R.T. Moore Company, Inc., FAHS Construction Group, Hearth at Tudor Gardens, LLC, and Hearth at Juday Creek, LLC v. Slant/Fin Corporation

FILED
Feb 14 2012, 9:34 am
FOR PUBLICATION CLERK
of the supreme court,
court of appeals and
tax court
ATTORNEY FOR APPELLANTS: ATTORNEY FOR APPELLEE:
DAVID L. SIMMONS RICHARD J. DICK
SEAN T. DEVENNEY Mitchell Hurst Dick & McNelis, LLC
Drewry Simmons Vornehm, LLP Indianapolis, Indiana
Carmel, Indiana
IN THE
COURT OF APPEALS OF INDIANA
R.T. MOORE COMPANY, INC., FAHS )
CONSTRUCTION GROUP, HEARTH AT )
TUDOR GARDENS, LLC, and HEARTH AT )
JUDAY CREEK, LLC, )
)
Appellants, )
)
vs. ) No. 49A04-1109-CC-463
)
SLANT/FIN CORPORATION, )
)
Appellee. )
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Patrick L. McCarty, Judge
Cause No. 49D03-0911-CC-52574
February 14, 2012
OPINION - FOR PUBLICATION
FRIEDLANDER, Judge
R.T. Moore Company, Inc., FAHS Construction Group, Hearth at Tudor Gardens,
LLC, and Hearth at Juday Creek, LLC (collectively, Appellants) appeal from the trial court’s
grant of summary judgment in favor of Slant/Fin Corporation. Appellants present one issue
on appeal: Did the trial court err in determining that Slant/Fin had a right to enforce Ind.
Code Ann. § 32-28-3-9 (West, Westlaw current through 2011 1st Regular Sess.), also known
as the Personal Liability Notice Statute (the PLN Statute)?
We reverse.
The facts in this case are undisputed and were stipulated to before the trial court. This
case arises out of two separate, private construction projects—the Juday Project and the
Tudor Project (collectively, the Projects). For purposes of this appeal, however, the Projects
have the same operative facts.
Juday Creek is the owner of a construction project known as the Hearth at Juday
Creek located in Mishawaka, Indiana; Tudor Gardens is the owner of a construction project
known as the Hearth at Tudor Gardens located in Zionsville, Indiana (collectively, Owners).
The Owners hired FAHS Construction to serve as the general contractor to provide
improvements to their respective projects. FAHS Construction subcontracted the necessary
mechanical work on the Projects to R.T. Moore. R.T. Moore ordered finned tube pipe and an
enclosure (the Equipment) to be used in hydronic baseboard heating from Duraflo, a supplier
of mechanical equipment. Duraflo in turn ordered the Equipment from Slant/Fin, the
manufacturer that was specified in R.T. Moore’s approved redesign of the mechanical
system. After Duraflo delivered the Equipment to the Projects, Duraflo invoiced R.T. Moore
for the Equipment and R.T. Moore paid the balance due Duraflo in a timely manner. Duraflo
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subsequently suspended its operations and turned over its assets to a secured lender without
paying Slant/Fin for the Equipment Slant/Fin supplied and that were ultimately installed on
the Projects.
On November 4, 2009, Slant/Fin filed “Notice of Personal Liability” claims pursuant
to I.C. § 32-28-3-9 (the Notices) to the Owners, to secure moneys Slant/Fin claimed it was
owed for the Equipment supplied and installed on the Projects. Slant/Fin’s claim against
Juday Creek was in the amount of $31,833.35; its claim against Tudor Gardens was in the
amount of $34,670.92. In response to the Notices, the Owners withheld monies owed to
project participants on both Projects to protect against the possibility of double payment. As
a result, R.T. Moore did not receive payment for labor and materials it supplied to the
Projects.
