NEW M A R K E T S NEW M A R K E T S
NEW OPPORTUNITIES NEW OPPORTUNITIES

P I M A

C O T T O N

TANGIS

COTTON

S i p p o

SIPPO Programme for the Promotion of Alpaca Wool and Pima Cotton Knitwear from Bolivia and Peru
SIPPOs (Swiss Import Promotion Programme) strong commitment in promoting Alpaca-wool and Pima cotton products have currently made these fibers known in Switzerland and Europe. In 2000, SIPPO detected the big potential of local Alpaca and Pima cotton production in Peru and Bolivia. The biggest need for action consisted in marketing the products in Switzerland and Europe. In addition, local people were trained in fashion and product design. On behalf of SIPPO, a local on-site expert is helping producers in the inspection process of the ready-to-send pieces and in the different production processes. The effort was worthwhile. Alpaca and Pima became known by means of wellaimed design workshops, promotion actions in fashion centers and information campaigns. Thanks to this assistance, the exportation volume of SIPPOsupported companies to Switzerland and countries of the European Union was increased in 35%. SIPPO is fostering the upcoming generation by organizing study tours and workshops for students of the I.T.C textile school. This is aimed at arousing the interest of young people in alpaca and Pima cotton manufacturing and facilitating them access to this production sector.
All the information you find in this brochure was carefully researched on site and compiled by our SIPPO expert Denis Gouttenoire. We know each company and their products and we are sure this brochure will help you in the selection of a new supplier.
Eve Baechtold, Project Manager

Eve Baechtold

Denis Gouttenoire

Bolivia

Editorial - Contents

SIPPO - Introduction

Alpaca

Pima cotton

Tangis cotton
A few tips - Company profiles
Informations - Conclusions - Disclaimer

Alpaca-Pima-Collection

Copyright by Osec

o p p s i

Swiss Import Promotion Programme is a mandate from the State Secretariat for Economic Affairs of Switzerland (SECO), carried out by Osec. The programme supports small and medium-sized enterprises (SME) from emerging markets and markets in transition to access the Swiss and European markets. On the other hand, SIPPO helps Swiss and European importers to find suitable partners in emerging countries and countries in transition. The programme has five main goals: To inform the Swiss and European import economy about new market sources To strengthen trade institutions and business sector associations in the trade promotion process To increase the competitiveness of SME in selected partner countries To develop the manufacturing and exporting skills of SME in selected partner countries To establish qualified trade contacts between SME from emerging markets and markets in transition and the Swiss and European import economy
Osec Stampfenbachstrasse 85 P.O. Box 2407 CH-8021 Zurich Phone +00 Fax +02 E-mail: info@osec.ch www.osec.ch
The target groups are In emerging countries and countries in transition: Small and medium-sized companies and cooperatives Business organisations, chambers of commerce, associations In the importing countries (Switzerland, EU): Importers, major distributors and the processing industry Business organisations, chambers of commerce, associations
This brochure presents a short history of three outstanding fibers:

Alpaca Pima

cotton
You'll also find the profiles of 3 Peruvian spinning mills 19 Bolivian or Peruvian companies manufacturing flat knitted garments made of alpaca, lama, cotton or blends
T h e n , w h a t s n e x t ? Well, if after browsing through the brochure you feel the need to know more about alpaca and Pima cotton products, if your curiosity is awoken, if you can tell the difference between an alpaca Huacaya and an alpaca Suri, if you decide to send an e-mail to just one of the listed companies, if you pick-up your phone to call the SIPPO to obtain more information about our alpaca-Pima program in Peru and Bolivia and how we can eventually help you to make business contacts in these 2 countries, or even if you just decide to spend your next holidays in Bolivia or Peru to discover the wonders of the highlands people, traditions, industry and landscape, then we will be really happy and satisfied.

Tangis

4 companie coordinating the hand-knitted garment production in the Peruvian altiplano or high plateau
As we have focused exclusively on flat knit manufacturing what you will not find in the brochure is information about the following products which constitute nevertheless very important Peruvian and Bolivian exports: llama and alpaca slivers, tops and yarns, circular knit products and woven products.

The pre-eminent breeding area for The guanaco and the vicugna (or vicua) are wild animals while the Vicuna Lake Titicaca - Peruvian / Bolivian altiplano llama and the alpaca have been progressively domesticated by the inhabitants of the Andes. The long domestication process probably started around 5,000 b.c. Umayo Lake, Island populated with vicuas, Sillustani / Puno surrounding lake Titicaca, cradle of the pre-Inca civilization of Tiwanaku (Tihuanacu) and presently part of the Peruvian department of Puno. Andeans Camelidaes was and still is located in the highlands (altiplano)
The ecological area called Puna in the south of Peru situated between 3,800 and 4,800 m above sea level is the most important breeding area for alpacas, specially the humid Puna (as opposed to the dry Puna).
But the main and most obvious difference between these 2 varieties, the one which will allow you to differentiate them immediately (as long as they have not been freshly sheared!) lies in the appearance of their fleece. The huacaya has a

Alpaca Huacay a

There are 2 varieties of alpacas, the huacaya (sometimes spelled huacayo, wakayo or wakaya) and the suri. The first variety represents approximately 90 % of the present alpaca population.
spongy and dense fleece. The Suris fleece, on the other hand, hangs down parallel to the body in long tufts / spirals of hairs (see picture).
The Suri fiber is slightly longer, thinner, White-colored Suri Alpaca The huacaya is more resistant than the suri to the tough environmental conditions prevailing in the puna. It is also a bit larger than the suri, stouter with a slightly rounded back and general shape whereas the suri presents a straighter back and a more delicate and fragile appearance. softer and shinier than the huacaya type. Suri fibers are mostly used to produce woven fabric whereas huacaya fibers are used for knitted fabrics.
Alpaca Huacay a in 3 different hues

F I B E R

Alpaca fibers come in various natural colors: white, beige, coffee, grey and black with many variations in tones and a lot of possible combinations.

