Service Steel Warehouse Co., L.P., Appellant (Plaintiff below), –v– United States Steel Corp., Appellee (Defendant below).
Supreme Court Case No. 21S-CC-408
Indiana Supreme Court
March 10, 2022
Argued: October 28, 2021 | Appeal from the Lake Superior Court No. 45D02-1311-CC-828 The Honorable Calvin D. Hawkins, Judge On
Opinion by Justice Massa; Chief Justice Rush and Justices David, Slaughter, and Goff concur.
Massa, Justice.
A supplier sold steel for a project to a fabricator who did not perform any work on the project site. The supplier later sued to foreclose on its mechanic‘s lien against the site. The trial court granted summary judgment for the site‘s owner because the fabricator‘s lack of on-site work meant it was also a supplier, and case law barred supplier-to-supplier-based liens. An appellate panel reversed, because it found the fabricator was a subcontractor, even if it did not perform on-site work, so the supplier could have a lien.
We now conclude the supplier can have a lien, because it furnished materials for the project, which is all the mechanic‘s lien statute required. Accordingly, we reverse and remand.
Facts and Procedural History
United States Steel Corp. contracted with Carbonyx, Inc. to design and build two facilities in Gary. Carbonyx contracted with Steven Pounds, who did business as Troll Supply, to fabricate steel for the project. Service Steel Warehouse Co., L.P. sold steel for the project to Troll Supply, and it even identified the project on its invoices. The fabrication involved significant labor—cutting, welding, drilling, painting, and connecting thousands of pieces of steel to the exact specifications necessary for the project. Troll Supply did not perform any work at the project site, which would have been impossible. The
Troll Supply did not pay all its bills and ultimately owed Service Steel $452,825.03. Service Steel recorded a mechanic‘s lien against the project site and sued U.S. Steel to foreclose on it. Both parties moved for summary judgment. Relevant here, U.S. Steel argued that because Troll Supply did not perform on-site work, it was a material supplier of fabricated steel, not a subcontractor. And that meant Service Steel, also a material supplier, could not have a lien. The trial court granted summary judgment for U.S. Steel on the mechanic‘s lien claim. Although the court did not provide a basis for its ruling, the parties agree it was based on the prohibition against supplier-to-supplier-based liens. Service Steel appealed.
Our Court of Appeals reversed. It found the mechanic‘s lien statute does not require subcontractors to perform on-site work. Serv. Steel Warehouse Co., L.P. v. U.S. Steel Corp., 171 N.E.3d 115, 122 (Ind. Ct. App. 2021), vacated. It then defined a “subcontractor” under the statute “as one who performs a definite, substantial portion of the prime contract.” Id. at 123. Under that test, “Troll Supply was a subcontractor, not a material supplier,” so the prohibition against supplier-to-supplier-based liens did not bar Service Steel‘s lien. Id. at 123–24.
U.S. Steel petitioned for transfer, which we granted. Serv. Steel Warehouse Co., L.P. v. U.S. Steel Corp., 173 N.E.3d 1021 (Ind. 2021).
Standard of Review
We review summary judgment decisions de novo and apply the same standard as the trial court. City of Marion v. London Witte Grp., LLC, 169 N.E.3d 382, 390 (Ind. 2021). Summary judgment is proper only “if the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”
Discussion and Decision
Indiana‘s broad mechanic‘s lien statute has long been interpreted to only confer lien rights on suppliers who furnished materials to a recipient who performed on-site work, which meant a contractor or subcontractor. The status of the recipient—here, Troll Supply—determined a supplier‘s ability to acquire a lien. That interpretation, however, is incorrect. Because a mechanic‘s lien is purely a creation of statute, the General Assembly determines who can have one. And it has broadly conferred lien rights on suppliers, regardless of whether they furnish materials to a contractor, subcontractor, or another supplier. If a supplier, like Service Steel, furnishes materials for the erection of a building, it can have a lien.
I. Under the mechanic‘s lien statute, a supplier can have a lien by furnishing materials, regardless of the recipient, for the erection of a building.
