Indiana Mechanics Lien Update

Like in Illinois, people performing work on buildings in Indiana can place a mechanics lien on the property on which the work was performed. Pursuant to that State's mechanics lien act, lienable work includes the erection, alteration, repair, or removal of a building, among other things.

The Indiana Court of Appeals recently considered what qualifies as a "repair" under the statute. The case Midwest Biohazard Services, LLC v. Rodgers, 893 N.E.2d 1074 (Ind. Ct. App. 2008), concerned the clean-up and removal of a decomposing body.

Apparently Mr. Rodgers, Sr. died in his home. His body was not discovered for several days. During that time, his body decomposed causing fluids to leak into the carpet, subfloor, and down into the basement. Mr. Rodgers, Jr. contracted with Midwest Biohazard Services ("Midwest") for the clean-up and removal of his father's decomposed body. After the work was complete, Mr. Rodgers, Jr. informed Midwest that he would not be paying them.

Midwest quickly recorded a mechanics lien and filed suit to foreclose. The trial court dismissed, finding that the services did not constitute a repair under the statute. On appeal, Midwest argued that it performed repairs, but Mr. Rodgers, Jr. argued that they performed only cleaning services.

The Appellate Court looked to the purpose of the act and to the definition of the work repair. Because that word is not defined in the act, it is given its plain and ordinary meaning, which includes restoring something to its original value. The Court noted that a home free of biohazard contaminants was worth much more than a home that was full of biohazard contaminants, so the house had been repaired by Midwest and they were entitled to their lien.

Common Knowledge

I recently signed up for West's Headnote of the Day. They send you a random headnote from a random case via email everyday. Here is today's:

157 Evidence

157I Judicial Notice

157k14 k. Facts Relating to Human Life, Health, Habits, and Acts.

It is a matter of common knowledge that the United States is not a wine-drinking country, such as are some of the European countries.

In re Riverbank Canning Co., 95 F.2d 327 (1938)

True of False?

This story was posted to the ISBA email exchange. There was some debate back and forth as to whether this was actually a true story. The original poster claimed that this was a true story that took place in Charlotte, North Carolina. True or not, it is a good story that is worth reposting here. Here it is:

A lawyer purchased a box of very rare and expensive cigars, then insured them against fire, among other things.

Within a month, having smoked his entire stockpile of these great cigars, the lawyer filed a claim against the insurance company. In his claim, the lawyer stated the cigars were lost 'in a series of small fires.'

The insurance company refused to pay, citing the obvious reason, that the man had consumed the cigars in the normal fashion!

The lawyer sued and WON!

While delivering the ruling, the judge agreed with the insurance company that the claim was frivolous. The judge stated nevertheless, that the lawyer held a policy from the company, in which it had warranted that the cigars were insurable and also guaranteed that it would insure them against fire, without defining what is considered to be unacceptable 'fire' and was obligated to pay the claim.

Rather than endure lengthy and costly appeal process, the insurance company accepted the ruling and paid $15,000 to the lawyer for his loss of the cigars that perished in the 'fires'.

NOW FOR THE BEST PART....

After the lawyer cashed the check, the insurance company had him arrested on 24 counts of ARSON!!!

With his own insurance claim and testimony from the previous case being used against him, the lawyer was convicted of intentionally burning his insured property and was sentenced to 24 months in jail and a $24,000 fine.

What do you think? True or not?

Non-Wage Garnishments

In April I wrote about a successful adversary case in which I obtained a non-dischargeable judgment on behalf of my client for approximately $130,000.00. Here is the original article. One commenter noted that the case had been handled perfectly up to that point, but the commenter wondered how I expected to collect that kind of money from someone who had just filed bankruptcy.

This particular defendant runs a small business as a sole proprietorship. After several weeks of fruitless negotiations regarding a monthly payment plan, I issued a non-wage garnishment to the bank at which the defendant keeps his "business" accounts. The bank froze nearly $14,000.00. Now I had this guy's attention. We eventually worked out an agreement to accept $10,000.00, release $4,000.00, and the defendant would pay $2,000.00 per month towards his remaining balance beginning July 1st.

Then, a couple of days later, I received a call from the bank. They wanted to "amend" their answer down to about $1,800.00. They apparently paid out on a $12,000.00 check after receiving my garnishment summons. I told them that I could not accept an "amended" answer. I had already filed my motion for turnover of the $14,000.00.

Hearing on that motion is scheduled for next Wednesday. While preparing for that hearing, I dusted off the old Code of Civil Procedure. The garnishment statute begins at 735 ILCS 5/12-701. Section 707 states that the judgment operates as a lien on the non-exempt property of the debtor "held by the garnishee at the time of service of the garnishment summons and remains a lien thereon pending the garnishment proceeding." The bank ignored the lien by cashing the $12,000.00 check.

