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COA finds mechanic's lien statute requires only substantial compliance

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The Michigan City attorney representing a homeowner in a dispute over a mechanic’s lien has filed a petition for rehearing, arguing the Indiana Court of Appeals’ interpretation that “close enough is good enough” does not apply when two separate companies with similar names file lien notices on the same property.

John Lake, attorney for Margaret Lynn West, wants the Court of Appeals to take another look at Von Tobel Corporation, Individually and d/b/a/ Von Tobel Lumber & Hardware; and Von Tobel Lumber & Home Center, Inc. v. Chi-Tec Construction & Remodeling, Inc., John F. Ziola, Jr., and Margaret Lynn West, as Trustee for the Margaret Lynn West Trust, 46A03-1301-MI-18.

lake-michigan-house-front-15col.jpg The owner of this home built on Lake Michigan, Margaret Lynn West, is battling a mechanic’s lien filed by a construction supplier, arguing the lien is invalid. (Submitted photo)

The particular issues raised in this case, Lake said, have never before been presented. Similar cases have been heard, but not one where a corporation that filed for the mechanic’s lien was different from the corporation that filed for the pre-lien.

However, construction law attorneys say the court reached the proper conclusion.

“Our courts have a long history of not construing the state’s mechanic’s lien statute in a hyper-technical manner,” said Brian Falcon, attorney at Frost Brown Todd LLC in Indianapolis. “As long as the homeowner is not unfairly prejudiced by an error, the court is not going to take form over substance.”

lake Lake

West had contracted with Chi-Tec Construction to build a house on property owned by the Margaret Lynn West Trust and fronting Lake Michigan. The contractor then turned to Von Tobel Corp. for building supplies and materials to be used in the construction of the house.

On Jan. 17, 2007, Von Tobel Lumber & Home Center issued a pre-lien notice that was sent to West, according to a brief filed with the Court of Appeals by Von Tobel Corp.’s attorney. She then issued payments directly to Chi-Tec to satisfy the bills for the supplies.

When Von Tobel Corp. did not receive the funds for the materials and supplies delivered to the West property, Von Tobel Corp. filed the mechanic’s lien against the property.

Lake contended Von Tobel Home Center is a distinct and separate entity from Von Tobel Corp. The mechanic’s lien is therefore invalid, he argued, because Von Tobel Corp. did not file for the pre-lien notice so it could not acquire the mechanic’s lien.

“Von Tobel seeks to have its corporate form disregarded to overcome its failure to strictly comply with the requirement to provide pre-lien notice,” Lake wrote in his appellate brief. “The Court should deny Von Tobel’s request. If the Court does not allow Von Tobel to disregard the corporate form, then Home Center’s pre-lien notice cannot satisfy the condition precedent to the right of acquiring a lien for Von Tobel, as Von Tobel and Home Center remain separate and distinct entities.”

Tim Krsak, attorney at Douglas Koeppen & Hurley in Valparaiso, said his client, Von Tobel Corp., includes the Lumber & Home Center and is a single entity. Therefore, Von Tobel substantially complied with the statute governing mechanic’s liens.

The pre-lien provision in statute does not specifically delineate that the claimant be named, Krsak said. When the mechanic’s lien is filed, the claimant has to be identified as required by state law and as was done in this instance.

leone Leone

Von Tobel Lumber & Home Center’s pre-lien notice fulfilled the purpose of the law by giving notice to the property owner, Krsak said. The idea behind the statute is to inform the owner that the contractor is using a subcontractor who could file a lien if full payment is not made.

Joe Leone, partner at Drewry Simmons Vornehm LLP, made that same point. The purpose of the pre-lien notice is to let the homeowner know subcontractors and suppliers hired by the contractor could file liens if they are not paid. Then the homeowner should take steps to make sure the contractor is paying all the subcontractors and suppliers.

Drewry Simmons Vornehm and Frost Brown Todd are not representing any party in the Von Tobel case.

In this instance, Leone said, the homeowner knew “somebody named Von Tobel” had to be compensated for building supplies and materials.

The LaPorte Superior Court issued a summary judgment for West. The court agreed with Lake that Von Tobel Corp. was a separate company and had failed to file a pre-lien notice.

The Court of Appeals reversed and remanded with instructions to enter summary judgment in favor of Von Tobel Corp. Citing Beneficial Financial Co. v. Wegmiller Bender Lumber Co., Inc., 402 N.E.2d 41, 45 (Ind. Ct. App. 1980), the court stated it had previously rejected the idea that the mechanic’s lien statute must be “strictly construed with such hypertechnicality so as to frustrate the remedial purpose of the legislation.”

