Bricklayers of W. Pa. Combined Funds, Inc. v. Scott's Dev. Co.

• Decision Date: 17 April 2014
• Citation: 90 A.3d 682
• Parties: BRICKLAYERS OF WESTERN PENNSYLVANIA COMBINED FUNDS, INC., Appellee v. SCOTT'S DEVELOPMENT COMPANY, Appellant. Laborers' Combined Funds of Western Pennsylvania, as Agent for Phillip Ameris and Albert W. Betler, Trustees Ad Litem, Laborers' District Council of Western Pennsylvania Welfare and Pension Funds, the Construction Industry Advancement Program of Western PA Fund, and the Laborers' District Council of Pennsylvania and its Affiliated Local Unions, Appellees v. Scott's Development Company, Appellant.
• Court: Pennsylvania Supreme Court

90 A.3d 682

BRICKLAYERS OF WESTERN PENNSYLVANIA COMBINED FUNDS, INC., Appellee

v.SCOTT'S DEVELOPMENT COMPANY, Appellant.

Laborers' Combined Funds of Western Pennsylvania, as Agent for Phillip Ameris and Albert W. Betler, Trustees Ad Litem, Laborers' District Council of Western Pennsylvania Welfare and Pension Funds, the Construction Industry Advancement Program of Western PA Fund, and the Laborers' District Council of Pennsylvania and its Affiliated Local Unions, Appellees

v.Scott's Development Company, Appellant.

Supreme Court of Pennsylvania.

Argued April 10, 2013.

Decided April 17, 2014.

Bryan Geoffrey Baumann, Esq., Knox, McLaughlin, Gornall & Sennett, P.C., Erie, for Scott's Development Company.

Edward Bernandon Gentilcore, Esq., Pittsburgh, for Associated General Contractors of America, Amicus Curiae, General Building Contractors Association, Amicus Curiae, General Contractors Association of Pennsylvania, Amicus Curiae, Keystone Contractors Association, Amicus Curiae, The Master Builders' Association of Western Pennsylvania, Inc., Amicus Curiae.

Kenneth Weller Lee, Esq., Lemoyne, for Bricklayers of Western Pennsylvania Combined Funds, Inc. (No. 36 WAP 2012), Laborers Combined Funds of Western Pennsylvania, Phillip Ameris, Laborer's

District Counsel of Western pennsylvania, the Construction Industry of Advancement program, Albert W. Betler, Laborers District Council of Pennsylvania and Its Afflicted Unions (No. 37 WAP 2012).

BEFORE: CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, MCCAFFERY, ORIE MELVIN, JJ.

OPINION

Justice SAYLOR.

Appeal was allowed to determine whether the Mechanics' Lien Law of 1963 authorizes a union's employee benefits trust fund to file a mechanics' lien claim on behalf of union members who performed work for a construction contractor.

According to the allegations in the complaints filed by the trust funds (appellees herein),¹ William Pustelak, Inc., a construction contractor (“Contractor”), entered into collective bargaining agreements (“CBAs”) with two unions, Bricklayers and Trowel Trades International, Local No. 9, and Laborers District Council of Western Pennsylvania (the “Unions”). The CBAs specified, inter alia, that, when Contractor needed bricklayers and/or laborers, Contractor would obtain them from the Unions. The CBAs also referred to Contractor as “Employer,” and to any union members hired by Contractor in accordance with the CBAs as Contractor's “employees.” The CBAs additionally required Contractor to furnish contributions for employee benefits, such as health and retirement benefits, for each hour of labor performed by union workers. Under the CBAs, the contribution amounts were to be reflected in monthly reports issued by Contractor, and the contributions were to be paid directly to Appellees, who are trustees of Bricklayers of Western Pennsylvania Combined Funds, Inc., and Laborers' Combined Funds, Inc. (the “Trustees”), and who acted as agents to collect such monies on behalf of the union workers. These arrangements were set forth in trust agreements that were incorporated by reference into the CBAs.

While the CBAs were in effect, appellant Scott's Development Company (“Developer”) hired Contractor to complete a construction project on land owned by Developer, situated in Erie County and located within the Unions' territory. Because the project required bricklayers and laborers, Contractor, in turn, hired such craftsmen who, notably, were members of the Unions. These workers performed the necessary tasks in a satisfactory manner, and Contractor filed monthly reports as required. Contractor, however, failed to supply the benefit contributions to the trust funds.

The Trustees each filed a Statement of Mechanics' Lien Claim against Developer in the common pleas court pursuant to the Mechanics' Lien Law of 1963. ² The Trustees then filed Complaints to Enforce Mechanics' Lien Claim, seeking recovery of unpaid employee benefit contributions totaling approximately $42,000, together with interest, penalties, fees, and costs. Developer raised a preliminary objection in the nature of a demurrer as to each complaint, alleging that the Trustees lacked standing to assert a mechanics' lien claim on behalf of the unionized workers because such workers were employees of Contractor and, as such, were neither “contractors” nor “subcontractors.” ³ Developer noted, in this regard, that the CBAs predated the project in question and referred to Contractor as “Employer” and to the union workers as “employees.” Developer additionally asserted that the complaints sought to force it to fund Contractor's obligations to the Trustees. Developer argued that the Trustees' proper means of redress should be via a breach-of-contract action against Contractor. The Trustees filed answers to the preliminary objections.

