Shadie Electrical Associates v. Highland Manor Associates

41 Pa. D. & C.3d 633, 1984 Pa. Dist. & Cnty. Dec. LEXIS 42
Pennsylvania Court of Common Pleas, Luzerne County·Decided August 20, 1984·No. no. 2470-L of 1983·Published

Opinion

PODCASY, J.,

This is a case involving a question of the validity of stipulations against liens entered into between Highland Manor Associates, a limited partnership, as owner, Lazovitz, Inc., a Pennsylvania corporation, as general contractor, and George Shadie Electrical Associates, Inc., as subcontractor.

Shadie, plaintiff herein, filed a statement of mechanics’ claim against Highland Manor, defendant herein, on November 10, 1983, asserting a lien in the amount of $170,988.07 against premises in Exeter Borough owned by defendant, based on a claim for services and material furnished by plaintiff as an electrical subcontractor of Lazovitz, Inc.

On January 10, 1984, defendant filed preliminary objections to plaintiffs statement of mechanics’ claim, averring that on February 16, 1982, plaintiff had entered into a contract with Lazovitz, Inc., waiving its right to file a mechanics’ lien against the Exeter Borough premises owned by defendant. These preliminary objections were in the nature of a demurrer, praying that plaintiffs statement of mechanics’ claim be stricken.

On March 5, 1984, an answer to these preliminary objections was filed by plaintiff, admitting that plaintiff had entered into the contract with Lazovitz, Inc., as averred by defendant, but denying that plaintiff had, by virtue thereof, waived its right to assert a mechanics’ lien against the premises in question. The answer reads as follows:

“At the time the subcontract was entered into, plaintiff was unaware that the owner, Highland [635] Manor Associates, and the contractor, Lazovitz, Inc., were substantially the same party. Neither Lazovitz, Inc., nor Highland Manor Associates ever disclosed that fact to plaintiff. It is averred that in the event defendant had disclosed to plaintiff the fact that the owner and contractor were substantially the same parties, plaintiff would not have entered into the contract.”

We now have before us the question of proper disposition of defendant’s preliminary objections.

An examination of the contract which is attached as “Exhibit B” to defendant’s preliminary objections discloses that plaintiff entered into the following agreement with its. general contractor, Lazovitz, Inc., as set forth in Paragraph 15.3 thereof:

“Subcontractor hereby waives and releases its right to file any lien against any part of or the entire Project, or against any part of or the entire site.”

Under Pennsylvania law a written contract between an owner and a general contractor which provides that no mechanics’ lien may be filed by any subcontractor is a binding contract. Act of August 24, 1963, P.L. 1175, §402; 49 P.S. §1402. For such a provision barring the filing of liens to be valid, however, there must be a valid contract between owner and general contractor. Morrissey Construction Co. v. Cross Realty Co. (No. 2), 48 D.&C.2d 565 (1969). A provision barring mechanics’ liens in an agreement in which the same entity is both owner and general contractor is a nullity, and if the general contractor is the agent of the owner, or if the owner is actually dealing with himself in executing the provision barring such liens, the provision is invalid. Glemba v. Gaso, 69 D.&C.2d 347 (1975); L-Co Cabinet Corp. v. Summit Square Apartments, Inc., 64 D.&C.2d 528 (1973). On the other hand, such a provision has been held to be valid, in the absence of [636] a, showing of fraud, bad faith, or misleading conduct, when contained in an agreement between a corporate general contractor and several property owners, one of whom is the controlling owner of the corporation, and that the fact that a contractor is one of several owners does not prevent his good faith waiver of his right to a lien in such a manner as to bar the filing of liens by his subcontractors. Foggia Builders, Inc. v. RJD Contruction Co., 75 D.&C.2d 170 (1975), aff'd. without opinion, 240 Pa. Super. 723, 360 A.2d 235 (1976); Westmoreland Guarantee Bldg. & Loan Ass’n. v. Connor, 216 Pa. 543, 65 Atl. 1089 (1907).

Insofar as fraud is concerned, it has been held that a provision barring mechanics’ liens is unenforceable if procured by false and fraudulent representations made at the very time at which the contract is executed, inasmuch as fraud in the inducement renders the provision void. Stringert & Bowers, Inc. v. On-Line Systems, Inc., 236 Pa. Super. 196, 345 A.2d 194 (1975); Vansciver v. Churchill, 35 Pa. Super. 212 (1908). Likewise, a contract made by an owner with a party not inténded in good faith to be a general contractor has no legal effect on the rights of a third party, for the party purporting to act as general contractor will, in such a case, be treated as the agent of the owner. Act of August 24, 1963, P.L. 1175, §407; 49 P.S. §1407.

A copy of the waiver of mechanics’ liens agreement entered into between defendant and Lazovitz, Inc., is attached to plaintiffs argument brief, and indicates that the agreement was signed by the same person as agent for the general contractor and as a general partner of defendant owner. While the insertion of such factual material in an argument brief is an improper manner in which to aver or present facts, therefore requiring us to disregard the legal [637] effect of the document for purposes of our present decision, it is clear that the document itself is one of the items of evidence which plaintiff would offer to introduce at trial in support of its contention that the corporation known as Lazovitz, Inc., and the limited partnership known as Highland Manor Associates are in fact substantially the same parties.

Free access — add to your briefcase to read the full text and ask questions with AI

Shadie Electrical Associates v. Highland Manor Associates, 41 Pa. D. & C.3d 633, 1984 Pa. Dist. & Cnty. Dec. LEXIS 42 (Pa. Super. Ct. 1984).

41 Pa. D. & C.3d 633 (Shadie Electrical Associates v. Highland Manor Associates) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Birl v. Philadelphia Electric Co.
167 A.2d 472 (Supreme Court of Pennsylvania, 1960)
Sun Ray Drug Co. v. Lawler
79 A.2d 262 (Supreme Court of Pennsylvania, 1951)
Westmoreland Guarantee Building & Loan Ass'n v. Connor
65 A. 1089 (Supreme Court of Pennsylvania, 1907)
Legman v. Scranton School District
247 A.2d 566 (Supreme Court of Pennsylvania, 1968)
Stringert & Bowers, Inc. v. On-Line System, Inc.
345 A.2d 194 (Superior Court of Pennsylvania, 1975)
Vansciver v. Churchill
35 Pa. Super. 212 (Superior Court of Pennsylvania, 1908)