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Judgment reserving funds for mechanic’s lien reversed

June 26, 2015

A trial court judgment that a mortgage company reserve money to satisfy a mechanic’s lien was reversed by the Indiana Court of Appeals on Friday.

Rieth-Riley Construction Co. repaved a parking lot at the Woodmar Shopping Center in Hammond but didn’t get paid the $251,800 it was owed, plus interest and attorney fees. Rieth-Riley sought to foreclose a mechanic’s lien, but Wells Fargo has a senior lien on the property and also filed a foreclosure on the property.

Lake Superior Judge John R. Pera granted summary judgment in favor of Wells Fargo, in which he ruled the bank was owed more than $5.2 million by Woodmar. But he later ordered Wells Fargo to deposit the first $337,000 of any bid it may make to purchase the lot at the center of the dispute.

This was error, Judge John Baker wrote for the appeals panel in Wells Fargo Bank, N.A. v. Rieth-Riley Construction Co., Inc.; Woodmar Hammond, LLC; The Bon-Ton Department Stores, Inc.; Build Tech, Inc.; Ziese & Sons Excavating, Inc.; et al., 45A03-1410-PL-381.

 “Wells Fargo is entitled to use the full amount of its judgment as a credit towards any bid for the purchase of Lot 1, and the judgment of the trial court requiring Wells Fargo to deposit a certain amount of that bid in cash is reversed,” Baker said. “On remand, the trial court is to determine whether removal of the parking lot is practical and, if so, allow Rieth-Riley to exercise that option in accordance with Indiana Code section 32-28-3-2. Otherwise, Rieth-Riley’s mechanic’s lien is junior to Wells Fargo’s mortgage lien and Rieth-Riley is entitled to proceeds from the sale of Lot 1 only after Wells Fargo’s mortgage has been satisfied.”  
 

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