This stuff makes us angry. Just yesterday we told you about a contractor using the sleazy tactic of filing “mechanic’s liens” against landowners in western New York State because of a payment dispute with the company building a wind farm on their property (see Liens Filed Against W NY Landowners re Wind Turbines). Last year a contractor working on the Mariner East 2 Pipeline tried the same stunt (see Bankrupt Pipeline Contractor Leads to Liens Against PA Landowners).
And now it’s happened again–this time to landowners in Lancaster County, PA whose property is crossed by Williams’ Atlantic Sunrise Pipeline. The company using this sleazy tactic against Lancaster landowners is MacAllister Machinery Co. Inc. of Michigan.
This is a bit complicated, but MDN readers are smart and can follow the bouncing ball. Let’s begin first with the news, as reported by LancasterOnline:
A fight over payment for work on the Atlantic Sunrise gas pipeline made its way to the mailboxes of Lancaster County residents who own land the pipeline crosses.
Some local landowners along the Atlantic Sunrise gas pipeline are expressing surprise and concern about letters warning that liens might be placed on their properties.
Several said they received certified letters in the last few days that were formal notice of intent to file liens against their property if Michigan-based MacAllister Machinery Co. Inc. does not receive timely payment of about $1.02 million it asserts it is owed by Welded Construction LP, which was the main contractor on the project.
Jeff Kann of Conestoga said he never wanted the pipeline, which crosses about half an acre of his pasture land, and was surprised and concerned to receive the letters.
“They can come and take the pipe any day they want it,” he said.
But, he added, he’s seeking advice because “I don’t think a mortgage company would refinance me with a lien against my property.”
The letters indicated the liens would be filed under the Mechanics’ Lien Law, which allows unpaid contractors, subcontractors and suppliers to recover payment for work done by filing liens against the owners of properties where “improvements” had been made.
The pipeline crosses 250 properties across 37 miles in the western part of the county. It was not clear if all of those property owners received letters, because Harpst Ross Becker, an Ohio-based law firm that sent the letters, did not return phone and email messages Monday morning.
The Adorers of the Blood of Christ are Roman Catholic nuns near Columbia who unsuccessfully sued to stop the pipeline crossing their property. Dwight Yoder, a Lititz attorney representing them, confirmed Monday that they had received the letters warning of liens.
Pipeline owner disputes move
Chris Stockton is spokesman for Atlantic Sunrise owner Williams Partners.
“It is our position that subcontractors do not have any right or legal ability to lien these properties,” he wrote in an email Monday.
Stockton noted that Williams required Welded to procure a roughly $450 million bond before the project started, to help protect subcontractors and suppliers.
“Many subcontractors have already reconciled claims made with the bond surety, Federal Insurance Company,” he wrote. “Those claims can be processed once the subcontractor makes direct contact with the surety and follows the proper claims process.”
Any laborers and service providers unaware of the appropriate steps to follow or need help in the process can reach out to Williams at [email protected], he wrote.
In December, LNP reported on a similar situation in Berks County involving a similar threat of liens from a Minnesota company that said Welded hadn’t paid it for work on the Mariner East Pipeline.
Shortly thereafter, the owner of that pipeline said the situation had been resolved and landowners should expect follow-up letters to the lien notices.
Welded Construction was the main contractor on both the Atlantic Sunrise and Sunoco Marin East pipelines.
It declared bankruptcy in October after the owners of both pipelines refused to pay Welded. Williams Partners claimed Welded breached its contract on the Atlantic Sunrise, and Sunoco charges that Welded failed to comply with environmental regulations on Mariner East.
Derek Dissinger, an attorney who is a partner in Barley Snyder’s Lancaster office, said the prospect of mechanics’ liens is a powerful tool to start the process of getting claims paid, and that resolution before liens go into effect is pretty common.
Liens can’t be filed until at least 30 days after notice of intent is sent, he said, and to date there is no definitive Pennsylvania ruling on exactly how a lien would work on a case like this involving private property with an easement.*
MDN previously wandered into this mine field, the debate over Welded not paying its subcontractors.
In February we took Williams to task for the fact many of the subcontractors that did work for their contractor Welded Construction had still not been paid for work done on the Atlantic Sunrise Pipeline project (see PA Businesses Still Not Paid for Atlantic Sunrise Pipeline Work). As we came to learn, there’s far more to the story, including details on how those subcontractors *can* get their money, including MacAllister.
According to press reports (previously reported on MDN), last October Welded Construction, a pipeline construction contractor headquartered in Perrysburg, OH, filed for Chapter 11 bankruptcy protection saying they did so because Williams refused to pay them $23.5 million for work completed on Atlantic Sunrise Pipeline, and that refusal/dispute leaked out into the marketplace and created a “liquidity crisis” (crisis of confidence) with other Welded customers and their projects (see Williams Withholds Payment Forcing Pipeline Builder into Bankruptcy).
LancasterOnline said some 77 subcontractors had, as of a month ago, still not been paid for their work on Atlantic Sunrise performed in Lancaster and surrounding counties (see PA Businesses Still Not Paid for Atlantic Sunrise Pipeline Work). We found that untenable and chided Williams for the situation.
We then spoke to a knowledgeable source and got a fuller understanding of the situation. There’s always two sides to every story, right?
When Williams awarded the project to Welded, they agreed to pay Welded on a monthly basis in advance. Welded received money at the beginning of each month before they performed work. Then, because things never go 100% according to plan on a big project like Atlantic Sunrise, Williams would pay overruns at the end of each month if the monthly advance hadn’t covered all the costs and labor.
As the project progressed, Williams believed they were finding discrepancies in Welded’s billings, and they conducted an audit. The audit showed Williams had been overpaying for items that should have already been covered, so Williams withheld some of the money it felt it had overpaid Welded over the course of the project. That withholding resulted in the $23.5 million dispute that got a lot of press attention.
The point is that Welded was given enough money to pay their subcontractors each month–but didn’t. What did they do with that money?
Setting aside the Welded said/Williams said controversy, how do Welded’s subcontractors get paid now with Welded in bankruptcy?
When Williams strikes a deal with a contractor like Welded, they require the contractor to put up a bond in advance. In this case Williams required Welded to post a $450 million bond to cover this kind of unfortunate circumstance. There is a process for filing a claim against that bond. Many of the affected Lancaster subcontractors have already done so. Williams wants all of them to do it. We don’t know how long it will take, but we do know that some subcontractor claims have already been paid. Subcontractors who file a legitimate claim will get paid what they are owed.
Our point: There is NO REASON for MacAllister to use the dirty trick of filing mechanic’s liens against landowners, some of whom didn’t even want Atlantic Sunrise crossing their property in the first place! NO REASON for those liens. Any money that MacAllister is owed can be filed for and recovered.
In case anyone from MacAllister (or any other unpaid contractor) is reading this, contact Williams directly at [email protected] to learn how to file and get paid. And quit using landowners as pawns!
*Lancaster (PA) LancasterOnline (Mar 26, 2019) – Property owners along Atlantic Sunrise gas pipeline get letters warning of possible liens
This post appeared first on Marcellus Drilling News.