• Mechanics' Liens: Supplier Of Outdoor Sign May Lien, But Only After Preliminary Notice
  • May 16, 2003 | Author: Harris Ominsky
  • Law Firm: Blank Rome LLP - Philadelphia Office
  • Is a large sign placed on the outside of a building an "erection" or an "alteration"? The answer to that question determined whether a subcontractor was knocked out of court because it failed to file a written preliminary notice of an intention to file its claim.

    In a recent case, a subcontractor supplied electrical equipment in connection with construction of 12-foot high illuminated letters erected to serve as a sign spelling out the words "Carnegie Science Center" atop Pittsburgh's Carnegie Science Center. Unfortunately, the subcontractor's claim was terminated on preliminary objections because it had failed to provide a preliminary notice of its intention to file the lien before the work was completed. City Lighting Products Co. v. Carnegie Institute, PICS Case No. 03-0165 (Pa. Super. Feb. 5, 2003).

    The issue turned on a provision in the Pennsylvania Mechanic's Lien Act that sets an additional hurdle for subcontractors who do "alterations or repairs" in contrast to those who do "erection or construction." All subcontractors must provide at least 30 days notice of an intention to file a claim before they file. However, if the claim is for "alterations or repairs," the subcontractor must also send a written preliminary notice on or before the date of completion of its work.

    In the Carnegie Institute case, the Pennsylvania Superior Court interpreted the Mechanics' Lien Act which defines "erection and construction" as "the erection and construction of a new improvement or a substantial addition to an existing improvement or any adaptation of an existing improvement rendering the same fit for a new or distinct use and effecting material change in the interior or exterior thereof." "'Alteration and repair' means any alternation or repair of an existing improvement which does not constitute erection or construction as defined herein."

    The sub presented two arguments that the sign comprises "erection and construction." First, it argued that the erection of the sign had adapted the property for a "new and distinct purpose," ie, as an "identifiable landmark in the City of Pittsburgh." Second, the addition of the sign had "materially changed" the exterior of the property.

    The court rejected these arguments and held the Carnegie Science Center had been an identifiable landmark in the City of Pittsburgh since its completion and, therefore, the sign merely served to add to that status and did not create "a new an distinct purpose" for the building. It cited the Dollar Bank case that concluded that the installation of sewer lines, placing fill, and building an end wall to contain water flow, absent a continuous plan to erect a structure, did not qualify as an erection or construction of an improvement.

    Similarly, the court held that the sign was not erected as "a part of a continuous plan to erect a structure, but rather as an alteration of the presently existing structure." It also cited Joyce v. Sarnelli in which a common pleas court held that supermarket equipment, including refrigeration, shelving, checkout stands, walk-in coolers, gondolas, frozen food cases, compressors and produce cases were not "improvements" within the meaning of the Mechanics' Lien law because these items were not of a permanent character. Since the sign in question could be removed by simply detaching it from the main structure of the building, it was not a permanent improvement and therefore, could only be an "alteration and repair of an existing improvement."

    It should be obvious that the line between these two categories of work is not always easy to draw. Any subcontractor who suspects that it may not be paid would be well-advised to play it safe and send the preliminary notice before it completes its work. Unfortunately, in the real world, things don't usually happen that way. For one thing, at such an early stage many subs have no reason to suspect that they won't be paid. Remember, they must send the notice before they have even completed their work and submitted a final bill. Also, even if they do suspect a problem, they are unlikely to know of this somewhat technical requirement of preliminary notice - unless, of course, they happen to read this column.