T.P. Electric, Inc. v. GGC, LLC (In re GGC, LLC)

329 B.R. 36, 2005 Bankr. LEXIS 1569, 45 Bankr. Ct. Dec. (CRR) 51
CourtUnited States Bankruptcy Court, W.D. Pennsylvania
DecidedAugust 22, 2005
DocketNo. 05-21071-MBM
StatusPublished
Cited by1 cases

This text of 329 B.R. 36 (T.P. Electric, Inc. v. GGC, LLC (In re GGC, LLC)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
T.P. Electric, Inc. v. GGC, LLC (In re GGC, LLC), 329 B.R. 36, 2005 Bankr. LEXIS 1569, 45 Bankr. Ct. Dec. (CRR) 51 (Pa. 2005).

Opinion

[37]*37 MEMORANDUM OPINION

m. bruce McCullough, Bankruptcy Judge.

T.P. Electric, Inc. (hereafter “T.P.”) moves for relief from the automatic stay in the instant bankruptcy case so that it may then proceed to complete perfection of its mechanic’s lien against the instant debtor, Glenshaw Glass Co. (hereafter “the Debt- or”). T.P. performed work for the Debtor between September 29, 2004, and October 8, 2004, which work, pursuant to 49 P.S. § 1301, resulted in T.P.’s mechanic’s lien1 (hereafter “T.P.’s Lien”).2 Although T.P. neglects to inform the Court as to whether the nature of such work constituted the erection or construction of an improvement, on the one hand, or the alteration or repair of an improvement, on the other hand, T.P. maintains that, pursuant to 49 P.S. § 1508(b), T.P.’s Lien was effective against, and had priority over, third parties as of the point in time when T.P. filed its mechanic’s lien claim in the Pennsylvania Court of Common Pleas, Allegheny County — because § 1508(b) rather than § 1508(a) applies “in the case of the alteration or repair of an improvement,” 49 P.S. § 1508(b) (Purdon’s 2005),3 the Court must conclude that T.P. altered or repaired an improvement owned by the Debtor. The Debtor does not disagree that the nature of T.P.’s work was to alter or repair property of the Debtor.

T.P. filed its mechanic’s lien claim on February 1, 2005, at 4:24 p.m. Also on February 1, 2005, but at 11:39 a.m., an involuntary bankruptcy petition was filed against the Debtor, thereby commencing the instant bankruptcy case. T.P. has yet to comply with all of the lien perfection requirements regarding its lien called for under § 1502(a), namely the service of notice and affidavit requirements. T.P. maintains that it could not comply with such additional perfection requirements without first gaining relief from stay.

The Debtor opposes the instant stay relief motion by T.P. on several grounds. First, the Debtor maintains that (a) T.P., by virtue of 11 U.S.C. § 362(b)(3), was not stayed from completing the perfection process relative to T.P.’s Lien, (b) it is now too late, according to § 1502(a), for T.P. to complete such perfection process, (c) T.P.’s Lien accordingly can never be perfected pursuant to relevant state law, and (d) stay relief is consequently uncalled for. Second, the Debtor contends that (a) stay relief, even if it were to be granted and T.P.’s Lien could then be perfected in accordance with state law, [38]*38would be utterly futile given that, according to the Debtor, such lien would nevertheless be avoidable and would ultimately be avoided pursuant to 11 U.S.C. § 545(2), and (b) stay relief should not be granted to accomplish a futile act. The Court, based upon the rationale set forth below, agrees with the second of the Debtor’s two preceding contentions and, accordingly, denies with prejudice T.P.’s instant stay relief motion.

The Court holds that T.P.’s Lien could not now ever be perfected as of the commencement of the instant bankruptcy case so as to prime, that is outrank, the Debt- or’s avoidance power under § 545(2)4 (a) because, even if such lien were to now be perfected in accordance with § 1502(a) subsequent to a grant of stay relief, it could only, pursuant to § 1508(b), have priority against a third party — such as the Debtor via § 545(2) — as of the time when T.P. filed its mechanic’s lien claim, (b) since T.P. did not file its mechanic’s lien claim until February 1, 2005, at 4:24 p.m., and (c) because the Debtor’s priority by virtue of § 545(2) arose as of the time when the instant bankruptcy ease was commenced, or on February 1, 2005, at 11:39 a.m. — i.e., the Debtor’s priority would always be first-in-time by almost five hours when compared to that of T.P. and, thus, would always be superior to that of T.P.5 See In re Oxford Royal Mushroom Products, Inc., 40 B.R. 930, 931-932 (Bankr.E.D.Pa.1984) (mechanic’s lien in Pennsylvania for alteration or repair is avoidable in bankruptcy if mechanic’s lien claim is filed subsequent to the commencement of bankruptcy case); In re Poloron Products of Bloomsbury, Inc., 76 B.R. 383, 384-385 (Bankr.M.D.Pa.1987) (same). The effect of 11 U.S.C. § 546(b)(1)(A) in the instant matter does not change the foregoing analysis because (a) such provision only operates to subject the Debtor’s avoidance power under § 545(2) to 49 P.S. § 1508(b), see Oxford Royal, 40 B.R. at 931 (“the reference in § 546 to 'generally applicable law1 is Pennsylvania’s Mechanics’ Lien Law [§ 1508(b)]”); Poloron Products, 76 B.R. at 385 (same), and (b) even after applying § 1508(b) to the instant matter (and even if the Court were to grant stay relief to accomplish perfection via § 1508(b)), the Debtor’s avoidance power via § 545(2), as just set forth in the preceding sentence, would still prime T.P.’s Lien, see Id.

T.P. apparently, and bewilderingly, argues that, because its state law right to file its mechanic’s lien claim relates back to the time when it completed its work for the Debtor, T.P.’s Lien cannot be primed by the Debtor via § 545(2). Such argument is bewildering, the Court finds, because (a) T.P. itself concedes that its lien nevertheless can only have priority vis-a-vis the Debtor as of the time when such claim was filed rather than when such [39]*39work was performed, and (b) such claim indisputably was filed subsequent to when (i)the instant bankruptcy case was commenced, and (ii) the Debtor’s consequent priority by virtue of § 545(2) arose.6 Therefore, and based upon the foregoing rationale, the Court holds that T.P.’s Lien could not now ever be perfected as of the commencement of the instant bankruptcy case so as to prime the Debtor’s avoidance power under § 545(2).

Because T.P.’s Lien could not now ever be perfected as of the commencement of the instant bankruptcy case so as to prime the Debtor’s avoidance power under § 545(2), it would, of course, be utterly futile to grant stay relief so as to allow the completion of the perfection of such lien. Furthermore, because stay relief should not be granted to accomplish a futile act, the Court is constrained to deny T.P.’s instant motion for relief from the automatic stay.

As an aside, because the perfection of T.P.’s Lien could never have related back to a point in time pre-petition, and since, consequently, such lien could never have primed the Debtor’s avoidance power under § 545(2), the very act by T.P. of filing its mechanic’s lien claim approximately five hours after the commencement of the instant bankruptcy case and without the obtaining of stay relief (a) does not fall within the exception to the automatic stay set forth in 11 U.S.C. § 362(b)(3), and (b) constitutes a substantive violation of the automatic stay in the instant case under, at least, § 362(a)(4) and (5). See In re Maas, 69 B.R.

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Cite This Page — Counsel Stack

Bluebook (online)
329 B.R. 36, 2005 Bankr. LEXIS 1569, 45 Bankr. Ct. Dec. (CRR) 51, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tp-electric-inc-v-ggc-llc-in-re-ggc-llc-pawb-2005.