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Alliance Trutrus, LLC v. Carlson Real Estate Co. - 2/28/2012

Arizona Court of Appeals Division One Holds That A.R.S. § 33-1004(D)(2) Does Not Extend Time For Lien Claimants To File Suit on A Lien.

Alliance Trutrus, LLC (“Alliance”) performed subcontracting work for Carlson Real Estate Company (“Carlson”).  After Carlson failed to pay certain of Alliance’s invoices, Alliance filed a mechanic’s lien on the subject property.  In response, Carlson posted a surety bond and served the bond on Alliance.  More than six months after the filing of the lien, Alliance filed suit against Carlson for payment on the bond.  The parties filed cross-motions for summary judgment on the issue of whether Alliance’s suit was timely.  The trial court held that the suit was timely filed and entered summary judgment on that issue in favor of Alliance.

The appellate court held that Carlson’s surety bond had the legal effect of discharging the lien under A.R.S. § 33-1004.  Once the bond was recorded, rather than foreclosing on the property subject to the lien, Alliance was required to pursue the bond for the lien payment.  Under A.R.S. § 33-998(A), once a lien is recorded a lien claimant has six months to file suit.  Alliance argued that even though it had filed suit more than six months after the recording of its lien, section 33-1004(D)(2) extended that deadline because the surety bond was served less than ninety days from the six month deadline.  The appellate court disagreed, and held that the plain language of § 33-1004(D)(2) allowed the lien claimant an additional ninety days to “add the principal and the sureties as parties to the lien foreclosure suit.”  It held that the statute did not provide additional time to file the lien foreclosure suit in the first instance.  The appellate court reversed the summary judgment order in favor of Alliance, and remanded with instructions to enter judgment in favor of Carlson.

Presiding Judge Thompson authored the opinion, Judges Portley and Gemmill concurred.

Posted by: Chelsea Durkin

Posted On: 3/1/2012