PA Court Allows Union Benefit Fund To Assert Mechanics Lien
On January 6, 2012, the Pennsylvania Superior Court held, in a matter of first impression, that employee benefit funds could file mechanics lien claims for unpaid contributions owed to union members as a result of collective bargaining agreements between a contractor and the unions. [Bricklayers of Western Pennsylvania Combined Funds, Inc. v. Scott’s Development Company, 2012 Pa. Super 4 (Jan. 6, 2012)].
Defendant Scott’s Development Company owned real property in Erie County, PA, and retained J. William Pustelak, Inc. (“Pustelak”) as a general contractor to perform construction work on the property. Prior to this engagement, Pustelak entered into a collective bargaining agreement with several unions. Each agreement covered work to be performed within the union’s geographic jurisdiction as specified in the collective bargaining agreement and sets forth the precise work the union’s members are authorized to perform. Each agreement also required Pustelak to pay health, welfare, retirement and/or fringe benefits to the Bricklayers of Western Pennsylvania Combined Funds (“Benefit Funds”) for each hour of labor performed by the union’s members. The union’s members performed work on the Defendant’s property, but Pustelak failed to pay the Benefit Funds as required by the collective bargaining agreements. Accordingly, the Trustees for Benefit Funds filed a mechanics lien on the Defendant’s property.
The Superior Court allowed the Trustees to assert a mechanics lien claim, reasoning that the unions fall within a liberal definition of “subcontractor” under the PA Mechanics Lien Law of 1963. The Court explained that “in order to be a subcontractor, a person/entity must contract with the contractor, express or implied, for the construction of an improvement or the furnishing of labor to the construction of an improvement. Moreover, the subcontractor’s contract must relate to and involve a specific improvement. In reaching its conclusion, the Court held that the collective bargaining agreements constituted “implied in fact” contracts for a specific improvement since the collective bargaining agreements required Pustelak to use union members whenever the type of work specified in the agreement was to be performed within the union’s geographic jurisdiction. Furthermore, the Court found that the unions met the remaining definitional requirements to be a “subcontractor” because, solely by virtue of the collective bargaining agreements, the union members were present and working on the improvement on the Defendant’s property.
The Court held that the benefit funds’ trustees had standing to bring the mechanics lien claim due to their contractual obligation to collect unpaid fringe benefit contributions on behalf of the unions’ members. The Court also held that §301 of the Labor Management Relations Act did not preempt the trustees claim because in order to assert its claim, the Court only had to reference the collective bargaining agreement, not interpret it.
Logically, assuming the decision is not subsequently overturned, employees of contractors and first tier subcontractors would likewise have rights to file mechanic’s liens.
