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Judges reverse ruling mechanic's lien has priority over mortgages

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The Indiana Court of Appeals ruled there was no reason for a trial judge to disregard the state’s priority statutes regarding liens and mortgages and find that a construction company’s mechanic’s lien has priority over previously recorded mortgages.

Eby Construction filed suit to try to collect on a debt for work done on real estate owned by a trust. The loans for the construction came from LaPorte Savings Bank, which were secured by mortgages on the real estate prior to Eby beginning work. Eby and two other contractors had asserted mechanic’s liens, which were consolidated into one action. The trust used proceeds from its third loan with the bank to pay its debt to a third contractor.

The trial court originally entered a decree of foreclosure in favor of LaPorte Savings Bank, but after Eby filed an amended complaint, it granted partial summary judgment to Eby. The trial court concluded that although statute and caselaw clearly provides the bank’s mortgage liens should have priority, public policy dictates that Eby’s lien be given priority in this case. The judge also found the bank came to court with “unclean hands” because the trust had used proceeds from a bank loan to pay a third contractor before paying second contractor Eby.

On interlocutory appeal, the COA concluded this was an error by the judge. Citing Harold McComb & Son v. JP Morgan Chase Bank, 892 N.E.2d 1255 (Ind. Ct. App. 2008), and Indiana Code 32-28-3-5(d), the judges held that LaPorte Savings Bank’s mortgages should have priority over Eby’s mechanic’s lien as the mortgage was recorded first.

The judges also disagreed that the bank came to court with unclean hands. While they don’t condone the decision to pay a subsequent contractor when the trust hadn’t yet paid Eby, that decision isn’t an act of unclean hands on the part of the bank, as it did not and was not under any obligation to control the trust’s decision, wrote Judge Terry Crone in City Savings Bank n/k/a LaPorte Savings Bank v. Eby Construction, LLC, No. 64A03-1012-MF-611.

The trial court attempted to use its equitable powers to achieve what it thought was a more fair and balanced result, but it failed to appreciate the importance of the doctrine “equity follows the law”, the judge continued.

“Because there is nothing in the designated evidentiary material to indicate that substantial justice cannot be accomplished by following the law, and the parties’ actions are clearly governed by our priority statutes, equity must follow the law,” he wrote.

The judges remanded the case for further proceedings consistent with the opinion.

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  1. Looks like 2017 will be another notable year for these cases. I have a Grandson involved in a CHINS case that should never have been. He and the whole family are being held hostage by CPS and the 'current mood' of the CPS caseworker. If the parents disagree with a decision, they are penalized. I, along with other were posting on Jasper County Online News, but all were quickly warned to remove posts. I totally understand that some children need these services, but in this case, it was mistakes, covered by coorcement of father to sign papers, lies and cover-ups. The most astonishing thing was within 2 weeks of this child being placed with CPS, a private adoption agency was asking questions regarding child's family in the area. I believe a photo that was taken by CPS manager at the very onset during the CHINS co-ocerment and the intent was to make money. I have even been warned not to post or speak to anyone regarding this case. Parents have completed all requirements, met foster parents, get visitation 2 days a week, and still the next court date is all the way out till May 1, which gives them(CPS) plenty of to time make further demands (which I expect) No trust of these 'seasoned' case managers, as I have already learned too much about their dirty little tricks. If they discover that I have posted here, I expect they will not be happy and penalized parents again. Still a Hostage.

  2. They say it was a court error, however they fail to mention A.R. was on the run from the law and was hiding. Thus why she didn't receive anything from her public defender. Step mom is filing again for adoption of the two boys she has raised. A.R. is a criminal with a serious heroin addiction. She filed this appeal MORE than 30 days after the final decision was made from prison. Report all the facts not just some.

  3. Hysteria? Really Ben? Tell the young lady reported on in the link below that worrying about the sexualizing of our children is mere hysteria. Such thinking is common in the Royal Order of Jesters and other running sex vacays in Thailand or Brazil ... like Indy's Jared Fogle. Those tempted to call such concerns mere histronics need to think on this: http://www.msn.com/en-us/news/us/a-12-year-old-girl-live-streamed-her-suicide-it-took-two-weeks-for-facebook-to-take-the-video-down/ar-AAlT8ka?li=AA4ZnC&ocid=spartanntp

  4. This is happening so much. Even in 2016.2017. I hope the father sue for civil rights violation. I hope he sue as more are doing and even without a lawyer as pro-se, he got a good one here. God bless him.

  5. I whole-heartedly agree with Doug Church's comment, above. Indiana lawyers were especially fortunate to benefit from Tom Pyrz' leadership and foresight at a time when there has been unprecedented change in the legal profession. Consider how dramatically computer technology and its role in the practice of law have changed over the last 25 years. The impact of the great recession of 2008 dramatically changed the composition and structure of law firms across the country. Economic pressures altered what had long been a routine, robust annual recruitment process for law students and recent law school graduates. That has, in turn, impacted law school enrollment across the country, placing upward pressure on law school tuition. The internet continues to drive significant changes in the provision of legal services in both public and private sectors. The ISBA has worked to make quality legal representation accessible and affordable for all who need it and to raise general public understanding of Indiana laws and procedures. How difficult it would have been to tackle each of these issues without Tom's leadership. Tom has set the tone for positive change at the ISBA to meet the evolving practice needs of lawyers of all backgrounds and ages. He has led the organization with vision, patience, flexibility, commitment, thoughtfulness & even humor. He will, indeed, be a tough act to follow. Thank you, Tom, for all you've done and all the energy you've invested in making the ISBA an excellent, progressive, highly responsive, all-inclusive, respectful & respected professional association during his tenure there.

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