Mechanics Lien Challenge

I am an independant accountant in CO, and I just recieved an email from an attorney that I am at a loss on how to respond to. I was hired by a construction company (subcontractor) to audit a construction project and facilliate a settlement on monies owed after the subcontractor filed a lien against the general and the owner. The lien is valid and we are getting close to our deadline to file a lawsuit to foreclose and a lis pendens. I work with many construction contractors/subcontractors and file a fair amount of liens so I have some experience with the process. However, there have been times when the opposing parties' attorney has sent threatening letters about filing fraudulent or frivolous liens and have used the "trust statute" with some aggression. I can usually negotiate my way around most problems and get a settlement or get the sub paid and every one is happy. In this instance, while I know the accounting for the project is to the penny correct, I have just been threatened with the general contractor and the owner filing a suit against the sub for a fraudulent lien, and actually bringing my firm in as a party to the suit for fraud as well. This has never happened before, and I can find no research that helps me with my companies liability when hired as an independant third party to assess the accounting of the project. Is this attorney just throwing threats out there, or is there a statute that clearly applies to punishing a third party company that has nothing to do with the actual contract or the lien? I hope this intriques you enough to provide an answer for me, as I am leary of continuing any more dialogue with this attorney, he sounds like a racketeer? Also, the history of this general contractor is filled with mechanics liens and non-payment to subs on numerous different projects, so I am thinking the attorney might not be any more reputable than the general contractor. I was told two months ago that the general had been paid for all monies due by the owner/owners, so that's why I helped with getting the liens filed for the subcontractors, yet this attorney is actually using the trust statute against the subcontractor and my company. All comments welcome

This seems to be one of those cases where YOU should have your sub contractor file a lawsuit immediately so he is in the drivers seat. This lawyer is using the statutes to scare you off and I'd bet he has done it before for this same general. While I've not seen the books and don't know anything of the contracts between the sub and the general, if YOU say the books are clean and represent a fair payment due, then YOU should tell the sub to take the jerks on in court.

If he waits until THEY try to file against him, the only thing they can complain about is that he put a valid lien on the property. Since he has already been paid, it is going to hurt his reputation if he doesn't pay. The filing fees will cost your sub quite a bit, and the retainer for a lawyer will seem like he is giving away a lot... but he can collect his lawyer's fees in most states (no I haven't looked yours up).

So the sub should call their bluff and you should support him.

This is just a general and his crony lawyer trying to jam you both up. Take them to court.

I would hire my OWN attorney. The posters interests are separate from the sub-contractors. I would hire my OWN attorney and have him represent me solely.

I would distance myself from the sub since, in fact, the posters interest is entirely separate. And, the sub hiring a lawyer doesn't 1. give HER representation or 2. keep HER out of a lawsuit.

HER attorney can review her individual contribution to the melee and assure her there is no grounds for HER to be sued. Then let the opposing counsel rant and rave at will.

IF her cause of action is tied to the subs, she is STILL part of the lawsuit even if HER individual grounds are ruled unactionable---that is not a position she wishes to be in.

The key word is INDEPENDENT. She is INDEPENDENT and should be represented as such and establishing an affiliation with an attorney will bring her peace of mind when this situation arises in the future---and I am sure it will .

Hi there: thank you so much for your timely replies, as time is of the essence on this one. We are filing a lawsuit to foreclose on the lien in the next week, I am in agreement that the attorney is a "bully" and trying to scare me, but I am concerned about Grace's comment "cause of action" on my part. What exactly does that mean? Since I am an independant third party hired by the subcontractor to perform the audit, I am basically a witness in the lawsuit, isn't the attorney actually threatening or tampering with a witness? If I get an attorney, will I still be allowed to testify in court for the subcontractor? Because I am a compelling and strong witness, my testimony is crucial to winning the judgment on the lien. I should have added we are talking substantial figures here, the lien amount is over 1M. Thanks so much for your comments, they are extremely valuable to me.

For those unfamiliar this is an informative article: Mechanics Lien Lawyers

If you do not stand to gain by the lien, you are not party to the cause of action. This is just a phrase Grace learned but didn't tell you how it applies or if it does apply.

Since you are simply an accountant for the subcontractor, they have no cause to treat you in such a hostile manner... except that they are trying to get you to back away from the subcontractor and not support HIS cause of action. So do what you KNOW is right. But like Grace says, get a lawyer and tell them everything they might need to know about your participation in the business and the audit.

