Valdez v. Diamond Shamrock Refining & Marketing Co.
36 Tex. Sup. Ct. J. 269, 1992 Tex. LEXIS 155, 842 S.W.2d 273 (1992)
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Rule of Law:
A properly perfected mechanic's lien relates back to the commencement of visible construction and attaches to the entire undivided lot as it existed at that time. A subsequent purchaser of a portion of that lot is subject to the lien if they have constructive notice of the lienholder's rights, which is established by the visible presence of ongoing construction.
Facts:
- In the fall of 1985, Opus I, Ltd. ('Opus') purchased a 7.9-acre tract of undeveloped land.
- Opus hired Ambassador Development Corporation as a general contractor, who then subcontracted with Juan Valdez for concrete work.
- Valdez began work on the property in February 1986 and completed it in August 1986.
- During Valdez's work, in June 1986, Opus replatted the land, dividing it into a 7.1-acre tract and a 0.8-acre tract.
- On July 31, 1986, before Valdez finished his work, Opus sold the 0.8-acre tract to Diamond Shamrock Refining and Marketing Company ('Diamond Shamrock').
- Prior to the purchase, an agent for Diamond Shamrock regularly visited the property and observed the large construction project underway on the 7.9-acre lot.
Procedural Posture:
- Valdez filed a mechanic's lien affidavit against the entire 7.9-acre tract for unpaid work.
- Valdez sued Opus and Ambassador, obtaining a judgment and a lien on the entire 7.9 acres.
- When Valdez attempted a sheriff's sale, Diamond Shamrock obtained a temporary injunction blocking the sale of its 0.8-acre portion.
- The trial court, in a bench trial, permanently enjoined the sale of the 0.8-acre tract, holding Valdez's lien was not perfected as to that portion.
- Valdez, as appellant, appealed to the court of appeals.
- The court of appeals affirmed the trial court's judgment, holding that Diamond Shamrock was a good-faith purchaser for value without notice.
- Valdez, as petitioner, appealed to the Supreme Court of Texas.
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Issue:
Does a subcontractor's mechanic's lien, filed after a portion of the original property was sold, extend to the sold portion when the purchaser had constructive notice of ongoing construction on the original undivided lot?
Opinions:
Majority - Justice Mauzy
Yes, the mechanic's lien extends to the sold portion of the property. Under the Texas Property Code's 'relation-back' provision, the inception date of Valdez's lien was the commencement of visible construction in February 1986, which predates Diamond Shamrock's purchase. The lien attaches to the entire 'lot' as it was configured at the inception date—the full 7.9 acres. Diamond Shamrock had constructive notice of Valdez's inchoate lien rights because its agent's knowledge of the visible and recent construction on the property was sufficient, as a matter of law, to put a reasonable purchaser on notice. Valdez fulfilled his statutory duty by providing notice to Opus, the 'owner or reputed owner' he contracted with, and was not required to recheck property records for subsequent purchasers.
Analysis:
This decision solidifies the power of the 'relation-back' doctrine in Texas mechanic's lien law, ensuring that a contractor's rights are fixed at the beginning of a project. It prevents property owners from defeating a lien by subdividing and selling off parcels after work has commenced. The ruling clarifies that visible construction on any part of an undivided tract provides constructive notice to prospective purchasers for the entire tract, placing a clear due diligence burden on buyers of property where work is underway. This precedent protects subcontractors and simplifies their lien perfection process, as they can rely on the property's status at the project's start.
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