J-A10045-20


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    BRACKENRIDGE CONSTRUCTION                       :   IN THE SUPERIOR COURT OF
    COMPANY INC.                                    :        PENNSYLVANIA
                                                    :
                       Appellant                    :
                                                    :
                                                    :
                v.                                  :
                                                    :
                                                    :   No. 2611 EDA 2019
    LAKEVILLE DPP, LLC,                             :

                  Appeal from the Order Entered July 30, 2019
     In the Court of Common Pleas of Wayne County Civil Division at No(s):
                               No. 90-MLD-2017


BEFORE: BOWES, J., SHOGAN, J., and PELLEGRINI, J.*

MEMORANDUM BY PELLEGRINI, J.:                                   FILED JUNE 9, 2020

        Brackenridge Construction Company, Inc. (Brackenridge) appeals from

the order entered in the Court of Common Pleas of Wayne County (trial court)

sustaining the preliminary objections of Lakeville DPP, LCC (Lakeville) and

striking Brackenridge’s mechanics’ lien claim.              The trial court found that

Brackenridge was precluded from enforcing its lien because it had already

prevailed at arbitration on claims for unpaid labor. After review, we reverse

and remand for further proceedings.

                                               I.

        In April 2016, Brackenridge entered into a master construction contract

with Dollar Texas Properties XV, LLC c/o GBT Realty Corporation (GBT) to build

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*   Retired Senior Judge assigned to the Superior Court.
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two Dollar General Stores in Pennsylvania.       One would be built in Wayne

County, which is the subject project in this appeal; the other would be built in

Franklin County. Under the contract, GBT would assign all of its rights to a

special purpose entity created to finance and own each respective project.

Lakeville is the assignee of the Wayne County project and owner of the subject

property.

      The contract also contained dispute resolution provisions requiring all

disputes to be settled by binding arbitration.     Section 12.4 of the contract

entitled “BINDING DISPUTE RESOLUTION” provided:

      If the matter is unresolved after submission of the matter to a
      mitigation procedure or to mediation, the Parties shall submit the
      matter to the binding dispute resolution procedures selected
      below.

                                       ***

      Arbitration using the current Construction Industry Arbitration
      Rules of the AAA [American Arbitration Association] or the Parties
      may mutually agree to select another set of arbitration rules. The
      administration of the arbitration shall be as mutually agreed by
      the Parties.    If the Parties cannot agree, then it shall be
      administered by AAA.

      The dispute resolution provisions also addressed Brackenridge’s lien

rights under Section 12.6 entitled “LIEN RIGHTS.” That section provided that

“[n]othing in this article shall limit any rights or remedies not expressly waived

by the Contractor that the Contractor may have under lien laws.”

      After completing both projects, Brackenridge disputed how much it had

been paid for its work, claiming that it was still owed $102,480.73 for the


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Wayne County project and $76,707.49 for the Franklin County project.

Consequently, in December 2017, Brackenridge timely filed in each county a

statement of mechanics’ lien claims pursuant to the Mechanics’ Lien Law of

1963 (Mechanics’ Lien Law), 49 P.S. §§ 1101-1902.1

       As required by the contract, Brackenridge’s unpaid labor claims were

submitted to arbitration. On March 11, 2019, the Arbitrator issued an award

in favor of Brackenridge for the full amount of its unpaid labor claims on both

projects totaling $179,188.21 plus interest.2    That amount, however, was



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1Contractors are required to file a claim within six months after completion of
work. See 49 P.S. § 1502(a)(1).

2 An arbitrator’s authority is restricted to the powers the parties have granted
him [or her] in the arbitration agreement. A common law arbitration award
“may be corrected if the arbitrator exceeds the scope of his authority.” Com.
ex rel. Kane v. Philip Morris USA, Inc., 114 A.3d 37, 56 (Pa. Cmwlth. 2015)
(citations and internal quotation marks omitted.) The Arbitrator listed the six
separate claims and counterclaims that were submitted to him to decide as:

       1. A claim by Claimant for the unpaid balances due for work
       performed under the Agreement and Amendments.

       2. A claim by Claimant for interest on the unpaid balance
       referenced in claim 1 above.

       3. A claim by Claimant for penalties and legal fees under
       Pennsylvania’s Contractor and Subcontractors Payment Act.

