03/31/2022

Editor's Notes

Mechanic’s liens and public works payment bonds provide payment security to parties furnishing labor or materials to a construction project. There is a question as to how far down the procurement chain this protection extends. Courts have carved out an exception for the so-called “remote supplier.” A supplier that sells materials to a party performing work at the project site—a contractor or subcontractor—has payment protection. A supplier that sells to another supplier does not. The concern is that the project owner might be subjected to liens by remote suppliers whose products just happened to end up in the owner’s project.

 

For many years, the rule in Indiana was that a supplier-to-supplier transaction could not create mechanic’s lien rights. The issue finally came before the Indiana Supreme Court. The state lien statute does not limit supplier lien rights to sales to contractors or subcontractors. But did the “remote supplier” concern justify the rule? Was this really a matter for the state legislature, not the courts?

 

The other case in this issue involved the COVID pandemic as a cause of excusable delay. It would certainly seem to be an event that was beyond the control and without the fault of the contractor. But could this contractor prove causation? Did COVID really have the impact on the contractor’s work as the contractor alleged?

 

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