Carter Lumber Company, Inc. v. Bales, L.

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
CARTER LUMBER COMPANY, INC. : IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
LINDA S. BALES, TRUSTEE OF THE : No. 180 MDA 2019
LINDA S. BALES LIVING TRUST
DATED NOVEMBER 20, 2008, AND
ANY AMENDMENTS THERETO, OF
THE COMMONWEALTH OF
PENNSYLVANIA
Appeal from the Order Entered January 8, 2019
In the Court of Common Pleas of Cumberland County Civil Division at
No(s): 2018-02732
BEFORE: LAZARUS, J., MURRAY, J., and STRASSBURGER*, J.
MEMORANDUM BY LAZARUS, J.: FILED AUGUST 12, 2019
Carter Lumber Company, Inc. ("Carter") appeals from the order
granting Linda S. Bales' ("Bales") preliminary objections, and striking Carter's
mechanics' lien claim pursuant to the Mechanics' Lien Law of 1963
("Mechanics' Lien Law").1 After careful review, we affirm.
On March 21, 2017, Bales entered into an agreement of sale with Home
Designs Unlimited ("Home Designs") to purchase a residential property
located at 14 Peyton Drive, Carlisle, Pennsylvania ("Property"). Bales
1Act of August 24, 1963, P.L 1175, No. 497, as amended 49 P.S. § 1101-
1902.
Retired Senior Judge assigned to the Superior Court.
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requested modifications to the home's original specifications and contracted
with Home Designs for those modifications. Home Designs subsequently
contracted with Carter to perform a portion of those modifications.
It is undisputed that Bales and Carter never entered into any contract,
whereas Home Designs and Carter entered into three separate contracts.
Carter prepared all three of those contracts, which identify Home Designs as
the general contractor and Carter as the subcontractor.
Prior to settlement on the Property between Home Designs and Bales,
Home Designs and its individual owners entered into a promissory note in
which they agreed to pay Carter the sum of $756,697.04 arising from multiple
jobs Carter had performed for Home Designs. A small portion of that debt
represented the amount associated with work performed on the Property and
included in Carter's mechanics' lien claim.
Closing on the sale of the Property to Bales took place on October 27,
2017, at which time Bales made full purchase payment to Home Designs. Prior
to and immediately following the transfer of the Property, Home Designs
timely remitted its scheduled payments to Carter under the note. However,
Home Designs defaulted on its payment to Carter in December 2017 and
subsequently filed for bankruptcy.
As a result of Home Designs' default on its obligation to Carter, on
January 16, 2018, Carter served Bales with a notice of intent to file a
mechanics' lien claim, and subsequently filed the claim on March 6, 2018.
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Bales filed preliminary objections,2 which were granted, and Carter's
mechanics' lien was stricken by the court on January 7, 2019.
Carter filed a timely notice of appeal to this Court on February 1, 2019,
followed by a court -ordered Pa.R.A.P. 1925(b) concise statement of errors
complained of on appeal. On appeal, Carter claims the trial court erred in
holding Carter to be a subcontractor pursuant to section 1201(5) of the
Mechanics' Lien Law. See Appellant's Brief, at 5.
Our scope and standard of review of a challenge to an order sustaining
preliminary objections is well -settled:
In determining whether the trial court properly sustained
preliminary objections, [this Court] must examine the averments
in the complaint, together with the documents and exhibits
attached thereto, in order to evaluate the sufficiency of the facts
averred. The impetus of our inquiry is to determine the legal
sufficiency of the complaint and whether the pleading would
permit recovery if ultimately proven. This Court will reverse the
trial court's decision regarding preliminary objections only where
there has been an error of law or abuse of discretion. When
sustaining the trial court's ruling will result in the denial of a claim
or a dismissal of suit, preliminary objections will be sustained only
where the case is free and clear of doubt.
Clem/eddy Construction Inc. v. Yorston, 810 A.2d 693, 696 (Pa. Super.
2002); see also Wetzel-Applewood Joint Venture v. 801 Mkt. St.
Assocs., LP, 878 A.2d 889, 892 (Pa. Super. 2005).
2 Section 1505 of the Mechanics' Lien Law provides: "Any party may
preliminarily object to a claim upon a showing of exemption or immunity of
the property from the lien, or for lack of conformity with this act." 49 P.S. §
1505.
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The Mechanics' Lien Law was intended to protect the prepayment labor
and materials that a contractor invests in another's property, by allowing the
contractor to obtain a lien against the property involved. Matternas v.
