2nd Engrossment - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to liens; modifying mechanics' lien 1.3 penalties; creating a civil cause of action; 1.4 authorizing attorney fees; providing that proceeds are 1.5 exempt from execution; imposing criminal penalties; 1.6 amending Minnesota Statutes 1998, sections 514.02, 1.7 subdivision 1, and by adding a subdivision; and 1.8 550.37, by adding a subdivision. 1.9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.10 Section 1. Minnesota Statutes 1998, section 514.02, 1.11 subdivision 1, is amended to read: 1.12 Subdivision 1. [ACTS CONSTITUTING THEFT.] Proceeds of 1.13 payments received by a person contributing to an improvement to 1.14 real property within the meaning of section 514.01 shall be held 1.15 by that person for the benefit of those persons who furnished 1.16 the labor, skill, material, or machinery contributing to the 1.17 improvement. Proceeds of the payment are not subject to 1.18 garnishment, execution, levy, or attachment. Nothing contained 1.19 in this subdivision shall require money to be placed in a 1.20 separate account and not commingled with other money of the 1.21 person receiving payment or create a fiduciary liability or tort 1.22 liability on the part of any person receiving payment or entitle 1.23 any person to an award of punitive damages among persons 1.24 contributing to an improvement to real property under section 1.25 514.01 for a violation of this subdivision. If a person, on any1.26improvement to real estate within the meaning of section 514.01,1.27 fails to use the proceeds ofanya payment made to that 2.1 personon account of suchfor the improvementby the owner of2.2such real estate or person having any improvement made, for the 2.3 payment for labor, skill, material, and machinery contributed to 2.4suchthe improvement, knowing that the cost ofany suchthe 2.5 labor performed, or skill, material, or machinery furnishedfor2.6such improvementremains unpaid, and who has not furnishedto2.7 the person making such payment either a valid lien waiveras to2.8any unpaid labor performed, or skill, material, or machinery2.9furnished for such improvementunder section 514.07, or a 2.10 payment bond in the basic amount of the contract price forsuch2.11 the improvement, conditioned for the prompt payment to any 2.12 personor personsentitled thereto for the performance of labor 2.13 or the furnishing of skill, material, or machinery for the 2.14 improvement, shall be guilty of theft of the proceeds ofsuch2.15 the payment andupon conviction shall be fined not more than2.16$3,000 or imprisoned not more than one year, or bothis 2.17 punishable under section 609.52. For an improvement to real 2.18 property that requires a pre-lien notice under section 514.011, 2.19 if the person is a corporation: 2.20 (1) any officers, directors, or agents of the corporation 2.21 responsible for the theft shall be guilty of theft of the 2.22 proceeds; and 2.23 (2) proceeds of the payment, received as salary, dividend, 2.24 loan repayment, capital distribution, or otherwise by any 2.25 shareholder not responsible for the theft shall be a civil 2.26 liability of the shareholder and may be recovered and restored 2.27 as provided in subdivision 1a. 2.28 Sec. 2. Minnesota Statutes 1998, section 514.02, is 2.29 amended by adding a subdivision to read: 2.30 Subd. 1a. [CIVIL ACTION.] A person injured by a violation 2.31 of subdivision 1 may bring a civil action against the person who 2.32 committed the theft and recover damages, together with costs and 2.33 disbursements, including costs of investigation and reasonable 2.34 attorney fees, and receive other relief as determined by the 2.35 court, including, without limitation, equitable tracing. 2.36 Sec. 3. Minnesota Statutes 1998, section 550.37, is 3.1 amended by adding a subdivision to read: 3.2 Subd. 25. [PROCEEDS FOR IMPROVEMENTS TO 3.3 PROPERTY.] Proceeds of payments received by a person for labor, 3.4 skill, material, or machinery contributing to an improvement to 3.5 real property within the meaning of section 514.01. 3.6 Sec. 4. [EFFECTIVE DATE.] 3.7 Sections 1 and 2 are effective August 1, 2000, and apply to 3.8 crimes committed on or after that date and civil claims for 3.9 causes of action arising on or after that date.