Navigating Arkansas materialmen’s lien law can be daunting for the unexperienced. The Arkansas lien statute imposes numerous and specific notice and timing requirements, with the form, content, and timing of the notice dependent on factors that include:
- Whether the lien claimant is a contractor or subcontractor
- Whether the project is commercial or residential
- Whether the lien claimant supplied materials and services directly to the property owner
The requirements can be ambiguous and sometimes appear contradictory. The result is that there is not always a clear path to perfecting a lien, and the prevailing party to a lien protest is entitled to recover a reasonable attorney’s fee.
Further, Arkansas courts strictly construe the lien statutes. This means not only that “substantial compliance” with the lien requirements is not good enough to perfect a lien, but also that attorney’s fees will be awarded against an unsuccessful lien claimant – making a lien claim a potentially risky proposition for an unpaid contractor. A recent decision by the Arkansas Court of Appeals shows these principals in action. In Florida Oil Investment Group, LLC v. Goodwin & Goodwin, Inc., a general contractor claimed a lien against property owned by FCRA. FCRA sold the property to Florida Oil. The general contractor then sued Florida Oil to foreclose on the lien.
After successfully defending the foreclosure, Florida Oil sought attorney’s fees under the Arkansas lien statute, Ark. Code Ann. § 18-44-128(b). Section 128(b) provides, in relevant part,
“If the owner is the prevailing party in the action, the court shall allow the owner a reasonable attorney’s fee….”
Ignoring the plain language of the statue, the trial court denied Florida Oil attorney’s fees, interpreting the statute as providing that only those owners who received a statutorily required notice of intent to file lien were entitled to recover fees. Because FCRA, and not Florida Oil, owned the property and received the pre-lien notice; Florida Oil was not an owner that could recover fees.
The Court of Appeals rejected this reasoning, finding it contrary to the plain, unambiguous language of the statute:
“The statute does not limit recovery to those owners who received notice of the intent to file lien, to those who owned at the time the lien was filed, or to those who owned the property before the lawsuit was filed. It applies to an ‘owner’ who is a ‘prevailing party.’”
The Florida Oil decision, 2016 Ark. App. 380 (Sept. 7, 2016), can be found here.