using hand operated and/or semiindustrial knitting machines (in some cases electronic programmable machines) constitute the second category.
premises of the person coordinating the production.
In Peru and Bolivia, the three following combinations of techniques, products and working organisation can be found: This category has many groups and individuals; the sector can sometimes be very informal but the knowledge
This sector includes small family-run workshops having 3 to 5 machines as well as organized and professional companies with much more equipment and staff. This type of organization is the most commonly found, they knit from gauge 3 to gauge 10 mostly, but gauges 3, 5 and 7 are the most commonly used.
Entirely hand-knitted, hand
and experience of the knitters cannot be questioned. What is needed in that case is a strong organization, a very strict follow-up of the production process (working through an agent or a production coordinator is highly
crocheted or hand woven items produced by individuals and groups scattered in various regions of Peru and Bolivia.
They are mostly groups of women organized in workshops by villages, hamlets or neighborhoods or independent women; both offer their services in knitting, crocheting or weaving on a daily basis to earn extra income. For the vast majority of these women, the textile-related activity is a part-time job (4 hours a day as an average) as they certainly have many other things to attend to (agricultural
recommended in that case) and a strict monitoring of working conditions to avoid any form of exploitation.
The last and smallest category is
made of medium-superior and large size companies, well organized, well ran, with sufficient investment capacities to
Because of its flexibility and creative diversity, hand knit sectors offer designers a very interesting experimental ground to test new ideas and designs. Production capacity in that field is pretty important.
buy state-of-the-art electronic knitting machines and and all modern equipment (circular looping machines, washing, drying, pressing etc.).

The history of the Tangis cotton is the history of a man, a truly exceptional man Jacquard whose name was Fermin Tangis. (All the information given below comes from the book: Innovacin en la agricultura: Fermin Tangis y el algodn en el Per by Marcos Cueto and Jorge Lossio - Lima, Peru, Centro de Investigacin de la Universidad del Pacfico - 1999).
In 1905, Fermin Tangis, 60 years old at the time, took the decision to look for a variety of cotton immune to Cotton Wilt.
For 3 years, with an incredible perseverance, obstinacy and conviction he went on foot visiting and
Fermin Tangis was born in 1851 in San Juan de Puerto Rico still under Spanish rule, so he had the Spanish citizenship. In 1873, he arrived in the port of Callao (Lima, Peru). For 17 years, he worked in various places and companies in Peru.
relentlessly exploring all the farmlands located in and around the Pisco valley, each time he came across a cotton plant which seemed to have resisted the plague he collected some seeds and replanted them in a soil infested by Cotton Wilt.
In 1890, he decided to settle in the province of Pisco, situated on the Peruvian coastline 200 km south of Lima to raise cotton in his farm Urrutia located in the Pisco valley.
It took him 3 years of persistent efforts, of patient and systematic collection, innumerable unsuccessful trials and minute observations before finally getting a positive result.
In 1904, the first cases of Cotton Wilt, a disease caused by a fungus attakking the cotton roots, hit Peru
In 1908, Fermin Tangis ran into a cotton plant which had successfully resisted the plague and on top of
Thanks to the courage, vision, inexhaustible energy, conviction and generosity of that truly exceptional man, the Peruvian cotton industry was again set up and ready to compete with real sales points in the international cotton market for the next 100 years.
Today, Tangis cotton represents approximately 70 % of the total Peruvian cotton exports; its price and Hand knit workshop properties (good fiber length, good color, excellent tensile strength, soft texture, remarkable dyeing affinity that, seemed to present very interesting fiber characteristics. Fermin Tangis could have sold these seeds and made his own fortune, but he did not. He simply distributed the Then it took him another full year to carry out the necessary tests and operate a first selection and 3 (!) additional years to refine the selection and obtain a new variety of cotton resistant to Cotton Wilt and presenting fibers properties clearly superior to other Peruvian cottons (good length, good cream-white color, good productivity and tensile strength) new seeds freely among all the cotton farmers. During the next 90 years, the variety he had discovered and selected would be refined and improved by agricultural institutes and research centers to avoid its degeneration (that Tangis had foreseen). and good absorption capacity) are highly appreciated by foreign buyers worldwide.

reading

understanding

easier

Gauges are indicated by the term E (English gauge) followed by the gauge number. For example E.7 = English Gauge 7. The number of machines per gauge is indicated using the following symbol x followed by the number of machines in the given gauge. For example: Knitstar SK17, E.7 x 3 (3 units of flat knit machines brand Knitstar model SK-17 in gauge 7) Delivery time: it obviously depends of the time that will be necessary to receive the yarn from the spinning mill that can vary a lot according to the yarn composition and period of the year (the peak season for alpaca being from April to August). So, in general, to have your garments production completed, do consider 60 days
delivery as a minimum and 90 days a safe and probably more realistic option. Customs duties: all apparel products exported from Peru to the USA and European Union markets are exempted from duties. For Europe, a certificate of origin form A is requested and also for the USA plus a textile affidavit. Most of the export companies are aware of export procedures and will provide you with requested documents. Shipments can be made by air or by sea: if by air it will be through the Jorge Chavez International Airport in Lima or the La Paz Airport. If by sea, the port of Callao (close to Lima) will most probably be used.
Shipping agents: most of them have their main office in Lima and La Paz Payment terms: most of the time and in case of first contact / first order an irrevocable and confirmed at sight documentary credit is requested. For subsequent orders, payment terms can be discussed. Accessories (buttons, zippers, etc.) many foreign buyers prefer to import them. Nevertheless, some accessories can be sourced in Peru and Bolivia. Express parcels: all international companies specialized in express parcel services are present in Peru and Bolivia. Average transit time: 5 days to and from Europe and 3 to 4 days to and from the USA.
25 Bolivian and Peruvian companies manufacturing flat knitted garments made of alpaca, cotton or blends:

Company

profiles
19 Bolivian or Peruvian companies manufacturing flat-knitted garments made of alpaca, lama, cotton or blends:
ALTIFIBERS S.A. (p. 26) ALPACRYL S.A. (p. 27) ARTESANIA MON REPOS S.A. (p. 28) CONCEPTOS DEL PERU S.A.C (p. 29) C Y C CHOZZIE S.R.L. (p. 30) CORDILLERA AZUL (p. 31) CONFECCIONES MEXICO S.A.(p. 32) CREACIONES CARSANT S.A. (p. 33) D'LUGARO S.A.C. (p. 34) EL AYNI S.A. (p. 35)

garments and accessories (scarves, gloves, hats) mostly for women and men and in the future for children in baby alpaca and alpaca SF, Pima and Tanguis cotton, alpaca and cotton blends. Yarns come from wellestablished Peruvian spinning mills
USA 70 %, Europe 30 % Clients: Peruvian Connection, The Apparel Group, Fairway & Greene, Beyond Threads, Shanes Barnes, Nat Nats company.
Monthly production capacity per gauge:
(Cortextil, Creditex, Inca Tops, Itessa, La Colonial, Michell, Textil el Amazonas etc.). The Factory has an inhouse laundry facility, a laundry technician, a designer, a quality team and a manual, no CAD/CAM system. Only a limited hand-knitted production can be organized.
E.14 - 5,000 pcs E.12 - 10,000 pcs E.8 - 7,000 pcs E.7 - 3,000 pcs
Prototypes Salesman samples Bulk Production Available Color 2 weeks No extra charges 30 to 60 days FOB + 30 % 60 days

