|Romar Sheet Metal, Inc. v F.W. Sims, Inc.|
|2005 NY Slip Op 51220(U)|
|Decided on June 21, 2005|
|Supreme Court, New York County|
|Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.|
|This opinion is uncorrected and will not be published in the printed Official Reports.|
Romar Sheet Metal, Inc., Plaintiff,
F.W. Sims, Inc., YONKERS CONSTRACTING COMPANY, INC., NEW JERSEY TRANSIT CORPORATION, ATLANTIC MUTUAL INSURANCE COMPANY and JOHN DOE 1 through JOHN DOE 20, said persons having or claiming to have a right, title or interest in the contract funds herein being sued fictitiously because their respective names are presently unknown to the Plaintiff, Defendants.
This is an action to foreclose two mechanic's liens filed by plaintiff Romar Sheet Metals, Inc. ("Romar") in the sum of $489,325.31 and $38, 928.49. On November 26, 2004, defendant Yonkers Contracting Company, Inc. ("Yonkers") and defendant New Jersey Transit Corporation ("NJTC") filed a motion to dismiss the complaint as against these defendants pursuant to CPLR § 3211(a)(1) and CPLR § 3211(a)(7). For the reasons stated herein, the motion to dismiss as to defendant NJTC is denied. The motion to dismiss as to defendant Yonkers is granted.
Prior to 1998, defendant NJTC, as owner of property located at 2 Penn Plaza, New York, New York, hired defendant Yonkers as general contractor of a construction project at said location. Yonkers subsequently hired defendant F.W. Sims, Inc. ("Sims"). Sims, in turn, hired plaintiff Romar to provide certain labor, services and materials for the construction project.
On July 2, 2002, Romar filed a Notice Under Mechanic's Lien Law claiming the amount of $489, 325.31 (the "First Lien") in the office of the Clerk of the County of New York. On June 24, 2003 the First Lien was extended for one year pursuant to Lien Law § 17 by filing an extension with the Clerk of the County of New York. On June 18, 2004, the First Lien was extended for an additional one year by order of the Supreme Court, New York County.
On August 8, 2002 Romar filed a Notice Under Mechanic's Lien Law claiming the amount of $38,928.49 (the "Second Lien") in the office of the Clerk of the County of New York. On July 24, 2003, the Second Lien was extended for one year pursuant to Lien Law § 17 by filing an extension with the Clerk of the County of New York. On June 16, 2004, the Second Lien was extended for an additional one year by order of the Supreme Court, New York County. [*2]
Yonkers, as principal, obtained two bonds ("Yonkers' Bonds") with Seaboard Surety Company ("Seaboard"), as surety, in the amounts of $534,000 and $43,000. The First and Second Liens were thus discharged by Consent Orders for Discharge of Mechanic's Liens in the Supreme Court, New York County, on July 23, 2002 and September 3, 2002, respectively.
In August, 2003, defendant Sims requested plaintiff's consent to allow Sims to substitute surety bonds in place of Yonkers' Bonds, and on March 25, 2004 an Order issued from this court (Hon. Eileen Bransten) permitting Sims to substitute its surety bonds for Yonkers' Bonds. On or about April 22, 2004, Sims, as principal, filed substitution surety bonds obtained from Atlantic Mutual Insurance Company ("Atlantic"), as surety, in the amounts of $538,258.00 and $42,822.00 ("Sims' Bonds") in the office of the County Clerk, New York County .
On July 22, 2004, Sims served a Demand Pursuant to Lien Law §59 for Romar to commence a lien foreclosure action. Thereafter, Romar commenced this lawsuit on August 25, 2004 in Supreme Court, New York County.
CPLR § 3211(a) provides that a party may move to dismiss a cause of action against him on the ground that "a defense is founded upon documentary evidence," CPLR § 3211(a)(1), or "the pleading fails to state a cause of action," CPLR § 3211(a)(7).
NJTC asserts that the filing of Sims' bonds discharged the mechanic's liens posted by Romar against the real property owned by NJTC and located at 2 Penn Plaza, New York, New York ("Property"), and thus NJTC is no longer a necessary party to this action. NJTC alleges that the filing of the bonds extinguished Romar's claim against the Property. Specifically, NJTC asserts that, as the liens against the real property were discharged by the filing of the bonds, NJTC, the property owner, no longer has an interest in this action and thus the motion to dismiss should be granted as to NJTC.
As NJTC acknowledges, Lien Law § 44(3) clearly states that "[a]ll persons appearing by the records in the office of the county clerk or register to be owners of such real property or any part thereof" must be brought as parties to an action in a court of record to foreclose a lien. NJTC, however, argues that when a bond has been filed discharging a mechanic's lien, Lien Law § 37(7) supersedes Lien Law § 44, and thus the owner of the subject property is no longer a necessary party. Lien Law § 37(7) provides that the "plaintiff in such an action [to recover on a bond discharging a mechanics' lien]...shall join as parties defendant, the principal and surety on the bond, the contractor, and all claimants who have filed notices of claim prior to the date of the filing of such summons and complaint."
