In Bricklayers of Western Pennsylvania Combined Funds, Inc. v. Scott's Development Company, [pdf.] an en banc panel of the Superior Court of Pennsylvania held that the trustees of employee benefit funds may assert mechanics’ liens against a property owner to recoup delinquent contributions owed by a contractor.  In Scott’s Development, the property owner, Scott’s Development Co. (“Scott’s”) contracted with J. William Pustelak, Inc.  (“Pustelak”) to perform construction work on its property.  Pustelak was a party to collective bargaining agreements with two unions, under which Pustelak was to contribute to employee health and pension funds.  After Pustelak failed to pay the required contributions, the trustees of the funds filed mechanics’ lien claims against Scott’s, seeking recovery of the contributions that Pustelak allegedly failed to make.   In an issue of first impression, the Superior Court held that the trustees had standing to assert mechanics’ lien claims against the property owner.

The significance of Scott’s Development is that the law of Pennsylvania now provides trustees with a method of obtaining delinquent contributions from property owners that is unavailable under ERISA.  Although Scott’s Development may be appealed to the Supreme Court of Pennsylvania and may be susceptible to the argument that this use of the mechanics’ lien statute is preempted by ERISA because it regulates the enforcement of benefit plans, for now at least the Superior Court’s decision adds a new weapon to the considerable arsenal already available to fund trustees to collect contributions, and adds an additional element of risk to property owners engaging union contractors to perform construction work on their property.  Property owners may wish to add certification requirements or holdback provisions to their construction contracts to ensure payment of required trust fund contributions.