2 weeks

Minimum per color: (In kg of yarns)
Contact: Mr. Froiln Encarnacin H.
Plain colors alpaca, alpaca blends and cotton - 20 kg Chin, heather, moulin, fancy - 40 kg Cotton combinations plain or chin, moulin - 40 kg
Average percentage of second rate pieces: 1 % Equipment:
Equipment: Tricotosa rectilineal
Address: Alpacryl S.A. Knitwear Factory Agustin Gamarra 263 San Luis Lima 30 - Peru Direct Phone + 71 Fax + Direct e-mail: froilan.e@alpacryl.com
2 MC Universal WPJ E.729 WPJ E.Stoll CMS 411.6 E.E.14 Scheller 2 BS E.BSI E.12
Stoll CMSW 433 TC GG10 computerized, Tricotosa rectilineal Universal MC -720 GG8 computerized, Tricotosa rectilineal Stoll CMS 433.6 GG7 computerized, Tricotosa rectilineal Stoll ANVH-BLM GG8 computerized, Tricotosa rectilineal Stoll LNCU-2B GG8 computerized, Tricotosa rectilineal Stoll lifado GG8-12 electromechanical Loom domestic machine, passap, singer, brother, GG5, GG7, GG8, Manual machines, Coppo GG8, GG10, Assembler of dishes GG7, GG8, GG10, GG12 Sewn rectilineal machines
ARTESANIAS MON REPOS S.A.
AnnualExports: US$ 1,800,000,00 Type of company: Exporter Founded in: 1962 Employees: 75 in plant and 250 at home Customers:
We offers fully fashioned, cut and sewn, hand-knitted and crocheted garments, accessories (scarves, hats, gloves, shawls and others) mainly for women and men, last year we started to produce babys garments. Our principal material used is 100% Baby Alpaca, 100% Alpaca SF, 100% Pima Cotoon and Baby Silk. Our yarns suppliers are of the most known Peruvian spinning mills, Cortextil for Cotton yarn and Incatops. Michell and Productos del Sur for Alpaca yarn.

Prototypes Salesman samples Bulk Production Available Color 2 weeks Price 20% more 45 days price 70 days 5 days
of the production process: on receipt of the fabric, before cutting, after cutting, during sewing (parts and final), before and after steaming, then final
inspection that allows Chozzie to offer a good level of quality and reliability. The company does not employ any designers but Mrs Oscategui closely follows the fashion trends and
Contact : Mrs. Hilda Pease General Manager
Minimum per color: (In kg of yarns) Chin, heather, moulin, fancy yarns: 40 kg or more Exports of ready made garments:
is very much involved in product development together with her 40 workers (mostly women).
Address: CyC Chozzie S.R.L. Risso # 335 Lince Lima 14 Peru Phone + 30 Fax + 60 E-mail: chozzie@terra.com.pe
Garments in 100% Pima Cotton, blends Pima / Alpaca, Pima / Lycra, Pima/ Modal yarndye

100% organic cotton

55 machines Rimoldi, Juki, Brother

CORDILLERA

Annual Exports:
US$ 580,000 (100 % exports)
Founded in: 2001 Employees: 35 Beginning of exports: 2001 Type of company: Exporter Customers:
Cordillera Azuls strong point is its great flexibility in producing not only fully fashioned cotton garments and accessories for women and children in gauge 3 and 5 but alpaca knits as well. Cotton (Pima, Tangis) is bought from well known Peruvian spinning mills such as: Calinova, Itessa,
(USA) Planet Earth Import (Holland) Andina Textile
Incatops and others. Alpaca and alpaca blends come from Itessa, Incatops and Michell. The company has a quality manual and uses CAD/CAM prog-
USA 99 %, Europe (Holland) 1 %.

medium to medium / high

rams such as Design a knit and Stitch painter and is preparing 5 collections a year using in-house and free lance designers. It has a sample room equipped with 3 machines. Crochet work can be organized. Third party workshops are used under strict supervision by Cordillera Azul quality
(including third party knitting capacities) E.3: 2,200 pcs / E.6: 2,000 pcs
Prototypes Salesman samples Bulk Production Available Color 5 days FOB + 50 % 20 days FOB 4 to 6 weeks

supervisors.

5 days
Contact: Mrs. Charlene Guzman General Manager

Average percentage of second rate pieces: 1 % Equipment : 15 Brothers hand looms, gauge COPPO hand looms, and gauge 10
Correspondence languages:
Founded in: 1993 Employees: 150
Spanish, English and Italian
Our products are baby clothes in 100% Pima Cotton, ladies, mens and babies/childrens wear (pullovers, jackets, dresses, skirts, trousers, scarves, caps, gloves) in 100% machine knitting.

US$ 250 000

Beginning of exports: 1991 Type of company:
Manufacturer and Exporter Sociedad Anonima
Representative) in foreign countries:
Peruvian Highlands INC. Miami - USA
(Germany) Chompas, Maas Naturwaren, Dw-Shop (Italy) Hollit (USA) Julian & Sara
Prototypes Salesman samples Bulk Production Available Color
Contact: Mrs. Silvia Mejia de Zubieta Gerente de Ventas Address: El Ayni S.A. Calle Martir Olaya Mz. 7 Lote 2 Armatambo-Chorrillos Lima 9 - Peru Phone + 75 Fax + 41 E-mail: elayniventas@infonegocio.net.pe www.elayni.com
Sweaters and accessories for Adults in 100% Alpaca and Wool. Baby Clothes in 100% Pima Cotton. Sweaters for adults in 100% Alpaca and wool.

azo free products

Subcontractors: yes Equipment: We work with differents kinds of machines: manual machines and industrial machines like Stoll and Shima.

I N T I W A R A

Annual Sales (2007):
Inti Wara offers exclusive fully-fash-

US$ 985.000

Founded in: 1983 Employees: 150 Type of company: ioned garments (mainly sweaters) and accessories (scarves, hats, gloves and others) for men and women in baby alpaca, alpaca SF, baby alpaca / silk (cotton is rarely used). Alpaca yarns are imported from 2 well -known Peruvian spinning mills Inca Tops and Michell. Nino Molinari from Italy is Inti Waras designer and launches 2 collections a year. The well-organized workshop has a large stock of yarns in many colors (more than 300 colors) so models can be readily made when needed. Inti Monthly production capacity per gauge: E5 - 900 PCS E8 - 400 PCS E10 - 350 PCS E 12 - 450PCS Waras garments are manufactured using a sophisticated combination of colors.

