Monday, November 4, 2013

Is A Mechanic's Lien Claim Possible Without Construction?

Frank Kosir, Jr.
B.N. Excavating, Inc. v. PBC Hollow-A, L.P., et. al2013 PA Super 120; 2013 Pa. Super. LEXIS 730 (2013)

This matter addressed the issue of whether a subcontractor retained to complete site preparation work for the construction of commercial buildings can assert a mechanic’s lien claim even though the contemplated structure were never constructed.  Warihay Enterprises, Inc. (“General Contractor”) was retained by PBC Hollow-A, L.P. and PBC Hollow-B, L.P. (“Owners”) to construct two commercial office buildings on the Owners’ real property (“Property”) situated in Phoenixville, Pennsylvania.  The General Contractor subsequently entered into a contract with B.N. Excavating, Inc. (“Subcontractor”) pursuant to which the Subcontractor was to provide “labor and materials for excavation work, including but not limited to, a silt fence, temporary riser, emergency spillway, topsoil stripping, cut and fill, concrete pipe, sub-grading for building pad, storm water bed, rock ribbing and other site work.”  The Subcontractor completed all of the contracted-for work on December 18, 2008, in accordance with its contract.  However, construction of the commercial buildings never commenced.

After its demands for payment were denied, on June 8, 2009, the Subcontractor filed a notice of mechanics’ lien claim in the amount of $118,670.71, and subsequently filed a Complaint on the lien.  In response, the Owners filed Preliminary Objections asserting, inter alia, that, as the buildings were never constructed, the Subcontractor’s work was not incidental to construction, and no mechanics’ lien claims could be asserted.  The trial court, concluding that the lack of any constructed buildings on the Property precluded the assertion of a mechanics’ lien claim, sustained the Preliminary Objections and dismissed the mechanics’ lien with prejudice.

On appeal, our Superior Court reversed.  In issuing its ruling, the court noted that Pennsylvania’s Mechanics’ Lien Law does not require that the erection, repair or construction of the improvement at issue be completed.  Rather, the Law only requires that any excavation or other preliminary groundwork completed be undertaken in conjunction with the erection, repair or construction of the improvement.  In this instance, the Subcontractor’s Complaint included numerous factual allegations that the work it had performed was completed in anticipation of the construction of the commercial buildings.  As such, the trial court had erred in dismissing the Complaint on Preliminary Objections, and the matter had to be remanded to the trial court for a hearing on the issue of whether the work completed was, in fact, incidental to the planned construction of the office buildings.  

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