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Alternative dispute resolution clauses requiring mediation as a condition precedent to litigation are common in construction contracts.  While most courts hold that such ADR clauses do not impact a party’s right to file a mechanic’s lien, a recent decision by the U.S. District Court for the District of Maryland found differently.

In Kane Builders S&D, Inc. v. Maryland CVS Pharmacy, LLC, 2013 WL 2948381 (D. Md. June 13, 2013), a subcontractor filed a mechanic’s lien action prior to engaging in alternative dispute resolution.  The general contractor moved to dismiss, or in the alternative, stay the proceedings, pending alternative dispute resolution.  The Court found that the subcontractor’s mechanic’s lien action was one that was subject to the mediation clause in the subcontract.  As such, the Court held that engaging in mediation was a condition precedent to the filing of a mechanic’s lien action.   While the court refused to dismiss the action, it stayed the subcontractor’s action pending the contractually required ADR process.

Parties should always be aware of any ADR requirements in their contract that may impact proceeding with litigation, and in some cases, a party’s ability to pursue a mechanic’s lien claim.