Vulcan Materials Co. v. Fowler Contracting Corp.

ARNOLD, Chief Judge. Plaintiffs argue that their liens on Marketplace’s real property are not limited by the amount remaining due on the contract. They *921 contend that under Electric Supply Co. v. Swain Elec. Co., 328 N.C. 651, 403 S.E.2d 291 (1991), they are permitted to assert liens on the improved property for the full amount of their claims even though that amount greatly exceeds the amount due on the contract. We disagree. The relevant statute, N.C. Gen. Stat. § 44A-23 (1989), reads in pertinent part: A first, second or third tier subcontractor, who gives notice as provided in this Article, may, to the extent of his claim, enforce the lien of the contractor created by Part 1 of Article 2 of this Chapter. The manner of such enforcement shall be as provided by G.S. 44A-7 through 44A-16. Our Supreme Court in Swain determined that this statute provides “first-, second-, and third-tier subcontractors a separate right of subrogation to the lien of the contractor who deals with the owner, distinct from the rights contained in N.C.G.S. § 44A-18.” Swain, 328 N.C. at 660, 403 S.E.2d at 297. As for the extent of the lien, the Supreme Court held that: [T]he subcontractor may assert whatever lien that the contractor who dealt with the owner has against the owner’s real property relating to the project. Therefore, even if the owner has specifically paid the contractor for the labor or materials supplied by the specific unpaid subcontractor who is claiming the lien, that subcontractor retains a right of subrogation, to the extent of his claim, to whatever lien rights the contractor otherwise has in the project. Id. at 661, 403 S.E.2d at 297 (citation omitted). Swain permits a subcontractor to assert the general contractor’s lien even though the owner has already paid the general contractor specifically for the subcontractor’s labor or materials. That right is limited, however, by the lien rights the contractor has in the property. Id. Plaintiffs are necessarily limited in this way by the nature of the right they assert. The subcontractor’s right to assert a lien pursuant to G.S. § 44A-23 arises by way of subrogation, Mace v. Bryant Constr. Corp., 48 N.C. App. 297, 269 S.E.2d 191 (1980), and “it is firmly established that ‘[a] party can acquire no better right by subrogation than that of the principle.’ ” Thomas v. Ray, 69 N.C. App. *922 412, 420-21, 317 S.E.2d 53, 58 (1984) (quoting Dowdy v. Southern Ry. Co., 237 N.C. 519, 525, 75 S.E.2d 639, 643 (1953)). Because plaintiffs are subrogated to the rights of the general contractor, they may assert only the lien rights which the general contractor has in the project. Swain, 328 N.C. at 661, 403 S.E.2d at 297. The general contractor can enforce the lien only for the amount due on the contract, and plaintiffs are, therefore, similarly limited. The trial court’s order is affirmed. Affirmed. Judges COZORT and MARTIN concur.