ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:
JOHN A. KRAFT DAVID J. JURKIEWICZ
Young, Lind, Endres & Kraft Feiwell & Hannoy, P.C.
New Albany, Indiana Indianapolis, Indiana
WIND DANCE FARM, INC., ) ) Appellant-Defendant, ) ) vs. ) No. 22A04-0210-CV-501 ) HUGHES SUPPLY, INC., ) ) Appellee-Plaintiff. )
OPINION FOR PUBLICATION
6. That on April 12, 2001, pursuant to the direction of [Hughess attorney]
. . . the affiant, on behalf of his client, sent a notice
to [Hughess attorney], to either have his client release the lien or commence
foreclosure proceedings, and said notice was sent more than thirty (30) days prior
to the date of this Affidavit.
7. That more than thirty (30) days have passed since the notice being
forwarded to the attorney for Hughes Supply, Inc., and no suit or foreclosure
on said lien is pending and no unsatisfied judgment has been rendered on
8. That this Affidavit is made in accordance with Indiana Code 32-8-3-10 [now
Indiana Code Section 32-28-3-10] for purposes of the Recorder of Floyd County, Indiana,
to rely upon said Affidavit for the purposes of releasing the Mechanics Lien
as referenced herein.
(Appellants App. 11-12.) Relying on the Affidavit of Service, the Floyd County
Recorder released the mechanics lien.
On February 15, 2002, approximately ten months after Wind Dances second letter, Hughes commenced this action to foreclose its mechanics lien, claiming a balance due of $44,460.83. Wind Dance answered the complaint on April 22, 2002, presenting several defenses, including an assertion that the complaint was barred by release, and asserting a counterclaim for slander of title. (Appellants App. 16-17.) On that same date, Wind Dance filed a Motion to Dismiss the complaint. Following a hearing, the trial court denied the motion but granted Wind Dances Motion to Certify Interlocutory Appeal. This court accepted jurisdiction over the case on December 16, 2002.
Any person who has given such notice by registered or certified mail to
the holder of the lien at the address given in the notice of
lien recorded may file an affidavit of service of said notice to commence
suit with the recorder of the county in which said real estate is
situated, which affidavit shall state the facts of said notice and that more
than thirty (30) days have passed and no suit for foreclosure of said
lien is pending and no unsatisfied judgment has been rendered on said lien;
and it shall be the duty of the recorder to record said affidavit
in the miscellaneous record book of his office and to certify on the
face of the record of any such lien that the same is fully
released and the real estate described in said lien shall thereupon be released
from the lien thereof.
Typically, a lienholder has one year to foreclose a mechanics lien. Haimbaugh Landscaping, Inc. v. Jegen, 653 N.E.2d 95, 103 (Ind. Ct. App. 1995) (citing Indiana Code Section 32-8-3-6, now Section 32-28-3-6). Indiana Code Section 32-8-3-10 provides a mechanism by which a party with an interest in real estate may require the lienholder to commence suit before that time in order to clear title or to determine a claimants lien rights. Lafayette Tennis Club, 406 N.E.2d at 1214. The failure to file an action within thirty days after receipt of proper notice voids the lien. Ind. Code § 32-8-3-10; Jegen, 653 N.E.2d at 103.
Unquestionably, proper notice is required so that the lien holder has an adequate opportunity to take action during the thirty-day period. The statute requires that written notice to commence suit be given by registered or certified mail to the holder of the lien. That process may assure that the proper person receives the notice and indicates that the enclosed communication imparts some legally significant information. Burggrabe v. Bd. of Pub. Works of Evansville, 469 N.E.2d 1233, 1236-37 (Ind. Ct. App. 1984); Lafayette Tennis Club, 406 N.E.2d at 1214; but see Holmes v. Randolph, 610 N.E.2d 839, 845 (Ind. 1993) (noting that the use of certified mail provides a better record of receipt but does not necessarily increase the probability that the addressee will actually receive the notice). Further, mailing by registered or certified mail, return receipt requested, provides an objective method of ascertaining when the thirty-day period begins to run. See Smith v. Review Bd. of Ind. Employment Security Div., 439 N.E.2d 1334, 1338 (Ind. 1982) (Hunter, J., dissenting to denial of transfer) (discussing the benefit in a different context).