The appropriate remedy is the entry of a judgment against the garnishee. Actually, all turnover orders are judgments against the bank according to Section 711. The appropriate language for a turnover order is that "judgment shall enter in favor of defendant, and against garnishee/respondent, for the use of plaintiff, in the amount of _____." On Wednesday, I plan to enter a standard turnover order. When the bank says that it can't pay, I will begin collections against the bank. The question becomes whether the bank will try to recoup that money from my defendant, which could jeopardize my monthly payment plan. I'll keep you posted.

NIU Golf Outing

The NIU College of Law Golf Outing & Alumni Awards Dinner will be held on June 12, 2009 at River Heights Golf Course in DeKalb. The Northern Law Blog is once again sponsoring a hole at the golf outing.

The Northern Law Blog Finance Committee has also once again authorized me to offer a free drink to one lucky Law Blog reader. After reviewing the Law Blog budget, it was determined that the free drink would go to the first Law Blog reader to ace the eighteenth hole.

To get in the spirit, I am asking for commenters to give their favorite Caddyshack quotes. I hope to see some of you on June 12th.

Violations of the Automatic Stay

Pete Bastianen's last post did a great job of explaining when the automatic stay is limited to thirty days and when it is terminated in its entirety. But, when the automatic stay is in effect, does a violation require an affirmative act, or can the automatic stay be violated by failing to act at all?

A recent case out of the 7th Circuit says that a creditor can violate the automatic stay by failing to act. In Re Kuehn, 563 F.3d 289 (2009), concerned a student enrolled at a two-year master's degree program at Cardinal Stritch University. The student fell behind nearly $6,000 on her tuition, but was still allowed to complete her classes and graduate. After graduation, the student requested a copy of her transcripts from the school. The school did not provide the transcript, presumably in an attempt to get paid. Then, the student filed bankruptcy. After filing, the student again requested the transcripts and was again denied.

In ruling that the school's refusal to provide the transcript violated the automatic stay, the court applied the "coercive effects" test, which says that a creditor acts to collect a debt if it acts or fails to act in a coercive manner with the sole purpose of collecting a debt. Because the transcript had no intrinsic value to the university, and was essentially worth only as much as the paper on which it was printed (or less), the university was being coercive by withholding it from the student.

Does the 30-day bankruptcy stay terminate in its entirety?

The 2005 Amendments to the bankruptcy code included some changes to application of the automatic stay in serial bankruptcy cases. Under 11 U.S.C. §362(c)(3), a Debtor who files a case within one year of the dismissal of a prior case only gets the stay for 30 days, unless extended on timely motion. Under 11 U.S.C §362(c)(4), a Debtor who files a case within one year of the dismissal of two or more prior cases gets no stay at all, unless imposed on timely motion. If the stay is not extended or imposed, a party in interest can file a motion to confirm that no stay is in effect.

Seems simple enough, but alas, it isn’t. Some Courts have concluded that the inclusion of the phrase "with respect to the debtor" in §362(c)(3) and omission of that phrase from §362(c)(4) means that the 30 day stay terminates only as to the debtor and the debtor’s property, but does not terminate with respect to property of the bankruptcy estate. These Courts have held that if the 30 day stay is not extended on timely motion, Creditors can take action against the Debtor by making collection calls and sending collection letters, but can not take action against property of the bankruptcy estate by repossessing or foreclosing their collateral.

Other Courts have concluded that the phrase "with respect to the debtor" in §362(c)(3)and omission of that phrase from §362(c)(4) means that the 30-day stay applies to one spouse in a joint case, where one spouse had a prior bankruptcy case dismissed within a year of the filing of the current case. These Courts have criticized opposing views as contrary to legislative intent, and held that unless extended on timely motion, the 30 day stay terminates in its entirety.

Recently, Bankruptcy Judge Wedoff considered the issue and held that the 30 day stay terminates in its entirety. In Re Daniels, 2009 Bankr. LEXIS 919. Previously, Judge Schmetterer came to the same conclusion. In Re Curry, 324 B.R. 394, 2007 Bankr. Lexis 474.

Welcome Pete Bastianen!

The Northern Law Blog is pleased to announce the addition of another Guest Contributor. Pete Bastianen is employed at Codilis & Associates, P.C. in Burr Ridge. He concentrates his practice in the areas of foreclosure and bankruptcy. We look forward to hearing more from Pete in these areas.

Welcome aboard Pete!

Big Brother is watching...and listening

This interesting example of the utmost invasion of privacy is out of London. A 48-year-old woman was apparently arrested for...ahem..."execessively noisy sex". If you desire, you can find the entire article at http://www.suntimes.com/news/otherviews/1577146,CST-EDT-open16.article.

I had no idea that Great Britain had become such a part of the public's private life. I found the fact that they have 5 million closed-circuit television cameras to monitor people's outside behavior a bit troubling. And now, they have decided to move their way into the public's bedroom. The offending woman was previously banned from having excessively noisy sex in all of England because someone had previously reported her. According to the article, a neighbor can make a complaint that someone is disturbing the peace and ultimately get an Anti-Social Behavior Order issued against the offending party. This is what happened to our 48-year-old vocalist. Perhaps we should consider double sound-proofing our walls.