Ambassador Development Corp. v. Valdez
791 S.W.2d 612, 1990 WL 98740, 1990 Tex. App. LEXIS 1733 (1990)
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Rule of Law:
Under Texas law, a statutory mechanic's and materialman's lien secures payment for labor done and materials furnished for construction as defined by statute, but it does not extend to securing prejudgment interest on the unpaid amount.
Facts:
- Opus I, Ltd. ('Opus'), the owner of a real estate project, hired Ambassador Development Corporation ('Ambassador') as the general contractor.
- In late 1985 and early 1986, Ambassador entered into two written contracts with a subcontractor to perform excavation and concrete work on the project for a total of $688,850.
- During the project, Ambassador and Opus requested that the subcontractor perform additional work that was not included in the original written contracts.
- A dispute arose when the subcontractor was not paid in full for the original and additional work performed.
- The subcontractor ceased work and claimed a balance was owed, while Ambassador and Opus counter-claimed that the subcontractor's work was defective and incomplete.
Procedural Posture:
- The subcontractor (appellee) filed suit in trial court against Ambassador Development Corporation (appellant) for unpaid contract amounts.
- The subcontractor also sought to foreclose a mechanic's and materialman's lien filed against the real property owned by Opus I, Ltd. (appellant).
- Ambassador filed a counterclaim for defective and incomplete work, and Opus filed a counterclaim to cancel the lien.
- After a trial, the jury found in favor of the subcontractor on the claims of substantial performance and amounts due.
- The trial court entered a judgment on the verdict, awarding the subcontractor monetary damages against Ambassador and ordering foreclosure of the lien against Opus's property in an amount that included prejudgment interest.
- Ambassador and Opus (appellants) appealed the trial court's judgment to the intermediate court of appeals.
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Issue:
Does Texas law permit the inclusion of prejudgment interest in the amount secured by a statutory mechanic's and materialman's lien?
Opinions:
Majority - Meyers, Justice
No. A statutory mechanic's lien under the Texas Property Code does not secure payment for prejudgment interest. A mechanic's and materialman's lien is a creation of statute, and its scope is strictly defined by the express language of the law. The Texas Property Code specifies that a lien secures payment for 'the labor done or material furnished' and lists the components of a valid claim, which include labor, materials, overhead, and profit. The statutes do not mention prejudgment interest. Because the legislature could have included prejudgment interest in the scope of the lien but did not, the court cannot expand the statute to include it. Therefore, while a claimant may be entitled to recover prejudgment interest in a personal judgment, that interest cannot be included in the amount of the lien to be foreclosed upon the property.
Analysis:
This decision clarifies the scope of a statutory mechanic's lien in Texas, strictly limiting its reach to the items expressly enumerated by the legislature. It establishes a clear distinction between the underlying debt for labor and materials, which can be secured by a lien against property, and ancillary damages like prejudgment interest, which can only be recovered through a personal judgment against the contracting party. This precedent protects property owners from having their property encumbered by amounts beyond the direct value added by the construction work itself, reinforcing the principle that statutory liens are not to be expanded by judicial interpretation.
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