Here, Wind Dance did not utilize either registered or certified mail. Nevertheless, Hughes concedes that it received the letters. We have held that substantial compliance with a statutory notice requirement is sufficient when notice is timely received. See, e.g., McGill v. Ind. Dept of Correction, 636 N.E.2d 199, 202 (Ind. Ct. App. 1994) (observing that, although the Tort Claims Act requires hand delivery or sending by registered or certified mail, notice filed by regular mail constitutes substantial compliance if it is received within the statutory time limit). As Judge Ratliff reasoned, [T]o hold that the notice was defective because of its mode of delivery when the notice was received and the purpose of either hand delivery or registered or certified mail, that of assurance of receipt, was met, is contrary to logic and defies common sense. Burggrabe, 469 N.E.2d at 1236. Similarly, we find that Wind Dances failure to comply with the statutory method of mailing does not in itself render the notice deficient. See footnote
We next examine the quality of the notice. The first letter, dated April 4, 2001, is directed to Hughes and to its counsel and provides in part:
I have reviewed a certain Sworn Statement of Intention to Hold Mechanics Lien filed in the office of the Floyd County Recorder on March 12, 2001. I have also reviewed the invoices from Hughes Supply, Inc., to L.D. Rice Construction, and must request you release your Mechanics Lien, as not having been timely filed . . . . You might be eligible for a Mechanics Lien on a significantly reduced amount on those items which were delivered ninety (90) days prior to the Mechanics Lien. Anything outside that time frame operates as slander of title on my clients real estate.
This letter is to request that you immediately release the existing Mechanics Lien
or look to the consequences of a slander of title litigation.
(Appellants App. 7.)
The second letter, dated April 12, 2001, was sent to Hughess counsel only. It provides in part:
I am comfortable with my clients position . . . . It appears Mr. Rice and/or his representatives picked up the last three (3) items. These three (3) invoices total Nine Hundred Ninety-Eight and 15/100 ($998.15) dollars. There was no delivery of these materials by your client to the property. Once again, I request you release the Mechanics Lien due to the untimely filing.
Should you choose to foreclose, you might run the title to find there is an existing mortgage on this real estate of One Million Seven Hundred Thousand and no/100 ($1,700,000.00) dollars. Should you choose to bring the foreclosure, my client will counterclaim for slander of title due to the defective nature of the Mechanics Lien, looking to your client for damages. My client paid L.D. Rice Construction, Inc., and Mr. Rice signed off on Waiver of Liens.
As you may be aware, part of the work was under a Performance Bond and Payment Bond. According to what I have reviewed of your invoices, your invoice number 21005843 dated November 16, 2000 appears to be part of the bonded work. I believe your client may have already made contact directly with the bonding company to attempt collection of that amount.
I would be more than happy to further discuss these issues with [you].
(Appellants App. 9-10.)
Neither letter mentions a notice to commence a foreclosure action, the relevant statute,
or the statutory thirty-day period.
Cf. Overhauser v. Fowler, 549 N.E.2d 71,
72 (Ind. Ct. App. 1990) (describing notice that stated the lienholder had to
file suit within thirty days or lose his claim). Collectively, the correspondence
represents little more than an effort to motivate Hughes to release the lien,
in whole or in part. Release is defined as the act of
giving up a right or claim to the person against whom it could
have been enforced. Blacks Law Dictionary 1292 (7th ed. 1999). Wind
Dances request that Hughes voluntarily relinquish its perceived right to the mechanics lien
is not the same as notice to file a formal foreclosure action to
enforce that right.
Further, the letters fail to mention the consequences for the failure to file suit. Our Court considered a similar situation in Lafayette Tennis Club, where an unregistered and uncertified letter advised the lienholder, Please file suit on your Mechanics Lien which you filed in order that the matter may be brought to a head. 406 N.E.2d at 1214. We found Indiana Code Section 32-8-3-10 ambiguous in that reasonable minds may differ as to whether the form of notice requires express notification that failure to commence a timely suit would result in forfeiture of the lien. We also acknowledged that the statute should not be treated as intended to create a trap for the unwary. Id. at 1215. Considering the remedial purpose of the statute, our Court found the letter deficient in that it did not alert to the consequences of noncompliance[.] Id. at 1215.
Wind Dance claims that, unlike in Lafayette Tennis Club, it was not dealing with an unwary layperson but, instead, with Hughess attorney. (Appellants Reply Br. at 3.) However, all are presumed to know the law. Lafayette Tennis Club, 406 N.E.2d at 1214. In any event, the letters at issue were not reasonably calculated to inform either a layman or an attorney that Wind Dance was invoking the statute. As a matter of law, we find them insufficient to constitute statutory notice to commence suit within thirty days. The trial court properly denied Wind Dances motion to dismiss.
BROOK, C.J., and NAJAM, J., concur.