{"id":5702,"date":"2026-10-23T12:51:28","date_gmt":"2026-10-23T12:51:28","guid":{"rendered":"https:\/\/www.fwhtlaw.com\/blog\/?p=5702"},"modified":"2026-10-23T12:51:31","modified_gmt":"2026-10-23T12:51:31","slug":"important-updates-to-minnesota-mechanics-lien-law","status":"publish","type":"post","link":"https:\/\/www.fwhtlaw.com\/blog\/2026\/10\/23\/important-updates-to-minnesota-mechanics-lien-law\/","title":{"rendered":"Important Updates to Minnesota Mechanic\u2019s Lien Law"},"content":{"rendered":"<h6 class=\"FWHTAuthor\">By Colin M. Bruns<\/h6>\n<h6><span class=\"fontstyle0\"> Colin is a shareholder of the firm\u2019s Construction Law Department. He can be reached at 612.359.7665 and <a href=\"mailto:Cbruns@fwhtlaw.com\">Cbruns@fwhtlaw.com<\/a>.<\/span><\/h6>\n<p style=\"text-indent: 40px; text-align: justify;\">In the last several months, Minnesota courts have issued two important decisions that may impact contractors\u2019 ability to recover their attorneys\u2019 fees in a lien foreclosure action under the Minnesota mechanic\u2019s lien statute.<a href=\"#_ftn1\" name=\"_ftnref1\"><sup>[1]<\/sup><\/a><\/p>\n<p style=\"text-indent: 40px; text-align: justify;\">First, in <em>Advanced Eng&#8217;g &amp; Env&#8217;t Servs., LLC v. Gaughan Companies,<\/em><a href=\"#_ftn2\" name=\"_ftnref2\"><sup>[2]<\/sup><\/a> the Minnesota Court of Appeals found that where a contractor requested, but did not recover, attorneys\u2019 fees in arbitration, the contractor was not entitled to recover attorneys\u2019 fees under the mechanic\u2019s lien statute in district court.<\/p>\n<p style=\"text-indent: 40px; text-align: justify;\">Second, in <em>Sustainable 9, LLC v. Coleman<\/em>,<a href=\"#_ftn3\" name=\"_ftnref3\"><sup>[3]<\/sup><\/a> the Minnesota Supreme Court held that when the amount of damages caused by a contractor\u2019s negligent construction exceeds the amount of that contractor\u2019s mechanic\u2019s lien, the owner\u2019s defense of recoupment eliminates the lien and the contractor is not entitled to recover attorneys\u2019 fees under the mechanic\u2019s lien statute.<\/p>\n<p style=\"text-indent: 40px; text-align: justify;\">Contractors performing work in Minnesota should be aware of these two recent decisions, which are discussed in further detail below.\u00a0<\/p>\n<p><strong><u>Advanced Eng\u2019g &amp; Env\u2019t Servs., LLC v. Gaughan Companies<\/u><\/strong><\/p>\n<p style=\"text-indent: 40px; text-align: justify;\">In <em>Advanced Eng&#8217;g &amp; Env&#8217;t Servs., LLC v. Gaughan Companies<\/em>, the lien claimant, Greystone Construction Company (\u201cGreystone\u201d) filed a mechanic\u2019s lien on an apartment building in Shakopee, Minnesota on which it performed work. An engineering company that also worked on the project commenced a lien foreclosure action naming the owner, Shakopee Apartments LLC (\u201cShakopee\u201d) and Greystone as parties. Greystone filed a cross-claim against Shakopee to foreclose on its mechanic\u2019s lien. The district court stayed the action while the parties proceeded to arbitration pursuant to the arbitration clause in their contract.<\/p>\n<p style=\"text-indent: 40px; text-align: justify;\">In its arbitration demand, Greystone sought approximately $1.4M for alleged nonpayment and specifically sought an award of attorneys\u2019 fees. The arbitrator awarded Greystone $562,269, which included pre-award interest but did not include any amounts for attorneys\u2019 fees. The arbitrator\u2019s final award provided: \u201cThis Award is in full consideration of all claims, counterclaims and third-party claims and motions presented. All other claims, counterclaims, third-party claims, motions and requests for relief by any Party are denied in their entirety.