What Design Professionals Should Know About the Ramey Kemp Decision: Working Under a Single Contract is Key
The North Carolina Court of Appeals’ decision today in Ramey Kemp & Associates, Inc. v. Richmond Hills Residential Partners, LLC et al is an important discussion of the mechanics’ lien rights of architects and design professionals, but also a lesson on effective contracting. In ruling that Ramey Kemp & Associates, Inc. (“Ramey Kemp”) was entitled to foreclose upon its lien, the Court upheld a broad interpretation of N.C.G.S. Section 44A, the state mechanics’ lien statute, as it applies to design professionals. However, because one judge on the Court’s panel issued a dissenting opinion, the case could be subject to further review by the North Carolina Supreme Court.
Section 44A-7(3) provides that improvements giving rise to lien rights include “any design or other professional or skilled services furnished by architects, engineers, land surveyors and landscape architects … .” In addition, for such work to give rise to lien rights, it must be done pursuant to a contract with the owner. In Ramey Kemp’s case, Ramey Kemp had provided, at the owner’s request, a status report of outstanding or unresolved engineering issues on the project. Ramey Kemp used the date of the status report as its last date of furnishing, and had it not done so, its lien would not have been filed timely under the 120-day statutory deadline.
The Court ruled that the status report constituted an improvement under Section 44A, which is perhaps a broad interpretation of the statute. However, essential to the Court’s opinion was an affidavit Ramey Kemp used in its summary judgment argument. The affidavit stated that the parties to the contract intended the engineer’s services to constitute one seamless contract and that the engineer’s work was not piecemeal and subject to separate contracts, but rather performed under a single contract. The two of three judges on the panel who ruled in Ramey Kemp’s favor found the Defendant, Richmond Hills Residential Partners, LLC (“Richmond Hills”) had not provided sufficient evidence in summary judgment to potentially prove otherwise.
The dissenting judge in the case based the dissenting opinion on deposition testimony of the same witness who issued the affidavit stating there was one contract. The dissenting judge believed that this testimony called into question the witness’ personal knowledge of the contract, and therefore the evidence showing there was a single contract might’ve been questionable.
Regardless of whether the case is appealed and how the Supreme Court rules, the message to design professionals is clear: performing work under a single contract for the same project can be essential to preserving lien rights. If, on appeal, it is determined that Richmond Hills had presented enough evidence to potentially disprove the existence of a “single contract,” the judgment in favor of Ramey Kemp could be overturned. The Court in Ramey Kemp acknowledged that professional design services often span months or years for a single project, and often with lulls in the work. Despite the passage of time, however, design professionals will better protect themselves under the lien statute by demanding change orders for additional work under a single contract – even if work under the contract is ongoing for years – rather than executing a new agreement.
If you have any questions about this construction topic or any other legal concern, Anderson Jones, PLLC Attorney Caroline Lindsey can be reached at (919) 277-2541 or by email!