Waiver for Failure to File Preliminary Objections to Mechanic’s Lien

Terra Firma Builders, LLC v. King, 215 A.3d 1002 (Pa. Super. 2019), allocatur granted March 10, 2020, appeal docket 15 MAP 2020

The Pennsylvania Supreme granted allocatur in this case to determine whether there is a time limitation by which a property owner must file preliminary objections to a mechanic’s lien under Section 505 of the Mechanic’s Lien Law of 1963 (Law) that expressly provides that a “failure to file an objection preliminarily shall not constitute a waiver of the right to raise the same as a defense in subsequent proceedings.” 49 P.S. §1505.

On February 20, 2013, Terra Firma Builders, LLC (Terra Firma) timely filed a mechanic’s lien in the amount of $131,123.24 against the property owners William and Melanie King (Kings) for materials, supplies, and labor Terra Firma provided the Kings. In accordance with the Law, the Sheriff served the lien on the Kings on March 18, 2013 and the affidavit of said service was timely filed with the Delaware County Court of Common Pleas on March 22, 2013. Under the Law, Terra Firma had perfected its lien against the King’s property. Subsequently, Terra Firma voluntarily withdrew its lien against the Kings’ property.

On April 29, 2013, Terra Firma refiled the same lien against the Kings’ property under a different docket, but failed to perfect its lien under the Law by failing to file an affidavit of service with the court as required by 49 P.S. §1502(a)(2). On February 19, 2015, prior to the 2-year time limitation to enforce its lien, Terra Firma filed its complaint under a second docket seeking to reduce its lien to a judgment. In 2017, the trial court heard the matter on the merits. At no time during the litigation of these matters did the Kings file preliminary objections or raise as a defense Terra Firma’s failure to perfect its lien. The trial court ruled in favor of the Kings. The parties proceeded to file post-trial motions including a motion to strike off the mechanic’s lien filed by the Kings, and during the pendency of said motions the Kings asserted, for the first time, that Terra Firma failed to perfect its lien. The trial court granted King’s motion to strike off the lien holding that preliminary objections under Section 505 of the Law could be filed at any time, even after the enforcement action was filed and the trial was over.

On appeal, the Superior Court found King’s argument that Terra Firma failed to perfect its lien as untimely and reversed the trial court’s decision. Terra Firma conceded that it had failed to perfect its lien but argued that the Kings waived that argument when they failed to object (i) when the lien was filed, (ii) in response to Terra Firma’s lien enforcement action, (iii) in response to Terra Firma’s separate breach of contract action against the Kings, (iv) at trial, or (v) in any post-trial motion. After examining the Law and reaffirming that it is a pure statutory creation and that it must therefore be strictly followed, the majority agreed with Terra Firma that the Kings had waived this argument. Specifically, the majority found:

That does not mean, though, that Section 505 preliminary objections can be filed at any time to the claim; after all, they are denominated as “preliminary.” Given the Mechanic’s Lien Law’s statutory scheme that governs leading to final resolution in the §1701 enforcement action, Section 505 can properly be construed as providing that if one of the specified defenses has not been raised “preliminary” by the time a §1701 enforcement action has been filed to obtain judgment on the claim, but the owner desires to assert a Section 505 defense, it has to be raised in the enforcement proceeding in accordance with the manner provided for in the applicable rules of civil procedure. If it does not do so, then the claim is waived.

Slip Op. at 8 (internal citations omitted).

Judge Murray was the lone dissent. Judge Murray also examined the Law and also noted that because it was a statutory creation, strict compliance was required to perfect the lien. The dissent concludes that because the Law provides that failure to timely file an affidavit of service “shall” be sufficient to strike the lien, 49 P.S. §1502(a)(2), and that there is no stated time limitation to raise the issue of such a defect, 49 P.S. §1505, the Kings did not waive the issue. Specifically, the dissent writes:

There is no support, either in the Mechanics’ Lien Law itself or the applicable case law, for this interpretation of Section 505. Section 502 states that in order to perfect a lien, the lienholder must file a claim with the prothonotary, serve written notice on the owner, and file an affidavit of service of notice. 49 P.S. § 1502(a). Section 502 goes on to state that “[f]ailure to serve such notice or to file the affidavit or acceptance of service within the times specified shall be sufficient ground for striking off the claim.” 49 P.S. §1502(a)(2) (emphasis added). Section 505 provides that any party may file preliminary objections “for lack of conformity with this act,” in which the objecting party could then contest the validity of the lien based on the lienholder’s failure to file an affidavit of service. See 49 P.S. §1505. Critically, Section 505 goes on to state that “[f]ailure to file an objection preliminarily shall not constitute a waiver of the right to raise the same as a defense in subsequent proceedings.” Id. (emphasis added). Thus, Section 505 unambiguously places no limit on when a party may raise a defense to the enforcement of the lien. See id.

Dissent Slip Op. at 6-7 (emphasis in original). Judge Murray points to Rees, Weaver & Co., Inc. v. M.B.C. Paper Mill Corp. 406 A.2d 562 (Pa. Super. 1979) for support of her position, in which the Superior Court affirmed a trial court’s decision to strike off a contractor’s mechanic’s lien because it failed to perfect its lien more than 2-months after a default judgment had been entered against the property owner. Relying on the language in Sections 502 and 505 of the Law, as well as M.B.C. Paper, Judge Murray would affirm the trial court’s decision to grant the Kings’ motion to strike off the lien.

The Supreme Court granted allocator to examine:

Is a property owner who seeks to challenge the perfection of a mechanic’s lien required to file preliminary objections before or during the enforcement proceeding of the lien?

For more information, contact Kevin McKeon or Dennis Whitaker.