Opinion
No. 2593 EDA 2018
07-19-2019
TERRA FIRMA BUILDERS, LLC, Appellant v. William KING a/k/a Billy M. King and Melanie L. King a/k/a Melanie L. Frantz
Nathaniel J. Flandreau, Conshohocken, for appellant. Andrew P. Stafford, Newtown Square, for appellee.
Nathaniel J. Flandreau, Conshohocken, for appellant.
Andrew P. Stafford, Newtown Square, for appellee.
BEFORE: KUNSELMAN, J., MURRAY, J., and PELLEGRINI, J.
Retired Senior Judge assigned to the Superior Court.
OPINION BY PELLEGRINI, J.:
Terra Firma Builders, LLC (Contractor) appeals from the order entered in the Court of Common Pleas of Delaware County (trial court) granting the motion to strike a mechanics' lien filed by William King a/k/a Billy M. King and Melanie L. King a/k/a Melanie L. Frantz (Owners) pursuant to the Mechanics' Lien Law of 1963 (Mechanics' Lien Law). For the following reasons, we reverse.
Act of August 24, 1963, P.L. 1175, No. 497, as amended, 49 P.S. §§ 1101 -1902.
I.
We derive the relevant background of this case from our independent review of the record. On February 20, 2013, Contractor filed a timely mechanics' lien for materials, supplies or labor to the Owners in the amount of $131,123.24. That lien was served by the Sheriff on Owners on or about March 18, 2013. The affidavit of service was filed on or about March 22, 2013, with the Delaware County Court of Common Pleas Prothonotary. Contractor praeciped to voluntarily withdraw the lien.
On April 29, 2013, Contractor then refiled the exact same mechanics' lien it had previously perfected in March 2013 and it was given a new docket number. This time, though, Contractor failed to file an affidavit of service for the refiled lien as required by Section 502 of the Mechanics' Lien Law. The Owners did not file any preliminary objections to the claim as provided for in Section 505 of the Mechanics' Lien Law. On February 19, 2015, Contractor then filed a Complaint to enforce the lien. Owners did not file preliminary objections to the Complaint alleging the defect in service of the underlying mechanics' lien nor did they otherwise raise it as a defense in that action.
49 P.S. § 1502 provides:
(a) Perfection of Lien. To perfect a lien, every claimant must:
(1) file a claim with the prothonotary as provided by this act within six (6) months after the completion of his work; and
(2) serve written notice of such filing upon the owner within one (1) month after filing, giving the court, term and number and date of filing of the claim. An affidavit of service of notice, or the acceptance of service, shall be filed within twenty (20) days after service setting forth the date and manner of service. Failure to serve such notice or to file the affidavit or acceptance of service within the times specified shall be sufficient ground for striking off the claim.
(b) Venue; property in more than one county. Where the improvement is located in more than one county, the claim may be filed in any one or more of said counties, but shall be effective only as to the part of the property in the county in which it has been filed.
(c) Manner of service. Service of the notice of filing of claim shall be made by an adult in the same manner as a writ of summons in assumpsit, or if service cannot be so made then by posting upon a conspicuous public part of the improvement.
49 P.S. § 1502 (emphasis added).
On December 8, 2017, the trial court then consolidated the lien, the Complaint to enforce the lien as well as Contractor's breach of contract action against the Owners. The consolidated matters then proceeded to trial with the Owners prevailing on the merits. Post-trial motions were then filed.
While this is not in the record, at oral argument, the parties indicated that a new trial was granted, a new trial was held, and that post-trial motions have been filed.
In June 2018, while post-trial motions were still pending, the Owners then filed a petition to strike the mechanics' lien because Contractor failed to strictly comply with statutory requirements governing perfection of the lien, specifically, 49 P.S. § 1502(a)(2) concerning service. Even though the preliminary objection was filed five years after the filing of the claim, the trial court granted the motion and held that motion to strike, i.e., preliminary objections under § 505 of the Mechanics' Lien Law could be filed at any time, even after the enforcement action was filed and the trial was over. This timely appeal followed.