Stehman, 642 A.2d 1120, 1124 (Pa. Super. 1994). See generally 20
Standard Pennsylvania Practice 2d § 105. The Mechanics' Lien Law is to be
construed strictly, as it is a special remedy for a unique group of creditors in
derogation of common law. See Yellow Run Coal Co. v. Yellow Run
Energy Co., 420 A.2d 690, 692 (Pa. Super. 1980).
A party may object to a mechanics' lien if there is an exemption or
immunity of the property, or if there is lack of conformity with the act. See
49 P.S. § 1505; see also supra, n.3. Relevant here, a subcontractor does
not have the right to a mechanics' lien where the owner paid the full contract
price to the contractor, the property is the owner's residence, and the property
is intended for living purposes. 49 P.S. § 1301(b). A property is also exempt
from a mechanics' lien if the property was conveyed in good faith for a
valuable consideration prior to the filing of the mechanics' lien claim. 49 P.S.
§ 1303(c).
Here, the trial court concluded that Carter was a subcontractor and,
thus, does not have a right to a mechanics' lien pursuant to section 1301(b)
of the act. Carter disputes this finding, arguing that Home Designs, and not
Bales, was the legal owner of the property at the time all of the relevant
contracts were executed. As such, Carter argues that it was not a
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subcontractor, but rather a contractor employed directly by the owner. Thus,
Carter asserts the subcontractor exception under section 1301(b) does not
apply, and the trial court erred in sustaining Bales' preliminary objections. We
disagree.
Under the Mechanics' Lien Law, an owner is defined as "an owner in fee,
a tenant for life or years or one having any other estate in or title to property."
49 P.S. § 1201(3) (emphasis added). A contractor is one who, by contract
with the owner, express or implied, "erects, constructs, alters or repairs an
improvement or any part thereof or furnishes labor, skill or superintendence
thereto." 49 P.S. § 1201(4). A subcontractor is one who, by contract with
the contractor, or pursuant to a contract with a subcontractor in direct privity
of a contract with a contractor, express or implied, "erects, constructs, alters
or repairs an improvement or any part thereof." 49 P.S. § 1201(5).
Here, Bales signed an agreement of sale to purchase the property on
March 21,2017.
From the moment an agreement of sale of real estate is executed
and delivered it vests in the grantee what is known as an equitable
title to the real estate. See Ladner on Conveyancing in
Pennsylvania, § 5:26 (3d ed. 1961). Thereupon the vendor is
considered as a trustee of the real estate for the purchaser and
the latter becomes a trustee of the balance of the purchase money
for the seller. Kerr v. Day, 14 Pa. 112 (1850). Hence, if the
terms of the agreement are violated by the vendor, the vendee
may go into a court of equity seeking to enforce the contract and
to compel specific performance. Bone v. Satterthwaite, H 37
A. 102 ([Pa.] 1897); and Agnew v. Southern Ave. Land Co., H
53 A. 752 ([Pa.] 1902).
Payne v. Clark, 187 A.2d 769,770-71 (Pa. 1963).
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Accordingly, at the moment she signed the agreement of sale on March
21, 2017, Bales was vested with equitable ownership of the Property. As one
possessing "any other estate in or title to [the] property," Bales thus became
the "owner" of the Property for purposes of section 1201(3) as of that date.
Thereafter, Bales contracted exclusively with Home Designs, which in turn
subcontracted exclusively with Carter. The latter agreements-prepared by
Carter-named Home Designs as the general contractor and Carter as the
subcontractor. Bales paid Home Designs the full contract price, the Property
is Bales' home, and it is intended for living purposes. Therefore, Carter is a
subcontractor whose claim is subject to the exemption under section 1301(b).
Even if Home Designs were classified as the owner, and Carter as the
contractor, Carter's claim would still be exempt pursuant to section 1303(c).
Section 1303(c) exempts a property from a mechanics' lien if the property
was "conveyed in good faith for a valuable consideration prior to the filing of
a claim for alterations or repairs." 49 P.S. § 1303(c). Here, Home Designs
conveyed the Property to Bales in good faith on October 27, 2017. Carter did
not file notice of his intent to file its mechanics' lien claim until January 16,
2018, almost three months after the conveyance to Bales. Accordingly, even
if Carter were the contractor, it lost the right to assert a mechanics' lien when
Home Designs conveyed the Property to Bales. We conclude, therefore, that
the record support the trial court's decision, and we find no error of law or
abuse of discretion in the order granting Bales' preliminary objections and
striking Carter's mechanics' lien. Clem/eddy, supra.
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Order affirmed.
Judgment Entered.
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Jseph D. Seletyn,
Prothonotary
Date: 08/12/2019
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