Monthly Lien Law Update: December 2019

adminLien Laws Alert, Mechanics Lien, Notice of Intent

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Payment of First Facility Bills May Affect Funding for Second Facility.

Pyrolyx USA completed its first solid waste processing facility in Terre Haute, Indiana and now seeks to build a second facility funded by a $70 million Economic Development pass-through bond. Funding of the bond may be complicated for the used tire processing facility since an equipment provider for the first facility alleges it still hasn’t been paid. Zeppelin Systems USA, Inc. filed a $3.5 million mechanics lien against the Pyrolyx property in September 2019 and amended the lien to increase the amount owed to $5.5 million in November 2019.

Zeppelin filed a lawsuit seeking payment of the $5.5 million, alleging Pyrolox only paid it $15.8 million of the $21.39 million contract value, which includes 25 change orders. Zeppelin is also seeking to foreclose its mechanics lien against Pyrolyx first solid waste processing facility to recover the $5.5 million owed. It is unclear whether the payment dispute on the first Pyrolyx facility will hamper funding for the second facility Pyrolyx seeks to build.




Prairie Queen Construction Becomes Prairie Liens

EDP Renewables North America, LLC began in 2018 to construct its Prairie Queen wind farm in Allen County, Kansas. The construction project required executing numerous lease agreements with landowners for placement of the wind turbines. In November of this year, allegations of EDPR’s nonpayment to construction suppliers and service providers came to light when mechanic liens were filed against these landowners for almost $1.8 million. EDPR contracted with a Kansas company to provide materials and services for the construction of the infrastructure and roads needed to erect the wind turbines. Since EDPR does not own the land where the wind farm was established, the mechanic liens attach to the landowners’ property who leased the land to EDPR. Although these landowners are being compensated for allowing the Prairie Queen wind turbines on their property, they are not liable for unpaid construction invoices. Nonetheless, their property rights are severely limited and imperiled by the mechanic liens and EDPR’s failure to pay its construction contractors and suppliers.

Gambling on Garapan Casino Construction Project Becomes a Bad Bet

Imperial Pacific International, LLC hired Pacific Rim Land Development LLC, to perform construction on IPI’s hotel/casino project in Garapan. Pacific Rim alleges IPI failed to pay for $5.65 million in construction services performed. IPI responded by alleging Pacific Rim intentionally overstated the costs it incurred in performing construction services. Pacific Rim filed a civil suit to recover payment of the amounts due as well as filed a mechanics lien against the hotel/casino to secure its right to payment.

The court handling the matter handed Pacific Rim a few loses on their claims against IPI but none were fatal. The court first dismissed Pacific Rim’s civil suit for lack of jurisdiction but is allowing Pacific Rim to amend its complaint to fix the issue. The court also denied the mechanics lien but, again, is giving Pacific Rim the opportunity to amend the filing. The Pacific Rim dispute with IPI is only one of many plaguing the Garapan hotel/casino project. Several other former vendors and contractors are petitioning the Commonwealth Casino Commission to take action against IPI for a pattern of non-payment which has resulted in over $35 million in unpaid construction invoices.