LeChase Construction contracted with the State University of New York at Binghamton to build a campus dormitory. LeChase, as the general contractor for the project, hired Maxim Construction Service Corporation (Maxim) to be the site contractor responsible for coordinating various subcontractors. Maxim entered into a subcontract with DeMarco & Sons Nursery (DeMarco) to provide certain landscaping services for the project. Although Maxim paid DeMarco a total of $192,126.40 for its work on the project, DeMarco claimed that it was owed an additional $106,994.27 for labor and materials provided in connection with the landscaping project. DeMarco filed a construction lien in this amount in May 2012. In response, LeChase withheld $160,491.41—a sum representing one and a half times the value of DeMarco’s lien, from Maxim’s payment.

CASE QUESTIONS

1. Is this a case of a fraudulent lien? Explain.

2. What options did LeChase have once DeMarco filed the lien?