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Hanson Aggregates Ariz., Inc. v. Rissling Constr. Group, Inc - 2/2/2006

Arizona Court of Appeals Division One Finds Lien Claimant’s Action Against Surety Bond Not Barred by Failure to Commence Within Six Months of Recording Mechanic’s Lien Where Lien Was Discharged by Surety Bond But Lien Claimant Did Not Receive Post-Recording Service of Bond.

Plaintiff, a supplier of concrete and aggregate materials, recorded a mechanic’s lien on a building project to secure payment for materials. Defendant, the contractor on the building project, obtained a lien-discharging bond, which upon recording with the county recorder discharged the lien. Defendant served notice of the lien-discharging bond to Plaintiff before the bond was recorded, but did not serve Plaintiff with the bond after its recording, contrary to the requirement of A.R.S § 33-1004(C). Plaintiff filed an action against the bond seven months after recording the lien and six weeks after learning through correspondence that the lien-discharging bond had been recorded.

The trial court dismissed Plaintiff’s action for failure to commence the action within six months of recording the lien. The Court of Appeals, however, held that the bond was not discharged under A.R.S. § 33-1004(D)(1). Instead, because the lien-discharging bond had been improperly served (pre-recording) upon Plaintiff, the time to commence the action was governed by A.R.S. § 33-1004(F), which allows a claimant to bring an action for up to two years after the bond was recorded, if within six months of discovery of the recorded bond. Plaintiff’s action was timely filed. Given the preliminary phase of the action, the Court declined to award attorney’s fees.

Judge Snow wrote the opinion for the panel; Judges Timmer and Desens concurred.

Posted On: 2/6/2006