39 N.E.3d 660
Ind.2015Background
- Goodrich contracted with general contractor Roncelli to build an IMAX theater; subcontractors Fostcorp, Wilson, and Johnson provided labor/materials and were not fully paid.
- Each subcontractor timely filed mechanic’s liens under Ind. Code ch. 32-28-3 and sued to foreclose, seeking judgments and attorney’s fees.
- Roncelli posted an undertaking and surety bond under Ind. Code § 32-28-3-11 that promised to pay any judgment ‘‘including costs and attorney’s fees allowed by the court,’’ and the trial court released the property liens in exchange for the bond.
- Trial court awarded substantial judgments to the subcontractors and awarded attorney’s fees; Roncelli appealed arguing the fees could not be collected from it.
- Court of Appeals reversed on the fee awards; the Indiana Supreme Court granted transfer to decide whether the mechanic’s lien statute permits recovery of attorney’s fees from a party that posts a surety bond/undertaking.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 32-28-3-14 permits lienholders to recover attorney’s fees after obtaining a judgment to foreclose a mechanic’s lien | § 32-28-3-14(a) entitles a lienholder who recovers judgment to attorney’s fees; the statutory text is mandatory | Subcontractors can only seek contractual remedies once owner paid; § 14(b) bars fees when owner paid contract consideration | Held for plaintiffs: § 14(a) awards fees to lienholders who recover judgment; § 14(b) only bars fees against property owners who paid consideration |
| Whether posting an undertaking and surety bond under § 32-28-3-11 prevents lienholders from collecting attorney’s fees from the bond principal/surety | The bond language and § 32-28-3-11 require the bond principal/surety to pay judgment, costs, and attorney’s fees if the claim was a lien at filing | Posting a bond merely substitutes security and does not impose liability for fees beyond the underlying obligation | Held for plaintiffs: the bond/undertaking expressly obligates Roncelli to pay costs and attorney’s fees; lien attaches to the undertaking and subcontractors may foreclose on the bond |
Key Cases Cited
- Premier Investments v. Suites of America, Inc., 644 N.E.2d 124 (Ind. 1994) (purpose of mechanic’s lien statute to protect property owners from benefiting from others’ labor without recompense)
- Mann v. Schnarr, 95 N.E.2d 138 (Ind. 1950) (mechanic’s lien attaches to the property improved)
- Bailey v. Holliday, 806 N.E.2d 6 (Ind. Ct. App. 2004) (undertaking with surety must cover judgment, costs, and attorney’s fees)
- John Wendt & Sons v. Edward C. Levy Co., 685 N.E.2d 183 (Ind. Ct. App. 1997) (if surety provides adequate security, lienholder cannot object to substitution of security)