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I recently discussed the preliminary notice requirements as set forth in Indiana lien law. In that post, I mentioned that all parties not in direct contractual relation with the property owner and who provided labor or materials to a single or double family residential project must provide preliminary notice, and, that there had been significant confusion within the Indiana court system over these requirements. As a brief refresher, the parties listed above must provide preliminary notice when the project is the remodel or new construction of a single or double family residence. The parties who must receive notice and the time in which notice must be given depend on whether the project is a remodel or new construction. These requirements are set forth specifically, if a bit confusingly, in Ind. Code Ann. § 32-28-3-1(h) and (i).
Feitler v. Springfield Enterprises, Inc.’s Preliminary Notice Requirement – 2012 Version
In this case, Feitler v. Springfield Enterprises, Inc., 978 N.E.2d 1160 (Ind. Ct. App. 2012), the court examined a fairly complex mechanics lien case with multiple parties. For the purposes of our discussion, however, the pertinent facts are as follows. The Feitlers contested a mechanics lien filed against the property by JM Woodworking (“JM”). JM originally worked on the project as a subcontractor, but when the general contractor pulled out, subsequently entered into an agreement with the property owner to continue working. After non-payment, JM filed a mechanics lien against the property as a general contractor. The Feitlers contended that JM’s failure to file a pre-lien notice pursuant to Indiana Code section 32-28-3-1(i) prevented JM from holding a mechanics lien no matter whether they were classified as a subcontractor or a general contractor.
As stated by the court, Indiana Code section 32-28-3-1(i) provides that:
A person, firm, partnership, limited liability company, or corporation that sells or furnishes on credit material, labor, or machinery for the original construction of a single or double family dwelling for the intended occupancy of the owner upon whose real estate the construction takes place to a contractor, subcontractor, mechanic, or anyone other than the owner or the owner’s legal representatives must:
1) furnish the owner of the real estate…with a written notice of the delivery or labor and the existence of lien rights not later than sixty (60) days after the date of the first delivery or labor performed; and
2) file a copy of the written notice in the recorder’s office of the county not later than sixty (60) days after the date of the first delivery or labor performed.
The statute further states that ” The furnishing and filing of the notice is a condition precedent to the right of acquiring a lien upon the real estate or upon the improvement constructed on the real estate.”
Unfortunately for the court, it is at this point that it all went wrong. While examining the above statutory provision, the court noted that JM had argued that Indiana mechanics lien law treat subcontractors and general contractors differently, and the court acknowledged that this is true. However, in the next sentence of the opinion, the court veers drastically off course. The court stated that:
…subsection (i), at least, makes no distinction between contractors and subcontractors, and its plain language makes the filing of a pre-lien notice a condition precedent to the right to hold a lien with no provision for exceptions to this rule. JM points to no authority suggesting that we can simply ignore the plain language of subsection (i), and our research has discovered none.
This so very, very wrong. Not only does subsection (i) indeed draw a distinction between subcontractors and general contractors in the plain language of the statute that the court apparently misread, but that very “plain language” is the very authority that the court’s ‘research’ could not find. The language of the statute itself provides that general contractors – are excepted from the preliminary notice requirement. Let’s take another look at the statute to see where that occurs. Not only does subsection (i) indeed draw a distinction between subcontractors and general contractors in the plain language of the statute that the court apparently misread, but that very “plain language” is the very authority that the court’s ‘research’ could not find.
The subsection at issue states that during the new construction of a single or double family dwelling to be occupied the owner of the property, “A person, firm, partnership, limited liability company, or corporation that sells or furnishes” labor and/or materials on credit…to a contractor, subcontractor, mechanic, or anyone other than the owner or the owner’s legal representatives” must serve and file a preliminary notice.
While the syntax and construction of the subsection is inelegant, it clearly states that general contractors, (parties who furnish labor and/or materials directly to the property owner or owner’s agent), do not need to serve and file the otherwise required preliminary notice. The court clearly and obviously misread this statute, and applied the wrong conclusion to the case. Because the court discovered no authority to “ignore the plain language of subsection (i)”, it was concluded that “the trial court erred in determining that JM” was entitled to a lien on the Property.
Feitler v. Springfield Enterprises, Inc.’s Preliminary Notice Requirement – 2013 Version
Aa pre-lien notice is required only if work is provided to someone other than the owner or the owner’s legal representatives. The Indiana Court of Appeals did, however, notice the mistake (I’m looking at you Kentucky). In a rehearing of the case published as Feitler v. Springfield Enters., Inc., 981 N.E.2d 155 (Ind. Ct. App. 2013) the court corrected its error in a fairly terse one-paragraph opinion in which the court states that “a pre-lien notice is required only if work is provided to someone “other than the owner or the owner’s legal representatives[.]” The court went on to conclude that since JM contracted directly with the owners of the property, JM was not required to give preliminary notice in order to hold a valid mechanics lien on the property.
It took a bit, but in the end the correct result was reached.