Section 505 preliminary objections are similar to motions to strike. See H. P. Starr & Sons, Inc. v. Stepp, 206 Pa.Super. 15, 211 A.2d 78 (1965).
II.
A.
On appeal, Contractor contends that the trial court erred in striking the mechanics' lien. It concedes that it "did not properly file an affidavit of service or notice or an acceptance of service as set forth in 49 P.S. § 1502," but argues that the trial court erred in striking the lien because Owners waived any objection to the defective service because: they did not preliminary object when the lien was filed in 2013; did not raise it by preliminary objections to its Complaint to enforce the lien nor did they did raise it by preliminary objections in their contract action; never raised an issue regarding service at trial; and never raised it in any motion for post-trial relief. For their part, Owners contend that they can move to preliminary strike on the basis of § 505 at any time, including after the case has gone to trial, because no time period is provided for when preliminary objections have to be filed.
To answer this question, we examine how mechanics' lien claims can be challenged and enforced under the Mechanics' Lien Law.
B.
Mechanics' liens "were unknown at common law and are entirely a creature of statute." Terra Technical Services, LLC v. River Station Land, L.P. , 633 Pa. 171, 124 A.3d 289, 299 (2015) (quoting Bricklayers of Western Pennsylvania Combined Funds, Inc. v. Scott's Development Co. , 625 Pa. 26, 90 A.3d 682, 690 (2014) ). "Such liens are designed to protect persons who, before being paid (or fully paid), provide labor or material to improve a piece of property. Mechanics' liens accomplish this goal by giving lienholders security for their payment independent of contractual remedies." Id. (internal citations omitted). The Mechanics' Lien Law not only provides for such liens but creates a statutory procedure for the filing of and enforcement of such liens. "[T]he right to a mechanic[s'] lien is purely a creature of statute and it is only available if the conditions of the legislature are strictly followed." Schell v. Murphy , 153 A.3d 379, 381 (Pa. Super. 2016) (citation omitted).
After notice of a claim has been given as required by § 501 of the Mechanics' Lien Law, 49 P.S. § 1501, the lien is perfected by filing the claim in the appropriate prothonotary's office pursuant to § 502, 49 P.S. § 1502. The owner may "preliminary object" to the filing of the "claim" under Section 505 of the Law, 49 P.S. § 1505, which provides:
Any party may preliminarily object to a claim upon a showing of exemption or immunity of the property from lien, or for lack of conformity with this act. The court shall determine all preliminary objections. If an issue of fact is raised in such objections, the court may take evidence by deposition or otherwise. If the filing of an amended claim is allowed, the court shall fix the time within which it shall be filed. Failure to file an objection preliminarily shall not constitute a waiver of the right to raise the same as a defense in subsequent proceedings.
This allows the owner to strike the lien for the above-enumerated reasons. If the labor and material were furnished for residential construction the owner could also claim that the contractor or subcontractor waived his right to file such a lien. See 49 P.S. § 1401.
However, while the filing gives the contractor an in rem lien for the materials and labor that were expended under contract for the owner, it does not give the contractor the right to execute against the property to collect those debts or to keep that lien in force "forever." To be able to maintain and collect against the lien, the contractor must bring an action pursuant to Section § 701 of the Law, 49 P.S. § 1701, to enforce the lien. 49 P.S. § 1701(a) also provides that practice and procedure to obtain judgment upon a claim shall be in accordance with the Pennsylvania Rules of Civil Procedure. See Pa.R.C.P. 1651 et seq. Section 505 authorizes the owner to raise the failure to perfect the lien in compliance with the Mechanics' Lien Law as a defense to that action.
See Pa.R.C.P. 1651(b) which provides that "[e]xcept as otherwise provided in this chapter, the procedure to obtain judgment upon a claim shall be in accordance with the rules relating to a civil action."
