UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Fraser Engineering Company, Inc.

v. Case No. 17-cv-102-JD Opinion No.

IPS-Integrated Project Services, LLC and Lonza Biologics, Inc.

O R D E R

Fraser Engineering Company, Inc., alleges that IPS-

Integrated Project Services, LLC, and Lonza Biologics, Inc.,

wrongfully withheld payments for subcontract work Fraser

performed on a construction project. IPS served as general

contractor on the project, which involved the design and

construction of a building in Portsmouth, New Hampshire. Lonza

owned the building. Fraser entered into a subcontract with IPS

to provide mechanical and plumbing services as part of the

project.

The sole issue before the court is whether Fraser may

perfect a mechanics lien on the property. 1 Fraser moved for, and

was granted, an ex parte attachment in state court. The

1 Arbitration will resolve the merits of the parties’ dispute. See Jan. 11, 2018 Order (doc. no. 40) at 8-9 (DiClerico, J.) (ordering the parties to proceed to arbitration). defendants objected to that attachment before removing the case

to this court. They then filed an assented-to motion for a

hearing on their objections pursuant to N.H. Rev. Stat. Ann.

(RSA) § 511-A:3. The district judge granted that motion and

directed Fraser to refile its complaint and its motion for ex

parte attachment and the defendants to refile their objections

to that motion. Mar. 22, 2017 Order (doc. no. 8) at 2-3

(DiClerico, J.). The district judge designated the undersigned

magistrate judge, pursuant to

(b)(1)(A), to

consider and resolve the defendants’ objections. 2

The court held a hearing on the objections in May 2017. At

that time, the court granted the parties leave to file post-

hearing memoranda and statements of fact. Following the

hearing, Fraser moved to compel the defendants to produce the

prime contract governing the project. The defendants objected,

and the district judge referred the motion to the undersigned.

2 The undersigned indicated in a previous order that the mechanics lien issue had been referred for report and recommendation. In doing so, the undersigned misconstrued under which subsection of

the district judge designated this matter for review. Section 636(b)(1)(A) allows a district judge, with certain exceptions not presently applicable, to “designate a magistrate judge to hear and determine any pretrial matter pending before the court . . . .” The undersigned may therefore resolve the present matter by way of written order. See, e.g., Osgood v. Kent, No. 11-cv-477-SM,

, at *1 (D.N.H. Dec. 21, 2011) (magistrate judge resolved mechanics lien issue via order); H.E. Contracting v. Franklin Pierce Coll.,

(D.N.H. 2005) (same). 2 The court initially deferred ruling on the motion to compel

based on the parties’ representation that they would mediate

this matter in November 2017. When that mediation did not

occur, however, the court conducted an in camera review of the

prime contract and granted the motion to compel in part.

Following that ruling, the parties submitted a statement of

undisputed facts, statements of disputed facts, post-hearing

memoranda, and replies. The mechanics lien issue is therefore

ripe for resolution.

Having reviewed the parties’ pre- and post-hearing filings

and their arguments at the hearing, the court overrules the

defendants’ objections to Fraser’s attachment. As discussed

below, the defendants have not demonstrated that Fraser failed

to timely perfect the lien, that Fraser waived the lien, or that

the lien amount should be reduced. Fraser is accordingly

entitled to a mechanics lien on the property in the amount of

$4,917,122.02.

I. Standard of Review

Absent an applicable federal statute, “the law of the state

where the [district] court is located” governs attachment

proceedings. Fed. R. Civ. P. 64(a), (b). Under New Hampshire

law, any person who performs labor or furnishes materials in the

amount of $15 or more when erecting or repairing a building

3 pursuant to a contract with the owner of that building has a

lien on the materials furnished and on the building. See RSA

447:2, I. RSA 447:5 extends that right to subcontractors

performing work or furnishing materials pursuant to a

subcontract, so long as certain notice requirements are met.

The lien continues for 120 days after the work is performed or

the materials are furnished, unless payment is made. See RSA

447:9. The lien may be secured beyond the 120-day period by

attaching the subject property during the lien period. RSA

447:10.