       4. A counterclaim by Respondent that Claimant owes liquidated
       damages to Respondent for failure to complete the work on the
       Projects on time.




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offset by a $70,000 credit awarded to GBT for paving work on the Franklin

County project because it was already included in its original bid. Accordingly,

excluding costs and attorneys’ fees, Brackenridge’s final award was

$109,188.21      plus    interest.      Both   parties   sought   modification   with

Brackenridge seeking to decrease the $70,000 offset while GBT wanted

language added that the award also settled any derivative lien claims arising

out of the contract. The Arbitrator, however, declined both requests.

       In the weeks after the arbitration, Brackenridge and GBT reached an

impasse over payment of the award.             GBT claims that it tried to pay but

Brackenridge rejected any payment that did not also include the $70,000

offset. Believing that Brackenridge was using its mechanics’ liens as a vehicle

to recover payment beyond that awarded, GBT refused to pay any part of the

arbitration award until Brackenridge released its mechanics liens against the

properties.




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       5. A counterclaim by Respondent that Claimant owes Respondent
       money for performing paving work that was in Claimant’s scope
       of work for the Lakeville Project.

       6. A counterclaim by Respondent for punch list work not
       performed by Claimant.

(Reproduced Record at 141).




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       In May 2019, Brackenridge filed complaints in both counties to enforce

its mechanics’ lien claims against the properties.3 Lakeville, as owner of the

Wayne County property, responded in the trial court by filing preliminary

objections in the nature of a motion to strike. Relying on res judiciata and

collateral estoppel, Lakeville asserted that the complaint was legally

insufficient under Pa.R.C.P. 1028(a)(4) because the underlying basis for the

lien—the unpaid labor claims—had already been litigated and decided at the

arbitration.4 Brackenridge countered that its lien rights were not submitted in

the arbitration and were preserved by Section 12.6 of the contract’s dispute

resolution provisions. On July 30, 2019, the trial court sustained Lakeville’s

preliminary objections and struck Brackenridge’s complaint with prejudice,



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3 49 P.S. § 1701(a) provides that “[t]he practice and procedure to obtain
judgment upon a claim filed shall be governed by the Rules of Civil Procedure
promulgated by the Supreme Court.”

4 Pa.R.C.P. 1028(a)(6) also provides that preliminary objections may be filed
based on the “pendency of a prior action or agreement for alternative dispute
resolution.” We also note that Pa.R.C.P 1030(a) provides that “all affirmative
defenses including but not limited to the defenses of accord and satisfaction,
arbitration and award, consent, discharge in bankruptcy, duress, estoppel,
failure of consideration, fair comment, fraud, illegality, immunity from suit,
impossibility of performance, justification, laches, license, payment, privilege,
release, res judicata, statute of frauds, statute of limitations, truth and
waiver shall be pleaded in a responsive pleading [Answer] under the heading
‘New Matter.’ A party may set forth as new matter any other material facts
which are not merely denials of the averments of the preceding pleading.”
(Emphasis added).




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stating that it did not “have the appropriate authority to revisit or reconsider

the issues decided at the arbitration.”5

        After dismissal of its complaint, Brackenridge filed a notice of appeal.6

In its court-ordered Pa.R.A.P. 1925(b) statement of errors complained of on

appeal, Brackenridge contended that the trial court erred in finding that the

prior arbitration precluded enforcement of its mechanics’ lien.7

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5 Similar preliminary objections were filed in Franklin County. Finding neither
res judicata nor collateral estoppel precluded enforcement of the mechanics’
lien, the trial court there overruled the preliminary objections and allowed
Brackenridge’s complaint to continue.

