HomeMy WebLinkAbout2014-3197 (2)
BATTLESTONE STEEL, LLC, : IN THE COURT OF COMMON PLEAS OF
Claimant : CUMBERLAND COUNTY, PENNSYLVANIA
:
v. : CIVIL ACTION - LAW
:
CARLISLE AUTO, :
INDUSTRIES, INC., :
Respondent : NO. 14-3197 MLD
IN RE: DEFENDANT’S PRELIMINARY OBJECTIONS TO PLAINTIFF’S FIRST
AMENDED COMPLAINT TO ENFORCE ITS LIEN
OPINION AND ORDER
Peck, J., January 12 , 2016.
Defendant/Respondent, Carlisle Auto Industries, Inc., (“Carlisle Auto”), has raised
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the following preliminary objection in the nature of a demurrer to the first amended
complaint to enforce the mechanics’ lien claim of Plaintiff/Claimant, Battlestone Steel,
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LLC, (“Battlestone”):
(1)Battlestone’s Mechanic Lien Claim is defective based upon a failure to
conform to 49 P.S. § 1301(a), the Agreement’s unambiguous terms regarding
the scope of Battlestone’s work, and the facts averred in Battlestone’s amended
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complaint.
While Battlestone’s counsel at oral argument objected to Carlisle Auto’s
preliminary objection challenging the amount of the mechanic’s lien as defective because
the debt was not “for labor or materials furnished in the erection or construction, or the
alteration or repair of the improvement” on the basis that it was never included in the
preliminary objections, we find that Carlisle Auto specifically stated the grounds relied
upon in order to present its argument to the amount of the mechanic’s lien as required by
Pa.R.C.P. 1028(b). 49 P.S. § 1301(a). We read Carlisle Auto’s preliminary objection to
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Defendant’s Preliminary Objection to Plaintiff’s First Amended Complaint to Enforce Mechanics’ Lien
Claim, Oct. 9, 2014 (hereinafter “Def.’s Prelim. Objection”).
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First Amended Compl. To Enforce Mechanics’ Lien Claim, Sept. 23, 2014, Civil No. 2014-5004
(emphasis in original).
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Def.’s Prelim. Objection, Civil No. 2014-5004.
have challenged the scope of Battlestone’s work under the contract in two ways. First,
under 49 P.S. §1301(a), Battlestone’s scope of work did not fulfill the erection or
construction, or the alteration or repair component, requiring the demolition performed
to be incidental to the erection, construction, alteration or repair. Def.’s Prelim.
Objection, ¶¶ 8, 9, 14 Civil No. 2014-5004. Second, Battlestone did not exceed the scope
of its work under the contract, while also assuming all demolition activities at its cost.
Def.’s Prelim. Objection, ¶¶ 15, 20-23 Civil No. 2014-5004. In comparing Carlisle
Auto’s two arguments flowing from the single preliminary objection under review,
Carlisle Auto cited to the same statutory provision, 49 P.S. §1301(a), and paragraph 2 of
the Scrap Removal and Purchase Agreement, assigning Battlestone responsibility for all
demolition activities “\[a\]t its cost.” As a result, we review Carlisle Auto’s debt argument.
Accordingly, this Court will address each issue in turn.
PROCEDURAL HISTORY
On May 28, 2014, Battlestone filed a mechanic’s lien claim against Tax Parcel 06-
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20-1800-001. In response, Carlisle Auto submitted preliminary objections against the
claim arguing, “a mechanic’s lien cannot attach to land for work unconnected to the
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construction of building.” On August 26, 2014, under a different docket, Battlestone
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filed a complaint to enforce its mechanics’ lien claim. Carlisle Auto also filed
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preliminary objections against the complaint. Battlestone subsequently amended its
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Mechanic’s Lien Claim, May 28, 2014. The Mechanic’s Lien Claim also included Tax Parcel 06-19-
1641-133. When Carlisle Auto objected to that property’s inclusion in their preliminary objections on the
grounds it was not part of the scope of work under the written agreement, Battlestone admitted to the
error and released the tax parcel from the mechanic’s lien claim. Prelim. Objections of Resp’t to the
Claim of Mechanic’s Lien 3, July 11, 2014; Reply of Claimant to Respondent’s Prelim. Objections to
Mechanic’\[\] Lien Claim 2, Aug. 6, 2014; Partial Release of Mechanic’s Lien Claim, Aug. 6, 2014.
