Reversal: Trial court erred by transferring preferred venue in homebuilder’s dispute

A custom homebuilder has secured a reversal from the Indiana Court of Appeals in a preferred venue dispute after successfully arguing that the case was wrongly transferred to another county.

In July 2017, Clover Homes entered into a selling contract with Tracy and Robbyn Nash, who agreed to buy a home to be built on their Hendricks County property.

But Clover Homes, whose principal place of business is in Putnam County, later alleged the Nashes did not pay for all of the work done under the contract or for the materials used to build the home after the Nashes terminated the building contract in 2018. Clover Homes then filed in Hendricks County a notice of mechanic’s lien on the lot, and the Nashes served Clover Homes notice to commence suit to foreclose its mechanic’s lien within 30 days.

Meanwhile, Timberland Home Center, who opened a charge account for the building materials, initiated a suit in Putnam Superior Court against Clover Homes seeking payment for its balance due. A third-party complaint was then filed by Clover Homes against the Nashes alleging breach of contract and a claim for foreclosure of Clover Homes’ mechanic’s lien.

In response, the Nashes filed a motion to dismiss the claim of foreclosure of the mechanics lien in Clover Homes’ third-party complaint for lack of jurisdiction, arguing Indiana Code § 32-28-3-6 required the foreclosure action to be filed in Hendricks County, where the property subject to the lien is located. The Nashes further argued that pursuant Ford v. Culp Custom Homes, Inc., 731 N.E.2d 468 (Ind. Ct. App. 2000), the preferred venue for the foreclosure claim rested in Hendricks County, so they requested that the trial court transfer venue of the amended third-party complaint in lieu of the dismissal of the foreclosure count.

Clover Homes filed a surrebuttal to the Nashes’ motion to transfer, arguing that pursuant to Indiana Trial Rule 75, Putnam County was a preferred venue, and because the action was initiated in a county of preferred venue, venue could not be transferred. However, the trial court issued an order transferring the entire action to Hendricks County, basing its decision on Ford.

But an appellate panel reversed that decision in the interlocutory appeal of Clover Homes , et al. v. Timberland Home Center , et al., 19A-CC-1889, agreeing with Clover Homes that the trial court erred by transferring the action because preferred venue had already been established in Putnam County.

“The Nashes’ argument that Ford supports transfer in this case is misplaced,” Judge Terry Crone wrote for the appellate court. “First, Section 32-8-3-10 has been repealed and replaced with Section 32-28-3-10, which now explicitly requires that an action to foreclose a mechanic’s lien be filed in the county where the property is located. To that extent, Ford has been superseded by statute.

“Second, the Nashes’ argument relies heavily on Ford’s holding that its interpretation of Section 32-8-3-10 was consistent with the preferred venue category listed in Trial Rule 75(A)(2). Section 32-28-3-10 may be consistent with Trial Rule 75(A)(2), but that is not the end of the analysis. There may be more than one preferred venue in any given case,” Crone continued.

Simply put, Ford did not address the issue of whether transfer is proper when preferred venue has already been established, the appellate court said

“The Nashes’ argument ignores the legal principles that the preferred venue status of a county is determined when an action is commenced by the filing of a complaint … and if the county where the complaint was filed is a preferred venue, transfer to another county based on venue is improper. … Although the Nashes were brought into this action by third-party complaint, we can discern no reason, and the Nashes offer none, to depart from established principles,” the appellate court concluded.

Thus, the panel reversed the transfer order in Clover Homes’ favor.