Reversal erases partial judgment for U.S. Steel in mechanic’s lien dispute

A trial court erred in partially ruling for U.S. Steel in a dispute among material suppliers and contractors who built a now-defunct Gary industrial facility, the Indiana Court of Appeals held Monday.

The appeals court reversed and remanded the Lake Superior Court’s ruling in Service Steel Warehouse Co., L.P. v. United States Steel Corp., 20A-CC-1643.

U.S. Steel in 2008 contracted with Carbonyx to build two carbon alloy synthesis facilities in Gary, which were intended to produce a cheaper alternative to coke, the high-carbon fuel used in steelmaking. Troll Supply fabricated the structure from steel supplied by Service Steel.

After a portion of the facility was completed and went online in 2012, U.S. Steel closed it for economic reasons in 2014. Litigation ensued.

“At some point, a dispute between U.S. Steel and Carbonyx resulted in U.S. Steel agreeing to pay Troll Supply up to $1,780,249 for its fabrication work,” Judge Leanna Weissman wrote. “At least 65% of this sum was paid in exchange for Troll Supply’s release of any and all claims against U.S. Steel and its real estate. But Troll Supply allegedly did not pay Service Steel for $563,084 of the steel pieces it supplied for fabrication. Therefore, within ninety days of the last date Service Steel supplied Troll Supply with steel, Service Steel recorded a mechanic’s lien against U.S. Steel’s Project site.”

The key issue in the instant case between Service Steel and U.S. Steel is whether the supplier-to-supplier prohibition bars Service Steel from obtaining a mechanic’s lien against U.S. Steel. The COA determined the trial court wrongly granted U.S. Steel summary judgment.

“Here, the designated evidence establishes that Troll Supply performed a definite and substantial portion of the prime contract between U.S. Steel and Carbonyx. Based on Carbonyx’s unique plans and specifications, Troll Supply fabricated the majority of the steel components needed for the Project. … We therefore find that Troll Supply was a subcontractor, not a material supplier, under Indiana’s mechanic’s lien statute,” Weissmann wrote for the panel.

“Accordingly, we hold that Service Steel’s mechanic’s lien is not barred by the supplier-to-supplier prohibition and the trial court erred in entering summary judgment in favor of U.S. Steel on Service Steel’s mechanic’s lien foreclosure claim. We make no decision regarding any other issue referenced in the parties’ briefs, including the timeliness with which Service Steel recorded its mechanic’s lien, the value of that lien, or whether Service Steel may be entitled to attorney’s fees or prejudgment interest.”

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