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Wyatt Inc. v. Citizens Bank of Pennsylvania

June 4, 2009

WYATT INCORPORATED
v.
CITIZENS BANK OF PENNSYLVANIA AND MELLON BANK, N.A.
APPEAL OF: CITIZENS BANK OF PENNSYLVANIA
WYATT INCORPORATED, APPELLANT
v.
CITIZENS BANK OF PENNSYLVANIA AND MELLON BANK, N.A., APPELLEES
WYATT INCORPORATED
v.
CITIZENS BANK OF PENNSYLVANIA AND MELLON BANK, N.A.
APPEAL OF: APOSTOLOS GROUP, INC.
WYATT INCORPORATED
v.
CITIZENS BANK OF PENNSYLVANIA AND MELLON BANK, N.A.
APPEAL OF: MENDEL STEEL ORNAMENT IRON COMPANY
WYATT INCORPORATED
v.
CITIZENS BANK OF PENNSYLVANIA AND MELLON BANK, N.A.
APPEAL OF: LIGHTHOUSE ELECTRIC COMPANY
WYATT INCORPORATED
v.
CITIZENS BANK OF PENNSYLVANIA AND MELLON BANK, N.A.
APPEAL OF: JAMES E. HUCKESTEIN, INC.



Appeal from the Judgment September 28, 2007, In the Court of Common Pleas of Allegheny County, Civil Division at Nos. GD-03-011726, GD-03-008174, GD-03-009149, GD-03-009160, GD-03-009486, GD-03-009611, GD-04-020424, GD-04-020430.

The opinion of the court was delivered by: Popovich, J.

BEFORE: BOWES, FREEDBERG, and POPOVICH, JJ.

OPINION

¶ 1 These six appeals stem from the September 28, 2007 judgment in a Mechanics' Lien action entered in favor of the plaintiffs Wyatt, Inc., Apostolos Group, Inc., Mendel Steel and Ornamental Iron Co., Lighthouse Electric Co., and James E. Huckestein, Inc., (collectively Subcontractors) and against Citizens' Bank. Each party filed an appeal, and because the issues on appeal arise from the same factual scenario and involve similar arguments, we will address them contemporaneously. Upon review, we vacate the judgment and remand for computations consistent with this Opinion.

Citizens' Contract with Carlson

¶ 2 The causes of action arose from work performed at Three Mellon Bank Center in Pittsburgh, Pennsylvania, a 41-story office building built in the late 1940s. Mellon Bank was the owner of the premises and, in 2001, entered into a ten-year lease with Citizens for approximately 206,000 square feet of space in Three Mellon Center.*fn1

¶ 3 Prior to this time, Citizens did not have a banking presence in Western Pennsylvania. In an effort to expand into this region, Citizens leased the space of Three Mellon Center in order to perform banking functions and to construct a regional headquarters, which included executive offices.

¶ 4 In an effort to utilize the leased space in a specific manner, Citizens retained Carlson Implementation Associates, Inc., as the construction company responsible for the design and renovation of the leased space (Project). The leased space was not suitable to Citizens' needs in its pre-Project condition. Prior to the Project, Mellon used the leased space for its walk-up banking business. Carlson was the only construction company interviewed by Citizens, and the job was not put out for competitive bids.

¶ 5 Carlson initially submitted a Guaranteed Maximum Price (GMP) proposal to Citizens which set the maximum price of construction at approximately $12 million. Under the terms of the proposal, Carlson was to be "at risk" or would incur all costs of performing the Project even if the total costs exceeded the adjusted contract sum.

¶ 6 On or about October 15, 2001, Citizens entered into an American Institute of Architecture (AIA) Contract with Carlson regarding the Project. Although the form contract was submitted by Carlson, it was never signed nor was any other written agreement between Carlson and Citizens ever executed. Nonetheless, Citizens and Carlson understood that its terms governed their relationship as to the Project. Carlson submitted a number of change orders to Citizens that increased the GMP by approximately $2 million.*fn2

¶ 7 Three Mellon Center is a steel structure with an outer skin and core areas,*fn3 which are structural areas in the building which cannot be taken down without causing the collapse of the entire building. The space on each floor was demolished with the exception of the core. Carlson did not perform the work on the Project, but, instead, hired various firms, including the Subcontractors, to perform the required work. The Subcontractors entered into separate subcontracts with Carlson to perform their work on the Project. The scope of each Subcontractors work as defined in their individual subcontracts was undisputed and is detailed below.

Wyatt Incorporated

¶ 8 On or about December 31, 2001, Carlson entered into a subcontract with Wyatt to perform work on the Project. The original amount of the subcontract was $1,515,947.00. After Carlson approved change orders, the subcontract amount increased to $3,289,254.00. According to the terms of the subcontract, Wyatt was to complete the drywall and ceiling of the project. Prior to this work, Wyatt had done demolition work on the Project; however, this work was not the basis of the Mechanics' lien action.

¶ 9 The work pursuant to the subcontract included installation of metal stud drywall, acoustic ceiling tile, doors, doorframes, restrooms, hardware, and concrete work on floors 21 through 29, one half of floor 17, and the mailroom in the basement. Wyatt installed fire-resistant drywall and ceiling tiles in the UPS (uninterrupted power supply room), computer server, IDF, and MDF (main distribution frame) rooms. It also renovated the core area elevator lobbies to include domed ceilings.

¶ 10 On the 24th floor, Wyatt also demolished and refinished the exterior portion of some columns in order to provide space for a high density filing system to be installed by another subcontractor. On the 27th floor, Wyatt constructed a fitness room with a restroom. Between the 28th and 29th floor, Wyatt installed decking to accommodate the monumental staircase that was to connect the two floors. Wyatt also raised the floor in the computer room.

