Pearce & Moretto, Inc. v. Hyetts Corner, LLC

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
PEARCE & MORETTO, INC.,
Plaintiff,
V. C.A. No. N19L-06-090 WCC
HYETTS CORNER, LLC,
Defendant.
4.444.444 444
Submitted: October 10, 2019
Decided: January 31, 2020
DEFENDANT’S CORRECTED MOTION TO DISMISS — GRANTED
MEMORANDUM OPINION
G. Kevin Fasic, Esquire; Offit Kurman, P.A., 1201 N. Orange Street, Suite 10 East,
Wilmington, DE 19801. Attorney for Plaintiff.
Richard L. Abbott, Esquire; Abbott Law Firm, 724 Yorklyn Road, Suite 240,
Hockessin, DE 19707. Attorney for Defendant.
CARPENTER, J.
Before the Court is Defendant Hyetts Corner LLC’s (“Defendant” or “Hyetts
Corner”) Corrected Motion to Dismiss Mechanic’s Lien And Building Construction
Payments Act Claims. For the reasons set forth in this Opinion, Defendant’s Motion
is GRANTED.
I. Factual & Procedural Background
In April of 2013, Pearce & Moretto, Inc. (“Plaintiff” or “P&M”) was hired “to
perform infrastructure construction services” for two housing developments:
Windsor Commons at Hyetts Corner and Windsor South at Hyetts Corner.' The
name of Windsor South has since been changed to the Enclave at Hyetts Crossing
(“the Enclave”). On June 26, 2019, Plaintiff filed a Complaint against Hyetts
Comer alleging that the Defendant owes a balance of $38,870.00 for services
rendered at the Enclave.’
The Enclave development consists of 84 lots; 77 of which have been sold or
transferred to other developers.* Only the remaining seven lots are currently owned
by the Defendant.> Originally, P&M sought a mechanic’s lien on each of the
remaining seven lots owned by Hyetts Crossing for the amount of $462.74 per lot.®
This amount reflects the total balance owed apportioned among all 84 lots. On
' Compl. 7 3.
2 Id.
31d. 44.
41a. 5.
5 The lots owned by Defendant are identified as Lot 40, Lot 42, Lot 46, Lot 47, Lot 48, Lot 49 and Lot 50. Id. ff 5-6.
81d. 45.
2
October 10, 2019, Hyetts Corner tendered a check in the amount of $462.74 to
discharge the lien against Lot 40.’ As such, only the liens on the remaining six lots
are at issue.
The Plaintiff's Complaint asserts a mechanic’s lien claim for each lot, as well
as claims for breach of contract, quantum meruit/unjust enrichment, and the alleged
violation of the Building Construction Payment Act (“BCPA”). Defendant moved
to dismiss Plaintiff's mechanic’s lien claims and BCPA claims. This is the Court’s
decision on Defendant’s Corrected Motion to Dismiss.
IJ. Standard of Review
When considering a Rule 12(b)(6) motion to dismiss, the Court “must
determine whether the claimant ‘may recover under any reasonably conceivable set
of circumstances susceptible of proof.’”® It must also accept all well-pleaded
allegations as true, and draw every reasonable factual inference in favor of the non-
moving party.’ At this preliminary stage, dismissal will be granted only when the
claimant would not be entitled to relief under “any set of facts that could be proven
to support the claims asserted” in the pleading.”
7 See Defendant’s Petition to Discharge Mechanic’s Lien Against Lot 40.
8 Sun Life Assurance Co. of Can. v. Wilmington Tr., Nat’l Ass’n, 2018 WL 3805740, at *1 (Del. Super. Ct. Aug. 9,
2018) (quoting Spence v. Funk, 396 A.2d 967, 968 (Del. 1978)).
? Id.
\© See Furnari v. Wallpang, Inc., 2014 WL 1678419, at *3—4 (Del. Super. Ct. Apr. 16, 2014) (citing Clinton v.
Enter. Rent-A-Car Co., 977 A.2d 892, 895 (Del. 2009)).
3
III.
Discussion
a. Mechanic’s Lien Claims
Hyetts Corner asserts that P&M failed to state a claim for a mechanic’s lien
because the lots on which they seek liens are “vacant and undeveloped.”"' As such,
they claim any lien would need to be based on improvements to the land alone,
requiring a contract in conformity with 25 Del. C. § 2703.'* Defendant further argues
that P&M cannot meet the requirements of Section 2703 because (1) the incorrect
contract was attached to the Complaint, and (2) “no metes and bounds description”
is included in the contract.