RSA 511-A, which governs pre-judgment attachment

procedures, applies to proceedings to secure mechanics liens

under RSA 447. See Chagnon Lumber Co. v. Stone Mill Const.

Corp.,

(1984). Under RSA 511-A:8, a court may

attach property ex parte if a plaintiff establishes probable

cause of its basic right to recovery and the amount of the lien.

RSA 511-A:8, III; Chagnon,

. When a court grants

an ex parte attachment, the party against which the attachment

is made may object and is entitled to a prompt hearing. RSA

511-A:8.

Though a burden-shifting framework typically applies during

attachment hearings, see RSA 511-A:3, several courts, including

at least two in this district, have declined to follow this

framework when analyzing mechanics liens, see Osgood v. Kent,

4 No. 11-cv-477-SM,

, at *3 (D.N.H. Dec. 21, 2011);

H.E. Contracting v. Franklin Pierce Coll.,

(D.N.H. 2005); W. Side Dev. Grp. v. D’Amour, No. 04-C-018

(N.H. Super. Mar. 24, 2004); Consolidated Elec. Distrib., Inc.

v. SES Concord, Co., No. 89-C-571/579 (N.H. Super. Nov. 21,

1989). Those courts instead analyze whether a plaintiff has met

its burden under RSA 511-A:8, which a defendant may rebut by

challenging the plaintiff’s basic right to recovery, the lien

amount, or the notice provisions. See Osgood,

,

at *3; H.E. Contracting,

. Both parties

agreed at the hearing that the RSA 511-A:3 framework does not

apply in the present context. See Hearing Trans. (doc. no. 29)

at 71-74. Accordingly, the court will analyze this matter under

the standard articulated by those courts that have found RSA

511-A:3 inapplicable.

II. Background 3

Lonza leases a building on property in Portsmouth, New

Hampshire. Doc. no. 43 ¶ 1. On September 8, 2014, Lonza and

IPS entered into an agreement for the design, procurement, and

construction of a manufacturing facility on that property. Id.

¶ 2. That agreement was subsequently amended on July 19, 2016.

3 The following background is derived from the parties’ statement of undisputed facts and the evidence in the record. 5 Id. 4 Pursuant to these documents, Lonza was required to pay IPS

for “the cost of trade labor including the indirect costs,

overhead and profit for all [s]ubcontractors and equipment

necessary for construction.” See Prime Contract § 17.16

On October 9, 2015, IPS notified Fraser that it intended to

award Fraser a subcontract to perform mechanical piping and

plumbing work on the project. Doc. no. 43 ¶ 5. Fraser and IPS

executed a formal subcontract on February 11, 2016, whereby

Fraser agreed to furnish all labor, services, materials, tools,

equipment, supplies, and any other items necessary or incidental

to perform the plumbing and mechanical scope of work on the

project. Id. ¶¶ 3, 6. The original subcontract sum was

$5,312,100. Id. ¶ 7.

The subcontract contained specific procedures for

performing extra work. See, e.g., doc. no. 12-1 at 5, 71.

Though Fraser did not always follow those procedures, IPS

approved change orders totaling $1,535,350.87. See doc. nos.

12-2, 12-3. IPS rejected four change orders totaling

$317,461.17. See doc. no. 12 ¶ 12; doc. no. 12-5.

In December 2015, Fraser and IPS began having discussions

about Fraser potentially accelerating its work on the project.

4 The court will refer to the September 8, 2014 agreement and the July 19, 2016 amendment collectively the prime contract unless it is necessary to distinguish between them. 6 Doc. no. 20-4. On December 11, 2015, Fraser indicated to IPS

and Lonza that doing so would result in labor inefficiencies.

Doc. no. 20-5. On December 21, 2015, IPS directed Fraser to

accelerate its work by using extra overtime under the

subcontract. Doc. no. 20-7. The accelerated work continued for

months, during which time the parties communicated on numerous

occasions about purported labor inefficiencies resulting from

the acceleration. See doc. nos. 20-8 through 20-14. The

inefficiencies directly resulted in Fraser’s employees working

59,845 additional man-hours on the project. Doc. no. 12-6 at 7,

29.