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Prelim. Objections of Resp’t to the Claim of Mechanic’s Lien ¶ 8, July 11, 2014.
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Compl. To Enforce Mechanics’ Lien Claim, Aug. 26, 2014, Civil No. 2014-5004.
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Def.’s Prelim. Objections To Pl.’s Compl. to Enforce Mechanics’ Lien, Sept. 4, 2015, Civil No. 2014-
5004.
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complaint on September 4, 2014. Defendant filed preliminary objections in the nature of
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a demurrer to the amended complaint on October 9, 2014. After argument on the
preliminary objections against the mechanic’s claim itself, the Court overruled them on
the grounds that such an objection was not cognizable under 49 P.S. § 1505, but did so
without prejudice to the other set of preliminary objections under review against the
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complaint.
On February 5, 2015, following an in-chambers conference call on the record with
counsel from both parties, the Court granted the parties sixty days within which to
conduct discovery limited to the issues raised in Carlisle Auto’s preliminary objections
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and Battlestone’s opposition. In addition, both counsel were granted leave to reach a
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joint determination as to under which docket the preliminary objections should proceed.
After the parties reached an agreement relating to the preliminary objections, the Court
ordered all future filings and rulings pertaining to preliminary objections, oppositions and
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discovery to be submitted to this docket.
On April 7, 2015, the Court granted Plaintiff’s motion for an extension of time to
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complete discovery until April 30, 2015. Claimant’s subsequent motion requesting
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another extension was denied. Thereafter, the parties submitted supplemental briefs
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First Amended Compl. To Enforce Mechanics’ Lien Claim, Sept. 23, 2014, Civil No. 2014-5004
(emphasis in original) (hereinafter “First Amended Compl.”).
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Def.’s Prelim. Objection to Pl.’s First Amended Compl. To Enforce Mechanics’ Lien Claim, Oct. 9,
2014, Civil No. 2014-5004.
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Order of Court, Oct. 2, 2014.
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Order of Court, Feb. 5, 2015, Civil No. 2014-5004.
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Id.
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Order of Court, March 13, 2015.
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Order of Court, April 7, 2015.
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Order of Court, May 26, 2015.
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addressing the preliminary objections. On October 14, 2015, the Court heard argument
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regarding Carlisle Auto’s preliminary objections to Battlestone’s mechanic’s lien claim.
The preliminary objections to the first amended complaint are now before this Court.
STATEMENT OF FACTS
On January 18, 2012, Plaintiff, Battlestone, entered into a Scrap Purchase and
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Removal Agreement with Defendant, Carlisle Auto. The agreement sold “all right, title
and interest in and to the scrap material and metal” of all structures owned by Carlisle
Auto at 50 Spring Road, Carlisle, Pennsylvania, which structures Battlestone would
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demolish “at its cost.” Plaintiff would then sell the resulting scrap materials and keep
82.5% of the total gross revenue while the remainder went to Defendant, to total at least
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$500,000. On or about March 24, 2014, Carlisle Auto terminated its relationship with
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Battlestone.
DISCUSSION
I.Legal Standard
“Preliminary objections in the nature of a demurrer test the legal sufficiency of the
complaint.” Hranec Sheet Metal. Inc. v. Metalico Pittsburgh. Inc., 107 A.3d 114, 118
(2014) (quoting Richmond v. McHale, 35 A.3d 779, 783 (2012)). In a review of
preliminary objections in the nature of a demurrer, “all material facts set forth in the
challenged pleadings are admitted as true, as well as all inferences reasonably deducible
therefrom.” Id. “When issues of fact are raised by preliminary objections, the trial court
may receive evidence by depositions or otherwise.” Mellon Bank, N.A. v. Fanimyi, 650
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Resp.’t’s Supplemental Brief in Support of Prelim. Objections of Resp.’t to the Claim of Mechanic’s
Lien (hereinafter “Resp.t’s Supplemental Brief”); Supplemental Brief in Opposition to Def.’s Preliminary
Objections to Pl.’s First Amended Comp. to Enforce Its Lien (hereinafter “Def.’s Supplemental Brief”).
