Goodrich Quality Theaters, Inc., and Roncelli, Inc. v. Fostcorp Heating and Cooling, Inc., Wilson Iron Works, Inc., and Johnson Carpet, Inc.Goodrich Quality Theaters, Inc., and Roncelli, Inc. v. Fostcorp Heating and Cooling, Inc., Wilson Iron Works, Inc., and Johnson Carpet, Inc.
Thomas L. Kirsch, Thomas L. Kirsch & Associates, P.C., Munster, IN, Attorney for Appellee Fostcorp Heating and Cooling, Inc.
Paula E. Neff, Christina J. Miller, Lucas, Holcomb & Medrea, LLP, Merrillville, IN, Attorneys for Appellee Wilson Iron Works, Inc.
Timothy W. Withers, Philip D. Burroughs & Associates, LLC, Indianapolis, IN, Attorney for Johnson Carpet, Inc., d/b/a Johnson Commercial Interiors.
DAVID, Justice.
The question before us is whether, under Indiana’s mechanic’s lien statute, lienholders are entitled to collect attorney’s fees incurred in foreclosing upon their liens from a party who posts a surety bond securing the liens. By the statute’s plain language, under the circumstances our answer is yes.
Facts and Procedural History
Goodrich Quality Theaters, Inc. (Goodrich) hired Roncelli, Inc. (Roncelli) to be the general contractor responsible for building an IMAX movie theater in Porter County, Indiana. Roncelli then hired several sub-contractors to provide the labor, services, and materials necessary to construct the theater. Three of these sub-contractors—Fostcorp Heating and Cooling, Inc. (Fostcorp); Wilson Iron Works, Inc. (Wilson); and Johnson Carpet, Inc., d/b/a Johnson Commercial Interiors (Johnson)—are parties in this case.
Problems plagued the project, and the theater was completed months behind schedule. After Fostcorp, Wilson, and Johnson failed to receive full payment for their services, all three timely filed mechanic’s liens against the IMAX property pursuant to Indiana Code § 32-28-3-1. The three subcontractors then sued Roncelli and Goodrich to foreclose on their respective liens in the amount due on their Roncelli contracts. Each requested attorney’s fees.
While the case was pending, Roncelli filed an undertaking and posted a surety bond pursuant to Indiana Code § 32-28-3-11. The bond provided that Roncelli, the bond’s principal, and/or Hartford Fire Insurance Company, its surety, must pay in full any judgment recovered in an action to foreclose on a lien, “including costs and attorney’s fees allowed by the court.” (Appellant’s App. at 655.) Approving the bond, the trial court ordered the mechanic’s liens on the IMAX property released, with the bond to serve as security in lieu of the real property. Three months later, Goodrich paid Roncelli in full, and Roncelli and Goodrich filed a motion to dismiss the claims for attorney’s fees.1 The trial court denied the motion.
After a fourteen-day bench trial spanning nearly a year, the trial court awarded Fostcorp separate $489,962.81 judgments against Roncelli and Goodrich (later amended to $539,139.11); Wilson a $373,888.22 judgment against Roncelli (later amended to $412,751.84); and Johnson a $55,420.20 judgment against Roncelli. The trial court also awarded attorney’s fees to Fostcorp, Wilson, and Johnson. Specifically, it awarded Fostcorp $97,173.13 and Wilson $355,488.67 in attorney’s fees against Roncelli. The record does not appear to include the amount awarded to Johnson.
Roncelli then appealed, raising numerous issues primarily relating to breach of contract but also to the award of attorney’s fees. Regarding the latter, Roncelli claimed that
Though they submitted three separate briefs, the subcontractors collectively contended that
Determining that “[t]he crux of Roncelli’s argument is the mechanic’s lien statutes in Indiana Code chapter 32-28-3 only apply to the property owners,” which Roncelli is not, the Court of Appeals agreed with Roncelli that the mechanic’s liens and subsequent attorney’s fees could not be enforced against it. Goodrich Quality Theaters, Inc. and Roncelli, Inc. v. Fostcorp Heating and Cooling, Inc., Wilson Iron Works, Inc., Johnson Carpet, Inc., d/b/a Johnson Commercial Interiors, 16 N.E.3d 426, 441 (Ind.Ct.App.2014). Consequently, the Court of Appeals reversed the trial court’s award of attorney’s fees. Id. On all other issues, the court affirmed the trial court. Id.
