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Federal court denies contractor’s mechanic’s lien application

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CITING local mechanic’s lien statute, District Court for the NMI Chief Judge Ramona V. Manglona on Tuesday said the notice of mutual termination provided proper notice to Pacific Rim Land Development LLC that its obligations under the contract with Imperial Pacific International were complete.

But Judge Manglona denied the second amended lien application of Pacific Rim, finding it untimely.

Pacific Rim sued IPI for breach of contract for refusing to pay for services in the amount of $5.65 million after the plaintiff substantially completed or completed the agreed-upon construction work for the IPI casino-resort project on Sept. 30, 2018.

Pacific Rim also filed an application for a mechanic’s lien on the IPI hotel-casino project including the land where it sits.

According to an online legal dictionary, a mechanic’s lien “empowers and enables contractors, suppliers, and others that work in the construction industry to get paid the money they’ve earned on their projects and jobs.”

Recently, the federal court entered a civil judgment in the amount of $5.6 million against IPI after finding that the hotel-casino operator had breached a promissory note with its former contractor, Pacific Rim.

As for the denial of the lien application of Pacific Rim, Judge Manglona said the parties executed a notice of mutual termination on Sept. 21, 2018, agreeing that Pacific Rim had completed portions of the project and its obligations under the contract were complete.

Pacific Rim filed an application for a mechanic’s lien on Nov. 19, 2019 and a second amended mechanic’s lien on Dec. 12, 2019.

IPI, for its part, opposed the lien application saying that it was untimely.

Judge Manglona said “the CNMI mechanic’s lien statute provides two methods to determine the deadline for filing a lien application, both of which are calculated from the date of completion of the work on the improvement, 4 CMC § 5803(c).”

The parties highly contest the meaning of “completion” in section 5803(c), she added.

Judge Manglona said Pacific Rim argues that the term means completion of the entire project, whereas IPI argues it means completion of the contracted work at issue in the lien application.

“Using Pacific Rim’s definition, the clock for filing has not yet started as the hotel-casino complex is not yet substantially completed or abandoned. But if IPI’s interpretation is correct, then Pacific Rim’s lien application is time-barred under the first method of calculating the filing deadline,” the judge said.

She added that Pacific Rim’s reliance on Hawaii’s mechanic’s lien law is misplaced.

“Even if the recording of the notice of completion is mandatory, here, unlike in Hawaii, the date of completion is not dependent on the recording date. Consequently, IPI could record the notice of mutual termination tomorrow and the date of completion would still be the effective date of delivery of the notice — Sept. 30, 2018,” the judge said.

She finds that the notice of mutual termination “is a valid notice of completion and, pursuant to Section 5803(c), the timeframe for Pacific Rim to file a mechanic’s lien application expired on Nov. 29, 2018, 60 days after delivery. Pacific Rim first filed a lien application on Nov. 19, 2019, and then the 2nd amended lien application on Dec. 12, 2019.”

Attorney Colin M. Thompson represents Pacific Rim while IPI is represented by the law offices of O’Connor, Berman, Horey & Banes.

 

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