Oral Contract and Invalid Lien Spell Trouble for Contractor

Construction On the Level Blog
Feb 5, 2025

Speedy Maintenance, LLC v. Windsor Tower, LLC, 2024-Ohio-5841 (2d Dist.) is a recent case concerning a dispute over repairs to a parking garage where Ohio’s Second District Court of Appeals confronted issues such as:

  • What happens when an Owner withholds payment from a Contractor for failing to perform adequately under a verbal agreement?
  • What if the Owner fires the Contractor?
  • And what happens when the Contractor files a mechanic’s lien?

Case Background

The Owner of a commercial building sought to renovate an attached, six-floor parking garage. The Owner hired the Contractor, who agreed to remove and replace rusted steel and spalling concrete.  The Contractor provided an estimate, whereby they would receive $75,000 to repair each floor and an additional $10,000 for training and mobilization for the first floor completed. However, this estimate was never signed. Instead, according to the Owner, the parties verbally agreed to a flat rate of $75,000.

According to the Owner’s evidence at trial, the Contractor agreed to complete the first floor within eight weeks and each floor thereafter within four to five weeks. The Owner stressed that time was of the essence. But during the first few weeks, the Contractor made minimal progress, and the Owner expressed their concern with the pace and quality of the work.

By the eighth week, the Contractor completed 20% of a single floor and, subsequently, the Owner fired the Contractor. The Contractor, in turn, filed a mechanic’s lien for $66,000 and sued the Owner to which the Owner countersued for breach of contract and slander of title. The trial court ruled in favor of the Owner on both issues, and the Contractor appealed.

The Court of Appeals Affirms Trial Court Findings

The appellate court affirmed the trial court’s finding that the Contractor breached the oral contract as the evidence demonstrated the parties had agreed to an expedited timeline and the Contractor failed to meet a single deadline.

Of the 20% of completed work to a single floor:

  • The Contractor did not install sufficient shoring underneath the concrete forms (risking collapse).
  • Rebar protruded from the concrete in the areas that the contractor tried restoring.
  • Some of the concrete had already chipped or otherwise failed.

In the end, the $44,300 the Owner paid to the Contractor was wasted, and the Owner had to hire a new contractor to complete the work. Accordingly, the Contractor had materially breached the agreement, and the Owner was awarded $44,300.

The court also affirmed the trial court’s finding that the Contractor slandered the Owner’s title.

  • Slander of title occurs when a party publishes a false statement about another’s property.
  • Slander of title applies to mechanic’s liens filed against real property by parties who wrongfully claim an interest in the property.

Here, the Owner did not owe the Contractor the money claimed because the Contractor’s work was deficient. Accordingly, the appellate court affirmed the trial court’s award of $3,900 to post a bond to discharge the lien.

Key Takeaways

First, all parties should capture the entire agreement in a written contract before any work is performed. Any contemporaneous or verbal agreements should be reduced to writing, usually through a change order. This will avoid confusion on items like payment terms, the scope of the work, or the time for completion and will save money in the future should the parties dispute the terms of the agreement.

Second, contractors seeking to file a mechanic’s lien should ensure their claim is valid. If a contractor is unsure whether they can recover the full value of the lien, then the contractor should consider placing a conservative number on the lien. For example, if a contractor believes it is owed $10,000 on a project, but only $8,000 of that money is likely recoverable, then the contractor should consider placing only an $8,000 lien.

Finally, owners should take comfort knowing that they are not left without a remedy if someone wrongfully files a mechanic’s lien on the property. The owner can pursue a claim for slander of title and if an owner bonds-off the lien, like in Windsor Tower, the owner can likely recover the cost of the bond if the lien is found to be invalid.

For more information on this or other construction issues, contact Jordan D. Weeks or any member of the firm’s construction group.