issued two additional checks to Preferred Fire totaling $15,486.50 for the unpaid balance of the contract price.
Later, Ferguson Fire served upon Immedion, Preferred Fire, and others (and later filed) a “Statement and Notice of Mechanic’s Lien,” which gave notice of the existence of a lien and included a Statement of Account. Ferguson Fire stated $15,548.93 was still owing and due, and it asserted a mechanic’s lien upon the premises.
The South Carolina Court of Appeals previously found that the Notice of Furnishing was ineffective under section 29-5-40 because it was sent prior to furnishing all the material, failed to identify the final amounts of the goods delivered, and never made a demand for payment. However, the South Carolina Supreme Court found that the South Carolina Court of Appeals had added requirements that are not present in the statute itself and, as a result, erred in concluding Ferguson Fire’s lien was ineffective as a matter of law.
In the opinion, the South Carolina Supreme Court noted that if the person furnishing the labor or materials was employed by someone other than the owner (such as a contractor), for the lien to attach the person must meet the additional requirement of giving written notice to the owner of the furnishing of the labor or material. However, by its terms, section 29-5-40 only requires a supplier to give written notice to the owner (1) of the furnishing of such labor or material and (2) the amount or value thereof. In this case, Ferguson Fire gave Immedion written notice that it was supplying materials to Preferred Fire for its premises with an estimated value of $15,000.00. The Court held that this is all of the information specifically required by the General Assembly in section 29-5-40 for a Notice of Furnishing.
The Supreme Court noted that it believes Immedion and the Court of Appeals confused the requirements for a Notice of Furnishing to an owner under section 29-5-40 with the requirements for a notice or certificate of a lien under section 29-5-90.
Thus, although this case doesn’t represent a change in lien law, it does underscore the fact that following the statutory mechanic’s lien requirements is important and, often times, complicated