Update on Mechanic’s Liens and Union Benefit Funds

In prior newsletters we have discussed the case of the Bricklayers of Western Pennsylvania Combined Funds, Inc. v. Scott’s Development Company.  The Superior Court in that case determined that a union’s benefit pension fund was entitled to a mechanic’s lien against real estate on which union workmen had worked.  As we reported in our Summer 2012 issue, that result was viewed by many commentators as a departure from existing law.

The Superior Court decision was subsequently appealed to the Pennsylvania Supreme Court, which overturned the decision.  The Supreme Court determined that the union members were not subcontractors of the property owner (but merely employees of the general contractor).  The Supreme Court also determined, unlike the Superior Court, that the benefit fund trustee demonstrated no “quasi-contractual” relationship between itself and the general contractor, and, therefore, no subcontractor status with respect to the owner was established on that basis.

In reaching this decision, the Supreme Court engaged in detailed analysis of the statute’s language and history.  However, the Court also reasoned that “it is proper to consider the consequences” of reading the law to allow for such a lien.  The Court went on to reiterate an old  decision to the effect that such a reading would make the property owner a “guarantor” of the general contractor’s wage obligations, and then quoted an 1848(!) case to the effect that the result “would soon be felt as intolerable.”

The overall result is what many attorneys and commentators expected from the start – the union funds were not entitled to assert mechanic’s liens in real estate the union members had worked on.


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