In March of 2005 a general contractor, Pustelak, entered into a collective bargaining agreement (CBA) with a Bricklayers Union local that provided for the type, terms, and conditions of labor to be provided on Pustelak jobs within a certain geographical jurisdiction. There was no reference to any particular job, job site or development in the CBA. Under the CBA, Pustelak was, among other things, to pay health, welfare, and other fringe benefits into a union trust fund (the “Trust”) for the benefit of the union members, and, importantly, the agreement between the Local and the Trust was incorporated by reference into the CBA. Over two years later in July of 2007, Pustelak entered into an agreement with a developer that was in the geographical scope of the CBA. Pustelak thus used the Local’s employees on the job site. Pustelak failed to make the necessary employee benefit payments to the Trust. The trustee of the Trust promptly took the step of asserting a mechanics’ lien in the landowners real estate.
The only parties with standing to assert a mechanics’ lien in Pennsylvania are contractors, sub-contractors and sub-sub-contractors. When the landowner contested the mechanics’ lien at the trial court level, the trial court determined that the Trust was neither a contractor, sub-contractor or sub-sub-contractor on the project. Thus, the Trust could not assert a lien.
The Superior Court determined otherwise. The crux of the argument is whether the union and thus the Trust is a subcontractor by way of its contractual relationship with the general contractor (which would allow it to file a lien) or whether it simply has an employer/employee relationship to the general contractor (which would not so allow). Although the Superior Court conceded that the union and by extension the Trust was not a sub-contractor by way of the CBA (thus far agreeing with the trial court), the Court went on to decide that there was an “implied contract” between the Trust and the general contractor. That implied contract resulted in the union, and by extension the Trust, being a sub-contractor on the project. The Superior Court majority also found it persuasive that a union benefit trust fund, like the plaintiff in this case, was protected under the Federal Miller Act, which provides protection to a “person who has furnished labor” to a federal construction project.
The dissenting opinion in the case was vigorous and criticizes the majority logic as both not in keeping with Pennsylvania law and too reliant on foreign (state and federal) cases. However, unless the Supreme Court overrules a similar decision (this one has not yet been appealed) or unless the legislature acts, the risk of a mechanic’s lien on projects that employ union labor just got greater.
— Rod Fluck