Justices: Steel supplier can have mechanic’s lien over U.S. Steel project site

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Like the Court of Appeals of Indiana did before the case was transferred, the Indiana Supreme Court has reversed summary judgment granted to United States Steel Corp. over a mechanic’s lien dispute regarding a now-defunct industrial project in Gary.

In 2008, U.S. Steel contracted with Carbonyx Inc. to design and build two carbon alloy synthesis facilities in Gary. Carbonyx contracted with Steven Pounds, who did business as Troll Supply, to fabricate approximately 75% of the steel components needed for the project. Troll Supply’s steel was supplied by Service Steel Warehouse Co. L.P.

One of the project’s modules was completed and became operational in late 2012. However, U.S. Steel permanently shut down the facility in 2014 for economic reasons. It then halted construction of the other module, which was never completed.

Troll Supply did not pay all its bills and ultimately owed Service Steel $452,825.03. Service Steel recorded a mechanic’s lien against the project site and sued U.S. Steel to foreclose on it.

Both Service Steel and U.S. Steel moved for summary judgment in Lake Superior Court.

U.S. Steel argued that because Troll Supply did not perform on-site work, it was a material supplier of fabricated steel, not a subcontractor, which meant Service Steel, also a material supplier, could not have a lien. The trial court granted summary judgment for U.S. Steel on the mechanic’s lien claim.

The Court of Appeals of Indiana reversed the trial court’s order in May 2021, determining the mechanic’s lien statute does not require subcontractors to perform on-site work. It then defined a “subcontractor” under the statute “as one who performs a definite, substantial portion of the prime contract.”

Under that test, “Troll Supply was a subcontractor, not a material supplier,” so the prohibition against supplier-to-supplier-based liens did not bar Service Steel’s lien, the COA ruled.

On transfer to the Indiana Supreme Court, justices reversed the trial court’s ruling on Thursday.

“Under Indiana’s mechanic’s lien statute, a supplier that furnished materials for the erection of a building, regardless of the recipient, can have a lien on that building and the accompanying land,” Justice Mark Massa wrote for the court. “Of course, the supplier must have furnished the materials ‘for the particular building upon which’ it bases its lien. Talbott v. Goddard, 55 Ind. 496, 502 (1876); I.C. § 32-28-3-1(b).

“Here, the evidence — including Service Steel’s invoices — establishes that Service Steel furnished steel for the erection of U.S. Steel’s facilities. Accordingly, it can have a lien on the project site,” Massa concluded.

The Supreme Court in Service Steel Warehouse Co., L.P. v. United States Steel Corp., 21S-CC-408, remanded to the trial court to reconsider Service Steel’s summary judgment motion.

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