TRUSTEE OF EMPLOYEE BENEFITS FUND FOR UNION HAS STANDING TO FILE A MECHANICS’ LIEN IN PENNSYLVANIA
6/18/2012 | Construction Blog
In the case of Bricklayers of Western Pennsylvania Combined Funds, Inc. v. Scott’s Development Company, the majority of the Pennsylvania Superior Court, sitting en banc, overruled the lower court’s decision to dismiss a mechanics’ lien claim by the trustee of the employee benefits fund for the union on the basis that the trustee lacked standing to file the lien under the Pennsylvania Mechanics’ Lien Law (hereinafter “Lien Law”) for unpaid contributions to union members because neither the trustee nor the union were a “subcontractor” under the Lien Law. Under the Lien Law, only a “contractor” and “subcontractor” are permitted to file a lien claim against the owner of real property for debts due to a “contractor” or “subcontractor” relating to improvements made to the property. Under the Lien Law, a “subcontractor” is defined as:
one who, by contract with the contractor, or pursuant to a contract with a subcontractor in direct privity of contract with contractor, express or implied, erects, constructs, alters or repairs an improvement or any part thereof; or furnishes labor, skill or superintendence thereto; or supplies or hauls materials, fixtures, machinery or equipment reasonably necessary for and actually used therein; or any or all of the foregoing, whether as superintendent, builder or materialman.
In overruling the trial court, the majority of the Superior Court liberally construed the definition of “subcontractor” under the Lien Law and concluded that a “traditional subcontractor agreement” is not a mandatory prerequisite to obtain “subcontractor” status under the Lien Law. The majority of the Superior Court indicated that the collective bargaining agreement between the union and the contractor was an “implied in fact contract to furnish labor” and concluded that the union is a “subcontractor” under the Lien Law. The majority of the Superior Court ultimately concluded that the trustee has standing to assert a mechanics’ lien claim given the “unique relationship that exists between the trustee for the benefits fund and union.”
Pennsylvania Courts have in the past strictly construed certain provisions of the Lien Law, particularly when it comes to notice and service. The Superior Court decision in Bricklayers of Western Pennsylvania Combined Fund does not seem to disrupt this general rule, but the Superior Court made it clear that the strict construction of the Lien Law should not be universally applied to all provisions of the Lien Law, especially provisions defining the class of lien claimants. The Superior Court believed that liberal construction of the definition of “subcontractor” is necessary to promote and effectuate the Lien Law’s remedial purpose of protecting pre-payment of labor and materials. The Superior Court also noted that the Pennsylvania Statutory Construction Act suggests that the Court is to liberally construe the provisions of the Lien Law unless expressly stated otherwise the Lien Law. The Superior Court did not find anything in the definition of “subcontractor” to suggest that the legislators intended this provision to be strictly construed.
The two lone dissenting judges seemed to agree with the majority that the Court is to liberally construe the definition of “subcontractor.” However, the dissenting judges believed the majority made a quantum leap in finding that the trustee and union fell within the definition of “subcontractor” and such a finding stretches beyond the legislative intent. One dissenting judge indicated that giving the union “subcontractor” status under the Lien Law does not further the Lien Law’s statutory purpose as the union does not “invest” labor in the project and furnish any “capital outlays.” That dissenting judge believed it was error for the majority to find that the union “furnished labor” for the project and brought up an interesting point: it was the collective bargaining agreement with the union that defined the union members as employees of the contractor – not the union.