"Service requirements under Pennsylvania's Mechanics' Lien [l]aw are strictly construed such that a complaint will be stricken if the statutory service requirements are not met[.]" Regency Investments, Inc. v. Inlander Ltd. , 855 A.2d 75, 77 (Pa. Super. 2004), appeal denied, 581 Pa. 679, 863 A.2d 1148 (2004) (citation omitted). If a mechanics' lien claim is not perfected, the claimant still has an adequate remedy in a suit for monetary damages arising out of a breach of contract. See id. at 80.
This action must be filed by the contractor within two years of the filing of the lien. See 49 P.S. 1701(b). If the action is not brought within two years, the lien will be stricken. If brought within that time period, the end result of the enforcement action is that the lien will be sustained, reduced or, if unsubstantiated, stricken. In short, it will end the matter.
Because the trial court has jurisdiction to enter a judgment, the judgment cannot be stricken as void. Comm. ex rel. Penland v. Ashe , 341 Pa. 337, 19 A.2d 464, 466 (1941) ("It is certainly true that a void judgment may be regarded as no judgment at all; and every judgment is void, which clearly appears on its own face to have been pronounced by a court having no jurisdiction or authority in the subject matter.").
Also, at any time after the filing of the lien, the owner can compel, by praecipe, the contractor to file a complaint within twenty days after service of the rule or be forever barred from enforcing the lien. See Pa.R.C.P. 1659. If the contractor fails to file the complaint, judgment for the owner will be entered resulting in the striking of the lien.
C.
From the above, an owner who desires to challenge the perfection of the lien or the ability of the contractor to file the lien must do so by filing a preliminary objection to the claim under Section 505 of the Mechanics' Lien Law. Because Section 505 statutory preliminary objections are governed by the Mechanics' Lien Law itself, not the Rules of Civil Procedure, Section 505 preliminary objections do not have to be filed within twenty days like those to a normal civil complaint. Moreover, any defenses authorized by Section 505 but not raised by statutory preliminary objections are not waived and may be used a defense in subsequent proceedings.
That does not mean, though, that Section 505 preliminary objections can be filed at any time to the claim; after all, they are denominated as "preliminary." Given the Mechanics' Lien Law's statutory scheme that governs leading to final resolution in the § 1701 enforcement action, Section 505 can properly be construed as providing that if one of the specified defenses has not been raised "preliminary" by the time a § 1701 enforcement action has been filed to obtain judgment on the claim, but the owner desires to assert a Section 505 defense, it has to be raised in the enforcement proceeding in accordance with the manner provided for in the applicable rules of civil procedure. If it does not do so, then the claim is waived. In this case, the lack of service defense to the claim was not raised by preliminary objection or new matter as required under the Rules of Civil Procedure in the enforcement proceeding. Instead, the Owners filed their Section 505 preliminary objections in the form of a motion to dismiss over five years after the claim was filed and over three years from commencement of the enforcement proceedings. Under these circumstances, Owners' motion to strike was untimely and the issue was waived.
The result we reach here is consistent with our position under the prior mechanics' lien statute from 1901 when a claim began by a contractor filing a writ of scire facias instead of a civil complaint. Crane Co. v. Rogers , 60 Pa. Super. 305 (1915). Linder the old procedure, if a lien was "fatally defective" because a claimant failed to follow the procedural prerequisites, a party opposing the lien had to file a petition with the court asking that the claim be postponed due to the rights of the petitioner. Id. at 307. The court then entered a rule upon the claimant to show cause why the relief should not be allowed and stayed the proceedings on the claim pending a hearing on the rule, if justice required. Id. As we held in Crane , the party who was served with the writ but did not raise a defect in the lien by way of a defense waived his or her right to object later. Id. at 310.
Order reversed.
Judge Kunselman joins the opinion.
Judge Murray files a dissenting opinion.