The subcontract required Fraser to tag valves and mark

pipes. Doc. no. 43 ¶ 12; doc. no. 12-1 at 32. Fraser started

this work on August 9, 2016. Doc. no. 20-16 at 11. The work

continued through at least October 3, 2016. See id. at 11-13;

doc. no. 20-17 at 4-7; doc. no. 20-18 at 1. All told, Fraser

employees spent 1,199 hours tagging valves and marking pipes in

August, September, and October 2016. See doc. no. 20-16 at 11-

13; doc. no. 20-17 at 4-7; doc. no. 20-18 at 1.

The subcontract contained several additional clauses

relevant to the present dispute. Under section 10.6, IPS has

the sole and exclusive option to arbitrate any disputes arising

under the subcontract, which it has invoked in this case. Doc.

no. 12-1 at 13. Section 4.18 contains what the defendants

7 characterize as a waiver of indirect damages. Doc. no. 12-1 at

8. Section 2.17 required Fraser to notify IPS of any unforeseen

conditions resulting in changes to the work, and indicated that

failure to do so would result in Fraser waiving any claim for an

adjustment of time of completion, milestone dates, or agreement

value. Id. at 4-6. Section 2.6 required IPS to submit

conditional lien waivers with each request or invoice for a

progress payment. Id. at 3, 79. During the course of its time

on the project, Fraser submitted eight individual lien waivers

pursuant to section 2.6. Fraser did not exclude any claims from

the first seven of these waivers, the last of which was executed

on May 31, 2016. See doc. no. 14-5. The eighth waiver,

executed October 26, 2016, included exclusions. See doc. no. 45

¶ 29.

On August 31, 2016, Fraser submitted a closeout claim to

IPS in the amount of $4,006,505.72. Doc. no. 43 ¶ 10; doc. no.

12-6. Fraser specifically sought $3,324,083.30 for unpaid man-

hours caused by the labor inefficiency (doc. no. 12-6 at 7, 29)

and $682,422.42 resulting from changes in the scope of Fraser’s

work during the course of the project (doc. no. 12-6 at 2, 4,

7). See also doc. no. 43 ¶ 10. Fraser further indicated in its

closeout claim that it was entitled to $1,554,867.29 in

retainage and unpaid contract balance amounts. Doc. no. 12-6 at

2. On September 16, 2016, IPS rejected the closeout claim.

8 Doc. no. 43 ¶ 11.

On January 24, 2017, Fraser provided IPS and Lonza with a

notice of intent to lien. See doc. no. 12-7. Two days later,

Fraser filed a verified motion for ex parte attachment to

perfect a mechanics lien in Rockingham County Superior Court.

See doc. no. 1-1 at 12-18. Fraser specifically sought a lien

totaling $4,917,122.02, including $3,324,083.30 in unpaid man-

hours resulting from the labor inefficiency, $682,422.42 caused

changes to the scope of Fraser’s work, $593,155.13 in

outstanding subcontract balance, and $317,461.17 in outstanding

change order requests. Id. at 12. The state court granted

Fraser’s motion on an ex parte basis to the extent it sought to

attach the building, fixtures, and leasehold held by Lonza. Id.

at 19. After appearing and objecting to the attachment in state

court, the defendants removed the matter here. See doc. no. 1.

III. Discussion

By virtue of having received an ex parte attachment in

state court, Fraser has met its initial burden under RSA 511-

A:8. See id. (requiring that a plaintiff “establish[] probable

cause to the satisfaction of the court of [its] basic right to

recovery and the amount thereof” in order to receive an ex parte

attachment). Thus, the burden shifts to the defendants to

challenge Fraser’s basic right to recovery, the lien amount,

9 and/or the notice provisions. See Osgood,

, at

*3; H.E. Contracting,

. In objecting to

the lien, the defendants contend (1) that Fraser did not timely

perfect the lien; (2) that Fraser waived its right to the lien;

and (3) that the lien amount must be reduced. The court

considers each argument in turn.

A. Failure to Timely Perfect

The defendants contend that Fraser did not perfect the

mechanics lien within 120 days, as required by RSA 447:9 and RSA

447:10. Though the defendants concede that Fraser last

performed work on the project within the 120-day period, they

argue that any work performed after September 16, 2016 — 132

days before Fraser sought to perfect the lien — was “remedial

punch list work and other inconsequential work.” Doc. no. 44 at

20. Relying on Bader Co. v. Concord Elec. Co.,

(1969), the defendants contend that this work cannot extend

Fraser’s lien.

