McCartin McAuliffe Mechanical v. Midwest, 685 N.E.2d 165 (Ind. App. 1997).

Facts: A mechanical contractor entered into a contract with a privately owned public utility to construct a natural gas pipeline. After the utility failed to pay in a timely manner, the contractor stopped work and filed mechanics' liens against various property interests associated with the pipeline. Later, the contractor filed suit against the utility seeking to foreclose on the mechanics' liens. The utility is subject to the Federal Energy Regulatory Commission's (FERC) jurisdiction and must comply with the provisions of the federal Natural Gas Act (NGA). The utility argued that Indiana's mechanics' lien statutes were preempted by the NGA and that Indiana law did not permit mechanics' liens on property serving an essential public use or purpose. The trial court granted the utility's motion for summary judgment.

Holding: Reversed. A trial court can allow foreclosure of the property subject to approval by the FERC. While federal regulations may complicate the foreclosure proceedings, the mechanics' lien foreclosure does not conflict with the regulations. Accordingly, Indiana's mechanics' lien laws are not preempted by the NGA. Although a gas company is a necessary public utility, a particular private company's ownership of a public utility is not necessary for the public benefit. Therefore, the public use and necessity exception does not apply.

ILLINOIS RESULT: In Illinois, the contractor's lien would be brought under the Oil and Gas Lien Act, 770 ILCS 70/1. A case has not been decided that addresses the preemption of the Oil and Gas Lien Act by the NGA. Unlike Indiana, neither the Illinois Mechanics' Lien Act nor the Illinois Oil and Gas Lien Act contains a provision prohibiting the acquisition and enforcement of liens against a public project held for public use. The lien is placed on the funding source of the project, not the property on which the project is located. Gunther v. O'Brien Bros. Const. Co., 16 N.E.2d 890, 369 Ill. 362 (Ill. 1938).

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