Morrell Masonry Supply, Inc. v. Lupe's Shenandoah Reserve, LLC
363 S.W.3d 901
Tex. App.2012Background
- Morrell Masonry Supply, as a derivative claimant, supplied materials to Joyce's Stucco Design for Lupe's Shenandoah Reserve project and sought fund-trapping and retainage remedies against Lupe's and its insurer Berkley.
- Morrell mailed a January 13, 2009 notice of claim to Lupe's, Comanche (original contractor), and Joyce's for invoices totaling $20,719.33, covering October 2008 and November 2008 deliveries.
- Chapter 53 requires separate timely notices to the original contractor and then to the owner for perfection of a derivative lien, with specific two- and three-month timelines and a later lien affidavit deadline.
- Morrell's notice was timely as a three-month notice but untimely as a two-month notice for October 2008 materials; the October 2008 lien was not perfected.
- The trial court granted Lupe's summary judgment on fund-trapping and retainage for October 2008, and Morrell prevailed only on a November 2008 amount, with other relief denied; Lupe's obtained a large attorney's fee award.
- The appellate court overruled Don Hill to the extent it allowed perfecting a lien without timely notices, and affirmed the trial court's denial of Morrell's October 2008 lien and related relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Derivative lien perfection requires timely notice | Morrell contends late first notice to Comanche is harmless | Lupe's asserts timely notice to original contractor is required for lien validity | Yes; timely notice required; Don Hill overruled |
| Effect of late pre-lien notice on fund-trapping | Late notice to Comanche should not defeat fund-trapping against owner | Late notice prevents perfection and fund-trapping recovery | Late pre-lien notice defeats fund-trapping for October 2008 |
| Effect on retainage when lien not perfected | Retainage claim should survive despite late notices | Retention rights hinge on perfected lien | Retainage claim failed for October 2008 |
| Foreclosure and bond effect | Bond does not bar claims against Lupe's beyond foreclosure | Bond precludes foreclosure on property | Foreclosure barred; bond precluded lien foreclosure but not personal liability |
| Attorney's fees award reasonableness | Fees should reflect Morrell's success and reasonable work | Fees reasonable given complexity and duration | Court acted within discretion; fee award upheld |
Key Cases Cited
- Don Hill Construction Co. v. Dealers Electrical Supply Co., 790 S.W.2d 805 (Tex. App.—Beaumont 1990) (don’t overlook lien perfection requirements; Don Hill limited by later overruling)
- Sledge v. Dealers Elec. Supply Co., 653 S.W.2d 283 (Tex. 1983) (subcontractor liens depend on statutory notice timing; original vs. owner liability)
- Dealers Elec. Supply Co. v. Scoggins Constr. Co., 292 S.W.3d 650 (Tex. 2009) (McGregor Act remedies not exclusive; trust fund considerations)
- First Nat'l Bank in Graham v. Sledge, 653 S.W.2d 283 (Tex.1983) (early precedent on lien perfection and subcontractor notices)