6 Though the notice of appeal was filed one day after the expiration of the 30-
day appeal deadline, Brackenridge has submitted documentation showing that
its notice of appeal was received by the Prothonotary on August 29, 2019, but
was not filed until the following day. Nagy v. Best Home Services, Inc.,
829 A.2d 1166, 1168 (Pa. Super. 2003) (finding delay in filing appeal
excusable because of “breakdown in the court’s operations” based on
Prothonotary’s failure to time-stamp and docket timely notice of appeal).

7   Our standard of review is as follows:

        Our standard of review of an order of the trial court overruling or
        granting preliminary objections is to determine whether the trial
        court committed an error of law.          When considering the
        appropriateness of a ruling on preliminary objections, the
        appellate court must apply the same standard as the trial court.

        Preliminary objections in the nature of a demurrer test the legal
        sufficiency of the complaint.       When considering preliminary
        objections, all material facts set forth in the challenged pleadings
        are admitted as true, as well as all inferences reasonably
        deducible therefrom.

Khawaja v. RE/MAX Cent., 151 A.3d 626, 630 (Pa. Super. 2016) (citation
omitted).



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                                               II.

       Though Brackenridge has split its argument into three issues, they all

go to a single question: whether collateral estoppel8 precludes a contractor

from enforcing a mechanics’ lien claim after there was an arbitration award

involving the claims between the parties. Brackenridge contends that the trial

court erred in holding that the arbitration award had a preclusive effect on the

mechanics’ lien action because Section 12.6 of the contract expressly provides

that nothing in the dispute resolution provisions limits its right to file a claim


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8Collateral estoppel (issue preclusion) is closely related to res judicata, but
bears certain distinctions:

       [W]e note that the doctrine of res judicata subsumes the more
       modern doctrine of issue preclusion which forecloses re-litigation
       in a later action, of an issue of fact or law which was actually
       litigated and which was necessary to the original judgment. Clark
       v. Troutman, 509 Pa. 336, 340, 502 A.2d 137, 139 (1985).
       Collateral estoppel applies if (1) the issue decided in the prior case
       is identical to one presented in the later case; (2) there was a final
       judgment on the merits; (3) the party against whom the plea is
       asserted was a party or in privity with a party in the prior case;
       (4) the party or person privy to the party against whom the
       doctrine is asserted had a full and fair opportunity to litigate the
       issue in the prior proceeding and (5) the determination in the prior
       proceeding was essential to the judgment. Philadelphia Marine
       Trade Association v. International Longshoreman’s
       Association, 453 Pa. 43, 308 A.2d 98 (1973); see also Mellon
       Bank v. Rafsky, 369 Pa. Super. 585, 535 A.2d 1090 (1987).

City of Pittsburgh v. Zoning Board of Adjustment, 559 A.2d 896, 901
(Pa. 1989).




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under the lien laws. Moreover, it contends that its mechanics’ lien claim differs

from the unpaid labor claim submitted at arbitration. Whereas its mechanics’

lien proceeding is an action in rem which attaches to the subject property, its

unpaid labor claim at the arbitration was an in personam action which attached

against the generalized assets of the unsuccessful party in the action.

        We agree with Brackenridge that an arbitration award does not preclude

a mechanics’ lien enforcement proceeding because they protect different,

though overlapping, interests.          Mechanics’ liens are designed to protect

persons who improve a piece of property by giving them a lien against that

property for payment for material and labor independent of contractual

remedies. Bricklayers of Western Pennsylvania Combined Funds, Inc.

v. Scott’s Development Co., 90 A.3d 682, 690 (Pa. 2014).9               However,

because the type of damages are limited to material and labor, a mechanics’

lien is not the basis for recovery of unliquidated damages for breach of


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9   Section 301 of the Mechanics Lien Law provides:

        [E]very 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).

49 P.S. § 1301(a).


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contract because it is not intended to settle the contractual obligations of the

parties. Wyatt, Inc. v. Citizens Bank of Pennsylvania, 976 A.2d 557, 570

(Pa. Super. 2009). As a result, in a mechanics' lien proceeding, the owner

may not raise a true counterclaim but only the right to setoff that is limited to

the amount of the lien itself. 49 P.S. § 1701(e).