Each subcontractor filed for rehearing and claimed, among other things, that under
The subcontractors subsequently petitioned this Court for transfer on the question of whether Indiana’s mechanic’s lien statute permits recovery of attorney’s fees from Roncelli under the circumstances. We granted transfer, thereby vacating the Court of Appeals opinions. Goodrich Quality Theaters, Inc. and Roncelli, Inc. v. Fostcorp Heating and Cooling, Inc., Wilson Iron Works, Inc., Johnson Carpet, Inc., d/b/a Johnson Commercial Interiors, 29 N.E.3d 124 (table) (Ind.2015); See also Ind. Appellate Rule 58(A).2
Standard of Review
We review the trial court’s interpretation of Indiana’s mechanic’s lien statute de novo. See Young v. Hood’s Gardens, 24 N.E.3d 421, 424 (Ind.2015). We do so with the knowledge that “[o]ur primary goal in interpreting any statute is to effectuate legislative intent. An unambig-
I. Mechanic’s Lien Statute Permits Recovery of Attorney’s Fees
At issue is whether, under Indiana’s mechanic’s lien statute, the subcontractors are entitled to collect attorney’s fees incurred in foreclosing on their liens from Roncelli, which posted a surety bond and filed an undertaking obligating it to pay attorney’s fees upon recovery of a judgment against it. To resolve this issue of first impression, we turn first to the language of the statute, which each side contends supports its argument. All agree that the mechanic’s lien statute should be strictly construed, as “statutes provide for the award of attorney’s fees are ... in derogation of the common law.” City of Jeffersonville v. Environmental Mgmt. Corp., 954 N.E.2d 1000, 1013 (Ind.Ct.App.2011) (citing Town of Georgetown v. Edwards Cmty., Inc., 885 N.E.2d 722, 726 (Ind.Ct.App.2008)).
Also uncontested is that Indiana Code
(a) A contractor, subcontractor, a mechanic, a lessor leasing construction and other equipment and tools ... a journeyman, a laborer, or any other person performing labor or furnishing materials or machinery, including the leasing of equipment or tools, for:
(1) the erection, alteration, repair, or removal of:
(A) a house, mill, manufactory, or other building; or
(B) a bridge, reservoir, system of waterworks, or other structure;
may have a lien as set forth in this section.
Ind.Code
After Roncelli failed to pay the contractual amount owed and the subcontractors utilized this mechanism, and after payment was still not forthcoming, the subcontractors sued to foreclose on their liens and requested attorney’s fees incurred in the foreclosure pursuant to Indiana Code
(a) Except as provided in subsection (b), in an action to enforce a lien under this chapter, a plaintiff or lienholder who recovers a judgment in any sum is entitled to recover reasonable attorney’s fees. The court shall enter the attorney’s fees as a part of the judgment.
(b) A plaintiff may not recover attorney’s fees as part of the judgment against a property owner in an action in which the contract consideration for the labor, material, or machinery has been paid by the property owner or party for whom the improvement has been constructed.
The subcontractors counter that subsection 14(a) makes attorney’s fees mandatory in foreclosure actions because it states that “the court shall enter the attorney’s fees as part of the judgment.” Ind.Code
But the question of whether the plain language of
(a) In an action to foreclose a lien:
(1) the defendant or owner of the property subject to the lien; or
(2) any person having an interest in the property subject to the lien, including a mortgagee or other lienholder;
may file in the action a written undertaking with surety to be approved by the court.
(b) An undertaking filed under this section must provide that the person filing it will pay any judgment that may be recovered in the action to foreclose the lien, including costs and attorney’s fees allowed by the court, if the claim on which the judgment is founded is found by the court to have been a lien on the property at the time the action was filed.
(c) If an undertaking is filed and approved by the court:
(1) the court shall enter an order releasing the property from the lien; and
(2) the property shall be discharged from the lien.
(Emphasis added.)
Roncelli’s bond echoes this statutory language:
NOW, THEREFORE, the condition of this obligation is such that if [Roncelli] ... and the Surety, Hartford Fire Insurance Company, jointly and severally, shall well and truly pay in full any judgment that may be recovered by [subcontractors] in its action to foreclose its lien, including costs and attorney’s fees allowed by the court ...
(Appellant’s App. at 655) (emphasis added).
The language of
As set forth in
Moreover, it would be an unfair and certainly unintended result if, as the subcontractors question, a general contractor could post a surety bond and avoid paying the attorney’s fees that it would otherwise have to pay if a subcontractor foreclosed on a lien, thereby leaving the subcontractor in a worse position than if it had foreclosed—especially when the subcontractor cannot object to the posting of a surety bond. See John Wendt & Sons v. Edward C. Levy Co., 685 N.E.2d 183, 188 (Ind.Ct.App.1997) (explaining that if surety adequately provides security in event of judgment, then lienholder cannot object to substitution of security for lien). The Court of Appeals recognized as much in Bailey v. Holliday, 806 N.E.2d 6, 11 (Ind.Ct.App.2004), where it held that when a party files a written undertaking with surety, “the surety must cover any judgment, including the amount of the lien, costs, and attorney’s fees.... Any other interpretation would result in the mechanic’s lien holder receiving less protection if the owner elects to provide an undertaking with surety than if the mechanic’s lien holder forecloses the lien.” It is therefore only fair that the subcontractor lienholders be fully protected and allowed to recover attorney’s fees under
But even if Roncelli had not posted a bond under
Thus, the trial court did not abuse its discretion in awarding the subcontractors attorney’s fees, albeit under a different section of Indiana’s mechanic’s lien statute. Returning to
Conclusion
Finding no abuse of the trial court’s discretion in awarding the subcontractors attorney’s fees incurred in their foreclosure suits, we affirm the trial court’s fee award.
RUSH, C.J., DICKSON, RUCKER, and MASSA, JJ., concur.