In response, Fraser argues that it performed work required

by its subcontract with IPS — namely, tagging valves and marking

pipes — less than 120 days before it sought to secure the

mechanics lien. In Fraser’s view, work expressly required by a

subcontract must count toward the 120-day calculation. Fraser

further contends that the facts in Bader bear little resemblance

to those in this case.

10 Neither side is entirely correct. On the one hand, the

defendants overstate the holding in Bader. In that case, the

New Hampshire Supreme Court ruled that certain work “could be

found not to . . . extend the duration of the plaintiff’s lien”

and that the trial court therefore “could properly find and rule

that [the plaintiff] did not have a mechanic’s lien . . . .”

(emphasis added) (citations omitted). This language,

plainly conditional, does not constitute a broad holding.

Indeed, it does not even suggest that the trial court’s ruling

was the only acceptable outcome. Rather, the court in Bader

merely concluded that the trial court did not err in ruling for

the defendant based on the evidence before it. Bader’s

precedential value is accordingly limited.

And in any event, the court agrees with Fraser that Bader

is factually distinguishable. Whereas the plaintiff in Bader

returned to the jobsite nearly a month after completing the

subcontract to perform certain remedial work, the record here

suggests that Fraser remained on the property continuously

through at least October 3, 2016. See doc. no. 20-17; doc. no.

20-18. Similarly, while the Bader court accepted the trial

court’s finding the work at issue “was not done pursuant to the

contract,”

, there is no dispute here that the

subcontract expressly required Fraser to tag valves and mark

pipes, see doc. no. 12-1 at 32 (“Perform all tagging and

11 labelling as indicated per the contract drawings and

specifications.”); doc. no. 43 ¶ 12. These factual differences

further limit Bader’s applicability to the present

circumstances. 5

At the same time, however, Fraser’s contention that work

performed pursuant to a subcontract must count toward the 120-

day calculation appears to be at odds with precedent. In

Peabody v. Wentzell,

(1983), the New Hampshire

Supreme Court declined to reach whether the plaintiff’s work was

inconsequential, gratuitous, or remedial “because there was

sufficient evidence to support the . . . finding that the work

at issue was not included in the parties’ contract.”

. Though arguably dicta, this language suggests that work

performed pursuant to a contract, but nonetheless

inconsequential, gratuitous, or remedial, may not extend a

mechanics lien period. As the New Hampshire Supreme Court has

neither disavowed nor elaborated upon this language, 6 this court

5 The defendants’ reliance on Fabcon Precast, LLC v. Zirkelbach Constr. Inc., No. 218-2015-cv-1101 (N.H. Super. Nov. 25, 2015), is misplaced for essentially the same reasons. In Fabcon, the court concluded that caulking work performed by the plaintiff did not extend the lien period because it was not performed as part of the final contract. Id. at 5. There is no similar evidence in the record here.

6 Indeed, there appears to be only one other New Hampshire Supreme Court case that even addresses what types of work qualify to extend a mechanics lien. See Tolles-Bickford Lumber Co. v. Tilton Sch.,

(1953). But that case is 12 is disinclined to hold as a matter of law that work done

pursuant to a contract necessarily extends a mechanics lien.

For its part, the mechanics lien statute provides little

guidance. For one, any strict construction of that statute in

Fraser’s favor would seemingly be at odds with Peabody. More

fundamentally, however, RSA 447 provides no definition of what

sort of work creates a lien thereunder, and in fact uses

multiple terms interchangeably to refer to that work. Compare

RSA 447:2, :5 (“labor”) with RSA 447:9 (“services”). As such,

the court is left without any concrete standard for determining

what types work performed pursuant to a contract might

nonetheless fail to extend a mechanics lien period.

Even so, the court is not without recourse. The New

Hampshire Supreme Court has noted, as recently as 2010, that

“the purpose of the mechanics’ lien law is remedial.” Alex

Builders & Sons, Inc. v. Danley,

(2010)

(citation omitted). “The general rule is to construe remedial

statutes liberally in favor of the person the statute is

designed to benefit.”