On November 17, 2009, R.T. Moore filed its complaint against Slant/Fin seeking, in
part, a declaratory judgment that Slant/Fin, as a “material supplier to a material supplier” on
the Projects, lacked standing to assert a claim under the PLN Statute against the Owners and
was therefore not entitled to the protections afforded under the PLN Statute. Appellants’
Appendix at 10, 13. FAHS Construction and the Owners were ultimately joined as plaintiffs
in the case. In answering a first amended complaint filed by R.T. Moore, Slant/Fin filed a
counterclaim seeking a judgment affirming its rights under the PLN Statute and requiring the
Owners to pay Slant/Fin monies it claimed it was owed.
On September 22, 2010, the Plaintiffs filed a motion for summary judgment seeking a
declaration that Slant/Fin could not enforce the protections of the PLN Statute. Slant/Fin
responded to the motion for summary judgment on October 18, 2011 and filed a cross-motion
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for summary judgment. The parties stipulated to the determinative facts for purposes of their
cross-motions for summary judgment. On December 9, 2010, the trial court held a hearing
on the cross-motions for summary judgment, and on April 25, 2011, the trial court entered its
order granting Slant/Fin’s motion for summary judgment. The parties stipulated to an
amended order correcting an apparent typographical error concerning one of the parties, and
the trial court issued the amended order on June 27, 2011. Notwithstanding their stipulation
to correct the typographical error, the Plaintiffs reserved their right to continue to contest the
entry of summary judgment. On June 28, 2011, the Plaintiffs filed a motion to correct errors,
to which Slant/Fin filed a response in opposition. After a hearing on September 7, 2011, the
trial court filed its order denying the Plaintiffs’ motion to correct errors. Plaintiffs now
appeal.
When reviewing a trial court’s order granting summary judgment, we apply the same
standard as that of the trial court. Lacy-McKinney v. Taylor Bean & Whitaker Mortg. Corp.,
937 N.E.2d 853 (Ind. Ct. App. 2010).
Summary judgment is appropriate only where there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law.
Ind. Trial Rule 56(C); Mangold ex rel. Mangold v. Ind. Dep’t of Natural Res.,
756 N.E.2d 970, 973 (Ind. 2001). All facts and reasonable inferences drawn
from those facts are construed in favor of the nonmovant. Our review of a
summary judgment motion is limited to those materials designated to the trial
court.
Runkle v. Runkle, 916 N.E.2d 184, 190 (Ind. Ct. App. 2009) (some citations omitted), trans.
denied. Because a trial court’s grant of summary judgment comes to us clothed with a
presumption of validity, the appellants must persuade us that error occurred. Lacy-McKinney
v. Taylor Bean & Whitaker Mortg. Corp., 937 N.E.2d 853. We will affirm if the trial court’s
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grant of summary judgment can be sustained on any theory or basis in the record. Clary v.
Dibble, 903 N.E.2d 1032 (Ind. Ct. App. 2009), trans. denied. We must carefully review a
grant of summary judgment in order to ensure that a party was not improperly denied his or
her day in court. Lacy-McKinney v. Taylor Bean & Whitaker Mortg. Corp., 937 N.E.2d 853.
Plaintiffs argue that the trial court erred in granting summary judgment in favor of
Slant/Fin because Slant/Fin, as a material supplier to a material supplier on a private
construction project, cannot enforce the protections of the PLN Statute. To address the issue
presented, we must interpret the PLN Statute.
In interpreting the provisions of the personal liability statute, we are faced with
a matter of law which we will determine de novo. Pendleton v. Aguilar, 827
N.E.2d 614, 619 (Ind. Ct. App. 2005), reh’g denied, trans. denied. We are not
bound by the trial court’s legal interpretation of a statute and need not give it
deference. Id. We independently determine the statute’s meaning and apply it
to the facts before us. During our review, the express language of the statute
and rules of statutory construction apply. Id. We will examine the statute as a
whole and avoid excessive reliance on a strict literal meaning or the selective
reading of words. Id. Where the language of the statute is clear and
unambiguous, there is nothing to construe. Id. However, where the language
is susceptible to more than one reasonable interpretation, the statute must be
construed to give effect to the legislature’s intent. Id. The legislature is
presumed to have intended the language used in the statute to be applied
logically and not to bring about an unjust or absurd result. Id. Further, we are
compelled to ascertain and execute legislative intent in such a manner as to
prevent absurdity and difficulty and to prefer public conscience. Id. In so
doing, we are required to keep in mind the object and purpose of the law as
well as the effect and repercussions of such a construction. Id. at 619–20.
