Wilmington Trust FSB v. A1 Concrete Cutting & Demolition, LLC
128 Nev. 556
| Nev. | 2012Background
- Fontainebleau Las Vegas sought a $2.8 billion project in Nevada with extensive lien claims from contractors.
- Bank of America lent $150 million prepetition, secured by first priority deed of trust; later a $1.85 billion post-2007 loan was secured by a first-priority deed of trust with a subordination provision for the general contractor and subcontractors.
- Construction stalled; Fontainebleau filed for Chapter 11, later converted to Chapter 7 liquidation; liens attached to sale proceeds.
- Wilmington Trust, as successor administrative agent, sued contractors and suppliers asserting lien priority disputes.
- Nevada law, particularly NRS 108.225, grants mechanics’ liens priority over post-commencement encumbrances, regardless of recording dates.
- Court declined to answer question 1 but addressed questions 2 and 3: equitable subrogation cannot overcome statutory priority; non-prospective subordination agreements may be enforceable under NRS 108.2457 if statutory requirements are met.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does NRS Chapter 108 prohibit equitable subrosgation against mechanics’ liens? | Wilmington Trust urging equitable subrogation to leapfrog intervening liens. | Respondents contend statutory scheme precludes such subrogation, preserving mechanic’s lien priority. | Equitable subrogation is precluded; NRS 108.225 controls priority. |
| Are contractual subordination agreements by mechanics’ lien claimants enforceable? | Wilmington Trust seeks enforceability of subordination by lien claimants to a new mortgage. | Respondents argue anti-subordination and open conflicts under NRS 108.2453/108.2457; prospective waivers invalid. | Prospective subordination unenforceable; non-prospective subordination may be enforceable if compliant with NRS 108.2457. |
Key Cases Cited
- Houston v. Bank of America, 119 Nev. 485 (Nev. 2003) (equitable subrogation enables subrogee to take senior position)
- American Sterling Bank v. Johnny Mgmt. LV, 126 Nev. 423 (Nev. 2010) ( Restatement mortgage subrogation principles adopted)
- Lamb v. Lucky Boy M. Co., 37 Nev. 9 (Nev. 1914) (mechanic’s liens have no place in equity jurisprudence)
- Lehrer McGovern Bovis v. Bullock Insulation, 124 Nev. 1102 (Nev. 2008) (statutory priority and remedial nature of mechanic’s liens)
- Beazer Homes Nevada, Inc. v. Dist. Ct., 120 Nev. 575 (Nev. 2004) (statutory interpretation and public policy in lien context)
- Hardy Companies, Inc. v. SNMARK, LLC, 126 Nev. 528 (Nev. 2010) (NRS 108.2453 ambiguous; legislative history discussed)