954 N.E.2d 459
Ind. Ct. App.2011Background
- Trust owns commercial real estate in Porter County; LSB loaned $360,000 for improvements not secured by mortgage, then lent $2,025,000 secured by mortgage (recorded Feb 23, 2005); another mortgage of $1,775,000 recorded Aug 8, 2007 for construction; Eby Construction provided labor/materials totaling $487,149.95 for improvements; Eby recorded a mechanic's lien within 90 days (Feb 25, 2008) and filed suit (Mar 28, 2008); LSB foreclosed its mortgages in 2009; Eby sought priority for its lien over the mortgages via partial summary judgment filed Apr 12, 2010; trial court granted partial summary judgment in favor of Eby based on equity/public policy; on appeal, the court held that statutory priority favors LSB and reversed the partial summary judgment, remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court erred in prioritizing the mechanic's lien over a mortgage when the mortgaged funds financed the specific project. | LSB: statutes give mortgage priority over later mechanic's liens. | Eby: equity/public policy require lien priority over mortgage. | Mortgages have priority; court erred in granting partial summary judgment for Eby. |
Key Cases Cited
- Provident Bank v. Tri-County Southside Asphalt, Inc., 804 N.E.2d 161 (Ind. Ct. App.2004) (priority follows recording; equity cannot defeat statutory order)
- Harold McComb & Son v. JP Morgan Chase Bank, 892 N.E.2d 1255 (Ind. Ct. App.2008) (more specific statute governs priority in commercial property construction)
- Provident Bank, 804 N.E.2d 161 (Ind. Ct. App.2004) (reiterates mechanics' lien protection and 90-day removal rights)