Here, Fraser has presented evidence

that its employees tagged valves and marked pipes for 1,199

hours over a nearly two-month period, concluding less than 120

unhelpful here, both because, like Bader, it addressed work performed after the underlying contract was completed and because it concerned allegedly gratuitous work. See

(citation omitted). 13 days before the date Fraser sought to perfect its lien. See

doc. no. 20-16 at 11–13; doc. no. 20-17 at 4-7; doc. no. 20-18

at 1. Additionally, there is no dispute that the subcontract

expressly required valve tagging and pipe marking. See doc. no.

12-1 at 32; Hearing Tr. (doc. no. 30) at 91. Given the remedial

nature of the mechanics lien statute, and the absence of any

authority compelling a different outcome, the court cannot

conclude that this work was so de minimis that it did not extend

Fraser’s lien. The court therefore overrules the defendants’

objections insofar as they contend that Fraser failed to timely

perfect the mechanics lien.

B. Waiver

The defendants further four arguments with respect to

waiver: (1) that the arbitration clause in the subcontract

constituted a waiver of the lien; (2) that Fraser waived the

lien by waiving indirect damages in the subcontract; (3) that

Fraser waived the lien by executing lien waivers throughout the

course of its work on the project; and (4) that Fraser waived

the lien by failing to give the defendants notice of its

inefficiency claim prior to performing the work. 7 The court

7 IPS also argues in its reply to Fraser’s post-hearing memorandum that the prime contract contains an explicit lien waiver and that the subcontract incorporated the prime contract through a “flow-down” provision. As IPS does not explain its delay in raising this argument, and Fraser has not had the 14 considers these arguments in succession.

1. Arbitration Clause

The defendants contend that the arbitration clause in the

subcontract constitutes a waiver of Fraser’s mechanics lien

claim. They cite Pine Gravel, Inc. v. Cianchette,

(1986), in support of this request. The court need not linger

on this argument, as Pine Gravel in fact holds the opposite.

See

(“[An] arbitration provision is not a waiver of

the . . . right to a [mechanics] lien.”). The court accordingly

overrules the defendants’ objections insofar as they contend the

arbitration clause waived the lien. 8

2. Waiver of Indirect Damages

Next, the defendants point to section 4.18, which they

contend precludes Fraser from recovering indirect damages from

IPS. The defendants argue that this section constitutes a valid

opportunity to respond, the court declines to address it. See Pukt v. Nexgrill Industries, Inc.,

, 12 n.2 (DiClerico, J.) (citations omitted) (“Ordinarily, the court does not consider arguments raised for the first time in a reply.”); cf. United States v. Casey,

(1st Cir. 2016) (“[A]rguments raised for the first time in an appellate reply brief [are] ordinarily deemed waived . . . .”).

8 To the extent the defendants believe Pine Gravel mandates the dismissal of Fraser’s underlying action, then this request is beyond the scope of the present review. See Mar. 22, 2017 Order (doc. no. 8) (designating the undersigned to resolve “the defendants’ objections to the plaintiff’s attachment”). The court notes, however, that Judge DiClerico has already indicated that “[o]nce the motion for an attachment is resolved, the case will be closed.” Jan. 11, 2018 Order (doc. no. 40) at 9. 15 waiver of the mechanics lien.

The court disagrees. It is well-established under New

Hampshire law that in order to waive the right to a mechanics

lien by contract, “a clear expression of intent to waive the

right must exist.” Daniel v. Hawkeye Funding, Ltd. P'ship,

(2004) (quoting Pine Gravel,

).

Unlike in Daniel, where the contract in question had a provision

titled “No Liens” and expressly waived “any Lien on the Facility

Site, the Facility, or any part or interest in either,”

, section 4.18 does not mention liens at all, see doc. no.

12-1 at 7. The court accordingly declines to discharge the lien

pursuant to section 4.18. 9

3. Subsequent Lien Waivers

The defendants next contend that Fraser executed a series

of eight explicit lien waivers during the course of its work on

the project. The defendants contend that Fraser did not exclude

any of its claims from the first seven of these waivers, the

last of which was executed May 31, 2016. See doc. no. 14-5.

