Earlier this year we wrote about Suppliers to Suppliers and how they are rarely qualified to file a mechanics lien. This week, an unpublished decision from the Indiana Court of Appeals demonstrated just how difficult it is for these parties to get lien protection.
In Indiana, there are two statutes available to construction participants, their traditional mechanics lien statute and another “Personal Liability Statute.” Without getting into details, the personal liability statute renders a property owner liable to claimants when they go unpaid for construction services or materials, in contrast to the lien statute which actually encumbers the owner’s property interest.
In this Indiana case, R.T. Moore Co. v. Slant/Fin Corp, a supplier to a supplier filed a Notice of Personal Liability claim pursuant to I.C. § 32-28-3-9. The supplier to supplier argued that although it wasn’t qualified to file a traditional mechanics lien, it was qualified to claim privileges under the personal liability statute. Not so, said the Indiana appeals court.
Although the decision is unpublished and not officially legal precedent in the state, the court connected the Personal Liability Statute with the Mechanics Lien Statute, saying a supplier to supplier is not protected under either. Too bad for those suppliers to suppliers
Hat tip to the National Law Review (@natlawreview) for reporting on the case.