American Bar Association
Forum on Construction Law
How to Avoid Tilting at Windmills:
Points to Consider When Filing
Mechanics’ Liens Against Windfarms
Ed Gentilcore
Division 10
Energy and Environment
Dan King
Division 7
Bonds, Liens & Insurance
Not for the Faint of Heart
• Take all the problems associated with
Mechanics’ Lien Claims
• Throw in Multiple Layers of Property
Ownership
• Compound that with a Multitude of Units
• Stretch Your Average Windfarm Over Miles,
County Lines, and Even Other States
• Stir Vigorously Until Delirious Thinking You
Are Don Quixote
Seriously, Windfarm Liens are in
a League of Their Own
• Effective Lien Filings Require Long Lead
Times For Adequate Preparation
• Cannot Let These Be Beat the Clock Events
• Perhaps Consider Requiring Alternative
Security Upfront
• Are Payment Bonds in Place?
• Material Suppliers are Probably in the Most
Precarious of Positions
Windfarms are All Around Us
• Over 500 Windfarms
 Credit:
http://www.credittoday.net/public/Mechani
cs-Lien-Rights-on-Wind-Solar-Farms.cfm
• Over 43 States
 Id.
• Some are in the Water (Off-Shore)…
 We are NOT going to talk about those!
So Let’s Get to These Windfarms!
What Are They? The Basics
• Turbines: Containing a Significant Number
of Parts
• Towers: Massive Structures and a Great
Deal of Metal Components
• Interconnecting Wiring and Conduit
• Inverters
• Transmission Lines
• Grid Connectors
• Batteries and Other Components
Who Are the Owners?
• Never a Simple Question
• Multiple Owners Usually Involved
• Special Purpose Entities with Limited
Liquid and Little Already Unencumbered
Assets Often Involved
• Is it a Public Entity?
 Many States Do Not Permit Liens on Projects
with a Public Purpose
• Then, Consider Who May Own the
Property on Which the Turbine(s) Sit(s)
• Read the Contracts/Subcontracts for
Waiver of Liens (Enforceable?)
Active Consent Doctrine
• Some Jurisdictions Require “Active
Consent” of Land Owner to the
Improvements
• “Active consent” Can Be Difficult to
Establish
• For Example, Farmer Who Signs Lease
Agreement for the Use of Land for a Tower
and Interconnecting Wiring and Conduit
• “A lease calling for improvements, even
detailed improvements, will not prove the
sort of active consent needed to maintain a
Mechanic’s Lien”
Speaking of Property
• What Property Interests are Implicated on
Windfarm Projects?
• Fee Ownership in the Land
• Ground Leases With/Without Rents Based
on Power Generated and Sold
• Rights of Way
• Public Lands (Forests/Game Lands/Etc.)
• Easements
• All Have to Be Properly Identified in Terms
of Location and Ownership
Speaking of Property
• Simple?? Right??!
• Consider One Project Covers 45,000 Acres
and Involves Over 150 Owners
• Consider Another “Smaller” Project
Involved 35 Owners of Various Interests in
Land and in the Project and Covered
Property Interests in Over Five Different
Townships (Luckily in Only One County)
• Think of Title Work Needed to Be Done!!
• Not to Be Rushed, Especially if Pre-Filing
Notices Required
And What Exactly IS the Project?
• One Windfarm? Several? Thirty? Fifty?
• May Depend on How the Lien Law is
Drafted
• Can Liens Be Consolidated Given a Single
Windfarm?
• Or Must The Liens Be Broken Down Per
Parcel of Land in Hands of a Given Owner?
• Or Must a Separate Lien Be Filed For Each
Turbine/Tower Unit?
• Be Prepared to Support Your Approach …
Without Windfarm Specific Case Law!
A Recent Case! Helpful or Not?
