Construction Law Blog
Upon review, the Superior Court reviewed the prior cases that have addressed this issue. After a careful examination, the court rejected those cases that interpreted Sampson-Miller to provide a bright-line rule that a lien rights never exists in the absence of a constructed improvement. The court first observed that “nothing in the Mechanics’ Lien Law requires that a structure actually exist” or that construction of the improvement must be completed. Rather, as the court explained, the Lien Law merely requires that excavation must be performed incidental to the erection or construction of an improvement in order to create lien rights.
Moreover, the court found that Sampson-Miller’s perceived requirement that the actual erection of an improvement must occur for lien rights to exist directly conflicts with Section 1305 of the Lien Law, which provides: “Except in case of destruction by fire or other casualty, where, through no fault of the claimant, the improvement is not completed, the right to lien shall nevertheless exist.” Therefore, the Superior Court concluded that B.N. Excavating’s lien rights must “nevertheless exist” even if no structure was ultimately constructed as contended by the owners.
The B.N. Excavating Court also proclaimed that Sampson-Miller unnecessarily restricted the ordinary meaning of the term “incidental.” If the common definition of “incidental” is employed, as the Court explained, the plain language of the Lien Law “simply requires excavation and preliminary groundwork to be connected to a structure and not merely an independent improvement” of land. Thus, the B.N. Excavating Court reasoned that Sampson-Miller’s limited definition of “incidental” erroneously forced the rule that actual construction of the improvement must occur even though the statute does not contain such a requirement.
Based on this analysis, the B.N. Excavating Court held that it remains true that when grading and excavation work is performed independent of a plan to construct an improvement, the Lien Law does not provide claim rights. However, where “excavation is performed as an integral part of a construction plan, the activity falls within [the scope of the Lien Law] regardless of whether a structure is ever erected.” The court also acknowledged that its holding is consistent with the analysis in Dollar Bank, FSB v. EM2 Development Corp., 716 A.2d 671, 673 (Pa. Super. Ct. 1998) in which the court held that a lien attaches when excavation and related site work is performed as part of a “’continuous scheme to erect’ a structure.”
Interestingly, the Superior Court in dicta also remarked on its recent holding in Bricklayers of Western Pennsylvania Combined Funds, Inc. v. Scott’s Development Co., 41 A.3d 16 (Pa. Super. Ct. 2012) (en banc), which jettisoned the long-established rule for strict construction of the Lien Law and proclaimed that a liberal construction should be employed for non-procedural provisions of the Lien Law. The B.N. Excavating Court expressed that the liberal construction standard proclaimed by the Bricklayers Court did not apply to 49 P.S. § 1202(a)(12) because it was adapted from the Mechanics’ Lien Law of 1901 and, according to the statutory comment to Section 1202, was expressly intended to retain the existing decisional law affecting that section under the Lien Law of 1901. The B.N. Excavating Court’s discussion of Bricklayers, however, had no effect on the outcome of the decision because, as the court explained, the holding would be the same whether a liberal or strict construction of the Lien Law was utilized.
With this decision in mind, the best practice going forward for lien claimants involved in failed constructed projects should be to include an express statement in their lien claim that indicates that the work was performed incidental to a planned improvement and as part of a construction plan. By including this express statement, lien claimants will put themselves in the best position to avoid any uncertainty about the existence of lien rights in cases where the improvement was never constructed or completed for reasons unrelated to the claimant’s work.