2nd Tier Sub Can Recover $300K Under Mechanic's Lien---If It Can Prove Project Performance

Monday, December 03, 2018 9:28 am
December 2018 - Volume 40 Number 12

Mechanic’s Lien

Yale Elec. East, LLC v. Semac Elec. Co., 2018 Conn. Super. Lexis 1524 (July 30, 2018)

A sub-subcontractor’s attempt to recover $300,000 via summary judgment was denied when the court questioned whether the materials it supplied to the project were actually used on the project.

Stamford Hospital hired general contractor Skanska USA Building, Inc. (Skanska) to perform on a hospital expansion and renovation project in Stamford, Connecticut. Skanska entered into a subcontract with Semac Electric Co., Inc. (Semac) for electrical work. Semac in turn established an open account contract with Yale Electric East, LLC (Yale) under which Yale supplied project materials at a total price of $1,112,164. Yale claims Semac paid it $798,231, leaving $313,932 of the open account contract unpaid.

In January 2016, Yale served a notice of intent to file a mechanic’s lien on the hospital, Skanska, and Semac---and then recorded a certificate of mechanic’s lien on all three entities the following month. Skanska obtained a surety’s bond to substitute for the mechanic’s lien (as permitted by Connecticut General Statutes §49-37), which was issued by Fidelity and Deposit Company of Maryland (FDCM). However, the hospital, Skanska, and Semac all failed and refused to pay Yale under the bond. 

Yale filed a complaint that, in part, sought to recover from FDCM under the bond.

Yale claimed that it had “established a valid mechanic’s lien against the project, which was thereafter substituted by the defendant’s bond,” and that bond required F DCM to pay Yale the amount secured by the liens for which the bond was substituted.

FDCM responded, in a motion for summary judgment, that Yale could not recover on the bond because the amount available to Yale for recovery under a mechanic’s lien---i.e., the project’s lienable fund---had been exhausted.

Was there any money left?

Specifically, FDCM claimed[..]