Steel Suppliers, Inc. v. Ehret, Inc.

• Decision Date: 08 August 1984
• Citation: 486 A.2d 32
• Parties: STEEL SUPPLIERS, INC., a Delaware corporation, Plaintiff, v. EHRET, INC., a Delaware corporation, PB & W RR Co. Penn Central (Amtrak) and International Underwriters, Inc., a Delaware corporation, Defendants. . Submitted:
• Court: Delaware Superior Court

Page 32

486 A.2d 32

STEEL SUPPLIERS, INC., a Delaware corporation, Plaintiff, v. EHRET, INC., a Delaware corporation, PB & W RR Co. Penn

Central (Amtrak) and International Underwriters,

Inc., a Delaware corporation, Defendants.

Superior Court of Delaware,

New Castle County.

Submitted: Aug. 8, 1984.

Decided: Nov. 26, 1984.

On Motion of Defendant Amtrak for Summary Judgment--Denied.

Samuel J. Frabizzio, of Agostini & Frabizzio, Wilmington, for plaintiff.

Timothy A. Casey, of Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, for defendant Amtrak.

TAYLOR, Judge.

The parties have agreed that the briefs heretofore submitted in connection with their earlier motions to strike and for default judgment contain their contentions on the issues discussed here and they rely on those contentions.

The issue is whether the waiver of mechanics lien provision contained in the contract between defendant Penn Central [Amtrak] and defendant Ehret, Inc. [Ehret] dated August 31, 1981 prevents plaintiff from pursuing this mechanics lien action against Amtrak. Plaintiff acted as a subcontractor to Ehret in supplying labor and materials which were required by the Amtrak-Ehret contract.

The contract between Amtrak and Ehret provided:

(a) The contractor hereby waives his right to assert Mechanics' or materialmen's liens pursuant to any applicable State or local statutes, or otherwise, against AMTRAK property or any other property in connection with work performed under this contract.

(b) The contractor shall insert or cause to be inserted, this clause including this subparagraph (b) in all subcontracts hereunder.

It has not been contended that plaintiff had actual notice of this provision and the discussion hereafter proceeds on the assumption that plaintiff was unaware that the provision was a part of the Amtrak-Ehret contract.

Amtrak relies on two documents which Ehret and plaintiff executed which it contends extends the waiver of mechanics lien to plaintiff. One document is a joint venture agreement dated October 5, 1981 which related to a portion of the work contemplated by the Amtrak-Ehret contract and which provided:

2.1 The Parties shall share, as hereinafter provided, the general obligations and responsibilities for the professional services to be performed under the Project Agreement.

* * *

* * *

4.1 The Policy Board shall have full responsibility and authority for the performance of the Project Agreement, including, but not limited to, reassignment of work between the Parties, preparation of schedules of work, settlement of disputes with the Owner, and any other matters affecting the performance of services under this Joint Venture Agreement Actions and decisions of the Policy Board shall be by unanimous vote, or as otherwise set forth in Article 23, and shall be final, conclusive and binding upon the Parties.

Amtrak contends that by the quoted provisions of the joint agreement Article 2.1 plaintiff agreed to share the general obligations under the Amtrak agreement and that this included the waiver of lien provision of the Amtrak contract. This contention overlooks the precise language of Article 2.1. Article 2.1 provides for Ehret and plaintiff to share "the general obligations and responsibilities for the professional services to be performed under the Project Agreement." It will be assumed that the "Project Agreement" is the contract between Amtrak and Ehret. While the quoted language does refer to "general obligations and responsibilities ... under the Project Agreement" it is qualified by the language "for the professional services to be performed". I view the phrase "professional services" as referring to the work to be done under the contract. I do not view the sentence as imposing upon plaintiff non-work obligations which Ehret committed itself to. This conclusion is re-enforced by Article 2.4 which provides:

2.4 The relationship between the Parties shall be limited to the performance of professional services under the terms of this Joint Venture Agreement, which shall be construed and be deemed to be a Joint Venture for the performance of the Project Agreement only.

Here again, the relationship is confined to the "performance of professional services". Moreover, the document makes clear that each party is not a partner or agent of the other.

Article 4.1 quoted above provides for a Policy Board with full responsibility and authority for performance of the Project Agreement. While this Board is given broad powers, the Court has not been informed of any action taken by the Board to implement Ehret's obligation with respect to waiver of liens. Therefore, that provision standing alone does not aid Amtrak's position.

The other contract document entered into between Ehret and plaintiff which Amtrak relies on is a form contract dated October 21, 1981. This contract provides:

Subcontractor agrees to furnish all labor, materials, supplies, equipment and perform all the following part(s) necessary for the New Roofing & Siding Locomotive & Erecting Ship, Wilmington, Delaware, all in accordance with plans and specifications and contract documents as prepared by Amtrak and Ehret, Inc.

Based upon this language, Amtrak contends that plaintiff became bound by the waiver provision of the Amtrak-Ehret contract. This language merely binds plaintiff to perform work and supply materials in accordance with the contract documents. It does not bind plaintiff to meet Ehret's general obligations under the Amtrak-Ehret contract. Moreover, from an examination of the Ehret-plaintiff contract, the only specific reference to liens is in paragraph 16, which provides:

Subcontractor will forward to Ehret, Inc. partial Releases of Liens for payments received. Such Releases of Liens shall be mandatory and will be required before further payment can be made. Additionally, subcontractors and major vendors of the subcontractor may be required to forward to Ehret, Inc. Releases of Liens to indicate payment to them for portions of work performed.

This provision contemplates partial releases of liens to be provided when payments are received and is inconsistent with the contention that plaintiff was to be bound by a general waiver of liens.

Based on the foregoing, I conclude that no provision of a contract entered into by plaintiff bound plaintiff to waive its right to mechanics lien or gave plaintiff actual notice of such waiver requirement.

Both parties have discussed G.R. Sponaugle & Sons, Inc. v. McKnight Const. Co., Del.Super. 304 A.2d 339 (1973). That case involved a subcontract to which the plaintiff was a party which contained a waiver of mechanics lien--unlike the present case. This Court pointed out the requirement in 25 Del.C. § 2706 that mechanics lien be "expressly waived" and found that the work for which plaintiff sued was not covered by the contractual waiver language. The case is of assistance in that it holds that the waiver must be clearly expressed and should not be extended beyond its clear meaning and any doubt should be resolved against the waiver. Amtrak contends that the...