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Order of Court, Oct. 14, 2015.
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First Amended Compl., Ex. 2.
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First Amended Compl., Ex. 2 at 2-3.
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First Amended Compl., Ex. 2 at 2-3.
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Resp.’t’s Supplemental Brief 12; Def.’s Supplemental Brief, 2.
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A.2d 895, 899 (Pa. Super. 1994) (citing Pa. R.C.P. 1028; Slota v. The Moorings, Ltd., 494
A.2d 1 (Pa. Super. 1985)). When addressing preliminary objections in the nature of a
demurrer, however, the court is required “to resolve the issues solely on the basis of the
pleadings; no testimony or other evidence outside of the complaint may be considered to
dispose of the legal issues presented by a demurrer.” Mellon Bank, 650 A.2d at 899
(citing International Union of Operating Engineers, Local No. 66 v. Linesville
Construction Company, 322 A.2d 353 (Pa. Super. 1974)).
Finally:
Where the preliminary objections will result in the dismissal of the action,
the objections may be sustained only in cases that are clear and free from
doubt. To be clear and free from doubt that dismissal is appropriate, it must
appear with certainty that the law would not permit recovery by the plaintiff
upon the facts averred. Any doubt should be resolved by a refusal to sustain
the objections.
B.N. Excavating, Inc. v. PBC Hollow-A, L.P., 71 A.3d 274, 277-78 (Pa. Super. 2013).
Contract interpretation “is generally performed by a court rather than by a jury.”
Humberston v. Chevron U.S.A., Inc., 75 A.3d 504, 510 (2013) (citation omitted).“When
the language of a written contract is clear and unequivocal, its meaning must be
determined by its contents alone.” Greene v. Oliver Realty, Inc., 526 A.2d 1192, 1194
(1987) (citation omitted).
II. Work Incidental to Erection, Construction, Alteration or Repair
In its preliminary objection to the amended complaint, Respondent claims that
Battlestone did not, nor was it contractually required to, perform work necessary to
establish a right to a mechanic’s lien. Under Pennsylvania’s Mechanics’ Lien Law:
every improvement and the estate or title of the owner in the property shall
be subject to a lien, to be perfected as herein provided, for the payment of
all debts due by the owner to the contractor or by the contractor to any of
his subcontractors for labor or materials furnished in the erection or
construction, or the alteration or repair of the improvement, provided that
the amount of the claim, other than amounts determined by apportionment
under section 306(b) of this act, shall exceed five hundred dollars ($ 500).
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49 P.S. § 1301(a).
Specifically, Carlisle Auto contends that “Battlestone’s demolition and
debris/waste removal work” should not be characterized as incidental to the construction
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or erection of new structures. However, “\[e\]rection, construction, alteration or repair
includes \[d\]emolition, removal of improvements, excavation, grading, filling, paving and
landscaping, when such work is incidental to the erection, construction, alteration or
repair.” 49 P.S. §1201(12)(a). Moreover, “land is lienable for groundwork and site
preparation performed as an integral part of a planned construction process even if
construction never occurred.” B.N. Excavating, Inc. v. PBC Hollow-A, L.P., 71 A.3d
274, 280 (Pa. Super. 2013). The phrase “incidental to the erection \[or\] construction” does
not require “a structure \[to\] actually exist, particularly where … excavation clearly was
performed in preparation for planned construction.” Id. In short:
\[t\]he Mechanics' Lien Law requires only that excavation and other
preliminary groundwork occur in conjunction with the erection,
construction, or repair of a structure rather than as an independent,
unconnected improvement to the land…. The plain language of the law
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simply requires excavation and preliminary groundwork to be to
a structure and not merely an independent improvement.
B.N. Excavating, Inc., 71 A.3d at 282 (emphasis in original).