Gibson-Lewis, LLC v. Teachers Credit Union, 854 N.E.2d 392, 394-95 (Ind. Ct. App. 2006),
trans. denied.
The PLN Statute, I.C. § 32-28-3-9, which is found under the chapter pertaining to
mechanics’ liens, provides in pertinent part:
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(a) This section applies to a:
(1) subcontractor;
(2) lessor leasing construction and other equipment and tools,
regardless of whether an operator is also provided by the lessor;
(3) journeyman; or
(4) laborer;
employed or leasing any equipment or tools used by the lessee in erecting,
altering, repairing, or removing any house, mill, manufactory or other building,
or bridge, reservoir, system of waterworks, or other structure or earth moving,
or in furnishing any material or machinery for these activities.
The PLN Statute imposes personal liability on project owners in favor of subcontractors and
others identified in subsection (a) that have not been paid by their contractors. Mercantile
Nat’l Bank of Ind. v. First Builders of Ind., Inc., 774 N.E.2d 488 (Ind. 2002). Although
located in the Indiana Code chapter dealing with mechanics’ liens, the PLN Statute is a
separate mechanism at the disposal of a subcontractor who has not been paid by its general
contractor to seek recovery from the owner of a construction project. Id.As explained by our Supreme Court,
The Mechanics’ Lien Statute provides a procedure for persons who perform
labor or furnish materials or machinery for construction projects to establish
and enforce a lien on the structure on which they have worked or for which
they have furnished materials or machinery and on the interest of the owner of
the land on which the structure stands or with which it is connected to the
extent of the value of the work performed and material furnished.
Id. at 490. The PLN Statute
provides a procedure for subcontractors, workers employed by others, and
persons who lease materials or machinery for construction projects to establish
liability on the part of the owner of the project for the amount owed to such
subcontractors, workers, and persons by their respective contractors,
employers, and lessees.
Id.A subcontractor’s rights under the PLN Statute are viewed as an additional or
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alternative remedy to the subcontractor’s rights under the Mechanics’ Lien Statute and to any
other remedies the subcontractor may have against its contractor. Mercantile Nat’l Bank of
Ind., 774 N.E.2d 488; see also Lee & Mayfield, Inc. v. Lykowski House Moving Eng’rs, Inc.,
489 N.E.2d 603 (Ind. Ct. App. 1986), trans. denied. The key difference between the
Mechanics’ Lien Statute and the PLN Statute concerns the limitation on recovery.
Mercantile Nat’l Bank of Ind., 774 N.E.2d 488. Under the PLN Statute the owner’s liability
shall be “for not more than the amount that is due and may later become due from the owner
to the employer or lessee.” I.C. § 32-28-3-9(d). The Mechanics’ Lien Statute, on the other
hand, creates a secured interest that gives the subcontractor priority over the owner’s
unsecured creditors. Mercantile Nat’l Bank of Ind., 774 N.E.2d 488; see also I.C. § 32-28-3-
1 (West, Westlaw current through 2011 1st Regular Sess.). Further, the Mechanics’ Lien
Statute “does not, at least in so many words, limit the subcontractor’s lien to the amount that
the owner owes the contractor.” Mercantile Nat’l Bank of Ind., 774 N.E.2d at 490.