Europe 40%: UK (Germany, Italy, Finland, Switzerland, France, Denmark, Bulgary). North America 35%: (USA, Canada). South America 3%: (Ecuador, Mexico, Argentina). Asia 18%: (Japan, Korea). Oceana 4%: (Australia, New Zealand).
Prototypes Salesman samples Bulk Production Available Color 1 week FOB price 25 days FOB price 50 days
Contact: Mrs. Elena Cirvian General Manager
Exports of ready made garments: Ladies and mens
wear, fully-fashioned garments (mainly sweaters) and accessories (scarves, hats, gloves and others)

Capacity of production:

Address: Intiwara Avda. 6 de Agosto N 2372 PO Box. 8018 La Paz - Bolivia Phone + 72 Fax + 96 E-mail: intiwara@ceibo.entelnet.bo

35,000 Pieces per year.

Equipment: 60 Singer - Brother Gauge Silver Reed Gauge Dubied & Tricomaglia Gauge 1 Technotex (electronic full-fashioned) Gauge 12
LA VICTORIA FABRICA DE TEJIDOS DE PUNTO SAC
Correspondence languages: Spanish, English Founded in: 1956 Employees: 171 Annual Exports: La Victoria Fbrica de Tejidos de Punto is a private Company that was founded in Lima in 1956, as a vertical textile and garment manufacturer Beginning of exports: 1980 (aprox) Type of company: including weaving and dyeing

US$ 3,300,596

through to finished garments.
Manufacturer (own collection)
As a part of a specialization process at the present we have redefined our
enterprises goals, focusing mainly on product development and tailoring, counting for this with The Computer
Monthly production: 60,000 psc
Assistance Design (CAD) for Apparel Lectra Systems.
Exports to: USA, United Kingdom, France and Mexico.
We prepare collections with our own designs but we can also work in accord of the clients specifications. Our company have a design versatility because we are integrated with La
Prototypes Salesman samples Bulk Production Available Color week No cost price 30-60 days Double price 90 days
Colonial Fbrica de Hilos S.A.A. which produces all kind of yarns, like carded, combed, gassed, mercerized, twisted, colored threads and blends. Likewise, we are integrated with Fbrica de Cintas Arbona S.A.A. a ribbon factory, which is the biggest of the country, and produces rigid tapes, elastics and cords of all kind.

week No cost

Contact: Mrs. Josefina Fiocco Sales & Development Manager Address: La Victoria Fabrica De Tejidos De Punto Sac Psje. San Lorenzo 190 La Victoria Lima 13 Peru Phone: + 50 Phone: + 91 Direct e-mail: fina@victoriatextiles.com.pe Website www.victoriatextiles.com.pe

High end

Monthly production capacity per gauge: Gauge 7: 700 pieces Gauge 5: 1200 pieces
carried out by a well-organized team. Jacquard and garments using sophisticated color combinations is one of Millmas specialties. Hand-knitted and hand-crocheted work can be arranged.
Prototypes Salesman samples Bulk Production Available Color week price days price days
Contact: Mrs. Mariel Arana General Manager
solid color alpaca and cotton, blends: 20 kg Chin, heather, moulin, fancy yarns: 35 kg or more
Address: Millma S.A. Calle Carandaiti 1903 La Paz - Bolivia Direct Phone: + 55 Direct e-mail: mariel.arana@millma.com Phone + 55 Fax + 14
High end alpaca and pima knitwear products for men and women
Average percentage of second rate pieces: none Equipment: 125 Brother 35 Silver Reed 8 Passap

M I TAY O Q S. A.

Correspondence languages: Spanish and English Founded in: 2007 Employees: 8 Annual Exports: Mitayoq S.A. is a young company that bid for Peru and its textile products, was founded officially in March 2002 with the illusion of belonging to the large list of Peruvian exporters in the world market. Our production is notable for the high quality that you put in Subcontractors: yes Export markets and references: each garment completed, taking adanvantage here in our country we have the competitive advantage that others do not have, and these are the first level of fibres that the world uses, such as: Cotton and Alpaca. Our production includes serveral technics in the world of fabric as stick, crochet and machine. Today we are mixing techniques for the multiple trends that our customers are demanding! We are producers and exporters, we have the infrastructure, technology

US$ 27,931,50

Beginning of exports: 2007 Type of company:
Switzerland Germany United States of America Customer: Intifil
the price depends of the models, but the quality is very good at any model
Prototypes Salesman samples Bulk Production Available Color 1 week price 15 days price
and skilled personnel to take up the challenge to grow and become more competitive every da

Contact: Jorge Germana Leon Managing Director Jackeline Germana Leon Export Manager Address: Portafolio Textil Mariscal Eloy Ureta 535 Urbanizacion el Pino San Luis Lima 30 - Peru Phone: + 07 Fax: + 89 E-mails: jorge@portafoliotextil.com jackeline@portafoliotextil.com Web site : www.portafolio.com
400 pcs per style, 100 pcs per color in case of plain color, more if melange or heather
Average percentage of second rate pieces: 7 % Equipment:
customers request and to ensure a goof follow-up.
8 overlock Siruba 8 flat sewing machines Juki 5 flat lock Siruba 1 Yamamoto for placket 1 Picot machine Kansay 1 Stoll CMT 211 gauge 12 to knit ribs and cuffs etc.