• Fagen, Inc. v. Lava Beds Wind Park, LLC,
No. 42592-2014 – Supreme Court of Idaho
• Decided on January 26, 2016
• Contractor Files Suit to Recover for Work
on Single Wind Park Located in Single
County
• Sues Only LLC’s That Appeared to Be
Developers
• Included Claim to Foreclose on a ML
• Unfortunately, Claim Dismissed and
Appeal Focused More on Timing of Appeal
Back to the Drawing Board
• Use the Internet! Many Projects are
Described in Detail Regarding Footprint
Back to the Drawing Board
• But You Can’t Stop There! Must Confirm!
• Use Public Records/FOIA/Sunshine Law
Requests and Resources
 Ask For Building Permits/Rights of Way
Agreements/Leases
 Look for Deeds/Leases/Easements/Other
Recorded Documents Covering Properties
• Visit the Site(s)
• Use Correspondence/Demands to Create
Possible Estoppel Arguments/Defenses
Back to the Drawing Board
• Look For Other Filed Liens as Examples of
Approaches and Reference Materials
• Beware! These Are Starting Points and
Cannot Substitute for Your Own Due
Diligence!
• No One Approach is Absolutely Correct for
All Projects and Locales
• Consider Different Claimants Pursuing
Liens
• Evaluate Whether Judgment Call Made on
Which Owners to Pursue
• One Lien or Multiple Liens for Same Work?
Some Examples
• Sisken Steel & Supply Company, Inc. v
Highland North, LLC
 Originally filed in Court of Common Pleas of
Cambria County, Pennsylvania by
Fabricator/Supplier of Steel for Highland North
Wind Farm
 Only Liened Owner of Tenancy for Years (Lease)
 Case Ends Up Getting Removed to Fed. Ct.
 Then, Ultimately Transferred to Bankruptcy
Court Where Subcontractor Action Pending
 Had Sisken Joined Owners in Fee, Removal
Might Have Been More Complicated
Some Examples
• SSAB Alabama, Inc., et al. v. Knotts, et al.
 Over 20 Liens Simultaneously Filed in Court of
Common Pleas of Somerset County, Pennsylvania by
Fabricator/Supplier of Steel for Twin Ridges Wind
Farm Project
 Liened Owner of Tenancy for Years (Under Leases)
 Also Liens Fee Owners Based on Leases Providing
Immediate Benefit to Fee Owners From Generation
of Power
 Liens Separated by Fee Owner Parcels and Number of
Turbines/Towers on Each Parcel
 Consolidated Lien Also Filed Against All Parties
Included in Individual Liens
 All Liens Bonded Off to Protect Project/Property
Some Examples
• Ambassador Steel v. IKEA and APEX
 Project Occurred in Vermillion County, Illinois
 Failed to Make Payments to Steel
Fabricator/Supplier
 Numerous Farmers and Land Owners Who
Leased Their Properties Served With
Notice(s) of Subcontractors Claim and Illinois
Mechanic’s Lien Claim-Leasehold
Improvements
 Notice Sent Out to Fee Owners of Property to
Evaluate Whether Fee Owners Had
Shield/Defense to Swirling Lien Claims
Some Examples
Special Considerations
• Complications for Material Suppliers
What Material Went to Which Property?
What Material was not Paid for by the Buyer?
Where was Unpaid Material Located?
How to Allocate Lien Claim to Various
Properties Being Liened?
 Be Extra Careful in Slander of Title
States/Jurisdictions
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Other Considerations
• Upfront Lien Waivers on File
 Dependent on Jurisdiction and Type of Job
• Some Courts are Loath to Recognize
Easements/Rights of Way as Lienable
• OK, You Win. Now How do You Foreclose?
 If Bond/Security Substituted for Lien(s), Then
Not as Complicated
 But, If Not, Then…What Have You Liened?


Will the Lease Be Transferred? The Turbines?
Without Connection to the Grid, What Value?
QUESTIONS?
• Read the Lien Statute and the Annotations
for Analogous Situations
• Review Treatises
• Review and Consider the Arguments Made
in Other Claims/Challenges
THANK YOU!
Dan King
[email protected]
Ed Gentilcore
[email protected]