Two types of mechanic's liens under Texas law

CONSTITUTIONAL AND STATUTORY MECHANICS LIEN 

Texas law recognizes two possible types of mechanic's liens: (1) a constitutional lien and (2) a statutory lien. TEX. CONST. art. XVI, § 37; TEX. PROP. CODE ANN. 53.001 (West 2007). "[A] constitutional lien requires a person to be in privity of contract with the property owner."

Article XVI, Section 37 of the Texas Constitution provides,
Mechanics, artisans and material men, of every class, shall have a lien upon the buildings and articles made or repaired by them for the value of their labor done thereon, or material furnished therefor; and the Legislature shall provide by law for the speedy and efficient enforcement of said liens.
TEX. CONST. art. XVI, § 37.

Trinity Drywall Sys., LLC v. Toka Gen. Contrs., Ltd., 416 S.W.3d 201, 209 (Tex. App.-El Paso 2013, pet. filed); see Gibson v. Bostick Roofing & Sheet Metal Co., 148 S.W.3d 482, 493 (Tex. App.-El Paso 2004, no pet.). The same privity of contract with the property owner is required to establish a statutory lien that encumbers the owner's property. See TEX. PROP. CODE ANN. § 53.021(a)(2) (West Supp. 2013) (A person has a statutory lien if "the person labors . . . or furnishes the labor or materials under or by virtue of a contract with the owner or the owner's agent. . . ."); TEX. PROP. CODE ANN. § 53.001(7) (defining "Original Contractor" as "a person contracting with an owner either directly or through the owner's agent").

"[W]here the contract for labor, materials or construction is not made with the owner or his duly-authorized agent, a lien may not be fixed on his property." Gibson, 148 S.W.3d at 494; see 2811 Assocs., Ltd. v. Metroplex Lighting & Elec., 765 S.W.2d 851, 853 (Tex. App.-Dallas 1989, writ denied).

SOURCE: TEXARKANA COURT OF APPEALS - No. 06-14-00022-CV - DENCO CS CORPORATION v. BODY BAR - 9/26/2014 (the mechanic's lien affidavit was not filed until after
the sale of the property).

Smith's lien affidavit listed Bre Thorne as the owner of the property sought to be encumbered. Yet, there is no evidence in the record establishing that either Regency (who was the owner of the premises at the time the contract for improvements was entered) or Bre Thorne (the subsequent owner) contracted with Denco or that Body Bar was the agent of either at the time it entered into the contract for improvements or when Denco's additional charges supposedly accrued.

Because there was no evidence that Denco was in privity of contract with the owner of the premises, it was not entitled to a constitutional lien against Bre Thorne's fee interest in the property. "[I]f a lessee contracts for construction, the mechanic's lien attaches only to the leasehold interest, not to the fee interest of the lessor." Diversified Mortg. Investor v. Lloyd D. Blaylock Gen. Contractor, Inc., 576 S.W.2d 794, 805 (Tex. 1978); see Bannum, Inc. v. Mees, No. 07-12-00458-CV, 2014 WL 2918436, at **3-4 (Tex. App.-Amarillo Jun. 24, 2014, no pet. h.) (mem. op.); Terraces at Cedar Hill, L.L.C. v. Gartex Masonry & Supply, Inc., No. 05-10-00226-CV, 2011 WL 1050852, at *2 (Tex. App.-Dallas Mar. 24, 2011, pet. denied) (mem. op.). Thus, the affidavit laying claim to statutory and constitutional mechanic's liens—which were not limited to Body Bar's leasehold interest—did not validly encumber the property.[12] Because the liens were not perfected, Denco was not entitled to foreclosure.

PERFECTION OF LIEN

"A person who files an affidavit must send a copy of the affidavit by registered or certified mail to the owner or reputed owner . . . not later than the fifth day after the date the affidavit is filed with the county clerk." TEX. PROP. CODE ANN. § 53.055(a) (West 2007). "A party must comply with chapter 53 to perfect a lien under the statute." Addison Urban Dev. Partners, LLC v. Alan Ritchey Materials Co., LC, No. 05-13-00122-CV, 2014 WL 2946019, at *4 (Tex. App.-Dallas July 1, 2014, no pet. h.) (citing Morrell Masonry Supply, Inc. v. Lupe's Shenandoah Reserve, LLC, 363 S.W.3d 901 (Tex. App.-Beaumont 2012, no pet.); TEX. PROP. CODE ANN. § 53.051). 