In response, P&M asserts that a mechanic’s lien can be imposed on the lots
because “[t]he lack of any current structure upon the lots is not dispositive.”!* They
argue that each lot is classified as a residential address and will likely “have houses
erected upon them at some future date.”!° Furthermore, Plaintiff alleges that the
services they performed provided benefit to the subdivision as a whole, rather than
the land itself.!° Accordingly, they argue that the liens are in relation to structures
'l Def.’s Corrected Mot. to Dismiss 6.
2 Id. 9] 8-10.
3 Id. 410.
'4 P].’s Resp. in Opp’n to Def.’s Corrected Mot. to Dismiss { 6.
15 Ia.
16 14.49.
and so the Section 2703 requirements for liens based on improvements to land alone
are inapplicable.
In order to resolve this issue, the Court must first determine whether the
services provided by P&M were to the land alone or whether they were provided in
relation to any structure, specifically the future houses that may be built on the vacant
lots when Hyetts Corner eventually sells the land. If the services are determined to
have been provided to the land alone, then the Court must determine if P&M has
satisfied the contract requirements necessary to obtain a lien based solely on
improvement to land under Section 2703.
In Jones vy. Julian, the Delaware Supreme Court determined that the services
performed by a subcontractor in “paving around a motel” were not considered
improvements to the land alone because the work related to the general contractor’s
construction of improvements to the motel.'” In the same year, the Superior Court
held in Whittington v. Segal'® “that the paving of a driveway, not a part of
construction of the building erected on the premises” was considered an
improvement to land alone.'?
‘7 Jones v. Julian, 195 A.2d 388, 390 (Del. 1963) (indicating contract requirements for mechanic’s lien based on
improvements to land alone not applicable); see also Pioneer Nat. Title Ins. Co. v. Exten Assocs., Inc., 403 A.2d
283, 286 (Del. 1979).
18 Whittington v. Segal, 193 A.2d 534 (Del. Super. Ct. 1963).
19 Pioneer Nat. Title Ins. Co., 403 A.2d at 286 (citing Whittington v. Segal, 193 A.2d 534 (Del. Super. Ct. 1963)).
5
In Earl D. Smith, Inc. v. Carter, the Superior Court considered a motion to
dismiss a mechanic’s lien for services provided by a land surveying firm to a
subdivision.2° The Court acknowledged that “[i]t has been held that site work on a
parcel can be considered as benefiting individual structures to be constructed,”
referring to Jones.”! Although the Court did not decide whether these services would
be lienable, they dismissed the mechanic’s lien on other grounds.”
More recently, in C&J Paving, Inc. v. Hickory Commons, LLC, the Superior
Court determined that a mechanic’s lien based on paving and curbing of the streets
within a vacant development must be considered an improvement solely to the land
because no houses, buildings, or other structures had been built in the development.””
Despite plaintiff's argument that “as yet unknown structures may be built” in the
development, the Court found that “if this is not a case of improvements to land
alone, the Court is hard pressed to conceive of a situation that would fall under
Section 2703.4
While the Court is surprised that the issues raised in the Defendant’s Motion
have not been previously decided, after a review of the cases cited by the parties, it
20 Earl D. Smith, Inc. v. Carter, 1998 WL 283379, at *1 (Del. Super. Ct. Feb. 17, 1998).
21 Id. at *3 (indicating that “in such case the value of the work must be apportioned among the structures”) (citing
Jones v. Julian, 195 A.2d 388 (Del. 1963); Kershaw Excavating Co. v. City Sys., Inc., 581 A.2d 1111 (Del. 1990)).
22 The claims were dismissed for failure to apportion the cost among the relevant structures. Earl D. Smith, Inc.,
1998 WL 283379, at *4 (noting plaintiff did not plead a contract in conformity with §2703 and thus dismissed any
additional claims based on improvements to land alone).