The common pleas court disposed of the demurrers in two substantively identical speaking orders. In its orders, the court essentially agreed with Developer's position, concluding that the union members who provided labor for the construction project were employees of Contractor and not employees of the unions or of the Trustees. In this respect, the court did not view the CBAs as subcontractor agreements, but rather, as agreements made on behalf of Contractor's employees defining working conditions, compensation, and other terms. Consequently, the court held that the unionized workers did not come within the meaning of “subcontractor” as that term is defined by the 1963 Act. ⁴See Bricklayers of W. Pa. Combined Funds v. Scott's Dev. Co., Civil No. 12533–2009, Order at 2 (C.P.Erie, Mar. 25, 2010), reproduced in R.R. 241 a; Laborers Combined Funds of W. Pa. v. Scott's Dev. Co., Civil No. 12514–2009, Order at 2 (C.P.Erie, Mar. 25, 2010), reproduced in R.R. 243a. The Trustees appealed to the Superior Court and filed Rule 1925(b) statements in compliance with the common pleas court's directive. SeePa.R.A.P. 1925(b). However, the court did not issue a Rule 1925(a) opinion, presumably relying on the reasoning reflected in its March 25th orders.

The Superior Court consolidated the Funds' appeals and reversed. See Bricklayers of W. Pa. Combined Funds, Inc. v. Scott's Dev. Co., 41 A.3d 16 (Pa.Super.2012) ( en banc ). The majority determined that the term “subcontractor” should be given a broad interpretation, as the 1963 Act is remedial in nature and, as such, should be liberally construed to further its purposes. See generally Matternas v. Stehman, 434 Pa.Super. 255, 264, 642 A.2d 1120, 1124 (1994) (“The Mechanics' Lien Law of 1963 was intended to protect ... prepayment labor and materials that a contractor invests in another's property, by allowing the contractor to obtain a lien interest in the property involved.”). While recognizing that the intermediate court's previous decisions indicatedthat the enactment is subject to strict construction as a statute in derogation of the common law, see Bricklayers, 41 A.3d at 24 (collecting cases), the majority stated that such decisions improperly relied on case law from this Court interpreting the 1963 Act's predecessor statute, the Mechanics' Lien Law of 1901. The court pointed out that, under the Statutory Construction Act, the rule of strict construction for statutes in derogation of the common law is inapplicable to statutes enacted finally after September 1, 1937, see1 Pa.C.S. § 1928(a), and that, with certain limited exceptions not presently applicable, all other provisions of a statute should be liberally construed to “effect their objects and promote justice.” Id. § 1928(c). Accordingly, the majority suggested that, notwithstanding its prior case law, a liberal construction should pertain relative to the 1963 Act.

Applying such construction, the intermediate court agreed with Developer and the common pleas court that the CBAs do not constitute subcontracts between Contractor and the Unions, primarily because they do not relate to a specific, identifiable “improvement” for purposes of the relevant statutory definitions. See49 P.S. § 1201(1), (5) (respectively defining “improvement” and “subcontractor”). Instead, the court reasoned, the CBAs merely establish Contractor's obligation to employ union members for specific types of work, and govern the terms of employment whenever Contractor would hire such persons to work on a project. See Bricklayers, 41 A.3d at 29.

Still, although the Funds did not raise an implied-contract theory in their complaints, their Rule 1925(b) statements, or their brief, the Superior Court determined, sua sponte, that implied-in-fact contracts between Contractor and the Unions—for the specific construction project in question—could be discerned from the averments set forth in the complaints. See49 P.S. § 1201(5) (defining the term subcontractor to include one who has a contract with a contractor that is “express or implied”). In particular, the majority reasoned that, pursuant to the CBAs, the Unions furnished its members to Contractor to perform the necessary work on the improvement, and those individuals undertook such work with an expectation that Contractor would fulfill its obligations under the CBAs' employee-benefit provisions. See Bricklayers, 41 A.3d at 30. Therefore, according to the majority, the complaints' allegations, if accepted as true, established that the Unions were subcontractors for purposes of the 1963 Act. Referencing case law from other jurisdictions, the majority then held that the Trustees, standing in the shoes of the union members for purposes of collecting the employee-benefit monies, had legal standing to assert the mechanics' liens. See id. at 30–32 (discussing cases from other jurisdictions).⁵

Judge Olson dissented, initially faulting the majority for relying on an implied-contract theory which was not argued by the Trustees. See Bricklayers, 41 A.3d at 36–37 (Olson, J., dissenting) (citing Rabatin v. Allied Glove Corp., 24 A.3d 388, 396 (Pa.Super.2011) (indicating that the...