\u201d<\/p>\n<p style=\"text-indent: 40px; text-align: justify;\">Greystone subsequently moved the district court to lift the stay, confirm the arbitration award, and schedule a hearing for a motion to recover costs, disbursements, and attorneys\u2019 fees under the Minnesota mechanic\u2019s lien statute. The district court confirmed the award and concluded that the arbitrator\u2019s award did not preclude Greystone from seeking costs and attorneys\u2019 fees under the mechanic\u2019s lien statute in district court. Shakopee appealed the district court\u2019s decision. It argued, among other things, that the district court erroneously permitted Greystone to move for attorneys\u2019 fees.<\/p>\n<p style=\"text-indent: 40px; text-align: justify;\">The Court of Appeals reversed the district court and concluded that the final arbitration award precluded Greystone from seeking attorneys\u2019 fees in the district court because Greystone asserted the claim to the arbitrator and the arbitrator expressly denied all claims excluded from the award, which included Greystone\u2019s claim for fees. In doing so, the Court of Appeals distinguished its prior decision in <em>Stiglich Const., Inc. v. Larson<\/em>,<a href=\"#_ftn4\" name=\"_ftnref4\"><sup>[4]<\/sup><\/a> in which the court found that a contractor was not precluded from seeking attorneys\u2019 fees in district court under the mechanic\u2019s lien statute when the contract in that case reserved the parties\u2019 right to pursue purely statutory claims in district court and the contractor did not raise the issue of attorneys\u2019 fees in the arbitration.\u00a0<\/p>\n<p style=\"text-indent: 40px; text-align: justify;\">This case is a good reminder for contractors to carefully review and understand what their contract requires for dispute resolution. When a contract requires disputes to be resolved through arbitration, in order to perfect their mechanic\u2019s lien, contractors must commence a separate lien foreclosure lawsuit in district court, which often will be stayed pending the outcome of the arbitration. Contractors in this situation should carefully review their contracts to determine whether the arbitration proceeding or the district court action is the appropriate venue to assert a claim for attorneys\u2019 fees.<\/p>\n<p><strong><u>Sustainable 9, LLC v. Coleman <\/u><\/strong><\/p>\n<p style=\"text-indent: 40px; text-align: justify;\">In <em>Sustainable 9, LLC v. Coleman<\/em>, the lien claimant filed a mechanic\u2019s lien on a new home it built in Media, Minnesota. It subsequently commenced a lawsuit against the homeowner for breach of contract and to foreclose on its mechanic\u2019s lien. The homeowner asserted a counterclaim for breach of contract and negligence. At trial, the jury found that the homeowner breached the contract and awarded the contractor $94,951 in damages. The jury also found that the contractor was negligent in its work and awarded the homeowner $278,622 in damages on the negligence claim.<\/p>\n<p style=\"text-indent: 40px; text-align: justify;\">Following the jury trial, the district court held a hearing on the contractor\u2019s claim to foreclose on its mechanic\u2019s lien. The homeowner argued that, under the doctrine of recoupment, the lien was extinguished because the value of the lien was less than the amount the jury awarded to the homeowner on her negligence claim. The district court rejected the homeowner\u2019s recoupment theory and found that the contractor had a valid lien in the amount of $94,951 based on the amount the jury awarded to the contractor on its breach of contract claim; however, the court determined that the contractor could not collect on the lien because the amount of the lien was offset by the amount the contractor owed to the homeowner on the negligence claim. Nevertheless, the district court held that the contractor was entitled to recover its attorneys\u2019 fees under the mechanic\u2019s lien statute because it established a valid lien. The court determined that the homeowner\u2019s negligence claim reduced the amount of the lien, but it did not void the lien in its entirety and, thus, it did not void the contractor\u2019s claim for attorneys\u2019 fees. After offsetting the amounts due, the court determined that the contractor owed the homeowner $121,170. The homeowner appealed the district court\u2019s decision and the Court of Appeals affirmed. The homeowner then petitioned the Minnesota Supreme Court for review.