The Statute of Limitations under Ohio Statutory Lien Law Begins to Run when Liability Accrues

Akron Concrete Corporation v. The Board of Education for the Medina City School District, 2012 Ohio 2971 (Court of Appeals of Ohio, Ninth Appellate District, Medina, Ohio).
The Medina County, Ohio, Court of Appeals recently held that a subcontractor’s claim on a mechanic’s lien on public funds was not barred by the statutes of limitations, the subcontractor was entitled to the full amount due and owing to the general contractor, and the owner School District violated the lien on public funds by making a final payment to the general contractor without first satisfying the subcontractor’s lien.
Akron Concrete Corporation (“Akron Concrete”) was a subcontractor for Moser Construction Company (“Moser”), the general contractor on a public building project in 2000 with the Medina City School District (“District”). After Moser failed to pay Akron Concrete’s final bill in June 2001, Akron Concrete filed a mechanic’s lien against the public funds remaining to be paid on the project pursuant to Ohio Revised Code §1311.26. About the same time, a dispute arose between Moser and the District as to what, if any amount, the District owed to Moser for the completed project. The District and Moser ultimately settled the dispute in 2009, at which time, the District made a final payment to Moser without paying Akron Concrete the amount of the mechanic’s lien, thus violating the lien statute.
Under the Ohio public lien law §1311.311, the District could have forced Akron Concrete to file suit against it by serving Akron Concrete with a Notice to Commence Suit, thereby commencing a sixty-day period in which Akron Concrete was to file suit or waive its claim in the public funds.  Because the District did not serve Akron Concrete with the Notice to Commence Suit and there are no other statutes of limitations in the Ohio lien law applicable to public liens, the Court applied § 2305.07 of the Ohio Revised Code, providing for a six-year statute of limitation for an action “upon a liability created by statute other than a forfeiture or penalty.” The deciding issue was when Akron Concrete’s cause of action on the lien accrued, and whether the action was barred by the statute of limitation.
The lower trial court agreed with the District that Akron Concrete’s cause of action arose in 2001 when Akron Concrete perfected its lien on the project public funds. However, the court determined that the time had been tolled for the 8 years that the District and Moser litigated the final amount owed to Moser for the project, because the amount owed to Akron Concrete as the subcontractor could not exceed the amount actually owed to Moser as the general contractor and if it was determined that Moser was not owed any additional funds on the project, Akron Concrete would be barred from collecting on the lien.
On the District’s appeal, the Appellate Court ultimately held that “a cause of action arising from a statute accrues and the period specified in the statute of limitation begins to run when the violation giving rise to liability occurs.” Akron Concrete’s cause of action arose and the time period to file suit began to run in 2009 when the District violated Akron Concrete’s lien by disbursing funds to Moser without satisfying the statutory lien requirements and paying Akron Concrete. Akron Concrete sued to enforce the lien seven months after the District paid Moser, well within the statute of limitations period.
For a copy of the Court’s opinion, click on the link below, or contact any Hahn Loeser Construction Professional for more information.
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