Terra Firma Builders, LLC v. King

• Decision Date: 29 April 2021
• Docket Number: No. 15 MAP 2020,15 MAP 2020
• Citation: 249 A.3d 976
• Parties: TERRA FIRMA BUILDERS, LLC, Appellee v. William KING, a/k/a Billy M. King, and Melanie L. King, a/k/a Melanie L. Frantz, Appellants
• Court: Pennsylvania Supreme Court

249 A.3d 976

TERRA FIRMA BUILDERS, LLC, Appellee

v.William KING, a/k/a Billy M. King, and Melanie L. King, a/k/a Melanie L. Frantz, Appellants

No. 15 MAP 2020

Supreme Court of Pennsylvania.

Argued: October 21, 2020

Decided: April 29, 2021

Rocco Peter Imperatrice III, Esq., Andrew Philip Stafford, Esq., Imperatrice, Amarant & Bell, P.C., for Appellant.

Paul A. Bucco, Esq., David S. Makara, Esq., Davis Bucco PC, Nathaniel James Flandreau, Esq., Conshohocken, for Appellee.

BAER, C.J., SAYLOR, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

JUSTICE DOUGHERTY

We consider whether the failure of a mechanics’ lien claimant to comply with express statutory requirements results in an unperfected lien such that the property owner's late objection to the lien's defect does not constitute waiver. We conclude the Superior Court erred in determining that the owner's objection to the defect was waived in this case, and we therefore reverse.

Appellants, William King a/k/a Billy M. King, and Melanie L. King a/k/a Melanie L. Frantz (the Kings), hired appellee Terra Firma Builders, LLC (TF) to perform construction work in the backyard of their home. The construction began on June 25, 2012 pursuant to a written contract. In December 2012, TF was removed from the project before its completion due to a dispute about the work performed up to that point. On February 20, 2013, TF commenced two lawsuits in the court of common pleas of Delaware County: 1) a civil action seeking damages for breach of contract and unjust enrichment; and 2) a mechanics’ lien claim for alleged unpaid labor and materials in the amount of $131,123.24, pursuant to the Mechanics’ Lien Law of 1963, 49 P.S. §§ 1101 - 1902 (the Law). TF effectuated service of the mechanics’ lien on the Kings by sheriff on March 18, 2013, and filed an affidavit of service with the court on March 22, 2013, as required by Section 502 of the Law.¹ However, on April 23, 2013, TF filed a praecipe for voluntary discontinuance of the mechanics’ lien claim.

Shortly thereafter, on April 29, 2013, TF filed another mechanics’ lien claim against the Kings for the same dollar amount as the discontinued lien; this lien was assigned a new docket number. TF did not file the required affidavit of service for this lien claim. On May 17, 2013, the Kings filed an answer to the lien claim with a counterclaim alleging breach of contract. The Kings did not challenge TF's failure to file an affidavit of service at this time.

Almost two years later, on February 19, 2015, TF filed a complaint to enforce and obtain judgment on its lien pursuant to Section 701 of the Law.² The Kings apparently did not file preliminary objections or otherwise raise TF's failure to file an affidavit of service at this time. Almost three more years passed, and on December 8, 2017, the common pleas court consolidated TF's mechanics’ lien and breach of contract actions. The consolidated matters proceeded to a bench trial before the Honorable Spiros E. Angelos. At trial, the parties agreed that TF failed to complete the project but disputed the amount of work remaining unfinished and the quality of the work completed. Findings of Fact and Conclusions of Law at 11. Judge Angelos found in favor of the Kings on all claims, including the Kings’ counterclaim, and awarded the Kings monetary damages. TF filed a motion for a new trial, which was ultimately granted. At the conclusion of the second trial, the court again found in favor of the Kings on the merits, but did not award any damages. The parties filed post-trial motions.

In June 2018, while the post-trial motions were pending, the Kings filed a petition to strike the mechanics’ lien on the basis of TF's failure to file an affidavit of service to perfect the lien, as required by Section 502 of the Law. TF opposed the petition, arguing the Kings had waived their right to object to the five-year old lien when they accepted service of the complaint to enforce, never filed preliminary objections pursuant to Section 505 of the Law, and appeared in court to defend the action.³ Plaintiff's Memorandum of Law in Opposition to Defendants’ Petition to Strike Mechanics’ Lien at 3.

The trial court granted the petition to strike on the basis of TF's failure to file an affidavit of service and thus perfect its lien, pursuant to Section 502 of the Law. See Trial Ct. Op. at 6, citing Regency Invs., Inc. v. Inlander Ltd., 855 A.2d. 75, 77 (Pa. Super. 2004) ("Service requirements under Pennsylvania's Mechanics’ Lien law are strictly construed such that a complaint will be stricken if the statutory service requirements are not met[.]"); id . at 5, quoting Samango v. Hobbs. , 167 Pa.Super. 399, 75 A.2d 17, 20 (1950) (" ‘[C]ompliance with the [Law] is a prerequisite to the validity of the lien, and the failure to observe it invalidates the lien.’ ").