Turning now to the precise issue before us, we must examine the PLN Statute and
decide if Slant/Fin falls within the class of persons/entities entitled to seek a remedy
thereunder. This court has held that the class of individuals protected by the PLN Statute is
the same as under the Mechanics’ Lien Statute. Lee & Mayfield, Inc. v. Lykowski House
Moving Eng’rs, Inc., 489 N.E.2d 603. We found that such a rule is
consistent with the rationale that the personal liability section provides an
alternate or additional remedy for individuals who may be barred from
acquiring a mechanic’s lien because of a no-lien agreement between the
contractor and the owner, or for whom the mechanic’s lien might be
inadequate due to prior encumbrances on the property.
Id. at 608.
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We further note that the statutory language defining what class of construction
industry participants is entitled to make a claim under the PLN Statute is substantially similar
to the language defining what construction industry participants are entitled to claim rights
under the Mechanics’ Lien Statute. As set forth above, the PLN Statute, I.C. § 32-28-3-9,
which is found under the chapter pertaining to mechanics’ liens, provides in pertinent part:
(a) This section applies to a:
(1) subcontractor;
(2) lessor leasing construction and other equipment and tools,
regardless of whether an operator is also provided by the lessor;
(3) journeyman; or
(4) laborer;
employed or leasing any equipment or tools used by the lessee in erecting,
altering, repairing, or removing any house, mill, manufactory or other building,
or bridge, reservoir, system of waterworks, or other structure or earth moving,
or in furnishing any material or machinery for these activities.
The Mechanics’ Lien Statute specifies:
(a) A contractor, a subcontractor, a mechanic, a lessor leasing construction and
other equipment and tools, whether or not an operator is also provided by the
lessor, 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;
(2) the construction, alteration, repair, or removal of a walk or sidewalk
located on the land or bordering the land, a stile, a well, a drain, a
drainage ditch, a sewer, or a cistern; or
(3) any other earth moving operation;
may have a lien as set forth in this section.
I.C. § 32-28-3-1.
Because the Mechanics’ Lien Statute is in derogation of the common law, we have
strictly construed its provisions. We have also kept in mind that the purpose of the
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Mechanics’ Lien Statute is to promote honesty and fair dealing among the parties to a
construction contract and to prevent unjust enrichment of the owner who enjoys the material
improvement of his property.” City of Evansville v. Verplank Concrete & Supply, Inc., 400
N.E.2d 812, 818 (Ind. Ct. App. 1980). To that end, we have found that “[w]hile materialmen
are within the protected class, the phrase ‘all other persons’ has not been construed to permit
a lien by those parties whose contribution to the effort is remote.” Id. Indeed, we have found
that “materialmen supplying others who must themselves be considered materialmen have
traditionally been considered outside the ambit of the statute.” Id. at 819.1
The same principles hold true in construing the PLN Statute. Here, Duraflo is a
material supplier to the Projects. Slant/Fin is a materialman that supplied Equipment to
Duraflo. Neither Duraflo nor Slant/Fin performed any labor on the Projects. Thus, Slant/Fin
is a classic materialman to a materialman. Classified as such, Slant/Fin is not permitted to
seek a mechanics’ lien, and thus, is not permitted to seek the protections of the PLN Statute.
See id. We therefore conclude that the trial court erred in granting summary judgment in
favor of Slant/Fin.
Judgment reversed.
RILEY, J., and MATHIAS, J., concur.
1
We agree with this court’s acknowledgement in footnote 4 in its opinion in Evansville, that although in
some cases materialmen have been denominated as subcontractors for purposes unrelated to the Mechanics’
Lien Statute, such materialmen are not subcontractors within the meaning of the Mechanics’ Lien Statute.
City of Evansville v. Verplank Concrete & Supply, Inc., 400 N.E.2d at 819 n.4. But see Nash Engineering
Company v. Marcy Realty Corporation, Inc., 54 N.E.2d 263 (Ind. 1944); Western Cas. & Sur. Co. v. State,
256 N.E.2d 398 (Ind. Ct. App. 1970).
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