9 The defendants appear to alternatively argue that even if section 4.18 did not constitute a lien waiver, it did waive Fraser’s right to recover much of the lien amount. In response, Fraser contends that the amounts it seeks to recover are not consequential or indirect damages, but rather actual costs arising from labor and materials related to the project. These arguments, which go to the heart of the underlying dispute, are beyond the scope of the present analysis.

16 The defendants concede that the eighth waiver, executed October

26, 2016, included exclusions. See doc. no. 45 ¶ 29. The

defendants contend that in executing these waivers, Fraser

waived some, if not all, of its lien.

Fraser does not dispute that it signed the waivers in

question. But according to Fraser, the waivers are not

enforceable because IPS knew they were not accurate at the time

they were signed. To this end, Fraser contends that it

repeatedly communicated with the defendants between December 11,

2015, and August 31, 2016, regarding labor inefficiencies

stemming from IPS accelerating Fraser’s work on the project.

See doc. nos. 20-4 through 20-14. Fraser cites Metro. Pier &

Exhibition Auth. ex rel. Pitt-Des Moines, Inc. v. Mc3D, Inc.,

(N.D. Ill. 1999), for the proposition that

a party cannot rely on an explicit lien waiver when it knew the

waiver did not accurately reflect the current subcontract price

and payment status.

Though both sides’ arguments have their relative merits,

the court ultimately declines to discharge the lien on the basis

of these waivers. The court reaches this determination for two

reasons. First, there can be no reasonable dispute, based on

the evidence in the record, that the defendants were aware that

Fraser would seek compensation for labor inefficiencies at the

time many of the waivers were signed. Though Metro. Pier does

17 not control the present analysis, the defendants have not cited,

and the court cannot identify, any New Hampshire Supreme Court

decision rejecting the proposition in that case. Given the

remedial nature of the mechanics lien law, the court is unable

to say with certainty that the New Hampshire Supreme Court would

ignore the defendants’ awareness of the labor inefficiencies and

strictly enforce the lien waivers. Thus, the court declines to

hold as a matter of law that the defendants’ awareness is

irrelevant. 10

Even assuming the waivers are enforceable, however, the

court is unable to determine from the present record the extent

to which this affects Fraser’s lien. The defendants do not

dispute that the last waiver under which Fraser did not reserve

its rights was executed May 21, 2016. Yet they have made no

10Typically, when presented with an issue of New Hampshire law that the New Hampshire Supreme Court has not yet confronted, this court “must make an informed prophecy of what that court would do in the same situation.” Galvin v. EMC Mortg. Corp.,

(D.N.H. 2014) (brackets, internal quotation marks, and citations omitted). Prudence cautions against doing so here. 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 [Lonza] relating to the Partial Payment and/or the labor services, materials or equipment for which the partial payment has been made.” Doc. no. 14-5 at 1. In other words, the enforceability of these waivers goes directly to the merits of the underlying dispute. That dispute is not before this court; it is left for the arbitrator to decide.

18 attempt to separate the unpaid work Fraser performed before that

date from the unpaid work Fraser performed thereafter. As there

is no dispute that Fraser performed the work in question, this

failure leaves the court with an insufficient record to reduce

the lien by those amounts for which payment became due on or

before May 21, 2016. See Guyotte v. O’Neill,

, 620-

621 (2008) (noting that lien waivers do not extend to amounts

due and owing after their execution).

The court accordingly overrules the defendants’ objections

to the extent they rely on the lien waivers Fraser executed

during the course of its performance on the project.

4. Notice of Inefficiency Claim

Finally, the defendants argue that Fraser waived its right

to include its inefficiency claim in the lien because it did not

give the defendants notice of that claim before performing the

work. In support of this argument, the defendants point to

section 2.17 of the subcontract, which states in pertinent part

that “[Fraser] shall notify [IPS] immediately of any unforeseen

conditions that will result in changes to work. Failure [to do

so] shall result in waiver by [Fraser] of a claim for any

adjustment to time of completion, milestone dates, or agreement

value, related to the impacts.” Doc. no. 12-1 at 4-5

(capitalization omitted). In response, Fraser notes that

section 2.17 does not explicitly waive liens and contends that,

19 in any event, Fraser provided the defendants with notice of its

labor inefficiency claim before IPS directed Fraser to

accelerate its work.

