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What a Difference Two Days Make
By Catharine S. Andricos

Many statutes we deal with as consumer credit lawyers, especially in the context of real estate foreclosures, provide for publication of notices. Many of these statutes require that a creditor wait until the expiration of a certain number of days after the notice is published before taking steps to enforce its security interest.

A recent case in Indiana involved publication of a notice by a towing company under the state’s mechanic’s lien statute. In this case, the statute’s use of the word “placed” rather than “published” caused some major problems for the towing company. Here’s what happened.

The police impounded a car owned by Frank Niles. Rick’s Towing and Maintenance, LLC, towed the car and sent letters to Niles and the lienholder of record stating that the car would be sold if it was not claimed by a certain date.

Fifteen days before the scheduled date of sale, Rick’s Towing contacted the Indianapolis Star with a request to publish notice of the sale. The newspaper told Rick’s Towing that the notice would be published two days later. Thirteen days after publication of the notice of sale, Niles’s car was sold at auction. Based on these facts, Niles sued Rick’s Towing, alleging failure to comply with the Indiana mechanic’s lien statute and conversion. The trial court granted summary judgment for Niles. Rick’s Towing appealed, and the Indiana Court of Appeals affirmed.

Under Indiana’s mechanic’s lien statute, Rick’s Towing was prohibited from selling Niles’s car before 15 days after the notice of sale had been “placed.” Rick’s Towing argued that the notice was timely placed because it had contacted the newspaper to request publication 15 days before the sale. The appellate court rejected this argument, finding that the only reasonable definition of “placed” in this context was “published,” meaning that the notice had to be published at least 15 days before the sale. Otherwise, the requirements of the statute would be satisfied without the notice ever having been published. Accordingly, the appellate court found that Rick’s Towing failed to meet the mechanic’s lien statute’s requirements to auction Niles’s car by selling the car two days early.

A word to the wise: If a statute can be interpreted two different ways, make sure you use the interpretation that most protects the consumer. Otherwise, you risk violating the law, as the towing company did in this case.

Gillespie v. Niles, 2011 Ind. App. LEXIS 1863 (Ind. App. October 28, 2011).

Catharine S. Andricos is an associate in the Washington, D.C., office of Hudson Cook, LLP. Catharine can be reached at 202-327-9706 or by email at candricos@hudco.com.

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