R O S I M P E X

Founded in: 1990 Employees: 11
US$ 300,000 including US$ 210,000 exported
Rosimpex works exclusively with hand-operated knitting machines and is specialized in childrens wear in 100 % cotton, 100 % alpaca and blends. The company also offers a lot of accessories for children (regular or fancy): scarves, gloves, hats, knitted toys, baby blankets, fancy cushions etc. Rosimpex employs free-lance designers to develop new models on a regular basis. Pima and tangis cotton, alpaca and blends all come from
USA 60 % Europe 40 % Clients: Management, Planning and Research (Germany) Sara Lynn (USA).
well-established Peruvian spinning mills (La Colonial, Cortextil, Incatops, Itessa, Michell, Textil El Amazonas).
variable according to product
Models Salesman samples Bulk Production Available Color 5 days FOB price 40 days FOB price 60 days
Contact: Mrs. Carmen Acosta de Helm General Manager Address: Rosimpex S.A. Calle Carlos Arrieta 249 Barranco - Lima 4 - Peru Direct Phone: + 63 Direct e-mail: carmenhelm@hotmail.comPhone + 97 E-mail: rosimpex@ec-red.com
solid color alpaca, alpaca blends: 15 to 25 kg solid color cotton and cotton blends: 20 to 50 kg Chin, heather, moulin, fancy alpaca or cotton: 40 to 50 kg

0.05 %

10 Brother, E.Singer, E.Passap, E.8

T E X T R I C O T

S. A. C

Total exports (2005)

US$ 274,000,00
Founded in: 2002 Employees: 31 Export markets (%) and references:
Partly fully fashionned, partly cut & sewn knitted products for women and men made of alpaca, baby alpaca, Cotton (Pima and Tanguis) and blends (with wool, silk, cotton, acrylic etc.). Yarns (Nm 2/16, 2/20, 2/24, 2/30) from the best Peruvian mills (Incatops, Itessa, Michell, Cortextil, La

75 % UK 25 % USA Clients: Wall (UK) Zrinka, Royal Scott (USA)
Colonial), elastic fibers can be used for cuffs and collars (Lycra TM and Elasthane TM). Factory has an inhouse washing & drying facility and also uses third-party services (alpaca items may be dry cleaned with
E.12 2,000 pcs E.7 1,000 pcs

Minimum quantities:

(in kg of yarns)
perchlorethylene to improve hand feel, cotton can be washed too). Produccion process includes 3 pressing stages to ensure the perfect shape of garments and correct specs. Production planning depart-
solid color alpaca, alpaca blends & cotton 20 kg / color. Chin, heather, moulin, fancy 40 kg. Cotton combinations plain or Chin, 40 to 50 kg
Prototypes Salesman samples Bulk Production Available Color 10-15 days 40-60 days FOB+30% 60-90days
ment issues production reports twice a week, 3 people are in charge of organizing and supervising quality control in the factory at the various production stages (knitting, cutting, linking, before steaming, after

15 days free of charge

Contact : Mr. Hernan Leyva Izarnotegui
Average percentage of second rate pieces: 2 % Equipment:
steaming, final measurements), that allow Textricot to optimize the level of quality. An outside, independent laboratory can be used for any kind of testing. Embroidery with a third party (10 colors). Some light hand finishing can be done (crochet etc.).
Address: Textricot S.A.C. Calle Albert Einstein 150 Surquillo Lima Peru Phone + 57 Fax + 57 E.mail : textricot@infonegocio.net.pe
1 Stoll CMS 433.6 electronic (ff, jacquard, structures) in gauge 12. 1 Stoll CMT 211 electronic (mini jacquard + structures) Program Sirix. 1 Universal 740.PJ electronic (ff, jacquard & structures) in gauge 7. 3 linking machines (Complett), 4 overlock (Pegasus, Siruba, Rimoldi), 1 (Pfaff) Button holes etc.
4 companies producing hand-knitted garments and hand-waved accessories: CARILUIS ALPACA e.i.r.l (p.46) CLAUDIATEX (p.47) SUMAC s.r.l. (p.48) SURITEX s.a.c. (p.49)

CARILUIS

ALPACA

E.I.R.L

Total exports (2005):

US$ 70,000

Founded in: 1994 Employees: 15 Export markets (%) and references:
Cariluis offers bags made of hand woven fabrics produced on their own hand looms and adorned with hand embroideries and occasionally
USA 20 %. Clients Andrea Heckman, Tabask inc., Jamie Douglas, Andino Fibers
leather appliqus. Traditional Peruvian designs are normally used, Mrs Carmela Sierra de Gonzales is the designer, but buyers designs could be reproduced. Yarns (Pima cotton, baby alpaca, alpaca SF, alpaca / wool) and sometimes woven fabric are bought from top quality Peruvian mills (Incatops, Michell, La Colonial, Amazonas), kid and lllama leather from good tanneries mainly located in Arequipa, in southern Peru. Buyers can request their own colors Yarn and leather in their own colors as long as they are prepared to meet minimum requirerements. The workshop

Prototypes Salesman samples Bulk Production Available Color 3 days FOB price + 60 % 15 days FOB + 50 % 60 days
supervisors. Strict checking procedures are conducted throughout the

2 weeks No charge

production process to ensure the quality of the final products (control over yarn, tension, proto l measurements, finishing etc.). Special care is taken to give the garments a good hand feel (washing and steaming procedures), that allow the companies to offer very interesting childrens products. Mrs Gonzalez has been
Contact : Mrs. Claudia Gonzlez General Manager
can vary greatly according to the product s knitting time (from 600 to 1,200 pcs)
Address : Claudiatex E.I.R.L Las Orquideas 233 Urb. Santa Edelmira Trujillo Peru Phone + 76 Fax + 76 E.mail : tejidosclaudia@hotmail.com
designing and developing products for 16 years Average percentage of second rate pieces: 3% Equipment: all hand knitted only needles are used (various numbers) and crochets. If requested by buyers hand operated knitting machines can be used. Steaming is manual.
plain colors alpaca, alpaca blends & cotton 20 kg /color Chin, heather, moulin, fancy 40 kg. Cotton combinations plain or Chin, 40 to 50 kg
Ladies, mens and childrens wear, 100% hand knitting products

S U M A C

Exports (2003):

US$ 89,000.00

Minimum per color:
Definition: by hand -knit we mean pieces made exclusively by individual knitters using a pair of knitting needles. The items made on hand-operated knitting looms are not considered hand knits. Sumac organizes and coordinates the
100 % alpaca, Baby alpaca, cotton: 20 to 30 kg Chin, heather, moulin, fancy alpaca or cotton: 40 to 50 kg
hand knit production with 1. Groups (generally women) organized in workshops within a village or a small town, 2. Independent workers (mostly women but men can knit too). Both have very good knowledge and practice of handknitting techniques. They are experts with great manual skill. They offer their services to organized workshops which centralize orders during production periods. It is an informal sector, a seasonal activity involving people from rural areas as well as from the city for whom the knitting activity represents
USA 30 % Europe 70 % Clients: Agns B., BonPoint, Et-Vous, Hermes, Baby Chanel (France) Quincy (Belgium), Vitras (Japan)
Prototypes Salesman samples Bulk Production Available Color 21 days FOB Pricce 30-40 days FOB Pricce 45-60 days
an absolutely vital additional source of income. Production can be distributed in various micro-sites / workshops scattered over a wide rural area within a radius of 120 km around the main city. These persons hand-knit an average
Contact: Mrs. Elena Calatayud General Manager
of 4 to 5 hours a day because they have many other activities and obligations (children to take care of, fields to work, animals to breed, community service etc.). The monthly production

