Opinion ID: 718359
Heading Depth: 2
Heading Rank: 2

Heading: Summary Judgment on the Mechanic's Lien Claim (Count VII)

Text: 20 The district court's grant of summary judgment on CDI's attempt to foreclose its mechanic's lien was premised on its conclusion that CDI forfeited its right to sue on that lien when it failed to respond in a timely fashion to Wilhelm's Notice to Commence Suit. CDI argues that it bore no responsibility to respond to Wilhelm's letter because Wilhelm lacked authority to provide the required notice. The statute in question states: 21 The owner of property upon which a mechanic's lien has been taken, or any person or corporation having an interest therein, including mortgagees and lienholders, may notify, in writing, the owner or holder of the lien to commence suit thereon and if he fails to commence such suit within thirty (30) days after receiving such notice, the lien shall be null and void ... 22 Ind.Code § 32-8-3-10. 23 The district court found that, as a general contractor which was responsible for seeing that liens filed against the project were cleared and which had the right to file a lien on the property, Wilhelm qualified as a person or corporation having an interest [in the property]. Additionally, the district court found that Wilhelm was Mansur's agent and, thus, could equally well be deemed to have filed the notice on Mansur's behalf. 24 The question of the standing of a general contractor to issue notice under § 32-8-3-10 apparently is one of first impression. CDI has, therefore, relied heavily on policy arguments suggesting that general contractors should not be allowed to send notices on an owner's behalf. The governing consideration in these arguments is the danger that the general contractor, whose interests are often adverse to those of the owner, will undermine the owner's ability to resolve its disputes with lienholders. In this regard, CDI cites a general policy of the law to discourage litigation. Lafayette Tennis Club, Inc. v. C.W. Ellison Builders, Inc., 406 N.E.2d 1211, 1214-15 (Ind.App. 3 Dist.1980). 25 CDI also argues that, since the examples given in the statute of person[s] having an interest therein are mortgagees and lienholders, the statute should be construed to require that persons authorized to give notice have a recordable interest in the property. It contends that the statutory omission of agents in the list of authorized notice givers should be understood to imply that the Indiana legislature did not intend for agents of the owner to have the power to issue the required notice. Alternatively, CDI argues that there was insufficient proof of the required agency relationship in this case. 26 The defendants argue that Wilhelm had authority to issue the Notice to Commence Suit, even independent of its agency relationship to Mansur, because of its status as a potential lienholder (because of the right it would have had to file a lien against the property had Mansur failed to make payment to Wilhelm). 27 We doubt that the Indiana statute extends so far as to provide potential lienholders a right to issue a Notice to Commence Suit. We also agree with CDI that there might be cases in which an owner might not wish to grant a general contractor the right to foreclose liens on its property. We need not assess the general validity of either of these arguments, however, for, in this case, we conclude that Wilhelm had a right to issue the Notice to Commence Suit under the terms of its contract with Mansur. 28 First, we reject CDI's argument that, in order to issue a Notice to Commence Suit, the issuer itself must have a recordable interest in the property. We see no indication that ordinary principles of agency were not intended to apply in construing the statute. The issuance of legal notice is commonly undertaken by agents (in many cases, attorneys), and CDI does not persuade us that an exception to this ordinary practice was intended here. (Indeed, a corporation has no alternative but to issue notice through the hand of an agent.) 29 We also see no reason to confine the owner's choice of agent for the task. It may be, as CDI suggests, that many owners prefer not to grant power to a general contractor to issue a Notice to Commence Suit upon liens against the property which the contractor is developing. Here, however, the district court found (and CDI does not dispute) that Wilhelm was responsible for seeing that liens filed against the project were cleared. Dist.Ct. Nov. 10, 1992 Op., CDI App. at 8. Further, the uncontested affidavit of Wilhelm's Project Manager, Bareither, states that Wilhelm had a contractual obligation to indemnify Mansur against all liens filed by CDI and to maintain an escrow account containing funds sufficient to cover any mechanic's liens filed against the property. Bareither Aff., Rec. Doc. 63. 30 We therefore conclude that, in this case, Wilhelm had the authority to issue a Notice to Commence Suit on CDI's liens. Its contract with Mansur gave it the duty to clear liens from the property and the financial responsibility for any liens which were not cleared. 2 This contractual arrangement was Mansur's specific choice, thus obviating any need for us to decide whether owners generally would be at risk if general contractors were deemed by implication to be their agents for the purpose of issuing such notices. Further, we think it likely that Wilhelm's contractual obligation to indemnify Mansur with respect to CDI's mechanic's lien was sufficient to grant it an independent right to issue the required notice. Finally, as a point of equity, we note, as did the district court, that CDI registered no complaint against having been served notice by Wilhelm at the time it received Wilhelm's letter. Instead, CDI simply pointed out a typographical error and stood by. 31 Because we agree with the district court that Wilhelm had standing to issue the Notice to Commence Suit under § 32-8-3-10 and because CDI did not commence suit within thirty days of receipt of Wilhelm's notice, we affirm the district court's grant of summary judgment as to Count VII of CDI's Amended Complaint.