In B.N. Excavating, “\[a\]ppellant’s performance … was essential to the scheduled
erection of two new buildings and not simply the independent grading and clearing of a
site merely for the sake of improving the land.” Id. at 284. Rather, “the groundwork
Appellant performed on the selected site was so linked with the planned erection of
Appellees’ two new buildings as to become an essential part of the continuous
construction operation.” Id. In the present case, Battlestone has alleged that it performed
its demolition work as part of a planned “development and/or redevelopment” by Carlisle
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Def.’s Prelim. Objection to Pl.’s First Amended Compl. To Enforce Mechanics’ Lien Claim ¶17-23,
Oct. 9, 2014, Civil No. 2014-5004.
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Auto “as evidenced and substantiated by media reports relating to such redevelopment
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plans following Carlisle Auto’s November 29, 2010 purchase of the property.”
Battlestone further averred that “the timing of certain phases of the demolition for certain
portions of the Contract was dependent upon Carlisle Auto ‘obtaining approval of zoning
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for the site’ for the purposes of demolition and redeveloping the property.” Attached to
the amended complaint, Paragraph 5(b) of the Scrap Purchase and Removal Agreement
refers to possible zoning delays faced by Carlisle Auto that would affect the scope of
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Battlestone’s work.
Upon review of the complaint and its attached exhibits, we find that, while
Battlestone did not aver in its complaint or attached exhibits that Carlisle Auto had a
specific redevelopment plan, it alleged sufficient facts so as to create a doubt whether the
law would not permit recovery. In particular, Battlestone tied Carlisle Auto’s rezoning
efforts to the alleged planned development or redevelopment project, thereby creating a
reasonable inference that Battlestone’s “work \[was\] incidental to the erection,
construction, alteration or repair.” 49 P.S. §1201(12)(a). Therefore, as the Court finds
that Carlisle Auto has failed to establish with certainty that the law would not permit
recovery by the plaintiff upon the facts averred, we dismiss Carlisle Auto’s preliminary
objection in the nature of a demurrer averring that Battlestone’s work was not incidental
to the construction or erection of new structures.
III. Debts Due For Labor or Materials Furnished
Defendant argues that the mechanic’s lien must be struck because it is premised
upon unrecoverable sums for labor, materials, and alleged financial losses associated with
the sale of scrap and recyclable materials. Under 49 P.S. §1301(a), the right to a
mechanic’s lien is limited to “the payment of all debts due by the owner to the contractor
or by the contractor to any of his subcontractors for labor or materials furnished in the
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First Amended Compl. ¶16. It should be noted that Battlestone did not attach any media reports to either
its mechanics’ lien claim or its amended complaint.
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First Amended Compl. ¶17.
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First Amended Compl., Ex. 2 at 5.
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erection or construction, or the alteration or repair of the improvement.” (emphasis
added). The payment of debts for labor and materials “include\[s\] profits, and it equates to
amounts on unpaid invoices.” Wyatt Inc. v. Citizens Bank of Pa., 976 A.2d 557, 568 (Pa.
Super. 2009) (citing Artsmith Dev. Group v. Updegraff, 868 A.2d 495, 497 (Pa. Super.
2005).
In its Mechanic’s Lien Claim, Battlestone averred that it performed demolition
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activities pursuant to a “written agreement dated January 18, 2012.” In Battlestone’s
first amended complaint, it claimed that the amount due is “One Million, Six Hundred
Thousand Dollars ($1,600,000.00) representing seventy-eight and one-half percent
(78.5%) of the value of the materials recovered by Battlestone Steel, stored on the
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premises but not removed \[f\]or sale.” Under the Scrap Purchase and Removal
Agreement, provided as supporting documentation attached to Plaintiff’s first amended
complaint, Carlisle Auto agreed to sell to Battlestone “all right, title and interest in and to
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the Scrap Metal and Material … at the Facility.” The contract designated Carlisle Auto
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as “Seller” and Battlestone as “Buyer.” The parties agreed that “\[a\]t its cost, Buyer is
responsible for all demolition activities, including but not limited to the proper and
complete removal and abatement of asbestos-containing materials (“ACM”) required to
complete the safe demolition in order to access, remove and sell the Scrap Metal and
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Material from the Facility.” In distributing the profits from the sale of the scrap
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material, Battlestone was due to receive 82.5% of the total gross revenue. Carlisle Auto
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Mechanic’s Lien Claim ¶ 5, May 28, 2014.