Thank you for your timely response, that clears up a bunch of things. No I am not gaining financially from this lien, however I was paid to do the audit, so I hope that's not a problem. I fully intend to testify against these crooks, because a lot of families went without money over Christmas and this spring because they were not paid by this general contractor. I want them sanctioned with damages and judgment with penalties, that's why I worked so hard to make sure the numbers were correct. Do I have damages against this attorney for threatening me, can I report him to the bar or something? Always more questions, I know, but I'd rather be right than wrong. Thank you!!!

Oh for goodness sakes...IF THEY NAME YOU as a party, SHE IS party to the cause of action. Did you read her reply? SHE does not gain from the lien, BUT SHE has been named as a party. SHE PROVED your statement wrong--she said she has nothing to gain by the lien but she has been named as a party in the lawsuit. Kinda makes your efforts to speak for me pitiful.

GAINING something by the lien is what makes you a party?

Grace did not say that.

The "cause of action" is the legal theory forming the basis of a lawsuit.

They have brought a cause of action--a LAWSUIT against HER and she is named as a party ( parties in a lawsuit are those who are named as defendants or plaintiffs.)

SHE is already a PARTY in this lawsuit. THEY have jointly sued HER---implying SHE is equally as responsible for the issues THEY bring up in THEIR cause of action (lawsuit). IF the basis for their lawsuit is more than what pertains to her ( more than just the money /lien issue) then she does NOT want to be made responsible for anything over which she has no control.

THis is why she needs an attorney to represent HER and separate HER interest in this (which is only that which pertains to the lien) from any other cause of action that includes OTHER matters the remaining parties have with each other.

THIS statement is quite possibly, the most amazingly stupid thing you have uttered yet: If you do not stand to gain by the lien, you are not party to the cause of action.

Ignorance abounds.
SHE SAID she has nothing to gain. AND she HAS been named as a party in this cause of action.

This bit of information brought to you by someone who actually has darkened the door of a lawschool.

You're welcome.

IF you are a party ( a plaintiff or defendant) in a lawsuit, you may testify but you are not a witness per se. You are a DEFENDANT.

This cause of action, if you are named in the suit, makes YOU one of the parties.

And no, he is not tampering with a witness. Naming you in the lawsuit is not witness tampering .

If you have an attorney you can still be a witness for the SUB, but your interests will be protected by having your own attorney.

The only ethical way for a lawyer to threaten to take you to court in a situation where it is clearly a frivolous lawsuit if it is against YOU, is to bring the lawsuit. Yes, you probably should discuss this with a person from the disciplinary commission of your local Bar Association. In any lawsuit, to get an award, you must prove both loss and damage. This lawyer is GOING to attack your credibility. Staying calm will be your best way to do the best service for your subcontractor... but you cannot charge this lawyer for the legal disparagement he is going to visit upon you. This is what you need to discuss with your lawyer. It is not enough that you understand your rights. You need to understand that this lawyer cannot "libel" you in a courtroom... but he can say some heinous things that will both embarrass you, and anger you. They are given a wide latitude to say whatever they think will do the damage to your witness testimony. Your subcontractor's lawyer must object when this lawyer goes out of bounds. It would help if your lawyer discussed this with his lawyer. The end result is your vindication. If this general contractor owes money, YOU will have been accurate... and that is all you should try to do in court. DO NOT show anger.

But there are some things you should forego in the interim. Do NOT talk about making this lawyer pay. You will be perceived as having a stake, albeit emotional, in testifying. All auditors get paid for their services and many auditors take disgruntled exception to those who defraud their subcontractors. But FOR NOW you must strive to remove this animus/anger from your reactions... especially in depositions and then also in court. Your cool, unflustered, calm and NOT ANGRY demeanor will convince people more readily that you are serious and accurate.

There is a significant difference between being named in a lawsuit and being party to the CAUSE of the action. Some people here miss these little distinctions often enough that I generally mention that their reading skills are negligible. Since YOU do not gain from the lien, they cannot use that as a basis to attack your testimony. A lawyer like this one must attack anyone who says that his client owes money. Since it is clear that you found lots of unpaid money due your client in the audit, you need to be very clear about your qualifications to audit and to explain exactly what you found so they cannot waffle on what was due. It is up to the subcontractor to explain his contract with the general so that it will be clear that the numbers you found were accurate. It is always a difficult question when there is an overrun, but there must also be change orders to use in showing that any overrun was ordered by the general contractor.

You might go through the contract, but if you are not familiar with construction contracts, you might not find the right causation for any overruns. If the general has not paid even the basis for the contract, then HE will be trying to find an excuse... as in unsatisfactory work.

The lien is against the OWNER's property. Of course the OWNER will be trying to help the general contractor to some extent. Do not become personally involved with that part of this lawsuit. You are there only to show what was due based on the recorded numbers.