On Appeal from an Order of the United States Bankruptcy Court for the Western District of Pennsylvania
Before: ADAMS, GARTH, Circuit Judges, and BROTMAN, District Judge*fn*
The issue in this case is whether the filing of a lien under the Pennsylvania mechanic's lien statute, after a contractor has filed for bankruptcy, violates the automatic stay provision of the Bankruptcy Code, 11 U.S.C. § 362.
In March 1982, Wheeling-Pittsburgh Steel Corporation (W-P) and Yobe Electric (Yobe) entered into a contract whereby Yobe agreed to install electrical work in W-P's plant in Monessen, Pennsylvania. To fulfill the contract, Yobe purchased a substantial quantity of electric al equipment from Graybar Electric Co.
On March 4, 1983, Yobe filed a petition under Chapter 11 of the Bankruptcy Code. Later that month, Graybar served on W-P a notice of intention to file a mechanic's lien in the amount of $171,970.75, covering material Graybar furnished Yobe for installation at the W-P plant.
Yobe filed a complaint urging that the Bankruptcy Court strike Graybar's notice of intent to file a mechanic's lien on the ground that such a lien violated the automatic stay provision of the Bankruptcy Act by triggering W-P's right to withhold funds due to Yobe.
The bankruptcy judge asserted that the case turns primarily on the Pennsylvania statute dealing with mechanic's liens. Pa. Stat. Ann. tit. 49 § 1508 (Purdon 1965). He pointed out that under that statute the perfection of a mechanic's lien "relates back" to the installation of the first material and, therefore, concluded that the filing of a mechanic's lien does not violate the automatic stay provisions of the Bankruptcy Code. Id. at § 1508(a). the judge distinguished certain New Jersey cases, which held to the contrary, by noting that under New Jersey law the filing of a mechanic's lien does not necessarily relate back to a time prior to filing. See e.g. Harry Brainum, Jr., Inc. v. Shore Air Conditioning & Refrigeration, Inc., 18 B.R. 643 (D.N.J. 1982); ATC Systems, Inc. v. Valairco, Inc., 9 B.R. 289 (D.N.J. 1981). By agreement of the parties, a direct appeal was taken to this Court.
We will affirm the judgment of the Bankruptcy Court on the basis of the well-reasoned opinion of the bankruptcy judge. See Yobe Electric v. Graybar Electric Co. (In re Yobe ...