NJTC's argument, that Lien Law § 37(7) supersedes Lien Law § 44(3) in the instant case, is unavailing. Lien Law § 37(7) does not affect the rights of a lienor as to a lien filed prior to the action of an owner posting a bond to discharge the lien. In re Rockefeller Center, Inc., 238 A.D. 736, 738 (1st Dept 1933). Such a lien may still be discharged according to the process set forth in Lien Law § 19.
Lien Law § 19 provides that, in an action to foreclose a mechanic's lien that has been bonded, the plaintiff must still obtain a judgment to foreclose the lien, although such judgment will be enforced against the bond rather than the property. See, e.g., Worlock Paving Corp. V. Camperlino, 222 AD2d 1097, 1098 (4th Dept 1995). Since the mechanic's lien, once bonded, "no longer attaches to the real property, 'the judgment is against the property only as a matter of form. The decree may adjudge that the plaintiff has a good and valid lien for a specified amount, [*3]and that but for the filing of the bond the plaintiff would be entitled to a judgment of foreclosure.'" Warlock Paving Corp, 222 AD2d at 1098, quoting 77 NY Jur. 2d, Mechanics' Liens, § 318, at 52; and see Louis J. Sigl, Inc. V. Wertheimer, 223 A.D. 806 (4th Dept. 1928), aff'd 250 NY 605 (1929).
Moreover, the parties agree that Lien Law § 19 applies to the case at bar and that the two liens were discharged in accordance with Lien Law § 19. See Reply Memorandum of Law in Further Support of Defendants' Motion to Dismiss, p. 1 and Plaintiffs' Memorandum of Law in Opposition to the Motion of Defendants Yonkers Contracting Company, Inc. and New Jersey Transit, p. 7. Implicit in this recognition is the acknowledgment that the work at issue in this case was "for private improvement," Lien Law § 19, rather than "public improvement," Lien Law § 21. Whereas the discharge of a lien for public improvement under Lien Law § 21 excuses the property owner as a necessary party pursuant to Lien Law § 44(b)[FN1], no such provision exists for the discharge of a lien for private improvement pursuant to Lien Law § 19.
Thus, the filing of surety bonds to discharge mechanic's liens does not extinguish the requirement that plaintiff bring an action for the enforcement of the lien. Martirano Constr. Corp. V. Briar Contracting Corp., 104 AD2d 1028, 1031 (2nd Dept. 1984). To recover on a lien, a plaintiff must bring an action for the enforcement of the lien, obtain a judgment as if the lien still existed, and such judgment would then be paid by the surety for the amount found due on the lien. Id. The effect of the bond discharging the lien does not change the fact that the lien must still be established judicially, as requested in the plaintiff's verified complaint. Thus NJTC, as owner of the property upon which the lien is filed, must remain a party to the action. See, e.g., Harlem Plumbing Supply Co. V. Handelsman, 40 AD2d 768, 768 (1st dept. 1972); Spitz v. M. Brooks & Son, Inc., 210 A.D. 438, 440 (1st Dept. 1924); Von Den Driesch v. Rohrig, 45 A.D. 526, 527 (1st Dept. 1899); Morton v. Tucker, 145 NY 244, 248 (Ct. Of Appeals 1895).
Defendant Yonkers' motion to dismiss pursuant to CPLR § 3211 is granted. Yonkers is the general contractor to this action. General contractors are not necessary parties to an action to enforce a lien against real property. Strober Bros. v. Kitano Arms Corp., 224 AD2d 351, 353 (1st Dept. 1996); see also Lien Law § 44.
According to the Order of this court dated March 25, 2004 (Hon. Eileen Bransten), the original bonds posted by Yonkers were discharged and replaced by bonds posted by defendant Sims. Yonkers is thus no longer a necessary party in plaintiff's action to foreclose the two mechanic's liens. See Lien Law § 44.
Moreover, plaintiff contracted directly with sub-contractor Sims. Aff. In Opp. To Def.'s Motion to Dismiss, p. 2. Plaintiff was thus not in privity with general contractor Yonkers, and therefore cannot assert a cause of action against Yonkers to recover payment. See, e.g., Sky-Lift [*4]Corp. v. Flour City Architectural Metals, Inc., 298 AD2d 214, 214 (1st Dept. 2002).
Therefore, Yonkers is not a necessary party in plaintiff's action to foreclose the two liens; Yonkers no longer has valid bonds posted to discharge said liens, and Yonkers is not in privity of contract with Romar. Thus, Yonkers'motion to dismiss pursuant to CPLR § 3211 is granted.
Accordingly, it is hereby
ORDERED that defendant NJTC's motion to dismiss the complaint is denied; and it is further
ORDERED that defendant Yonkers' motion to dismiss is granted; and it is further
ORDERED that The Clerk of the Court is hereby directed to sever the action as against the two defendants NJTC and Yonkers, and to enter judgment dismissing the complaint only as against defendant Yonkers; and it is further
ORDERED that counsel for the remaining parties shall appear for a preliminary conference at 9:30 a.m. on July 20, 2005, at Room 438, 60 Centre Street, New York, New York 10007.
This shall constitute the decision and order of the court.
DATED: June 21, 2005
SHERRY KLEIN HEITLER