Major improvements to mechanics' lien litigation procedure

Effective on January 1, 2015, the litigation procedure for certain kinds of mechanics' liens will be dramatically improved. The Iowa Supreme Court has introduced new rules of procedure that may be used to resolve mechanics' lien litigation faster and more efficiently with a lower cost for the parties and the courts. Starting on January 1, 2015, any person or company who wants to foreclose a mechanics' lien will have the option of taking advantage of Iowa's new expedited civil action  track. Cases filed under the ECA will have firm trial dates that cannot be moved. The trial date must be within 12 months of the date the foreclosure is filed. Current guidelines require civil cases, such as cases to foreclose mechanics' liens, receive a trial within 18 months of being filed. More importantly, the costs associated with litigation will be controlled by the ECA rules. One of the biggest drivers of cost in litigation is the discovery process. This is the period where lawyers send requests for information to each other and conduct depositions of people who may have information that is important to the case. Under the ECA rules, each side is only allowed to take three depositions. The rules also limit the numbers of requests parties can send to the other side so parties don't get bogged down in costly fights over whether information is relevant to a case. The ECA rules also streamline trials by requiring that a trial take no more than two days. Each side of the case will only have six hours to present evidence and make their arguments. In cases where there is no jury, a judge will be able to rule much faster than in other civil cases.

The rules identified above are just a sample of the ways that the Iowa Supreme Court is trying to make civil litigation more efficient and accessible. For a case to be eligible for the ECA system, the amount of damages the plaintiff seeks must be less than $75,000. If the plaintiff is successful in an ECA trial, and is awarded more than $75,000 by a jury, then the award will be reduced to $75,000 according to ECA rules. This is an important limitation that potential plaintiffs should discuss with an attorney before deciding to use the ECA system. For many mechanics' lien cases, however, the ECA rules will make sense. In most cases where a contractor has not been paid for work on a job the amount of money he or she is owed is clear. These kinds of cases, where the money at issue is known, will be excellent candidates for resolution via the ECA system. Since the costs in the ECA system are known, lawyers also have an opportunity to charge clients needing to foreclose their mechanics' liens a flat fee. Many clients find a flat fee preferable to traditional hourly billing because costs are clear upfront. Since there is minimal chance of costly motions and discovery fights, the ECA rules helps lawyers better estimate their costs.

Anyone who has a mechanics' lien for less than $75,000 should talk to an attorney about whether the ECA system is right for them. The ECA rules present new opportunities for both contractors and lawyers to work together to resolve mechanics' liens.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.