Longview credit insurer looks to invalidate $350 million of claims

By Kali Hays

New York, Sept. 25 – Longview Power, LLC’s insurer, First American Title Insurance Co., is seeking a dismissal or subordination of $350.45 million of mechanics liens claims against Longview by Kvaerner North American Construction, Inc., Foster Wheeler North America Corp. and Seimens Energy. Inc., according to an adversary proceeding filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the mechanics liens were filed against Longview’s real property located in West Virginia by Kvaerner, Foster Wheeler and Siemens in 2012 related to disputes over the construction, operation and repair of a coal-fired boiler that Foster Wheeler agreed to build for Longview in January 2007.

The boiler was built and operated on land leased by Longview from Monongalia County Development Authority and the construction of the facility was financed through MUFG Union Bank, NA under a credit agreement insured by First American.

According to the complaint, neither First American nor Union Bank were named a party to any of the litigation that has taken place between Longview and the mechanics lien parties as required under West Virginia’s Bankruptcy Code.

With this alleged violation, First American claims that the liens “are not entitled to priority over the credit line deed of trust and are invalid under West Virginia mechanics’ lien statutes because at the time the contractors allege to have commenced work on the power facility, Longview was not the owner of the leased real property.”

First American asked that the court issue a declaratory judgment stating that the mechanics’ liens are invalid “as a matter of law” and if allowed, are not entitled to priority.

Longview, an integrated power generation enterprise based in Maidsville, W.Va., filed for bankruptcy on Aug. 30, 2013. The Chapter 11 case number is 13-12211.

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