DISSENTING OPINION BY MURRAY, J.:
Owners argue that the mechanics' lien at issue in this case is invalid because Contractor did not perfect the lien by filing an affidavit of service of notice for the lien pursuant to Section 502(a) of the Mechanics' Lien Law. See 42 P.S. § 1502(a). The Majority concludes that Owners waived their claim that Contractor failed to perfect the lien because Owners did not raise this defense to the enforcement of the lien until after preliminarily objections and the trial to enforce the lien. Majority Op. at 1005-06. In my view, however, the Mechanics' Lien Law and the applicable precedent do not preclude a party from raising a defense to the enforcement of a mechanics' lien at any time, and thus, a party may move to strike a lien even after the conclusion of enforcement proceedings. Therefore, I dissent.
Because this case presents an issue of statutory interpretation, we recognize the following:
"As this matter implicates an issue of statutory interpretation, our task is to determine the will of the General Assembly using the language of the statute as our primary guide." Osprey Portfolio, LLC v. Izett , [620 Pa. 274,] 67 A.3d 749, 754 (2013) (internal quotation marks omitted). See generally 1 Pa.C.S.[A.] § 1928(a) ("The object of all interpretation and construction of statutes is to ascertain and effectuate the intention of the General Assembly."). When the words of a statute are clear and precise, reviewing courts may not disregard those words under the pretext of pursuing the "spirit" of the enactment. See id. § 1921(b). Where, however, there is a conflict or ambiguity, we may resort to the tools of statutory construction. See Oliver v. City of Pittsburgh , 608 Pa. 386, 11 A.3d 960, 965 (2011). In so doing, we keep in mind that such tools are used as an aid in uncovering the intent of the Legislature, which is always the objective in matters of statutory construction. See Commonwealth v. Baker , 547 Pa. 214, 690 A.2d 164, 167 (1997).
Bricklayers of W. Pa. Combined Funds, Inc. v. Scott's Dev. Co. , 625 Pa. 26, 90 A.3d 682, 689 (2014).
As the Majority explained, our Supreme Court has stated generally the following about mechanics' liens:
Mechanics' liens were unknown at common law and are entirely a creature of statute. Such liens are designed to
protect persons who, before being paid (or fully paid), provide labor or material to improve a piece of property. See generally Matternas v. Stehman , 434 Pa.Super. 255, 642 A.2d 1120, 1124 (1994) ("The Mechanics' Lien Law of 1963 was intended to protect the prepayment labor and materials that a contractor invests in another's property [.]"). Mechanics' liens accomplish this goal by giving lienholders security for their payment independent of contractual remedies.
Id. (footnote and some citations omitted).
"The Mechanics' Lien Law, Title 49 of Pennsylvania's Statutes, is a creation in derogation of the common law, and, therefore, any question of interpretation shall be resolved in favor of strict, narrow construction." Wyatt Inc. v. Citizens Bank of Pa. , 976 A.2d 557, 564 (Pa. Super 2009) (emphasis added). It is well-settled that "[t]o effectuate a valid [m]echanics' [I] ien claim, the contractor or subcontractor must strictly comply with the requirements of Title 49." Id. (emphasis added).
"To file properly a [m]echanics' [I]ien, a subcontractor must [first] strictly comply with the notice requirement of § [ ]501[.]" Id. (emphasis added). Section 502(a) then sets forth the requirements for perfecting a mechanics' lien:
Section 501 provides as follows:
(b.1) Time Period of Formal Notice. No claim by a subcontractor, whether for erection or construction or for alterations or repairs, shall be valid unless, at least thirty (30) days before the same is filed, he shall have given to the owner a formal written notice of his intention to file a claim, except that such notice shall not be required where the claim is filed pursuant to a rule to do so as provided by section 506.1.
(c) Contents of Formal Notice. The formal notice shall state:
(1) the name of the party claimant;
(2) the name of the person with whom he contracted;
(3) the amount claimed to be due;
(4) the general nature and character of the labor or materials furnished;
(5) the date of completion of the work for which his claim is made;
(6) a brief description sufficient to identify the property claimed to be subject to the lien.