On appeal, a divided three-judge panel of the Superior Court reversed. Terra Firma Builders, LLC v. King , 215 A.3d 1002 (Pa. Super. 2019). The majority opined "an owner who desires to challenge the perfection of the lien ... must do so by filing a preliminary objection to the claim under Section 505" of the Law. Id . at 1005. The majority recognized Section 505 preliminary objections are governed by that statute, rather than the Rules of Civil Procedure, so they need not be filed within twenty days "like those to a normal civil complaint."⁴ Id . The majority further opined: "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.’ " Id . The majority then held: "if one of the specified defenses has not been raised ‘preliminary’ [sic] 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 [pursuant to] ... the applicable rules of civil procedure. If it does not do so, then the claim is waived." Id . (footnote omitted). The panel majority concluded the Kings’ objection to TF's mechanics’ lien, "in the form of a motion to dismiss [sic] over five years after the claim was filed and over three years from [the] commencement of the enforcement proceedings[,]" was too late. Id . at 1006.⁵

Judge Murray dissented, noting both the Law and applicable precedent permit an owner to raise defenses to a mechanics’ lien enforcement action at any time. Id . at 1006. Judge Murray opined the Law must be strictly construed, and a lien claimant must strictly comply with the statute's requirements to secure a valid lien. See id. at 1006-07, citing Wyatt Inc. v. Citizens Bank of Pa. , 976 A.2d 557, 564 (Pa. Super. 2009) (any question of interpretation of the Mechanics’ Lien Law "shall be resolved in favor of strict, narrow construction") and Regency , 855 A.2d at 79 (strict statutory compliance required to secure valid lien). Judge Murray reasoned TF failed to file the requisite affidavit of service under Section 502 of the Law and thus did not perfect its lien. She further observed Section 505 "unambiguously places no limit on when a party may raise a defense to the enforcement of the lien," and the majority's contrary reading lacked "explanation or citation to any authority." Id. at 1008-09.

We granted discretionary review of the following issue presented by the Kings: "Is a property owner who seeks to challenge the perfection of a mechanics' lien required to file preliminary objections before or during the enforcement proceeding of the lien?" Terra Firma Builders, LLC v. King, ––– Pa. ––––, 226 A.3d 971 (2020) (per curiam ).⁶ We consider the parties’ arguments mindful that the issue is a pure question of law over which our standard of review is de novo and our scope of review is plenary. A. Scott Enters., Inc. v. City of Allentown, 636 Pa. 249, 142 A.3d 779, 786 (2016).

The Kings argue Pennsylvania courts have consistently stricken void, unperfected mechanics’ liens for failure to comply with statutory requirements. The Superior Court majority's contrary reading, according to the Kings, is the first appellate court decision to excuse a failure to comply since the Law was enacted in 1963. The Kings argue the panel's decision must be reversed because its interpretation of Section 505 of the Law contradicts the clear mandate of Section 502, which the majority did not even discuss. The Kings observe Section 502 plainly states that in order to perfect a mechanics’ lien, an affidavit of service "shall be filed," and the failure to file the affidavit "shall be sufficient ground for striking off the claim." 49 P.S. § 1502(a)(2). The Kings explain that, as mechanics’ liens are statutorily-based, a party seeking to avail itself of its protections " ‘must comply strictly with the provisions of the statute conferring the right. Nothing is presumed in favor of the lien.’ " Appellants’ Brief at 18, quoting O'Kane v. Murray , 252 Pa. 60, 97 A. 94, 97 (1916). The Kings insist courts must strictly construe the statutory requirements concerning perfection of the lien. Id., citing, e.g. , McCarthy v. Reese , 419 Pa. 489, 215 A.2d 257, 258 (1965) ("We have consistently held that the right to a mechanic's lien is entirely statutory, and, therefore, not only the right itself but the method of enforcing and defending it must depend upon the statute and must be pursued in strict compliance with it."). In this case, the Kings reiterate, there is no dispute that TF never filed the required affidavit of service and, as a result, the lien is void and a court may not exercise any discretion in the matter. Id . at 20-23, citing 20 STANDARD PENNSYLVANIA PRACTICE 2d § 105:183 ("Where a mechanics’ lien claimant does not adhere strictly to the procedure for perfecting a mechanics’ lien claim, the lien must be stricken as a matter of law, and in such a situation, the court does not have discretion to refuse to strike the lien."). The Kings note every other Pennsylvania court to...