<\/p>\n<p style=\"text-indent: 40px; text-align: justify;\">The Minnesota Supreme Court undertook a thorough analysis of the doctrine of recoupment and determined that the defense applied to the contractor\u2019s mechanic\u2019s lien claim because the contractor\u2019s lien claim and the homeowner\u2019s negligence claim arose from the same transaction \u2013 i.e., the construction of the home. The Court concluded that the homeowner was entitled to assert the affirmative defense of recoupment and reduce the amount of the mechanic\u2019s lien by the amount of damage caused by the contractor\u2019s negligence. Because the damages caused by the contractor\u2019s negligence exceeded the amount of the lien, under the doctrine of recoupment, the contractor\u2019s mechanic\u2019s lien was eliminated in its entirety. And because there was no valid mechanic\u2019s lien, the contractor was not entitled to recover its attorneys\u2019 fees to enforce such a lien.\u00a0\u00a0<\/p>\n<p>This case illustrates some of the risks involved in a mechanic\u2019s lien foreclosure action where both the owner and contractor assert competing claims against each other. Under the doctrine of recoupment, if a court determines that the amount of the owner\u2019s claim exceeds the amount of the lien, the lien may be declared invalid and preclude the recovery of attorneys\u2019 fees under the lien statute. Given that the ability to recover attorneys\u2019 fees is often an important factor in litigating and resolving lien claims, contractors should be aware of this risk in light of the Minnesota Supreme Court\u2019s recent decision.<\/p>\n<p><strong><u>Conclusion <\/u><\/strong><\/p>\n<p style=\"text-indent: 40px; text-align: justify;\">In the two recent cases discussed above, Minnesota courts denied the contractors\u2019 claims to recover attorneys\u2019 fees under the Minnesota mechanic\u2019s lien statute. Contractors performing work in Minnesota should be aware of these cases to help understand the circumstances in which they may, or may not, be able to recover their attorneys\u2019 fees in a lien foreclosure action.<\/p>\n<p style=\"font-size: 12px;\"><a href=\"#_ftnref1\" name=\"_ftn1\">[1]<\/a> Minn. Stat. \u00a7 514.01 et seq.<\/p>\n<p style=\"font-size: 12px;\"><a href=\"#_ftnref2\" name=\"_ftn2\">[2]<\/a> No. A25-1734, 2026 WL 1469616, at *1 (Minn. Ct. App. May 26, 2026).<\/p>\n<p style=\"font-size: 12px;\"><a href=\"#_ftnref3\" name=\"_ftn3\">[3]<\/a> 38 N.W.3d 482 (Minn. 2026).\u00a0<\/p>\n<p style=\"font-size: 12px;\"><a href=\"#_ftnref4\" name=\"_ftn4\">[4]<\/a> 621 N.W.2d 801 (Minn. Ct. App. 2001).<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: center;\"><strong><u>Announcements<\/u><\/strong><\/p>\n<p>Congratulations to <strong>Fabyanske, Westra, Hart &amp; Thomson, P.A.<\/strong> attorney<strong> <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/hugh-d-brown\">Hugh Brown<\/a><\/strong> for being inducted into the CLSA. The ceremony will be at the CLSA International Conference and the Induction of Fellows will be held on Thursday, October 22nd at the Four Seasons Jackson Hole. For more information, click <strong><a href=\"https:\/\/www.fwhtlaw.com\/blog\/2026\/10\/21\/hugh-brown-inducted-into-the-the-construction-lawyers-society-of-america\/\">here.<\/a><\/strong><\/p>\n<p><strong>Fabyanske, Westra, Hart and Thomson, P.A.