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Preferred Venue and Mechanic’s Liens; Freeman v. Timberland Home Center, Inc.

Venue issues are a common theme at these presentations. But this one has an interesting twist—a statute that says where the claim can proceed. But what happens if this is a third-party claim and the case is venued elsewhere?

The Nashes hired Clover Homes to build a home for them in Hendricks County. Clover Homes opened an account with Timberland for the building materials. Freeman guaranteed this account for Clover Homes. Freeman and Clover Homes both reside of Putnam County. Timberland is located in Clay County. A subcontractor on the project was V-Line, which is based in Marion County.

The Nashes terminated their contract with Clover Homes in March 2018 after work was done, but before the project was complete. Clover Homes alleges that the Nashes have not paid for all the work done under the contract to build the home and for materials provided by Timberland to build the home.

Clover Homes filed a mechanic’s lien in Hendricks County in May 2018. Timberland then filed suit against Clover Homes in Putnam County in June 2018. Clover Homes then filed a third-party complaint against the Nashes, alleging breach of contract, mechanic’s lien, and defamation. It also filed a claim against V-Line.

The Nashes moved to dismiss or to transfer the claim related to the mechanic’s lien, arguing lack of jurisdiction because IC § 32-28-3-6 required that this claim be venued in Hendricks County. The trial court denied the motion to dismiss but transferred the case to Hendricks County. Clover Homes appealed.

On appeal, the Nashes supported the trial court’s order by arguing that they had been misjoined as parties to the Putnam County case. But the Nashes never presented that argument to the trial court, so the Court held that they could not defend the trial court’s order on this basis. The Court then turned to the preferred venue arguments.

Under Trial Rule 75, Putnam County was clearly a preferred venue for Timberland’s claim. And the general rule is that all other claims arising from the original filing are properly venued in that court. But the Nashes argued that mechanic’s liens are different because of the relevant statute. The Court had previously interpreted that IC § 32-8-3-10 required that an action to foreclose a lien be filed in the county where the property was located and found it consistent with Rule 75(A)(2).

The problem with the Nashes’ argument is that the Rule trumps the statute and the Rule says that there may be more than one preferred venue in any given case.

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.

When it comes to venue, Trial Rule 75 is king. Statutes describing venue are largely a distraction.

Lessons:
1. When it comes to issues of venue, Trial Rule 75 takes precedence over any statute.
2. The county where a complaint is first filed is where venue lies, even if a counterclaim raises issues which would be better resolved in another county.