Pursuant to Ind.Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case. ATTORNEYS FOR APPELLANT: GEOFFREY M. GRODNER KENDRA G. GJERDINGEN Mallor Clendening Grodner & Bohrer LLP Bloomington, Indiana

Dec 27 2010, 9:24 am

of the supreme court, court of appeals and tax court
ATTORNEYS FOR APPELLEE FIFTH THIRD BANK: MARK R. GALLIHER CRAIG D. DOYLE Doyle Legal Corporation, P.C. Indianapolis, Indiana ANGELA F. PARKER Andrews, Harrell, Mann, Carmin & Parker, P.C. Bloomington, Indiana
IN THE COURT OF APPEALS OF INDIANA
McINTYRE BROTHERS, INC., Appellant, vs. KIM D. HENDERSON, MELINDA J. HENDERSON, SYDNEYCO, LLC, FIFTH THIRD BANK and LAWRENCE COUNTY TREASURER, Appellees. ) ) ) ) ) ) ) ) )

No. 47A01-1004-PL-172

APPEAL FROM THE LAWRENCE SUPERIOR COURT The Honorable William E. Vance, Special Judge Cause No. 47D01-0402-PL-178
December 27, 2010 MEMORANDUM DECISION - NOT FOR PUBLICATION BAILEY, Judge
Case Summary Fifth Third Bank (Fifth Third) loaned $945,000 to Kim and Michele Henderson (the Hendersons), paying off two prior mortgages at closing. Fifth Third failed to discover a mechanics lien held by McIntyre Brothers, Inc. (McIntyre). In subsequent foreclosure proceedings, lien priority was disputed, with Fifth Third claiming that the doctrine of equitable subrogation granted priority to the $311,000 paid to satisfy a mortgage held by Stone City Bank (Stone City) over McIntyres mechanics lien. In partial summary judgment proceedings, the trial court agreed. After a bench trial, the trial court denied McIntyre foreclosure of its mechanics lien, granted McIntyre judgment against the Hendersons, and prioritized the entirety of the $945,000 Fifth Third mortgage lien over McIntyres judgment lien. McIntyre appeals. We affirm in part, reverse in part, and remand. Issues McIntyre presents two issues for review, which we re-order and restate as follows: I. Whether the trial court erroneously granted partial summary judgment to Fifth Third upon finding the doctrine of equitable subrogation applicable to Fifth Thirds payoff of the Stone City mortgage; and Whether the validity of McIntyres mechanics lien was an issue reserved for trial. Facts and Procedural History In 2001, the Hendersons purchased commercial property located in Bedford, Indiana, where a Dollar General Store and Subway Restaurant were operated. In April of 2002, the buildings were destroyed by fire and the Hendersons hired McIntyre to clean up debris. McIntyre eventually constructed a new building on the property. Around the time that 2
construction began, the Hendersons obtained a mortgage on the property from Stone City. The mortgage was recorded on September 23, 2002. The Hendersons transferred ownership of the property to Sydneyco, a limited liability corporation, and McIntyre billed Sydneyco for construction work. McIntyre submitted invoices totaling $1,565,139.59, a portion of which was paid. On August 15, 2003, McIntyre recorded its Notice of Intention to Hold Mechanics Lien for the unpaid balance of the invoices. On August 22, 2003, Fifth Third loaned $945,000 to Sydneyco and $100,000 to another company owned by the Hendersons. At the real estate closing on that date, the Hendersons executed mortgage documents in their individual capacity but deeded the property to Sydneyco. Fifth Third paid off the two liens that had been discovered by their title company, specifically, $311,706.18 to Stone City and $187,275.48 to the Poling Trust. McIntyres lien had not been discovered, and Fifth Third did not disburse funds to McIntyre.1 Fifth Third recorded two mortgages on August 25, 2003. In 2004, Fifth Third prepared a Corrective Mortgage and Security Agreement to reflect the fact that Sydneyco had owned the property as of the date of the August 22, 2003 closing. The corrective mortgage was recorded on September 1, 2004. On February 16, 2004, McIntyre filed a complaint for breach of contract, unjust enrichment, and foreclosure of a mechanics lien, naming as defendants the Hendersons,
After receiving excess funds at closing, Melinda Henderson delivered a Sydneyco check for $492,000 to McIntyre.
Sydneyco, LLC, Fifth Third Bank, and the Lawrence County Treasurer. Fifth Third filed a counterclaim, cross-claim, and third-party claim, in part asserting that the Hendersons had committed fraud in the execution of a Mortgagors Affidavit. The proceedings were stayed when, in March of 2006, Sydneyco filed for Chapter 11 bankruptcy protection. McIntyre filed a Proof of Claim indicating that it held a secured claim, a mechanics lien, against Sydneyco. After litigation, the Bankruptcy Court determined that Sydneyco owed McIntyre $560,000 as opposed to the $807,842.27 claimed. The case became active again in the Lawrence Superior Court on November 21, 2008, when Fifth Third filed a Motion for Scheduling Conference. Fifth Third subsequently filed a motion for partial summary judgment. Oral argument was heard on September 2, 2009, at which the Hendersons argued their lack of individual liability because of a novation, and Fifth Third requested a determination that equitable subrogation applied to prioritize its mortgage lien, to the extent that the funds had been used to pay off the Stone City mortgage.2 McIntyre claimed that Fifth Third was not entitled to equitable subrogation, due to its culpable negligence in failing to discover the mechanics lien and in lending to individuals rather than the corporate owner of the subject property. On September 16, 2009, the trial court issued an order finding for Fifth Third and against the Hendersons on the issue of novation. With respect to McIntyre, the trial court entered partial summary judgment in Fifth Thirds favor:

Fifth Third conceded that factual issues precluded summary judgment as to whether equitable subrogation was applicable to The Poling Trust mortgage it had paid off. According to counsel for Fifth Third, there is almost no good evidence as to how the proceeds of how that second mortgage, the Pulling [sic] Trust loan were applied. Theyre right about that because its the summary judgment stage we dont have that evidence. (Tr. 15.)
The Court finds for Fifth Third Bank and against McIntyre Brothers, Inc. on the question of priority as it relates to the funds expended to retire the Stone City Bank mortgage. Specific amounts are to be determined. (App. 22.) The matter proceeded to trial on September 23, 2009. By this time, Fifth Third had obtained dismissal of its fraud claim against the Hendersons but was pursuing a personal judgment against them and also a judgment of foreclosure. As for the equitable subrogation claim, counsel for McIntyre and Fifth Third jointly advised the trial court: the bank is not proceeding today by agreement on any claim that the Poling Trust mortgage, which some of the documents relate to, has a priority over the McIntyre lien. (Tr. 35.) Fifth Third submitted its Exhibits 13 and 18, detailing interest that would correspond to a principal balance of $311,706.18 (attributable to the Stone City mortgage). On January 21, 2010, the trial court issued a judgment of foreclosure inconsistent with its prior partial summary judgment order that had applied the doctrine of equitable subrogation. The trial court awarded McIntyre judgment against Sydneyco in the amount of $560,000 but determined that McIntyre had not perfected its mechanics lien. Accordingly, Fifth Third was granted foreclosure of a mortgage lien equal to the $916,003.66 principal balance on the current Fifth Third mortgage, plus interest (superior to McIntyres judgment lien). The trial court also decreed that Fifth Thirds claim for repayment of real estate taxes was to be prioritized over McIntyres judgment lien. This appeal ensued.
Discussion and Decision I. Partial Summary Judgment Equitable Subrogation McIntyre argues that partial summary judgment was erroneously granted, having been premised upon the trial courts misapprehension of the law regarding equitable subrogation. Pursuant to Indiana Trial Rule 56(C), summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. On review of a trial courts grant or denial of summary judgment, this Court applies the same standard as the trial court. Best Homes, Inc. v. Rainwater, 714 N.E.2d 702, 705 (Ind. Ct. App. 1999). Neither the trial court nor the reviewing court may look beyond the evidence specifically designated to the trial court. Id. Fifth Third claimed only that it was entitled to partial summary judgment with regard to the amount of the Stone City mortgage satisfied by refinancing. The designated evidence and the arguments of counsel at the summary judgment hearing reveal that the parties asserted that they held competing liens and that their point of contention primarily distilled to conflicting interpretations of statutory and common law regarding equitable subrogation. Indiana Code Section 32-28-3-1 provides that a contractor who has performed labor or furnished materials may have a lien to the extent of the value of any labor done or the material furnished. The historical origin and purpose of the mechanics lien statutes was to make a property owner an involuntary guarantor of payments for the reasonable value of improvements made to real estate by the physical labor or materials furnished by laborers or materialmen. Ford v. Culp Custom Homes, Inc., 731 N.E.2d 468, 472 (Ind. Ct. App. 2000),

trans. denied. In order to acquire a lien upon the property, the party seeking the lien must timely file a sworn statement of his intention to hold a lien in the recorders office of the county in which the relevant real estate is located. Id. To enforce a lien, the lienholder must timely file suit to foreclose the lien. Id. Indiana Code Section 32-21-4-1, addressing the priority of recorded transactions, provides that [a] conveyance, mortgage, or lease takes priority according to the time of its filing. A mechanics lien is not rendered superior to the lien of a prior recorded mortgage by the fact that the security of the latter is increased by the improvement. See Thorpe Block Sav. & Loan Assn v. James, 13 Ind. App. 522, 522, 41 N.E. 978, 978 (1895). According to the time of recordation, the Stone City and Poling Trust mortgages were superior to McIntyres mechanics lien. Fifth Third has claimed that it is entitled to step into the shoes of the Stone City mortgage under the doctrine of equitable subrogation. The doctrine of equitable subrogation has existed alongside the recordation statutes and is, consistent with its name, grounded in equity. Neu v. Gibson, 928 N.E.2d 556, 560 (Ind. 2010). The doctrine substitutes one who fully performs the obligation of another, secured by a mortgage, for the owner of the obligation and the mortgage to the extent necessary to prevent unjust enrichment. Id. (quoting Restatement (Third) of Property 7.6(a) (1997)). The substitution avoids an inequitable application of the general principle that priority in time gives a lien priority in right. Id. The classic formulation of the doctrine would permit a purchaser of a note and mortgage to be accorded a right of subrogation to the mortgage discharged, including its
priority over junior liens, where the purchaser did not have actual knowledge and where he or she was not culpably negligent in failing to learn of the junior lien. Bank of New York v. Nally, 820 N.E.2d 644, 653 (Ind. 2005). However, the Nally Court (agreeing with the Restatement position at least in the context of a conventional refinancing) revised this formulation, placing the focus not upon notice but rather upon whether or not the junior lienholder was prejudiced by subrogation: Precluding equitable subrogation when a mortgagee discovered or could have discovered a junior lien holder runs contrary to the purposes underlying the doctrine. Equitable subrogation is a remedy to avoid an unearned windfall. Neither negligence nor constructive notice of an existing lien is relevant to whether the junior lien holder will be unjustly enriched or prejudiced. Id. Application of the doctrine of equitable subrogation will depend on the equities and attending facts and circumstances of each case. Id. at 654. Mere negligence that causes no harm will not result in an unexpected elevation of priority status; however, culpable negligence, which is some action or inaction amounting to more than mere inadvertence, mistake or ignorance, may support the opposite result. Id. at 654-55. McIntyre has also identified authority it deems persuasive for the proposition that a subsequent lender cannot invoke equitable subrogation to gain priority over a prior-recorded mechanics lien. In Ex parte Lawson, 6 So.3d 7, 14 (Ala. 2008), the Alabama Supreme Court declared that the constructive notice supplied by the materialmans lien statute defeats the lenders equitable-subrogation claim and that to hold otherwise would violate the equitable maxim that equity follows the law. In Alabama, a recognized element of equitable subrogation is that the lender must be ignorant of the intervening lien. Id. at 12. However,