<\/strong> has been named among <strong><a href=\"https:\/\/minnlawyer.com\/2026\/09\/28\/legacy-law-firms-fabyanske-westra-hart-thomson-p-a\/\"><em>Minnesota Lawyer\u2019s<\/em> \u201cIn the Lead: Best Legacy Law Firms\u201d<\/a><\/strong><\/p>\n<p>For over four decades, <strong>Fabyanske, Westra, Hart &amp; Thomson, P.A.<\/strong> has specialized in construction law, maintaining the most extensive practice of its type in the Upper Midwest. Its staff of 21 attorneys dedicate their expertise primarily to the construction sector, serving a diverse array of public and private clients ranging from contractors and suppliers to property owners and design professionals.<\/p>\n<p><strong>Fabyanske, Westra, Hart &amp; Thomson, P.A. <\/strong>is pleased to announce the following thirteen attorneys have been selected as Best Lawyers by their peers in the recent <strong>Best Lawyers\u00a9 <\/strong>publication, one of the oldest and most respected peer-review publications in the legal profession:<strong> <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/scott-lloyd-anderson\">Scott Anderson<\/a>, <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/mark-r-becker\">Mark Becker<\/a>, <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/hugh-d-brown\">Hugh Brown<\/a>, <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/matthew-t-collins\">Matt Collins<\/a>, <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/julia-j-douglass\">Julia Douglass<\/a>, <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/rory-o-duggan\">Rory Duggan<\/a>, <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/gary-c-eidson\">Gary Eidson<\/a>, <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/kyle-e-hart\">Kyle Hart<\/a>, <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/jeffrey-w-jones\">Jeffrey Jones<\/a>, <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/jesse-r-orman\">Jesse Orman<\/a>, <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/robert-l-smith\">Robert Smith<\/a>, <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/dean-b-thomson\">Dean Thomson<\/a>, and <a href=\"https:\/\/www.fwhtlaw.com\/attorneys\/katie-welsch\">Katie Welsch<\/a><\/strong>. Also, congratulations to<strong> Rob Smith <\/strong>for being named <strong>\u201cLawyer of the Year\u201d <\/strong>by <strong>Best Lawyers\u00ae <\/strong>for Litigation \u2013 Construction, Minneapolis (2027) and to<strong> Katie Welsch <\/strong>for being named <strong>\u201cLawyer of the Year\u201d <\/strong>by<strong> Best Lawyers\u00ae <\/strong>for Banking and Finance Law, Minneapolis (2027)<\/p>\n<hr \/>\n<p><a href=\"#_ftnref1\" name=\"_ftn1\"><\/a><\/p>\n<h6><em>This discussion is generalized in nature and should not be considered a substitute for professional advice. \u00a9 2026 FWH&amp;T.<\/em><\/h6>\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Colin M. Bruns Colin is a shareholder of the firm\u2019s Construction Law Department. He can be reached at 612.359.7665 and Cbruns@fwhtlaw.com. In the last several months, Minnesota courts have issued two important\u2026<\/p>\n","protected":false},"author":8,"featured_media":5015,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7,24],"tags":[],"class_list":["post-5702","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-briefing-papers","category-colin-m-bruns"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Important Updates to Minnesota Mechanic\u2019s Lien Law - Fabyanske, Westra, Hart &amp; Thomson<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.fwhtlaw.com\/blog\/2026\/10\/23\/important-updates-to-minnesota-mechanics-lien-law\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Important Updates to Minnesota Mechanic\u2019s Lien Law - Fabyanske, Westra, Hart &amp; Thomson\" \/>\n<meta property=\"og:description\" content=\"By Colin M. 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Bruns Colin is a shareholder of the firm\u2019s Construction Law Department. He can be reached at 612.359.7665 and Cbruns@fwhtlaw.com. 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