VOL. 110 | NO. 90 | Tuesday, May 7, 1996
Subcontractors must give nonpayment notice monthly
In CMT Inc. vs. West End Church of Christ (Tenn. App., Feb. 15, 1996), the court of appeals interpreted TCA 66-11-145 to require a subcontractor to send the owner a notice of nonpayment within 60 days after the end of each month in which services or materials are provided.
In CMT, West End Church of Christ contracted with Acme to build a new sanctuary. Acme subcontracted with Pioneer, which in turn subcontracted with CMT. CMT performed work on the project over a two-year period and each month sent an invoice to Pioneer. Acme paid Pioneer, but Pioneer never paid CMT. So within 60 days after completing its work on the project, CMT sent a notice to West End. Shortly thereafter, CMT recorded a notice of lien and filed suit.
The trial court dismissed the suit because of CMTs failure to give timely notice of nonpayment, rejecting CMTs argument that only one such notice was required. On appeal, the court of appeals affirmed:
The issue, as agreed between the parties, is does TCA. 66-11-145 require that a subcontractor seeking a lien for nonpayment send a notice of nonpayment within 60 days of the end of each month within which services or supplies were provided?
The language of the statute at issue reads in pertinent part:
Notice of nonpayment. (a) Every subcontractor, laborer or materialman contracted with or employed to work on buildings, fixtures, machinery or improvements, or to furnish materials for the same ... shall provide, within 60 days of the last day of the month within which work, services or materials to the owner and contractor contracting with the owner if its account is, in fact, unpaid ... The notice ... shall contain ... (b) a statement of the last date the claimant performed work and/or provided services or materials in connection with the improvements ... (c) a subcontractor, laborer or materialman who fails to provide the notice of nonpayment shall have no right to claim a lien under this chapter...
This language does not clearly state, as (CMT) suggests, that notice is required only on the "last day of the last month." Nor does it say, as (West End) would urge, that the notice is required on the "last day of each month," resulting in the possibility that multiple notices might be sent. However, based on the remainder of the sentence ("the last day of the month within which work, services or materials were provided") the statute lends itself to the interpretation by the trial court that each month is isolated and requires a separate notice.
Requiring that notice be made within 60 days of the last day of each month in which work was performed comports with the companion provision TCA. 66-11-115. This statute requires that notice of a lien be given to the owner within 90 days of the completion of work on the project. If TCA. 66-11-145 was then read to require notice within 60 days of the completion of work, 66-11-115 would be rendered duplicative and meaningless. If the interpretation of the trial court is followed, requiring 60 days notice at the end of each month of work under 145 and 90 days at the completion of work under 115, the provisions have separate meanings and the legislative purpose of early notice to give time for correction is served.
This article is republished with permission from Tennessee Real Estate Law Letter.