Here, Denco admitted that it failed to comply with Section 53.055(a). However, substantial compliance with Chapter 53 is sufficient, and "[c]ases interpreting the mechanic's and materialman's lien statutes counsel against invalidating a lien on a purely technical basis." Id. (citing Ready Cable, Inc. v. RJP S. Comfort Homes, Inc., 295 S.W.3d 763, 765 (Tex. App.-Austin 2009, no pet.)).  

SOURCE: TEXARKANA COURT OF APPEALS - No. 06-14-00022-CV - DENCO CS CORPORATION v. BODY BAR - 9/26/2014

When is turnover relief warranted to enforce a money judgment?

  

REQUIREMENTS FOR GRANT OF TURNOVER ORDER

  

A turnover order is proper if the conditions of section 31.002 of the Texas Civil Practice and Remedies Code are met. See Suttles v. Vestin Realty Mortg. I, Inc., 317 S.W.3d 412, 416 (Tex. App.-Houston [1st Dist.] 2010, no pet.). Among the requirements of section 31.002 is that the creditor must show that the debtor owns property, including present or future rights to property, that cannot readily be attached or levied on by ordinary legal process. See Tex. Civ. Prac. & Rem. Code Ann. § 31.002(a) (West 2012); see also Europa Int'l, Ltd. v. Direct Access Trader Corp., 315 S.W.3d 654, 656-57 (Tex. App.-Dallas 2010, no pet.).

  
SOURCE: DALLAS COURT OF APPEALS - 05-10-01161-CV – 5/16/12 

In this case, Barclay presented no evidence to show that HSM had any present or future rights to the property it sought to have turned over.

 

Does Application for Turnover Order require a hearing?

ENFORCEMENT OF JUDGMENTS:
 
Is the Defendant entitled to a hearing when the Plaintiff requests that the Court sign a Turnover Order?
 
Houston Court of Appeals says 'No'.

OPINION EXCERPT

On August 10, 2009, Seeman moved for post-judgment relief under the Texas Turnover Statute, and apparently, a hearing was held on his motion on August 14, 2009.  In issues 25 and 26, Cantu complains that he did not receive notice of the hearing and that the turnover was erroneously granted ex parte.

 
However, due process does not require that a complainant who has been granted an opportunity to be heard and has had his day in court should, after a judgment has been rendered against him, have further notice and hearing before supplemental proceedings are taken to reach his property in satisfaction of the judgment against him. See Endicott–Johnson Corp. v. Encyclopedia Press, Inc., 266 U.S. 285, 288, 45 S. Ct. 61, 62–63 (1924); In re Guardianship of Bays, 355 S.W.3d 715, 720 (Tex. App.—Fort Worth 2011, no pet.).

The turnover statute itself does not require notice and a hearing. See TEX. CIV. PRAC. & REM. CODE ANN. § 31.002; Sivley v. Sivley, 972 S.W.2d 850, 861 (Tex. App.—Tyler 1998, no pet.). In the absence of a statutory requirement, it is not essential that a complainant be given notice before the issuance of an execution against his tangible property; after the rendition of the judgment, he must take notice of what will follow, no further notice being necessary to advance justice. Endicott–Johnson Corp, 266 U.S. at 288, 45 S. Ct. at 62–63; In re Guardianship of Bays, 355 S.W.3d at 720.

We overrule issues 25 and 26.

SOURCE: HOUSTON COURT OF APPEALS - 01-09-00545-CV - 5/3/12

On August 10, 2009, Seeman moved for post-judgment relief under the Texas Turnover Statute, and apparently, a hearing was held on his motion on August 14, 2009. In issues 25 and 26, Cantu complains that he did not receive notice of the hearing and that the turnover was erroneously granted ex parte.

Garnishment and Lien Priority: Who gets the funds in the garnished account in case of multiple competing claims?

