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IN THE SUPERIOR COURT OF THE STATE OF DELAWARE IN AND FOR SUSSEX COUNTY

CONSTRUCTION RESOURCE MANAGEMENT, Plaintiff, v. JOSHUA E. LITTLE TON, and JULIA W. LITTLETON, PULSE CONSTRU CTION, INC. and GERRY MOTT, Defendants.

) ) ) ) ) ) C.A. No. 06L-03-031-RFS ) ) ) ) ) ) )

MEMORANDUM OPINION
Submitted: Decided: May 1, 2008 August 28, 2008

Richard E. Franta, Esquire, Wilmington, Delaware, Attorney for Plaintiff. Dennis L. Schrader, Esquire, Wilson, Halbrook & Bayard, Georgetown, Delaware, Attorney for Defendants Littleton.

STOKES, Judge

This is a mechanic's lien and contract action brought by Construction Resource Management, Inc. (hereafter "Plaintiff" or "CRM") against homeowners, named Joshua and Julia Littleton (hereafter collectively "Littleton") and a general contractor, Pulse Construction Company (hereafter "Pulse"). Pulse has dissolved, and a default judgment has been entered against it. Pulse's president, Gerald Mott (hereafter "Mott") was sued on a perso nal guaran ty but he has file d bankru ptcy, and this claim is severed f rom this case. Following trial, the parties submitted memoranda, and the Court has reviewed them. After conside ration, the following finding s of fact and conc lusions of law are made. Findings of Fact 1. On August 16, 2005, Pulse and Littleton entered into a construction contract for a project named Littleton Residence, Lot #15, Crest Drive, Malihorn Crest, Seaford, Delaware, 19973. 2. The contract had a price of $323,038 with a draw schedule, calling for payments of $51,000 at lot clearing excavation and footings complete, $51,000 at foundation complete, $90,000 at framing and sheathing complete, $58,740 at framing inspection, rough in complete, $35,298 at insulation drywall complete, and $37,000 at certi fica te of occu pancy.

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3. Littleton obtained construction financing from Wilmington Trust Company (hereafter "WT C"). 4. On or about September 15, 2005, Pulse entered a contract with CRM. 5. Unde r the contrac t, CRM provided skilled wo rkers to Puls e for use in its construction work. Upon Pulse's order, CRM sent workers to job sites. Pulse was obligated to supervise and manage them. Pulse and CRM agreed upon a wage rate which was multiplied by 1.75 to cover expenses for CRM including withholding taxes and the like. CRM paid the workers. 6. Littleton was not mentioned in the contract nor was any specific construction project. 7. Betwe en Dece mber 8, 20 05 and Ja nuary 19, 200 6, Pulse ord ered CR M to prov ide skille d wo rkers to L ittleton's Seaford prop erty. 8. CR M pro vided f ive (5)sk illed ma sons w ho also could p erform carpen try work . The lead mason was Robert Lake (hereafter "Lake") although Pulse had managerial resp onsi bility. 9. Between December 8, 2005 and January 19, 2006, the five (5) masons supplied by Pulse worked on the foundation. Pulse's manager was named Mark Knodler (hereafter "Knodler") 10. Knodler and Lake confirmed the time spent by the masons which CRM used to bill Pulse. CRM would receive the information on or before Wednesday of each week,

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pay th e wo rkers on T hurs day, a nd bill Pu lse on Fri day. P ayme nt was du e 30 days thereafter. 11. In effect, CRM had a five week period before payments were received from Pulse. F or secu rity, CRM had ad equate financ ial resou rces an d had M ott's gua ranty. Also, CRM also determined that Pulse was creditworthy based upon Dunn and Bradstreet Reports and other background work done before its contract with Pulse. Also, if unpaid, CRM intended to rely on the mechanic's lien law by liening property where labor was performed. 12. Pu lse paid CRM 's first tw o invoi ces for the wo rkers us ed at Li ttleton's h ome. CRM and Pulse agreed that Lake would confirm the time worked when Knodler was not available. 13. On January 19, 2006, Knodler for Pulse, ordered Lake and the other CRM workers to leave Littleton's property. At that time, no complaints were made about poor performance or defective workmanship. 14. Thereafter, in the last two weeks of January, CRM attempted to contact Pulse but Pulse was evasive and failed to provide a reason for its decision. 15. Pulse breached its contract with CRM by failing to pay invoices due CRM. At the Littleton job, CRM is due $37,693.77 for six weeks work from December 8, 2005 January 19, 2006. CRM is due $47,565.77 from Pulse for workers supplied at all sites, including the Littleton Residence.

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16. The failure of Pulse to pay CRM was not justified by a belated claim made by Pulse of defective workmanship. Lake's trial testimony was credible and persuasive, and the m ason ry wo rk w as sa tisfa ctory. 17. On March 27, 2006, CRM filed suit. On March 30, 2006, the Littleton Residence was posted with a copy of the Summons, and the Statement of Claim for Mechanic's Lien. 18. On March 30, 2006, Joshua Littleton saw the posting. Littleton knew CRM had not be en paid. H oweve r, Littleton relied u pon Pulse 's assuranc es that Pulse would take care of CRM. Before the posting, Littleton paid two draw payments on October 26, 2005 and January 11, 2006 totaling $102,000. From the second payment, Pulse and Littleton agreed that $19,600 would be paid to Littleton for windows and other items supplied b y Littleton. Und er the draw schedule, th e founda tion work was to be complete by the second draw, and Pulse had the funds to satisfy CRM's claim but did not pay CRM for the masonry work. 19. Relying upon Pulse's assurance, Littleton continued to pay Pulse under the draw sch edule from the WT C constru ction loan. A fter the postin g, Pulse w as paid $184,038 - $90,000 on April 5, 2006, $58,740 on July 12, 2006 and $35,298 on August 4, 2006. Because of Pulse's failure to adequately perform its contract, Littleton terminated Pulse in November of 2006. Money due under the last draw, $37,000 at the certificate of occupancy, was used by Littleton for work at the residence.

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20. Pulse b reached its c ontract with Littleton and over $32 ,000 is requ ired to satisfactorily complete the residence. 21. Littleton made full payment to Pulse. Conclusions of Law Littleton argu es that CR M shou ld not be ab le to assert a m echanic's lie n becaus e it only had a lab or staffing a greemen t with Pulse . Howe ver, after rev iewing the applicable mech anics' lie ns statut es, the p urpose s behin d the sta tutes, an d the ap plicable case law , I conclude that CRM is able to seek a mechanics' lien. The statute establishing who is entitled to obtain liens is 25 Del. C .

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