as previously discussed, the Nally Courts adoption of the Restatement position removed the focus away from constructive notice, and the Court explained that constructive notice was irrelevant to the issue of unjust enrichment or whether a junior lienholder was prejudiced.3 Nally, 820 N.E.2d at 623. Finally, McIntyre points out that Nally involved competing mortgages, and argues that when a lien priority dispute includes a mechanics lien, the trial courts discretion is circumscribed by Indiana Code Section 32-29-1-11(d). This statutory provision, enacted in 2003 (when the common law focus was upon actual or constructive notice) and amended in 2005,4 now provides: Except for those instances involving liens defined in IC 32-28-3-1 [mechanics lien], a mortgagee seeking equitable subrogation with respect to a lien may not be denied equitable subrogation solely because: (1) the mortgagee: (A) is engaged in the business of lending; and (B) had constructive notice of the intervening lien over which the mortgagee seeks to assert priority; (2) the lien for which the mortgagee seeks to be subrogated was released; or (3) the mortgagee obtained a title insurance policy.
The Lawson Court, in dicta, stated that a mechanics lien falls within an exception as set out in the Restatement (Third) of the Law of Property 7.6, cmt. f, Illustration 30. Lawson, 6 So.3d at 15. The referenced illustration concludes with the language [a] court is warranted in finding that a grant of subrogation to Mortgagee-2 would be unjust to Mechanic, and upon such a finding may deny Mortgagee-2s subrogation claim. (emphasis added.) It does not, however, mandate a finding for a mechanics lienholder irrespective of the equities.
In 2003, the General Assembly enacted conflicting versions of subsections (d) and (e). P.L. 122-203 included (e) but omitted the phrase except for those instances involving liens defined in IC 32-28-3-1 at the beginning of subsection (d), while P.L. 151-2003 conversely included the reference to IC 32-28-3-1 at the start of subsection (d) and omitted the reference to mechanics liens in subsection (e). The General Assembly reconciled the conflicting versions by emergency legislation effective April 25, 2005. P.L. 2-2005 corrected and amended the statute to read as set forth herein.
Subsection (e) provides that [s]ubsection (d) does not apply to a municipal sewer lien under IC 36-9-23 or a mechanics lien under IC 32-28-3-1. According to McIntyre, the intent of the Legislature was to allow courts to deny requests for equitable subrogation as to mechanics liens based solely upon either one of these factors. Appellants Brief at 20. McIntyre then argues that two circumstances present in this case, constructive notice and Fifth Thirds purchase of title insurance, precluded a grant of summary judgment to Fifth Third. The interpretation of a statute is a legal question that is reviewable de novo. Avemco Ins. Co. v. State ex rel. McCarty, 812 N.E.2d 108, 115 (Ind. Ct. App. 2004). The goal of statutory construction is to determine and implement legislative intent. Fort Wayne Patrolmens Benev. Assn v. City of Fort Wayne, 903 N.E.2d 493, 497 (Ind. Ct. App. 2009), trans. denied. We read all sections of an act and strive to give effect to all provisions. Id. We will not read into a statute that which is not the manifest intent of the legislature. For this reason, it is as important to recognize not only what a statute says, but also what a statute does not say. Cox v. Cantrell, 866 N.E.2d 798, 809 (Ind. Ct. App. 2007) (citation and quotation marks omitted), trans. denied. The statute here at issue provides that, as to liens that are neither municipal sewer or mechanics liens, equitable subrogation may not be denied solely because of specified circumstances. It does not state the converse; it does not mandate the denial of equitable subrogation in one of the specified circumstances. Regardless of the origin of the lien asserted, when an equitable remedy is pursued, it becomes the task of the trial court to examine the equities and attending facts and

circumstances. See Nally, 820 N.E.2d at 653. This includes any evidence of culpable negligence by the party asserting that equitable intervention is necessary to prevent unjust enrichment. The refinancing mortgagees actual or constructive knowledge of intervening liens is irrelevant and so does not automatically preclude a court from applying equitable subrogation. See id. at 654. The relevant inquiry is whether the holder of the intervening lien was prejudiced. See id. At the time that McIntyre began to supply materials and perform work, Stone City held a recorded mortgage on the subject property, which McIntyre would have expected to be superior to its own mechanics lien. McIntyre was placed in no worse position when Fifth Third paid off Stone Citys mortgage and later asserted an equitable right to step into the shoes of the Stone City mortgage. At the summary judgment stage, McIntyre identified no genuine issue of material fact that would have precluded partial summary judgment for Fifth Third. McIntyre now claims that there is a genuine issue as to Fifth Thirds culpable negligence. The facts and circumstances surrounding the Fifth Third mortgage transaction have not been disputed. McIntyre essentially claims that the totality of these undisputed facts rise to the level of culpable negligence. No designated evidence indicates that Fifth Thirds conduct amounted to more than mere inadvertence, mistake, or ignorance. The trial court properly granted partial summary judgment to the effect that a portion of the Fifth Third mortgage lien, specifically that attributable to the Stone City mortgage payoff, is superior to McIntyres mechanics lien.
II. Validity of Mechanics Lien The decree of foreclosure made no specific reference to equitable subrogation, nor did the trial court determine what portion of Fifth Thirds mortgage was entitled to priority under the doctrine. The trial court dissolved McIntyres lien absent a motion by any party because of an ostensible failure of proof as to when the work was performed relative to the recordation. The foreclosure decree stated in relevant part: McIntyre Brothers failed to prove by a preponderance of the evidence that its Notice of Intention to Hold a Mechanics Lien was recorded against the Real Estate within the ninety-day period required by statute in order to perfect the mechanics lien which McIntyre Brothers has asserted in this case. (App. 24.) McIntyre asserts that the validity of its mechanics lien was not an issue reserved for resolution by the trial court at the bench trial, inasmuch as Fifth Third had not sought to dissolve the mechanics lien and the parties had uniformly taken the position in bankruptcy and summary judgment proceedings that McIntyre held a lien and the dispute was with regard to priority of liens. The record supports McIntyres contention. For example, at the summary judgment hearing Fifth Thirds counsel advised the trial court: Im here to talk about the issue of priority. We have competing liens against this building in Bedford. My client has a mortgage attached to that building. The Plaintiff McIntyre Brothers has a mechanics lien attached to that building. (Tr. 13.) (emphasis added.) Although arguments of counsel are not evidence that trial courts may consider when making factual determinations, nevertheless a clear and unequivocal admission of fact by an attorney is a judicial admission which is binding on the client. In re K.H., 838 N.E.2d 477, 480 (Ind. Ct. App. 2005).

In turn, the trial courts partial summary judgment order included its determination on the question of priority. (App. 22.) (emphasis added.) The reference to priority presumes the existence of competing liens; the parties proceeded to bench trial under such an assumption. A sua sponte challenge to the validity of the mechanics lien and the ensuing outcome is akin to trial by ambush. We therefore reverse the order of foreclosure which decreed that McIntyre had no mechanics lien. We remand for further proceedings consistent with the partial summary judgment order (which concluded that, under the doctrine of equitable subrogation, the amount of the Stone City mortgage has priority over the mechanics lien) and with this opinion. Affirmed in part, reversed in part, and remanded. RILEY, J., and KIRSCH, J., concur.