In finding the non-compliance with the statute was minimal in this case, the Court of Appeals noted the Margaret Lynn West Trust did not contend it was misled or confused by the differing names on the pre-lien and mechanic’s lien notices.

Very broadly, Leone said, the central issue in this case is how the statute should be interpreted. Here, the COA said the proper standard is substantial compliance, not strict compliance.

If the trial court’s ruling had been affirmed, compliance would have been difficult, Leone said. Then the name on the pre-lien would have to exactly match the name on the mechanic’s lien for the claimant to get the rights.

Lake said he did not expect a reversal and now believes the factual issues involved in the dispute created some confusion for the Court of Appeals. Since Von Tobel Corp. and Home Center are separate entities, Home Center could not transfer its pre-lien notice to Von Tobel Corp. because it had not been perfected by Home Center.

If the petition for rehearing is denied, Lake said he will file for transfer to the Indiana Supreme Court.

For West, “it’s a nightmare,” Lake said. She will likely lose her house if the rehearing and transfer are denied. “The client didn’t do anything wrong. It was the contractor.”•

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  1. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

  2. Hi there I really need help with getting my old divorce case back into court - I am still paying support on a 24 year old who has not been in school since age 16 - now living independent. My visitation with my 14 year old has never been modified; however, when convenient for her I can have him... I am paying past balance from over due support, yet earn several thousand dollars less. I would contact my original attorney but he basically molest me multiple times in Indy when I would visit.. Todd Woodmansee - I had just came out and had know idea what to do... I have heard he no longer practices. Please help1

  3. Yes diversity is so very important. With justice Rucker off ... the court is too white. Still too male. No Hispanic justice. No LGBT justice. And there are other checkboxes missing as well. This will not do. I say hold the seat until a physically handicapped Black Lesbian of Hispanic heritage and eastern religious creed with bipolar issues can be located. Perhaps an international search, with a preference for third world candidates, is indicated. A non English speaker would surely increase our diversity quotient!!!

  4. First, I want to thank Justice Rucker for his many years of public service, not just at the appellate court level for over 25 years, but also when he served the people of Lake County as a Deputy Prosecutor, City Attorney for Gary, IN, and in private practice in a smaller, highly diverse community with a history of serious economic challenges, ethnic tensions, and recently publicized but apparently long-standing environmental health risks to some of its poorest residents. Congratulations for having the dedication & courage to practice law in areas many in our state might have considered too dangerous or too poor at different points in time. It was also courageous to step into a prominent and highly visible position of public service & respect in the early 1990's, remaining in a position that left you open to state-wide public scrutiny (without any glitches) for over 25 years. Yes, Hoosiers of all backgrounds can take pride in your many years of public service. But people of color who watched your ascent to the highest levels of state government no doubt felt even more as you transcended some real & perhaps some perceived social, economic, academic and professional barriers. You were living proof that, with hard work, dedication & a spirit of public service, a person who shared their same skin tone or came from the same county they grew up in could achieve great success. At the same time, perhaps unknowingly, you helped fellow members of the judiciary, court staff, litigants and the public better understand that differences that are only skin-deep neither define nor limit a person's character, abilities or prospects in life. You also helped others appreciate that people of different races & backgrounds can live and work together peacefully & productively for the greater good of all. Those are truths that didn't have to be written down in court opinions. Anyone paying attention could see that truth lived out every day you devoted to public service. I believe you have been a "trailblazer" in Indiana's legal community and its judiciary. I also embrace your belief that society's needs can be better served when people in positions of governmental power reflect the many complexions of the population that they serve. Whether through greater understanding across the existing racial spectrum or through the removal of some real and some perceived color-based, hope-crushing barriers to life opportunities & success, movement toward a more reflective representation of the population being governed will lead to greater and uninterrupted respect for laws designed to protect all peoples' rights to life, liberty & the pursuit of happiness. Thanks again for a job well-done & for the inevitable positive impact your service has had - and will continue to have - on countless Hoosiers of all backgrounds & colors.

  5. Diversity is important, but with some limitations. For instance, diversity of experience is a great thing that can be very helpful in certain jobs or roles. Diversity of skin color is never important, ever, under any circumstance. To think that skin color changes one single thing about a person is patently racist and offensive. Likewise, diversity of values is useless. Some values are better than others. In the case of a supreme court justice, I actually think diversity is unimportant. The justices are not to impose their own beliefs on rulings, but need to apply the law to the facts in an objective manner.

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