Commerce Bank/Harrisburg, N.A. v. Kessler
46 A.3d 724
| Pa. | 2012Background
- Kesslers contracted with Ricker to build a luxury Harrisburg home on Oct 10, 2006; excavation began Oct 18, 2006.
- Ricker began construction; by Oct 2006 footers were in place; visible commencement occurred before 2007 amendments.
- Kesslers obtained a $435,000 open-end mortgage from Commerce Bank (Metro Bank) on Jan 12, 2007; recorded Jan 24, 2007.
- Metro Bank foreclosed in 2008; Ricker obtained a default judgment against the Kesslers in 2009.
- Bankruptcy stay relief was granted; sheriffs sale planned but stayed pending lien-priority briefing in 2010–2011.
- Trial court held Ricker’s mechanics’ lien priority over Metro Bank; the parties framed this as a declaratory judgment issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which version of §1508 applies to priority? | Ricker: pre-2007 version; contract principles govern; amended version retroactive. | Metro Bank: amended §1508 retroactive; plain language applies to post-2007 liens. | Amended §1508 applies retroactively to liens obtained after 2007. |
| Does §1508(c)(2) open-end mortgage exception apply? | Open-end loan proceeds must be used for enumerated purposes; non-enumerated use defeats the exception. | Broader reading; include related definitions; allow proceeds to cover related costs. | Exception does not apply; proceeds must be used for enumerated purposes. |
| Is Ricker's lien valid under §1503(5) despite attachments? | Substantial compliance suffices; lien describes general labor and materials; attached contract suffices. | Lack of attached drawings/specifications defeats the required statement of kind and nature. | Lien satisfies substantial compliance; lien valid. |
Key Cases Cited
- First National Bank of Pa. v. Flanagan, 515 Pa. 263 (Pa. 1987) (amendments not retroactive against preexisting contracts unless intended)
- Fletcher v. Pennsylvania Property & Cas. Ins. Guar. Ass'n, 985 A.2d 678 (Pa. 2009) (legislative notes inform retroactive intent)
- Denlinger, Inc. v. Agresta, 714 A.2d 1048 (Pa. Super. 1998) (substantial compliance acceptable in lien contents)
- Marchak v. McClure, 108 A.2d 77 (Pa. Super. 1954) (substantial compliance sufficient; direction to inquiry)
- Grambo et al. v. South Side Bank & Trust Co., 14 A.2d 925 (Pa. Super. 1940) (declaratory-like proceedings used to resolve lien priority)
- Conemaugh Iron Wks. Co. v. Delano Coal Co., 148 A. 94 (Pa. 1929) (early authority on lien priority and proceedings)
- Stevenson v. General Motors Corp., 521 A.2d 413 (Pa. 1987) (interlocutory appeal doctrine cited in related discussions)