A mechanic‘s lien is a statutory tool to help collect payment for labor and materials that improve real property. Premier Invs. v. Suites of Am., Inc., 644 N.E.2d 124, 130 (Ind. 1994). It prevents landowners from enjoying their improved property while those who provided the labor and materials get the shaft. See id. A mechanic‘s lien statute has long been part
Although Indiana‘s statute is broad, at times it has been interpreted to not support supplier-to-supplier-based liens. See, e.g., Caulfield v. Polk, 17 Ind. App. 429, 436–37, 46 N.E. 932, 934 (1897). In other words, a supplier who furnished materials to another supplier could not have a lien. City of Evansville v. Verplank Concrete & Supply, Inc., 400 N.E.2d 812, 819 (Ind. Ct. App. 1980). A supplier had to furnish materials to someone who performed work on the project site, which meant a contractor or subcontractor (or the owner, of course). Id. at 819–20. The prohibition against supplier-to-supplier-based liens protected landowners, because “[i]f one material man furnishing material to another material man ha[d] a right to a lien, then any material man, no matter how far removed, ha[d] the same right.” Caulfield, 17 Ind. App. at 437, 46 N.E. at 934.
That prohibition conflicts with the statute‘s plain language, which unambiguously allows any person who furnishes materials for the erection of a building to have a lien “without any limitation in respect to the person to whom the materials are furnished.” Colter v. Frese, 45 Ind. 96, 100 (1873);
In Barker v. Buell, an early lien case, the governing statute allowed “all persons performing labor, or furnishing materials for the construction . . . of any building” to have a lien. 35 Ind. 297, 299 (1871) (citation and internal quotation marks omitted). Under that statute, we found it “was not necessary” for a supplier to furnish materials to a landowner or contractor to have a lien. Id. at 302. Rather, the supplier there had a lien because his bricks “were furnished to a sub-contractor, and used in the erection of a new building, and this is all that was necessary, according to [the governing statute], to give the party furnishing them a right to acquire a lien.” Id. We recognized the supplier‘s rights did not depend on whom he supplied, because that was irrelevant under the statute.
In Colter v. Frese, we were “earnestly pressed to reconsider” Barker, only to “again reach[] the same conclusion” under the same broad statute. 45 Ind. at 98. We emphasized that the statute provided that “all persons . . . furnishing materials for the construction or repair of any building, shall have a lien, without any limitation in respect to the person to whom the materials are furnished.” Id. at 100. That conclusion—faithful to the statute‘s plain language—remains true while the statute continues to unambiguously confer broad lien rights on suppliers.
Subsequent intermediate appellate court decisions misconstrued and departed from Barker, Colter, and Smith by not staying faithful to the statute‘s plain language. Instead, they formulated a rule that limited suppliers’ lien rights: A supplier can only have a lien by furnishing materials to a party who performs on-site work, i.e., a contractor or subcontractor. See Caulfield, 17 Ind. App. at 434, 437, 46 N.E. at 933–34 (citing Smith and Colter and concluding the statute “makes no provision for a lien in favor of one who simply sells materials to another who is himself but a material man“); Rudolph Hegener Co. v. Frost, 60 Ind. App. 108, 112, 108 N.E. 16, 17 (1915) (concluding there was “no reason to depart from the holding in Caulfield . . . that a materialman furnishing material to another materialman has no right to a mechanic‘s lien“); Verplank, 400 N.E.2d at 819–20 (citing Barker, Colter, Caulfield, and Frost before affirming that a supplier to a supplier has no lien rights). We now disapprove of that demonstrably erroneous, though longstanding, rule. See Gamble v. United States, 139 S. Ct. 1960, 1984–85 (2019) (Thomas, J., concurring).
The mechanic‘s lien statute unambiguously confers broad lien rights on suppliers and does not require them to furnish materials to one who performs on-site work.
Under Indiana‘s mechanic‘s lien statute, a supplier that furnished materials for the erection of a building, regardless of the recipient, can have a lien on that building and the accompanying land. Of course, the supplier must have furnished the materials “for the particular building upon which” it bases its lien. Talbott v. Goddard, 55 Ind. 496, 502 (1876);
Conclusion
We reverse the trial court‘s entry of summary judgment for U.S. Steel and remand for reconsideration of Service Steel‘s summary judgment motion in light of this opinion.
Rush, C.J., and David, Slaughter, and Goff, JJ., concur.
ATTORNEY FOR APPELLANT
Joshua W. Casselman
Rubin & Levin, P.C.
Indianapolis, Indiana
ATTORNEY FOR APPELLEE
Kevin E. Steele
Burke Costanza & Carberry LLP
Valparaiso, Indiana