(d) Service of notice. The notice provided by this section may be served by first class, registered or certified mail on the owner or his agent or by an adult in the same manner as a writ of summons in assumpsit, or if service cannot be so made then by posting upon a conspicuous public part of the improvement.
49 P.S. § 1501.
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(a) Perfection of Lien. To perfect a lien, every claimant must:
(1) file a claim with the prothonotary as provided by this act within six (6) months after the completion of his work; and
(2) serve written notice of such filing upon the owner within one (1) month after filing, giving the court, term and number and date of filing of the claim. An affidavit of service of notice, or the acceptance of service, shall be filed within twenty (20) days after service setting forth the date and manner of service. Failure to serve such notice or to file the affidavit or acceptance of service within the times specified shall be sufficient ground for striking off the claim.
49 P.S. § 1502(a) (emphasis added).
Our case law has made clear that strict compliance with these provisions of the Mechanics' Lien Law is necessary to secure a valid lien. Regency Invs., Inc. v. Inlander Ltd. , 855 A.2d 75, 79 (Pa. Super. 2004). "Pennsylvania courts have not hesitated to strike down a claim if the notice provisions were not met." Tesauro v. Baird , 232 Pa.Super. 185, 335 A.2d 792, 793 (1975). This Court has explained:
The doctrine of substantial compliance does not apply when the timeliness of
the service of notice is at issue. Tesauro, supra . Substantial compliance applies only to a defect in the "form" of the notice. Id. Previously, this Court addressed arguments regarding substantial compliance in that particular context of Mechanics' Lien law. Samango v. Hobbs , 167 Pa.Super. 399, 75 A.2d 17, 20 (1950). The Samango Court stated:
... The plaintiff contends that a substantial conformance with this section of the statute is all that is required, and that the section will not be construed to be mandatory unless it would be inequitable to allow the lien to remain. This contention entirely overlooks the well established rules applicable to the interpretation of mechanics' liens. The language of the provision is clearly mandatory [...]. A compliance with the provision is a prerequisite to the validity of the lien, and the failure to observe it invalidates the lien. [...] The right to file a mechanics' lien, as has been uniformly held by all the courts, is of statutory origin. No such right existed at common law. It is class legislation and therefore must be strictly construed. If a party desires to avail himself of it, he must comply strictly with the provisions of the statute conferring the right.
Id. at 19-20 (internal citation omitted). Hence, substantial compliance does not apply to situations where notice was served, but service was untimely. Tesauro, supra . Notwithstanding more recent amendments to the Mechanics' Lien statute, one fact remains the same: notice of a claim must be served "within one (1) month after filing...." See 49 P.S. § 1502(a)(2).
Regency Invs. , 855 A.2d at 79.
Section 505 sets forth the procedure for contesting the validity of a mechanics' lien:
Any party may preliminarily object to a claim upon a showing of exemption or immunity of the property from lien, or for lack of conformity with this act. The court shall determine all preliminary objections. If an issue of fact is raised in such objections, the court may take evidence by deposition or otherwise. If the filing of an amended claim is allowed, the court shall fix the time within which it shall be filed. Failure to file an objection preliminarily shall not constitute a waiver of the right to raise the same as a defense in subsequent proceedings.
49 P.S. § 1505 (emphasis added).
Here, there is no dispute that Contractor failed to perfect the mechanics' lien because Contractor did not file the affidavit of service of notice required by Section 502(a). Contractor nonetheless asserts that Owners waived their right to challenge the lien under Section 505 on this basis because they did not raise the issue until after the trial on the enforcement of the lien.
The Majority agrees, concluding — without explanation or citation to any authority:
Section 505 can properly be construed as providing that if one of the specified defenses has not been raised ‘preliminary’ by the time a § 1701 enforcement action has been filed to obtain judgment on the claim, but the owner desires to assert a Section 505 defense, it must be raised in the enforcement proceeding in accordance with the manner provided for in the applicable rules of civil procedure.
Majority Op. at 1005.
