New Mechanic’s Lien Law Decision In Pennsylvania
11/12/2013 | Construction Blog
On October 16, 2013, the Superior Court of Pennsylvania issued a new opinion relating to mechanics’ liens. While seemingly academic on its face, the decision has practical ramifications for the ability of contractors to enforce a lien and ultimately get paid in certain circumstances.
In Hogg Construction, Inc. v. Yorktowne Medical Center, L.P., Hogg served as a subcontractor for the tenant fit out portion of a medical practice building. Hogg was owed approximately $90,000 for work incorporated into the project and filed a mechanic’s lien on April 30, 2007. It was largely undisputed that the bulk of the work was completed by approximately September 17, 2006, when a certificate of substantial completion was issued. Both parties also agreed that additional work was done in November 2006; but that work was limited to replacing a defective smoke detector and installing a new electrical wall outlet.
The owner and the tenant challenged the lien after a complaint was filed to enforce it. Both “owners” argued that the prior version of the Mechanic’s Lien Law allowing 4 months to file the lien should be applied. Hogg argued that the 6 month period mandated by the amendments that went into effect in 2007 should apply. The parties also debated whether the last date worked was at the time of substantial completion in September or should be based on the additional work performed in November. Finally, the “owners” maintained that the Complaint to enforce the lien should be dismissed because it was improperly filed under the same docket number as the lien itself.
The trial court agreed with the “owners” on all 3 issues and struck the lien. The Superior Court, however, reversed the trial court’s decision on grounds that seem to contradict its prior precedent established in Terra Technical Services, LLC v. River Station Land, L.P. The appellate court applied the 6 month time limitation because the lien was filed in 2007 when the amendments were in effect. It determined that the last date worked was a fact issue that the trial court could not rule on without a trial. Finally, in contrast to Terra Technical, the Superior Court held that the Mechanic’s Lien Law does not require that the Complaint to enforce the lien be filed under a separate docket number as the lien itself in order to be valid.
This decision is important for a number of reasons. First it creates somewhat of a split in the case law on the issue of how a complaint to enforce should be docketed (Terra Technical is an unreported case). Whether a complaint is filed under the same docket number as the lien or given a separate number is an important issue since Pennsylvania has long declared mechanic’s liens in “derogation of the common law”. Since they are unique remedies, mechanics’ liens must meet the specific procedural elements of the statute to be enforceable. The failure to do so can result in the mechanic’s lien being stricken from the record and render the lien useless. This decision also negates one of the primary attractive qualities of liens: they are a cost effective and streamlined remedy. By effectively declaring the last date worked a fact issue in the Hogg Constructiondecision, the Court effectively mandated that almost all mechanics’ lien cases must go to trial since they are relatively similar. That will add cost and time to reach a point where payment is made to the contractor.
It is likely safe to assume that the Supreme Court of Pennsylvania will have to take this issue up. There is no telling when that might occur, however, so construction companies and their lawyers could be left with limited guidance on this important issue for a while.