   
THE NATURE OF GARNISHMENT PROCEEDINGS - 3-PARTY ACTION
 

A garnishment proceeding involves at least three parties: (1) the plaintiff (also known as the garnishor or creditor); (2) the defendant or debtor; and (3) the garnishee. The garnishee is a third party who owes a debt to or holds property of the debtor. The plaintiff or garnishor is a creditor of the debtor and requests the court to issue the writ of garnishment to the garnishee.
  
Garnishment is a statutory proceeding whereby property of the debtor that is in possession of the garnishee is applied to the payment of the debt owed by the debtor to the garnishor. See Tex. Civ. Prac. & Rem. Code Ann. §§ 63.001-.008 (West 2008); Tex. R. Civ. P. 657-79; Thompson v. Harco Nat. Ins. Co., 997 S.W.2d 607, 611 (Tex. App.-Dallas 1998, pet. denied), overruled in part on other grounds by John v. Marshall Health Servs., Inc., 58 S.W.3d 738, 741 (Tex. 2001) (per curiam).

      

The garnishor is subrogated to the rights of the debtor against the garnishee and may enforce, against the garnishee, any rights the debtor could have enforced had he sued the garnishee directly. See Thompson, 997 S.W.2d at 611 (citing Beggs v. Fite, 106 S.W.2d 1039, 1042 (Tex. 1937)). The garnishor, however, cannot acquire any greater rights against the garnishee than the debtor, himself, possesses. See id. (citing Phoenix Ins. Co. v. Willis, 6 S.W. 825, 830 (Tex. 1888)).

    

Where, as here, the garnishee's answer is controverted the case is then tried as other cases and a judgment will be issued according to the results of the trial. See Tex. R. Civ. P. 668, 674.
  
The primary issue in a garnishment suit is whether the garnishee is indebted to, or has in its possession effects belonging to the debtor. See Buckeye Ret. Co. v. Bank of Am., N.A., 239 S.W.3d 394, 399 (Tex. App.-Dallas 2007, no pet.); Putman Putman, Inc. v. Capitol Warehouse, Inc., 775 S.W.2d 460, 463 (Tex. App.-Austin 1989, writ denied). The burden is on the garnishor to establish the amount of the debt owed to the debtor or the value of the property held by the garnishee. “If the garnishor's proof fails, he can of course recover nothing.” Putman, 775 S.W.2d at 463 (citations omitted).

   

Garnishment proceedings often involve competing claims to property that must be resolved by applying rules of lien priority. The general rule is that in a contest over rights or interests in property, the party that is first in time is first in right. See AMC Mortg. Services, Inc. v. Watts, 260 S.W.3d 582, 585 (Tex. App.-Dallas 2008, no pet.); World Help v. Leisure Lifestyles, Inc., 977 S.W.2d 662, 668 (Tex. App.-Fort Worth 1998, pet. denied). Rights under a writ of garnishment are determined by priority in time, which itself is determined by service of the writ. Small Bus. Inv. Co. v. Champion Int'l Corp., 619 S.W.2d 28, 30 (Tex. App.-Houston [1st Dist.] 1981, no writ). Service of the writ on the garnishee fixes a lien on the debtor's property or debts due him, “subject to prior valid rights and liens against such property or debt.” Hubbell, Slack & Co. v. Farmers' Union Cotton Co., 196 S.W. 681, 684 (Tex. Civ. App.-Beaumont 1917, writ ref'd) (quoting Cyclopedia of Law and Procedure) (emphasis added); United States v. Standard Brass & Mfg. Co., 266 S.W.2d 407, 408 (Tex. Civ. App.-Beaumont 1954, no writ). In garnishment proceedings, allowable claims that are prior in time are prior in right of payment. See Frankfurt's Tex. Inv. Corp. v. Trinity Sav. & Loan Ass'n, 414 S.W.2d 190, 192 (Tex. Civ. App.-Dallas 1967, writ ref'd n.r.e.).

  

SOURCE:  DALLAS COURT OF APPEALS –NATIONAL CITY BANK, A SUBSIDIARY OF NATIONAL CITY BANK CORPORATION, A DELAWARE CORPORATION TEXAS CAPITAL BANK, N.A., A NATIONAL BANKING ASSOCIATION, No. 05-10-00028-CV – 11/23/11

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