Petitioners, 8 Catherine Street, LLC and Twin City Enterprises, Inc. ("Catherine Street), move for an order summarily discharging a mechanics lien filed by Respondent, NJC Construction, Inc. ("NJC") on the grounds that the Notice of Lien failed to comply with NY Lien Law sections 3 and 9. NJC has filed an affidavit opposing Petitioners' motion. Catherine Street filed a reply to Respondent's opposition and an amended statement to its petition. For reasons set forth below, the court is referring the case to a referee to make a factual finding as to whether the Respondent fraudulently altered a 2008 lien against the Petitioners to create the current lien.

FACTS:

The lien in question is dated June 16, 2010. The lienor NJC, Respondent here, claims a lien of $40,000 on 17 Chatham Square, New York, NY 10038, Block 281, Lot 4 for demolition work. It is signed by Lien Cheng Chen as president of NJC. The relevant dates of work performed and furnished as written on this lien are as follows:

First item of work performed: 02/08/2010

First item of material furnished: 02/08/2010 [*2]

Time when last work was performed: 05/23/2010

Time when last item of material was furnished: 05/23/2010

The lien was served on Petitioners' attorneys, the Law Offices of Henry Lee M. Fong.

Petitioners argue that this lien stems from a contract dated July 15, 2006 between Petitioners and New Jia Cheng Construction, Inc. ("New Jia") signed by David Chen, as President of New Jia for demolition work performed at 17 Chatham Square in 2007 and 2008 in the amount of $85,000. They provide a copy of the contract as well as checks they say were paid pursuant to the contract in the amount of $73,500. They submit correspondence between the parties describing a dispute that arose in 2008 concerning the completion of the contract and the responsibilities of New Jia. They concede that they have not paid the entire $85,000 as per the contract because there has been no resolution of the dispute and note that, in fact, it cost Petitioners over $10,000 to cure an ECB violation which was at the heart of the dispute. Petitioners also include a letter from the general contractor indicating that New Jia has provided no work on site since May 2008.

In addition, Petitioners present another lien dated June 2, 2008 which is almost identical to the one at issue in this motion. There are only slight differences in the liens. The corporation name and address is different (the lienor in 2008 was NKC Construction, Inc.) although both are signed by Lien Cheng Chen as President. The lien amount in 2008 was $200,000 rather than the $40,000 of the current lien. The month and days of work performed and material furnished are the same, only the years are different. Thus, in the 2008 lien it states that the work was first performed and materials furnished on 02/08/2007 and completed on 05/23/2008. The current lien puts the year as 2010 for all work and material as discussed above.

The Petitioners also provide a court order dated August 14, 2008, in which this court, by the Honorable Carol Edmead, granted a motion on default to vacate this earlier mechanics lien pursuant to Lien Law section 19(6).

Petitioners argue that the current lien stems from the same contract as the 2008 lien that was discharged. They state that the Respondent uses a different corporate name as a way to "deceive" the court. And, they assert that Respondent did no work for them in 2010 but merely "altered" the dates on the former mechanics lien "to be 2010" as a way to "harass" the Petitioners. In addition, they contend that the Respondent changed the dates on the lien as a way to "get around section 10.1 of the Lien Law to make it within 8 months of filing," the statute of limitations for this type of mechanics lien.

Petitioners also argue that the lien is invalid on its face because it 1) inadequately described the premises; 2) it is against the wrong parties, as the 2006 contract was not with NJC but with New Jia; 3) that the amount of the lien is exaggerated — it has already paid $73,500 of the $85,000 agreed to in the contract; and 4) that personal service was required under section11 of the Lien Law and therefore the lien was improperly served because it was served on their attorney rather than Petitioners. [*3]

Respondent contends that it fulfilled the requirements of sections 9 and 10 of the Lien Law with regard to the description of the premises and the amount in controversy and that, therefore, the lien is valid on its face. With regard to Petitioners' argument that the lien was against the wrong party, it notes that NJC Construction and New Jia are the same entity and even if it should have filed under New Jia, the proper remedy would be a request to the court to have Respondent amend the lien. Finally, it argues that it believed that Henry Lee M Fong, attorney for Respondents, was the "owner, managing agent and legal counsel of the petitioners" and thus service was proper.

Conspicuously, Respondent makes no mention of the 2008 lien or the 2006 contract. Nor does it deny the charges by Petitioners that the current lien is not for work done in 2010 but for work done in 2007 and 2008. In addition, Respondents do not address Petitioners' argument that the lien is being used to deceive the court and to harass the Petitioners.

DISCUSSION

Courts do not have inherent power to vacate or discharge a notice of lien other than what is authorized under section 19 of the Lien Law. Northside Tower Realty, LLC v. Klin Const. Group, Inc., 73 AD3d 1072 (2d Dept. 2010). Under section 19(6) a lien is defective where "it appears from the face of the notice of lien" that it is not valid "by reason of the character of the labor or materials furnished and for which a lien is claimed, or where for any other reason the notice of lien is invalid by reason of failure to comply" with section 9 of the Lien Law. Section 9 sets forth the information that must be contained in the lien including the name and address of the lienor and owner of real property, the labor performed and materials furnished and the time that they were performed and furnished, the amount unpaid, and a description of the property "sufficient for identification."

In general, where the dispute over the lien is a factual one rather than a dispute over a facial defect, "the validity of the lien must await trial of the foreclosure action." Pontos Renovation Inc. v. Kitano Arms Corp., 204 AD2d 87 (1st Dept. 1994) (quoting Care Systems, Inc. v. Laramee, 155 AD2d 770 (3rd Dept. 1989)); see also Aaron v. Great Bay Contracting, Inc., 290 AD2d 326 (1st Dept. 2002). In such cases, unless there is a facial defect, the court may not vacate a lien even if the facts seem to indicate the lien should be vacated "in the interest of justice." Coppola General Contracting Corp. v. Noble House Const. Of NY Inc., 224 AD2d 856, 857 (3d Dept. 1996); see Dember Construction Corp. v. P § R Corp., 76 AD2d 540, 544 (2d Dept. 1980). Thus, the court's job is to determine whether the lien is defective on its face.

