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Federal Court in New Hampshire Holds That Subcontractor May Pursue a Mechanics' Lien Despite Signing Written Lien Waivers and Releases Because General Contractor Had Actual Notice of Subcontractor's Intent to Claim at Time Waivers Were Executed

Fraser Eng'g Co. v. IPS-Integrated Project Servs., LLC, 2018 US Dist. LEXIS 51392 (D.N.H. March 27, 2018)

Author: Kristopher Berr

6/07/2018

Read the full post at Constructlaw

Federal Court in New Hampshire Holds That Subcontractor May Pursue a Mechanics' Lien Despite Signing Written Lien Waivers and Releases Because General Contractor Had Actual Notice of Subcontractor's Intent to Claim at Time Waivers Were Executed

IPS-Integrated Project Services, LLC (IPS) was the general contractor on a project to design and construct a manufacturing facility in Portsmouth, New Hampshire. IPS subcontracted with Fraser Engineering Company (Fraser) for the project’s mechanical and plumbing scope of work. Shortly after award, IPS notified Fraser that it may be directed to accelerate its work. In response, Fraser put IPS on notice that acceleration would result in labor inefficiencies for which it expected to be reimbursed. Thereafter, IPS directed Fraser to accelerate and Fraser complied by using extra overtime over the next several months. During that time, the parties communicated numerous times about Fraser’s claim for labor inefficiencies.

Under its subcontract with IPS, Fraser was required to submit lien waivers with each of its payment applications. According to the court, the waivers at issue “do not merely release lien rights, but also ‘all claims, demands, or causes of action . . . which [Fraser] has, or might under any present or future law, assert against [IPS] or [the owner] relating to the Partial Payment and/or the labor services, materials or equipment for which the partial payment has been made.’” During its work, Fraser submitted eight such waivers.

Although IPS was aware that Fraser intended to submit a claim for labor inefficiency, Fraser executed its first seven waivers without including any reservation of rights to assert its inefficiency claim. It was not until its eighth payment application and waiver that Fraser expressly reserved such rights.

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