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First Amended Compl. ¶ 26.
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First Amended Compl., Ex. 2 at 2.
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First Amended Compl., Ex. 2at 1.
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First Amended Compl., Ex. 2 at 2.
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First Amended Compl., Ex. 2 at 3.
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would receive the remaining 17.5% but, in no event would that amount total less than the
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nonrefundable $500,000 in advance payments.
In receiving compensation for labor and materials, allowing contractors and
subcontractors to attach profits made in the construction or demolition activities is a
reasonable addition to the statute. In the present case, however, Battlestone’s profits
solely derive from the sale of scrap materials acquired from the site and not from
“amounts on unpaid invoices” for labor or materials. Battlestone’s amended complaint
averred that the $1,600,000 amount of the mechanic’s lien claim represents “seventy-
eight and one-half percent (78.5%) of the value of the materials recovered by Battlestone
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Steel, stored on the premises but not removed for sale.” Critically, the contract attached
to the amended complaint assigns the demolition activities to Battlestone “at its own
cost.” The Court can reasonably infer that Battlestone waived its interest to payment for
labor and materials furnished in order to assume the possibility of a greater reward from
the sale of the scrap materials, while also accepting the risk of a drop in price for the
scrap materials collected. What remains is an unliquidated damages breach of contract
claim for profits and “a mechanics’ lien cannot be made the basis of recovery of
unliquidated damages for breach of contract” as a “mechanic’s lien proceeding is not
intended to settle the contractual obligations of the parties.” Artsmith Dev. Group, 868
A.2d at 496. As a result, although Battlestone may possess a right to recovery under the
contract, it would be unreasonable to allow Battlestone to acquire a mechanic’s lien over
the tax parcel at issue for labor and materials when, under a negotiated contract between
sophisticated parties, Battlestone had expressly assumed the costs of demolition.
Therefore, we sustain Carlisle Auto’s preliminary objection in the nature of a demurrer
averring that Battlestone’s Mechanic’s Lien Claim is defective for failure to conform
with 49 P.S. § 1301 because the debts at issue are not “for labor or materials furnished in
the erection or construction, or the alteration or repair of the improvement.”
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First Amended Compl., Ex. 2 at 3.
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First Amended Compl. ¶ 26.
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ORDER OF COURT
th
AND NOW, this 12 day of January, 2016, upon consideration of the Defendant’s
Preliminary Objection to Plaintiff’s First Amended Complaint To Enforce Mechanics’
Lien Claim, the briefs filed by the parties, and oral argument,
IT IS HEREBY ORDERED AND DIRECTED
that: (1) Defendant’s
preliminary objection in the nature of a demurrer claiming that Plaintiff’s Mechanic Lien
Claim is defective for failure to conform with 49 P.S. § 1301(a) because a mechanic’s
lien cannot attach to land for work unconnected to construction of a building is
DISMISSED
; (2) Defendant’s preliminary objection in the nature of a demurrer claiming
that Plaintiff’s Mechanic Lien Claim is defective for failure to conform with 49 P.S.
§1301(a) because the amount allegedly due under the lien is not properly the subject of a
SUSTAINED
Mechanic’s Lien Claim is ; (3) Plaintiff’s First Amended Complaint To
DISMISSEDWITH PREJUDICE
Enforce Mechanics’ Lien Claim is ; (4) Plaintiff’s
STRICKEN AND DISMISSED WITH PREJUDICE
Mechanic’s Lien Claim is .
BY THE COURT,
s/ Christylee L. Peck
Christylee L. Peck, J.
Edward Seglias, Esquire
30 South 17th Street, 19th Floor
Philadelphia, Pa 19103
Attorneys for Plaintiff
Scott T. Wyland, Esquire
James D. Hughes, Esquire
E. Lee Stinnett II, Esquire
354 Alexander Spring Rd.
Carlisle, PA 17015
Attorneys for Defendant
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