¶ 11 Wyatt completed its work on January 21, 2003. Of the amended subcontract amount, Wyatt claimed that it was not paid for $83,779.83 for its work on the project. On February 27, 2003, Wyatt informed Citizens that it was owed $83,779.83 for its work on the Project. On April 15, 2003, Wyatt provided formal notice of its Mechanics' Lien to Citizens and to Carlson.

Apostolos Group, Inc.

¶ 12 On February 4, 2002, Carlson subcontracted with Apostolos for painting related to the Project. The initial subcontract was in the amount of $192,154.00 and increased to $414,705.00 after change orders were made.

¶ 13 Apostolos applied paint and wall covering to the walls on floors 21 through 29. It also painted the unfinished doors and door frames on these floors. Apostolos was to touch up any scratches on existing exterior windows. Apostolos applied an epoxy paint for the UPS floor and angle frame paint under the battery cabinet in that room. On February 12, 2003, Apostolos completed its painting work. On April 9, 2003, Apostolos provided Citizens notice of its Mechanics' Lien.

Mendel Steel and Ornamental Iron

¶ 14 Carlson subcontracted with Mendel Steel on January 31, 2002, to perform miscellaneous steel and structural steel work on the Project. Mendel Steel's work included fortifying the structural steel to support the new opening between the 28th and 29th floors. It also installed the structure for the monumental staircase between the 28th and 29th floors. This staircase was to be a showpiece, or focal point, of those floors and was the sole means of access between the floors. Regarding the stairs and adjoining balcony on the 29th floor, Mendel Steel was to provide the steel supports, brackets, glass, and stainless steel railing. Mendel Steel reinforced the raised floor built by Wyatt that was to support the high density rolling filing system on the 24th floor. It was also to supply the plate steel to be used at the UPS battery cabinet. Mendel Steel also supplied steel clips for lobbies and installed steel supports for toilet partitions and vanity counters in the restrooms. Mendel Steel completed its work on the Project on April 3, 2003.

¶ 15 On March 14, 2003, Mendel Steel sent a letter to Carlson indicating the balance owed for work on the Project and demanding payment in the amount of $74,097.10. This letter was not sent to Citizens. On April 3, 2003, Mendel Steel provided Mellon with formal notice of its intention to file a Mechanics' Lien action; Mendel Steel provided Citizens and Carlson with a copy of this letter.

Lighthouse Electric Company

¶ 16 On January 7, 2002, Lighthouse entered into a subcontract with Carlson for electrical work on the Project. After various change orders, the amount of the subcontract increased to $2,854,821.82. Lighthouse began work on the Project in December of 2001, prior to entering into the subcontract. Pursuant to the subcontract, Lighthouse was to upgrade the electrical distribution to the leased floors. This included the installation of conduit to run the power distribution system. It was to provide power to the other workers until it had upgraded that space. Lighthouse also installed an emergency power distribution system in conduit from the basement to the floors 21, 22, 23, and 29 in order to power the computer systems in the event of an outage. Lighthouse installed electrical lines for the HVAC system, wiring for the computer networks, and lighting fixtures. In the newly-built computer room, Lighthouse installed an UPS system. Lighthouse reused a majority of the existing lighting and fire safety systems, but it needed to provide power to the safety fixtures. It provided new lighting for the executive offices, toilet rooms, and elevator lobbies. It also connected the furniture power feeds following the installation of the furniture.

¶ 17 In addition to the electrical work, Lighthouse also installed security devices throughout the leased premises. Card readers and security cameras were installed on floors 21 through 29. It provided raceways with pull lines for the telecommunications outlets and security devices in locations that otherwise would be inaccessible. It was also to clean and re-lamp the light fixtures prior to the final cleaning of the floor.

¶ 18 Lighthouse's work on the Project was completed on February 10, 2003.*fn4 On March 24, 2003, Lighthouse provided notice to Citizens and Mellon of its intent to seek a Mechanics' Lien.

James E. Huckestein, Inc.

¶ 19 Carlson entered into a subcontract with Huckestein on January 7, 2002, to perform heating, ventilation, and air conditioning system (HVAC) work on the Project. The initial subcontract was in the amount of $425,957.00 and increased to $688,093.74 following the change orders. Huckestein was to install HVAC throughout floors 21 through 29. Huckestein installed duct work from the core areas on the floors to the remaining leased space on each floor in a manner that suited Citizens. The air handling units were located in the core areas and were not replaced by Huckestein. However, the previous duct work was removed during the demolition phase of the Project. Huckestein installed temperature systems in the computer server, IDF, and MDF rooms. It also installed a piping system to tap into Three Mellon Center's chilled water system. Huckestein cleaned and adjusted the existing Moduline units. Huckestein completed its work in January of 2003.

¶ 20 On February 26, 2003, Huckestein sent a letter to Citizens and Carlson requesting payment of $103,993.75 for work on the Project. The letter also advised of Huckestein's intent to file a Mechanics' Lien.

Filing of Mechanics' Liens

¶ 21 On January 2, 2003, Citizens released final payment for the Project to Carlson,*fn5 although not all of the work of the Subcontractors had been completed at that time. Carlson left the job just prior to Christmas of 2002, by that point, the Project was almost completed. Citizens and Carlson did not perform the final cost analysis which had been contemplated under the proposed GMP contract. Citizens never requested Carlson to post a bond to protect against potential liens and did not ...


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