Fraser has the better argument at this juncture. Section

2.17 neither mentions liens nor uses language supporting the

inference that it was designed to extend to liens. It is

therefore not a clear expression of Fraser’s intent to waive its

lien rights. See Daniel,

. Moreover, Fraser has

provided evidence that it first informed the defendants on

December 11, 2015, that accelerating its work on the project

would result in labor inefficiencies, but that IPS nevertheless

ordered Fraser to accelerate. See doc. nos. 20-5; 20-7. While

the arbitrator will ultimately determine the legal significance

of these facts, they are sufficient for now to sustain Fraser’s

lien claim. The court therefore declines to discharge or reduce

the lien based on the language in section 2.17.

C. Lien Amount

Finally, the defendants contend that the mechanics lien

amount should be reduced. They raise a series of arguments to

this end: (1) that Fraser overstated its claim to include

disputed amounts; (2) that the lien is limited by law to the

amount Lonza owed IPS at the time of Fraser’s notice of lien;

and (3) that Fraser’s claim prematurely includes unpaid

retainage. Additionally, Lonza argues that the lien amount must

20 be reduced based on the New Hampshire Supreme Court’s decision

in Axenics, Inc. v. Turner Constr. Co.,

(2013).

Once again, the court discusses each argument in turn.

1. Disputed Amounts

The defendants contend that Fraser improperly included

amounts for the labor inefficiency and outstanding change order

requests as part of its lien. The defendants claim that Fraser

did not receive prior written approval from IPS to perform the

work resulting in these amounts, as required by section 2.18 of

the subcontract. The defendants contend that, absent written

authorization or actual knowledge, claims for additional or

extra work do not fall within the scope of the mechanics lien

statute.

The court is not persuaded by this argument. It is well-

established under New Hampshire law that, under certain

circumstances, “the written terms of a contract may be waived

orally or by implication.” D.M. Holden, Inc. v. Contractor’s

Crane Serv., Inc.,

(1981) (citation omitted).

To this end, the New Hampshire Supreme Court has upheld a

finding that an advanced-approval requirement in a construction

contract was waived when that requirement was “disregarded by

the parties.”

Here, Fraser has provided evidence, disputed

by the defendants, that neither Fraser nor IPS adhered to the

requirements of section 2.18 during the course of Fraser’s work

21 on the project. While the arbitrator will ultimately resolve

this dispute, Fraser has a non-frivolous argument that the

parties’ subsequent conduct eliminated or limited section 2.18’s

enforceability. The court therefore declines to reduce the lien

based on a strict construction of section 2.18.

2. Amount Owed by Lonza to IPS

The defendants next argue that Fraser’s lien must be

limited to the amount Lonza owed IPS under the prime contract at

the time Fraser provided notice of its intent to lien. The

defendants cite Russell v. Woodbury,

(1992), and

RSA 447:6 in support of this argument. The defendants contend

that Lonza owed IPS $1,866,951.87 under the prime contract on

the date Fraser provided its notice of lien. The defendants

contend that Fraser’s lien should be limited to this amount.

Fraser responds with two arguments. First, Fraser contends

that the prime contract is a “cost of work” contract that did

not limit the total amount Lonza may be required to pay IPS for

work on the project. Alternatively, Fraser contends that IPS

has failed to adequately demonstrate that Lonza only owed

$1,866,951.87 under the prime contract as of the date Fraser

provided its lien notice. Either way, according to Fraser, the

lien amount should not be reduced.

Fraser’s first argument is persuasive. RSA 447:6 states

that if a subcontractor provides notice of its intent to lien

22 after performing labor, its mechanics lien “shall be valid to

the extent of the amount then due or that may become due to the

contractor . . . .” The New Hampshire Supreme Court has

interpreted this language to limit recovery “to those sums in

fact due and owing to the general or principal contractor at the

time of notice plus any sums which actually become due to the

general or principal contractor after notice is given.”