Here, Petitioner raises some factual issues that looked at in a vacuum may be better handled at a foreclosure trial (e.g., whether the lien amount was exaggerated). However, this court does not read the rule that courts may not decide factual matters when considering a motion to vacate a lien under section 19(6) to mean that it cannot make a factual inquiry where, as here, many of the facts are essential to determine whether a facial defect exists. If the information on the face of the lien is false and is merely being used to disguise a claim that has already been dismissed, then the lien is facially defective. For example, section 9 of the Lien Law requires a mechanics lien to state "[t]he time when the first and last items of work were performed and materials furnished." If the Respondent did merely alter the dates that were on the 2008 lien without [*4]performing work in 2010, clearly the lien is fraudulent and, therefore, defective on its face. Likewise, section 10.1 mandates that this type of mechanics lien must be filed within eight months from the completion of the work or the last time materials were furnished to the site by the contractor. Again, if the current lien is merely an altered duplicate of the 2008 lien and no work was performed after May 2008, the notice of lien would not fall within the 8 month time period and the lien is invalid on its face.

Indeed, upon comparing the two liens, the similarities are at the very least striking and at most quite suspicious. Both liens are signed by the same person and against the same premises. The work done - "demolition" — is the same, as is the material furnished — "Dumpster Truck, Mechanical." Especially of concern are the similarities of the dates. It appears, as the Petitioners contend, that Respondents simply replaced "2010" for "2007" and "2008" on the face of the lien. The days and months are exactly the same. Just the names of the corporations bringing the liens and the amount of the liens are different.

Also of concern is Respondent's silence in it's response concerning Petitioners contention that these dates were altered and that Respondent provided no work for Petitioners in 2010. Not only was there no explanation of the old lien, but Respondent did not even mention the 2006 contract at all. Respondent merely argues that the court's role under section 19(6) is not to look at the facts but to determine whether the lien is defective on its face. As discussed above, however, the court cannot make this determination without hearing the facts about which the Respondent has remained silent.

Accusations of fraud are serious. Therefore, despite the fact that Respondent thus far has chosen not to respond to the allegations, this court is giving it one last opportunity to do so. Referring this case to a referee gives both parties a chance to set forth the facts with regard to the similarities of the liens and the Petitioners' contention that Respondent has done no work for them since May 2008. Upon receiving a report from the referee on these issues, the court will have the information necessary to determine whether the lien is facially defective.

Therefore, pursuant to CPLR 4212, the Court having on its own initiative determined to consider the appointment of a referee to hear and report with recommendations, and it appearing to the Court that an exceptional condition requiring said appointment in this case exists, it is now hereby

ORDERED that a Judicial Hearing Officer ("JHO") or Special Referee shall be designated to hear and report with recommendations to this Court on the following individual issues of fact, which are hereby submitted to the JHO/Special Referee for such purpose:

(1) the issue as to whether the dates as they appear on the mechanics lien in this case are accurate with regard to the work Respondent performed and the material it furnished to Petitioners;

(2) the issue as to whether Respondent altered information on the mechanics lien against Petitioners to disguise a claim that has already been dismissed; and [*5]

(3) the issue as to whether Respondent has not performed any work for Petitioner since 2008 but instead altered information on the mechanics lien to avoid the eight month time limit for filing the lien; and it is further

ORDERED that the powers of the JHO/Special Referee shall not be limited further than as set forth in the CPLR and it is further

ORDERED that this matter is hereby referred to the Special Referee Clerk (Room 119 M, 646-386-3028 or [email protected]) for placement at the earliest possible date upon the calendar of the Special Referees Part (Part SRP), which in accordance with the Rules of that Part (which are posted on the website of this Court at www.nycourts.gov/supctmanh at the "References" link under "Courthouse Procedures"), shall assign this matter to an available JHO/Special Referee to hear and report as specified above, and it is further

ORDERED that counsel shall immediately consult one another and counsel for petitioner shall, within 15 days from the date of this Order, submit to the Special Referee Clerk by fax (212 - 401-9186) or email an Information Sheet (which can be accessed at the "References" link on the court's website) containing all the information called for therein and that, as soon as practical thereafter, the Special Referee Clerk shall advise counsel for the parties of the date fixed for the appearance of the matter upon the calendar of the Special Referees part, and it is further

ORDERED that the parties shall appear for the reference hearing, including with all witnesses and evidence they seek to present, and shall be ready to proceed, on the date first fixed by the Special Referees Part in accordance with the Rules of that Part, and it is further

ORDERED that, the hearing will be conducted in the same manner as a trial before a Justice without a jury and, except as otherwise directed by the assigned JHO/Special Referee for good cause shown, the trial of the issues specified above shall proceed from day to day until completion, and it is further

ORDERED that any motion to confirm or disaffirm the Report of the JHO/Special Referee shall be made within the time and in the manner specified in CPLR 4403 and Section 202.44 of the Uniform Rules for the Trial Courts, and it is further

ORDERED that, unless otherwise directed by this Court in any Order that may be issued together with this Order of Reference to Hear and Report, the issues presented in any motion identified in the first paragraph hereof shall be held in abeyance pending submission of the Report of the JHO/Special Referee and the determination of this Court thereon. [*6]

J.S.C.

Dated: New York, NY

November 17, 2010