In a decision issued March 10, 2022, the Indiana Supreme Court expanded the availability of a mechanic’s lien for material suppliers. To do so, the Court applied the plain language of the statute and returned to the roots of mechanic’s lien law in Indiana.
For the last 125 years, a mechanic’s lien was only available to someone who worked on a job site or provided materials to someone who performed work on the worksite. Therefore, if materials were provided to someone who did not perform work on the construction site, then a lien was not available. That has changed.
In Service Steel Warehouse Co., LP v. United States Steel Corp, Service Steel Warehouse Co. provided steel to Troll Supply who in turn fabricated the steel offsite, performing “significant labor – cutting, welding, drilling, painting, and connecting thousands of pieces of steel to the exact specifications necessary for the project.” Serv. Steel Warehouse Co., L.P., v. United States Steel Corp., No. 21S-CC-408, 2022 WL 713361, at *1 (Ind. Mar. 10, 2022). Troll Supply performed all the fabrication off-site, and then provided the fabricated steel to the general contractor, Carbonyx, who then delivered the fabricated steel to the building site where Carbonyx incorporated it into the two facilities it was constructing for Unites States Steel. Id.
Troll Supply did not pay Service Steel for all the steel provided. Id.
The parties disagreed over whether Service Steel was eligible for a lien because Troll Supply (who incorporated Service Steel’s product into its own work) did not perform its work on the building site. Service Steel argued that because it provided a “definite and substantial” portion of the work, the owner was on notice of its participation in the project and Service Steel was entitled to a lien under the statute as it had been interpreted for the last 125 years.
The Indiana Supreme Court acknowledged that going back to 1871, a lien was available to anyone performing labor or providing materials for the construction of a building. To whom the supplier provided a brick didn’t matter, as long as the brick became part of the building. Id. at 3.
But beginning in 1897, and continuing until this recent opinion, Indiana courts had limited lien rights to circumstances when a supplier provided materials to a party who performed on-site work. Id.
In the Service Steel decision, the Indiana Supreme Court returned us to the 1871 formulation, holding that “a supplier’s rights do not depend on whom it supplies” and “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.” Id. at 3-4. Although Service Steel did not argue for this change in interpretation of the statute, it won a broader victory than it had sought!
The takeaway – if you supplied materials for the construction of a building, get your lien filed timely and protect your right to get paid.
Steve Runyan is the Managing Partner at KGR. He primarily counsels and represents clients in complex commercial and contractual disputes.