23 C&J Paving, Inc. v. Hickory Commons, LLC, 2006 WL 3898268, at *1-2 (Del. Super. Ct. Oct. 6, 2006).
24 Td. at *2.
finds that the work P&M performed must be considered an improvement to land,
rather than an improvement to structure. In contrast to the motel project in Jones, the
services that P&M provided were not connected to any ongoing project to construct
structures upon the six lots. Although the Defendant suggests that Earl D. Smith,
Inc. indicates that the site work P&M performed should be understood as benefitting
the future structures that one day may exist on the six lots, the Court believes the
decision cannot be based on what may occur in the future, but what was occurring
at the time the work was performed. The lots on which P&M seek liens are wholly
undeveloped and lack any connection to structures. Therefore, any such liens must
be based on improvements to the land alone.
As such, in order to survive the Motion to Dismiss, P&M must satisfy the
requirements necessary to obtain a lien based solely on improvement to land under
25 Del. C. § 2703, which provides the following:
No lien shall attach in case the improvements are to the land alone,
unless a contract in writing, signed by the owner or owners thereof,
setting forth the names of all parties to the contract and containing a
description by the metes and bounds of the land to be affected and by a
statement of the general character of the work to be done, and of the
total amount to be paid thereunder, and the amounts of the partial
payments, together with the time when such payments shall be due and
payable.”>
25 25 Del. C. § 2703 (emphasis added).
Before continuing the Court’s analysis, it is important to note that “Delaware
courts have consistently held that the mechanic's lien statute must be ‘strictly
construed and pursued.”””° Accordingly, “a statement of claim failing to meet the
927
requirements of the statute is totally insufficient to warrant the entry of a lien and
once the time has expired to file the statement of claim, the Court cannot allow
“amendment to the statement of claim for the purpose of curing fatal defects.””
However, this “rule is, of course, confined to motions to amend a statement of claim
after the expiration of the time for filing a claim for mechanic's line [sic] which seeks
to make fundamental changes in the basic nature of the claim asserted.””
Accordingly, the Court has permitted amendments that did not change the
substantive nature of the claim.*”
When P&M filed their Complaint, they identified the Enclave as the property
containing the lots on which they seek liens in the body of their Complaint, but they
attached the incorrect contract. Instead of the contract for the Enclave, the contract
for Windsor Commons was included as Exhibit A. It should be noted, however, that
both contracts are executed by the same individuals, Gary Farrar on behalf of the
26 Builders' Choice, Inc. v. Venzon, 672 A.2d 1, 2 (Del. 1995) (citing Ceritano Brickwork, Inc. v. Kirkwood Indus.,
Inc., 276 A.2d 267, 268 (Del. 1971)).
21 Ceritano Brickwork, Inc. v. Kirkwood Indus., Inc., 276 A.2d 267, 268 (Del. 1971).
28 EJ. Hollingsworth Co. v. Cont'l-Diamond Fiber Co., 175 A. 266, 268 (Del. Super. Ct. 1934).
29 Ceritano Brickwork, Inc., 276 A.2d at 269.
30 Id. (citing Westinghouse Elec. Supply Co. v. Franklin Inst. of State of PA, 21 A.2d 204 (Del. Super. Ct. 1941);
Deluca v. Martelli, 200 A.2d 825 (Del. Super. Ct. 1964); Miller v. Master Home Builders, Inc., 239 A.2d 696 (Del.
Super. Ct. 1968)).
housing developments, and Robert Julian on behalf of the Plaintiff, and that the
scope of work described in the contracts is identical, with the exception of one
additional duty included for the Enclave.*'! Despite this administrative error, the
Enclave is correctly identified as the development containing the lots on which P&M
seeks liens throughout the Complaint and Exhibit D to the Complaint correctly
identifies the lots, as well as their addresses in the subdivision. The Court believes
that an amendment allowing the Plaintiff to substitute the correct contract would not
alter the substantive nature of the claim. As such, the Court will allow the Plaintiff
to attach the correct contract.
Unfortunately, when the Court views the correct contract, there is no
description of the metes and bounds of the land to which the Plaintiff is attempting
to attach the mechanic’s lien, which is required by Section 2703. In Matter of Distant
Horizon Dream, Inc., the Bankruptcy Court of the District of Delaware addressed
whether a description of the property not in metes in bounds, but rather as “Rehoboth
Marina, Bayside, West of Route 1, Dewey Beach, Delaware” sufficiently described
the land on which the contractor provided dock and pier installation.*? Although
street addresses have been found to sufficiently identify property when related to a
31 The scope of work for the Enclave contract includes one additional duty, “Pump Station per plans,” but otherwise
the contracts’ scopes are identical. See Def.’s Corrected Mot. to Dismiss, Ex. A.
