Feitler v. Springfield Enterprises, Inc. (IN)

Summary: If property owners and contractors have an agreement that no mechanic’s liens shall attach to the property in the event of nonpayment, subcontractors will be held to that agreement if they have sufficient notice of its existence.

Feitler v. Springfield Enterprises, Inc., 978 N.E.2d 1160 (Ind. Ct. App. 2012).

Facts: Fred and Mary Anna Feitler (“The Feitlers”) owned land in DeKalb County, IN and in 2009, contracted with Cedar Creek Homes (“CCH”) to build a house on the property for $478,225. Their contract included a clause that stated that no mechanic’s lien would attach to the property for nonpayment. CCH subcontracted with several companies including inter alia Springfield Enterprises (“Springfield”), J. Laurie Commercial Floors (“J. Laurie”) and JM Woodworking Company (“JM”). After construction began in 2010, Springfield provided $27,103.36 worth of materials and services to the project. J. Laurie provided $21,318.30 worth of materials and services, $4,213.62 of which was paid. JM provided $21,318.30 worth of materials and services. All three companies filed notices of mechanic’s liens against the property in February 2010.

When it became clear that the Feitlers would not be able to pay, CCH ceased construction on the property. All three subcontracters filed complaints against the Feitlers, CCH and the Feitlers’ lender and asked for summary judgment. All three asked for monetary judgments. J. Laurie and JM also asked for mechanic’s liens. The trial court entered summary judgment in favor of the subcontractors and the Feitlers appealed.

Holding: Reversed and remanded. The Appellate Court dealt with all three subcontractors separately. It first reversed the trial court’s decision that JM could hold a mechanic’s lien because JM had failed to file a pre-lien notice, as clearly required by the Indiana mechanic’s lien statute, Indiana Code section 32-28-3-1(i). JM had actually entered into a separate agreement with the Feitlers and so they argued that they were not subject to the no mechanic’s lien clause in the contract between the Feitlers and CCH. This was true, the Court held, but without the required pre-lien notice, their claim failed.

The court next looked at J. Laurie, who argued that they did not have sufficient notice of the agreement between the Feitlers and CCH and thus should not be bound to the no mechanic’s lien clause. Ind. Code §32-28-3-1(e) states that for a no-lien clause to be valid against subcontractors, it must be in writing, contain a legal description of the property, be acknowledged as provided in the case of deeds and be filed and recorded in the county recorder’s office. The court found that the Feitlers had sufficiently complied with the notice requirements because through “even the most cursory search” the contract with CCH featuring the no-lien clause could be found.

After finding that neither JM nor J. Laurie could hold mechanic’s liens against the property, the Court then looked at whether the Feitlers were personally liable to any of the three companies. The Appellate Court found that the trial court’s issuing of summary judgment was in error because there was a genuine issue of material fact over whether CCH had been paid off at the time of the filing of the subcontractors claims. The issue of personal liability was therefore remanded for trial.


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By: ATG Underwriting Department | Posted on: Mon, 04/15/2013 - 10:22am