There is no support, either in the Mechanics' Lien Law itself or the applicable case law, for this interpretation of Section 505. Section 502 states that in order to perfect a lien, the lienholder must file a claim with the prothonotary, serve written notice on the owner, and file an affidavit of service of notice. 49 P.S. § 1502(a). Section 502 goes on to state that "[f]ailure to serve such notice or to file the affidavit or acceptance of service within the times specified shall be sufficient ground for striking off the claim." 49 P.S. § 1502(a)(2) (emphasis added). Section 505 provides that any party may file preliminary objections "for lack of conformity with this act," in which the objecting party could then contest the validity of the lien based on the lienholder's failure to file an affidavit of service. See 49 P.S. § 1505. Critically, Section 505 goes on to state that "[f]ailure to file an objection preliminarily shall not constitute a waiver of the right to raise the same as a defense in subsequent proceedings ." Id. (emphasis added). Thus, Section 505 unambiguously places no limit on when a party may raise a defense to the enforcement of the lien. See id.
Additionally, case law has explicitly held that strict compliance with the notice provisions of Sections 501 and 502 is necessary to secure a valid mechanics' lien. See Wyatt Inc. , 976 A.2d at 564 ; Regency Invs. , 855 A.2d at 79. It is well settled that Pennsylvania courts will strike a lien if the lienholder did not satisfy these notice provisions. Tesauro , 335 A.2d at 793.
For example, in Rees, Weaver & Company Incorporated, v. M.B.C. Paper Mill Corporation , 267 Pa.Super. 148, 406 A.2d 562 (1979), the contractor properly filed and served a mechanics' lien on the owner, but filed the affidavit of service of notice after the 20-day period mandated by Section 502(a). Id. at 563. The contractor subsequently "filed an action to obtain judgment on its claim[,]" and eventually obtained a default judgment. Id. Approximately two months later, the owner "filed a petition to strike the judgment, alleging that [the contractor]'s claim was unperfected because of filing irregularities." Id. The trial court determined that the mechanics' lien was invalid and granted the owner's petition to strike the default judgment. Id.
This Court affirmed the trial court's determination that the lien was invalid, and explaining:
The statute provides that the failure to file the affidavit within the prescribed period "shall be sufficient ground for striking off the claim;" and the cases hold that this unequivocal provision is not to be diminished or qualified. McCarthy v. Reed Terrace, Inc. , 420 Pa. 534, 218 A.2d 229 (1966) ; Day and Zimmermann, Inc. v. Blocked Iron Corp. of [ Am. ], 394 Pa. 386, 147 A.2d 332 (1959) ; 12 Stand.Pa.Prac. Mechanics' Lien § 179 (rev.ed. 1964). As stated in Keely v. Jones , 35 Pa. Super. 642, 645 (1908) : "When the act fixes a date at which, or within which, something is to be done in order to establish a valid claim, substantial conformity will not answer. There must be compliance with the requirement." See also Thompson v. Radell , 42 Pa. Super. 105 (1910).
* * *
"[T]he proceeding for enforcement of the lien is entirely dependent upon the existence of the lien, and if there is no lien, or it is divested or stricken off, the enforcement proceeding falls with it." 12 Stand.Pa.Prac. Mechanics' Lien § 223 at 204 (rev.ed. 1964).
Id. at 565 (footnote omitted).
Therefore, in my view, the Mechanics' Lien Law and the pertinent authority support the conclusion that the failure to file an affidavit of service of notice invalidates a mechanics' lien, and under Section 505, the owner may move to strike the lien on that basis at any time. There is no support for the Majority's position that Section 505 contains a limitation on the time during which an owner may challenge the validity of a lien.
In this case, the parties do not dispute that Contractor failed to file the affidavit of service of notice mandated by Section 502(a). Thus, Contractor's mechanics' lien was invalid. Under Section 505 and the applicable case law, Owners were entitled to challenge the validity of the lien on this basis at any time, and did so by filing a petition to strike the lien. Consequently, I would affirm the trial court's decision to grant the petition to strike.