The plaintiff in this action unsuccessfully appealed the trial court's dismissal of its lien enforcement action arguing that the trial court's enforcing strict compliance with the requirements of N.C.G.S. Section 44A-12 for creating a valid lien, and by concluding that its lien filing was unenforceable was reversable error. The Court of Appeals determined that the lien filing was, in fact, defective because it failed to include the date of the last furnishing which is mandated for lien filings per statute and case law.

The parties agreed to a construction contract in 2022 to build the defendant's single-family home which the defendant Luthra signed as one of the Property owners and the defendant co-owner did not sign. In 2023, the defendant terminated the contract and after failing to pay for the services provided, the plaintiff filed a mechanic's lien. The plaintiff then timely filed a verified complaint (the "Complaint") against Defendants requesting enforcement of the lien, and alternatively, quantum meruit.

Per the opinion, the parties pleaded as follows:

Both defendants filed separate answers. The defendant, Steinbacher filed a pro se answer (the "Steinbacher Answer"), whereby she: denied being a party to the dispute as she did not sign the contract; claimed she was "being asked to pay for goods and services that were never delivered, such as a carport and vinyl rails around the stairs"; accused Plaintiff of making the "home [three] rooms instead of [four] as per [the] contract"; accused Plaintiff of "shoddy workmanship" and that "some work is not up to code such as the basement[,] stairs[,] and [the] front porch"; denied both claims of relief sought by Plaintiff; and, in relevant part, requested the trial court "dismiss the Complaint with prejudice[.]"

In Defendant Luthra's answer (the "Luthra Answer"), Defendant Luthra denied both of Plaintiff's claims for relief, moved to dismiss, and filed counterclaims of: unfair and deceptive trade practices, fraud, fraud in the inducement, false lien filing, breach of contract, breach of warranty, negligence, and quantum merit. In relevant part, the Luthra Answer alleged:

Plaintiff is barred from bringing a claim to enforce a lien because Plaintiff's lien is defective. Plaintiff's lien is defective because it does not contain a completion date or date of last work performed, and therefore, Plaintiff's claim to enforce the lien is not timely filed. Since Plaintiff's claim to enforce the lien is not timely filed, Plaintiff's claim to enforce the lien should be dismissed pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure.

After hearing, the trial court granted the defendants' motions to dismiss and ordered that that lien be cancelled, concluding that substantial compliance with the requirements of the statute is required that it is: "necessary is for the public to be on notice that there's a lien on a piece of property and how long that will be valid is the date upon which labor or materials were last furnished."

The trial court also denied the defendants' motions to dismiss the plaintiff's quantum meruit claim and also denied the plaintiff's motion to dismiss the counterclaims for fraud, unfair and deceptive trade practices, and false lien filing. In affirming the ruling of the trial court on the issue of the validity of the lien filing and requiring strict Compliance with the statute, the Court of Appeals was succinct and cited established lien law in North Carolina as follows:

N.C. Gen. Stat. § 44A-12(b) also provides that "[c]laims of lien on real property may be filed at any time after the maturity of the obligation secured thereby but not later than 120 days after the last furnishing of labor or materials at the site of the improvement by the person claiming the lien." N.C.G.S. § 44A-12(b) (emphasis added); see also Laws. Title Ins. Corp. v. Zogreo, LLC, 208 N.C. App. 88, 95 (2010); N.C.G.S. § 44A-11 (2023) (providing that, in order to perfect a mechanic's lien, the claim of lien must be filed pursuant to N.C.G.S. § 44A-12). This Court has previously stated that section (c)(5a) was added by the Legislature "to require that all claims of lien state the date upon which labor or materials were last furnished." Brown v. Middleton, 86 N.C. App. 63, 68 (1987); see also 1977 N.C. Sess. Laws c. 369 H.B. 526.

Our Supreme Court has explained that a mechanic's lien "is lost if the steps required for its perfection are not taken in the manner and within the time prescribed by law." Frank H. Conner Co. v. Spanish Inns Charlotte, Ltd., 294 N.C. 661, 667 (1978).

N.C. Gen. Stat. § 44A-13 provides,

[a]n action to enforce a claim of lien on real property may be commenced in any county where venue is otherwise proper. No such action may be commenced later than 180 days after the last furnishing of labor or materials at the site of the improvement by the person claiming the claim of lien on real property.

N.C.G.S. § 44A-13(a) (2023); see also Laws. Title Ins. Corp., 208 N.C. App. at 95 ("[T]he contractor must bring a lien enforcement action in the superior court within 180 days of the last furnishing of labor or materials at the site of the improvement.").

The date of the last furnishing of labor or materials is therefore required to determine whether the contractor has brought both the filing and the enforcement action within the statutory time period, which must be completed in order to perfect and enforce a mechanic's lien. See N.C.G.S. §§ 44A-11, 44A-12(b), 44A-13; Laws. Title Ins. Corp., 208 N.C. App. at 95.

The Court of Appeals also concluded that the failure to properly perfect the lien filing rendered the trial court's dismissal proper because the plaintiff's contention that "the Complaint presented a cognizable legal claim upon which relief could be granted" simply wasn't supported in light of the failure to state the last date of furnish as required by the statute. It should be noted that the plaintiff's quantum meruit claim and defendants' counterclaims for fraud, unfair and deceptive trade practices, and false lien filing remain before the trial court.

A key takeaway from this opinion is that a material failure to substantially comply with the requirements of N.C.G.S. Section 44A-12 will not survive a N.C.R. Civ. P. 12(b)(6) motion to dismiss. As to whether title insurers will rely on this case to insure over an improperly filed lien without requiring a dismissal or release remains to be seen.