32 Matter of Distant Horizon Dream, Inc., 110 B.R. 146, 147 (Bankr. D. Del. 1989).
9
structure, the Court held that “such a meager description . . . cannot be deemed
sufficient to attach a lien to land” under the strict requirements of Section 2703.
In the instant matter, neither the correct contract between the parties nor any
of the exhibits attached to the Complaint meet the requirements of Section 2703. The
closest description is the NCC parcel number that is referenced in Exhibit D to the
Complaint. However, as the mechanic’s lien statute must be “strictly construed and
pursued” and the contract at issue lacks a “description by the metes and bounds of
the land to be affected,”*> the Plaintiff cannot satisfy Section 2703. Therefore, even
though the Court would allow the correct contract to be substituted to the Complaint,
it still does not resolve the Plaintiff's statutory compliance issue. Accordingly, the
mechanic’s lien claims are dismissed.
b. Building Construction Payment Act Claims
Hyetts Corner contends that Plaintiff's BCPA claims must be dismissed
because the statute is inapplicable to the parties. They assert that P&M does not meet
the statutory definition of “contractor” because the work performed was unrelated to
33 Id.
34 Builders’ Choice, Inc. v. Venzon, 672 A.2d 1, 2 (Del. 1995) (citing Ceritano Brickwork, Inc. v. Kirkwood Indus.,
Inc., 276 A.2d 267, 268 (Del. 1971).
35.95 Del. C. § 2703.
10
any building or structure on the lots and, consequently, they cannot bring suit under
the BCPA.”*° Pursuant to 6 Del. C. § 3501:
(2) “Contractor” includes, but is not limited to, an architect, engineer,
real estate broker or agent, subcontractor or other person, who enters
into any contract with another person to furnish labor and/or materials
in connection with the erection, construction, completion, alteration or
repair of any building or for additions to a building, by such contractor,
or for the sale to such other person of any lands and premises, whether
owned by such contractor or another, upon which such contractor
undertakes to erect, construct, complete, alter or repair any building or
addition to a building... >"
In response, P&M claims that the BCPA should apply because their services
related to “each of the houses intended to be built” at some point in the future on the
lots, making the definition of contractor applicable to the Plaintiff.**
In order for the BCPA to apply, the parties must meet the definitions provided
in Section 3501.°? There are two possible ways to meet the definition of a contractor:
(1) to furnish labor and/or materials in connection with the erection, construction,
completion, alteration or repair of any building or for additions to a building; or (2)
for the sale to such other person of any lands and premises upon which such
contractor undertakes to erect, construct, complete, alter or repair any building or
addition to a building.*” However, the BCPA “is unambiguous and its plain language
3° Def.’s Corrected Mot. to Dismiss { 14.
376 Del. C. § 3501(2).
38 P].’s Resp. in Opp’n to Def.’s Corrected Mot. to Dismiss 14.
39 Cont'l Elec. Servs., LLC v. Delaware Hall Condo. Apartments Ass'n, 2019 WL 339978, at *9 (Del. C. P. Jan. 16,
2019).
4 6 Del. C. § 3501(2).
11
states that the statute only applies to the construction of buildings.”4! The U.S.
District Court for the District of Delaware addressed this very issue in VSI Sales,
LLC v. Griffin Sign, Inc.”
Throughout the Act, the legislature consistently and repeatedly used the
same terminology—“the erection, construction, completion, alteration
or repair of any building or for the additions to a building” thereby
reinforcing the fact that the law only applies to building construction
work. Indeed, the very title of Chapter 35 of Title 6—“BUILDING
CONSTRUCTION PAYMENTS”—eliminates any doubt concerning
the legislative intent behind the Act. Accordingly, the court finds that
the Construction Prompt Payment Act only applies to building
construction work.¥
As this Court has already determined that the Plaintiff's services were solely
an improvement to land and were unrelated to any building, the BCPA does not
apply. Accordingly, Defendant’s Motion to Dismiss the BCPA claims is also
granted.
IV. Conclusion
For the foregoing reasons, Defendant’s Corrected Motion to Dismiss is
GRANTED.
IT ISSO ORDERED.
Judge William C. Carpent
41 VSI Sales, LLC v. Griffin Sign, Inc., 2014 WL 1653271, at *2 (D. Del. Apr. 25, 2014).
42 Id.
43 Td.
12