KeyBank, NA v. Columbus Campus, LLC,

R. Russell O'Rourke

Case Conclusion Date:March 13, 2012

Practice Area:Construction / Development

Outcome:Pending in the Franklin County Court of Appeals

Description:We are Amicus Counsel for the American Subcontractors Association and ASA of Ohio. The lender required the owner to place a contractual provision in its contract with the prime contractor that waived mechanic's lien rights and required the contractor to place similar language in its subcontracts, waiving mechanic's lien rights and requiring subcontractors to place similar language in their subcontracts, etc. The contractor did not place the language in the subcontracts. No subcontractor or material supplier directly waived its mechanic's lien rights via contract. The lender successfully argued to the trial court that the flowdown clause carries with it ancillary contract clauses such as mechanic's lien waivers. The lender was a construction lender and had the possibility of properly documenting its construction loan, but failed to do so and is now trying to enforce a principle that a contractor can waive mechanic's lien rights for all subcontractors and suppliers, however distant, by flowdown clause alone.