May Construction Co. v. Town Creek Construction & Development, LLC
2011 Ark. 281
| Ark. | 2011Background
- May Construction is the general contractor for Town Creek's Aspen Ridge project; contract total not to exceed $3.9 million.
- Town Creek financed the project with a Chambers mortgage encumbering Phases I-II and a $150,000 CD; Phase III was not mortgaged.
- Chambers filed a construction mortgage on July 20, 2005; May recorded a materialmen’s lien on September 26, 2006.
- Arbitration awarded May $428,995.56 in 2007, but did not resolve lien entitlement or priority.
- Town Creek deeded the property to Chambers and Chambers posted a lien bond to release the lien; Ohio Casualty issued a $800,000 bond.
- Circuit court held that construction commenced after Chambers’s mortgage, first priority to Chambers, second to May; May appealed and Town Creek cross-appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Commencement and priority of the lien | May contends commencement pre-dates mortgage under 18-44-110(a)(1). | Town Creek/Chambers/Ohio argue commencement after mortgage and mortgage priority control. | Construction commence date is objective, not subjective; reversal to determine proper commencement and priority. |
| Amount and validity of May's lien and reliance on evidence | May asserts lien amount includes labor/materials; profits excluded; some costs lienable. | Town Creek contends disputed costs are speculative and not tied to labor/materials; overruled. | Circuit court did not clearly err; lien amount affirmed with adjustments as ruling. |
Key Cases Cited
- BB & B Constr. Co. v. F.D.I.C., 316 Ark. 663 (1994) (strict construction of lien statutes)
- Dempsey v. McGowan, 291 Ark. 147 (1987) (materialmen’s lien does not precede a prior construction mortgage)
- Mark’s Sheet Metal, Inc. v. Republic Mtg. Co., 242 Ark. 475 (1967) (commencement requires visible action indicating construction)
- Clark v. Gen. Elec. Co., 243 Ark. 399 (1967) (distinguishes preparatory work from commencement)
- Worthen Bank & Trust Co. v. Walker, 270 Ark. 868 (Ark.App. 1980) (site activities as commencement criteria)
- Nat’l Lumber Co. v. Advance Dev. Corp., 293 Ark. 1 (1987) (distinguishes site preparation from commencement of construction)