Russell,

. Here, Fraser has demonstrated that

IPS has not paid it for work it performed and materials it

furnished as part of the project. Should Fraser prevail on the

merits of its underlying claims, those amounts are actually due.

Additionally, Fraser has pointed to language in the prime

contract suggesting that Lonza must pay IPS for “the cost of

trade labor including the indirect costs, overhead and profit

for all [s]ubcontractors and equipment necessary for

construction.” See Prime Contract § 17.16; see also id. §

10.6.1 (requiring Lonza to pay IPS for work performed by

subcontractors under their subcontracts). Given this language,

the court cannot conclude that $1,866,961.87 is the total

actually due to IPS under the prime contract. The court

therefore declines to limit the lien to that amount.

3. Unpaid Retainage

The defendants contend that Fraser’s lien claim improperly

23 includes unpaid retainage. 11 The defendants contend that

Fraser’s inclusion of retainage is premature, as Fraser has not

yet met certain conditions precedent to be entitled to that

amount. In response, Fraser argues, among other things, that it

properly included retainage in its lien because its lien arose

when it performed the work.

The court agrees with Fraser. Under New Hampshire law, the

“creation of a lien does not depend upon the owner’s nonpayment;

rather, the contractor ‘creates’ its own lien by performing the

work or furnishing the materials.” Daniel,

.

There does not appear to be any meaningful dispute here that IPS

is withholding retainage for work Fraser actually performed or

materials Fraser actually furnished as part of the project.

This amount was therefore properly included in the lien.

4. Axenics

At the hearing, Lonza argued that Fraser’s lien must be

reduced based on the New Hampshire Supreme Court’s holding in

Axenics. Lonza elaborates upon this argument in its post-

hearing memorandum. In pertinent part, Lonza contends that the

majority of Fraser’s claim is based upon equitable adjustments

11IPS is withholding $627,187.47 in unpaid retainage. Doc. no. 43 ¶ 21. This amount includes the $593,155.13 in outstanding subcontract balance Fraser includes in its lien and $34,032.46 in credits Fraser has agreed to provide IPS. Doc. no. 12-4 at 2. 24 or quasi-contractual remedies. Citing Axenics, Lonza contends

that Fraser may not avail itself of these remedies because clear

contractual provisions control the dispute.

Lonza’s argument is unavailing for at least three reasons.

First, another judge in this district considered and rejected

the same argument in Osgood v. Kent. See

, at

*3. Lonza makes no attempt to distinguish Osgood, and the court

finds the reasoning in that case to be persuasive. The court

therefore declines to deviate from Osgood here.

Next, as noted in Osgood, the New Hampshire Supreme Court

has previously reversed the discharge of a mechanics lien in a

case brought “under theories of breach of contract, quantum

meruit and unjust enrichment . . . .” Alex Builders & Sons,

Inc. v. Danley,

(2010). No portion of that

decision suggests that a party cannot secure a mechanics lien

for claims brought under a quasi-contract theory, at least so

long as there was an underlying contract between the parties.

This, too, militates against Lonza’s reading of Axenics.

Finally, and perhaps most fundamentally, Lonza in essence

raises a substantive defense to Fraser’s underlying claims. It

is up to the arbitrator, not this court, to determine the

relative merits of Fraser’s claims and the defendants’ defenses

to those claims. It is beyond the scope of the present review

to delve into those waters now.

25 The court therefore declines to reduce the lien simply

because Fraser asserts claims under a quasi-contract theory.

IV. Conclusion

For the reasons set forth above, the court concludes that

the defendants have not demonstrated that Fraser’s lien should

be discharged or reduced. The court therefore overrules the

defendants’ objections and grants Fraser’s motion to perfect the

lien in the amount of $4,917,122.02.

SO ORDERED.

__________________________ Andrea K. Johnstone United States Magistrate Judge

March 27, 2018

cc: Ronald D. Ciotti. Esq. Seth Michael Pasakarnis, Esq. Rene David Quinlan, Esq. Shawn R. Farrell, Esq. Peter G. Callaghan, Esq. Christopher T. Hilson, Esq.

26