      Because it is not intended to settle the underlying contractual obligation,

a mechanics’ lien is “an additional concurrent and cumulative remedy in rem,

given by statute, and does not derogate from any other available remedies

such as assumpsit.” Halowich v. Amminiti, 154 A.2d 406, 407 (Pa. Super.

1959) (citations omitted). This holding flows directly out of Section 702 of

the Mechanics Lien Law, 49 P.S. § 1702, which provides that ”[n]othing in this

act shall alter or affect the right of a claimant to proceed in any other manner

for the collection of his debt.”

      Consequently, “[a] civil action is not barred by the pendency of an action

in rem upon a Mechanics' Lien, nor is the Mechanics' Lien claim barred by the

pendency of the civil action; a plaintiff has the liberty to proceed against the

property at the same time that he resorts to a personal action against the

defendant.” Artsmith Development Group v. Updegraff, 868 A.2d 495,

497 n.1 (Pa. Super. 2005). This is true even though the mechanics’ lien action

or the civil action has concluded.

      In Matternas v. Stehman, 642 A.2d 1120 (Pa. Super. 1994), we

considered whether an assumpsit action brought by a property owner was


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barred by either res judiciata or collateral estoppel by a prior mechanics’ lien

claim that had been settled by consent order. In first holding that res judicata

was not applicable, we explained that:

      A mechanics’ lien proceeding merely addresses the rights of
      parties vis-a-vis a parcel of property. It does not address the
      rights of parties vis-a-vis each other. In the former mechanics’
      lien action hereunder, [contractor] and [property owner]
      contested their interest in a certain real property; they did not
      litigate, for the purpose of res judicata, their contractual rights as
      against each other. This should be evident from the language of
      the statutory law, which does not allow an owner to assert a
      counterclaim as part of a set-off, nor is any money judgment
      authorized. 49 P.S. § 1701(e). That would inject an in personam
      claim into what is essentially an in rem proceeding.

Id. at 1123.

      We held that res judicata did not apply based on there being no identity

in the cause of action because the lien proceeding was not intended to settle

the contractual obligations of the parties, especially since the Mechanics’ Lien

Law was merely intended to “protect the prepayment labor and materials that

a contractor invests in another’s property[.]” Id. at 1124.

      Just because the bringing of a mechanic’s lien action is not precluded

because another proceeding is pending or concluded does not mean collateral

estoppel does not apply to issues involved in the mechanic’s lien proceeding.

Tellingly, in Matternas, we did not foreclose the application of collateral

estoppel but instead found that the consent order was inadequate to enable

us to discern whether the parties intended for the consent agreement to also

settle the assumpsit issue. Id. at 1125-26. If Lakeville’s position is correct


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that the unpaid labor claim or any setoff was decided in the arbitration

proceeding, that could have preclusive effect on those issues in this

proceeding.     Brackenridge could also use collateral estoppel offensively to

relieve it having to prove its underlying claims.10 Even if the amount awarded

is the same as awarded in the arbitration award, the net effect is that

Brackenridge would have a lien against the real property to which it made

improvements.

       Accordingly, because Brackenridge can maintain a mechanics’ lien

proceeding even though there is an arbitration award extant, we reverse the

trial court’s dismissal of that action and remand for further proceedings.

Jurisdiction relinquished.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 6/09/2020




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10Collateral estoppel is used offensively when the “plaintiff seeks to foreclose
the defendant from litigating an issue the defendant has previously litigated
unsuccessfully in an action with another party.” Shaffer v. Smith, 673 A.2d
872, 874 (Pa. 1996) (citation omitted). Offensive collateral estoppel may only
be utilized when certain additional considerations are met. See Toy v.
Metropolitan Life Ins. Co., 863 A.2d 1, 15 (Pa. Super. 2004) (summarizing
additional elements for offensive collateral estoppel).

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