This action arises from a breach-of-contract claim brought by plaintiffs, FiDi Creatives LLC sand Yu-Chen Lin, against defendant Skapos LLC, Shun-Ping Liu, and Jessica Lee. Plaintiffs claim that defendants abandoned the build out of Lin's commercial space before completion, yet nonetheless filed a mechanic's lien against the premises in November 2023. (NYSCEF No. 68 at 6.) Plaintiffs were forced to secure a bond to discharge the lien. Defendants never took action to foreclose on or extend the lien and do not dispute plaintiffs' allegation that the lien was cancelled as a matter of law as of November 2024. (NYSCEF No. 74 at ¶ 16.)

In its decision and order of April 12, 2024, this court dismissed all claims of co-plaintiff FiDi Creatives with the exception of the cause of action for unjust enrichment, reasoning that FiDi Creatives was not a party to the contract between Lin and Skapos. (See FiDi Creatives LLC v Skapos LLC, 2024 NY Slip Op 50438[U], *3 [Sup Ct, NY County 2024].) But this court held that plaintiff may add Lin as another plaintiff as of right. (Id. at 4.) This permitted contractual claims between only Lin and co-defendant Skapos to go forward. (Id. at 6.)

In motion sequence 004, plaintiffs move by order to show cause to (1) vacate and cancel co-defendant Skapos's mechanics lien; (2) discharge the associated surety bond; (3) grant preliminary injunction against the defendants from filing a new lien or contacting plaintiffs' landlord or property manager regarding any alleged debt or claims out of the construction contract; (4) award plaintiff attorneys fees and costs incurred pursuant to Lien Law § 39-a on the grounds that the lien filed by defendants was willfully exaggerated and asserted in bad faith; and, (5) waive the undertaking requirement of CPLR 6312 (b) in connection with plaintiffs' requested injunctive relief.

Defendants assert in their opposition papers that plaintiffs have improperly lumped together parties, ignored court orders, and filed a frivolous application for which sanctions should be granted against plaintiff. (NYSCEF No. 74 at ¶¶ 3, 12.) Defendants also argue that the lien was automatically discharged, plaintiffs have no factual basis to believe defendant will file a new lien, the premises in question is leased to another entity owned by Lin but not named as plaintiff, and an injunction would be a violation of their First Amendment rights.

Defendants argue that judicially declaring that its mechanic's lien expired is unnecessary because the plaintiffs allege it is expired by law. (NYSCEF No. 74 at ¶ 45.) Plaintiffs contend, on the other hand, that defendants' position fails to recognize the "significant practice and commercial realities at stake." (NYSCEF No. 80 at ¶ 3.) Plaintiffs further argue that Atlantic Specialty Insurance Company, who issued the bond, expressly requires judicial confirmation of the lien's status before it will release plaintiff Lin's collateral. (Id. at ¶ 4.)

If a defendant does not commence an action within one year to foreclose a mechanic's lien or to secure an order continuing a lien, the lien expires under Lien Laws §§ 17, 19. (Malafsky v Becker, 255 AD 444, 445 [1st Dept 1938].) Defendant relies on Bretzfelder v Froman (76 Misc 2d 1063 [Sup Ct, Westchester County 1973]) to argue that expiration automatically discharges the loan without any need for a court order. Although Bretzfelder held that Lien Law § 19 is self-executing, it also held that the "owner is entitled to summary order cancelling lien of record so as to remove any possible cloud on his title and service may be had on lienor's attorney." (Id. at 1065). The Fourth Department applied the same approach in Matter of Cook v Carmen S. Pariso, Inc. (287 AD2d 208, 212 [4th Dept 2001]). A surety-claims consultant and counsel for the Atlantic Specialty Insurance Company (ASIC) both confirm that "the Lien and bond should be cancelled and discharged as of record." (NYSCEF No. 80 at ¶ 4.) [*2]Defendants do not refute plaintiffs' allegation that the lien expired and was cancelled as a matter of law. (See NYSCEF No. 74 at ¶ 33.) When the facts of the lien expiration are not disputed, a summary order of the court to vacate the lien is appropriate. (See Matter of Lycee Francais de NY v Calagna, 26 Misc 2d 374, 382 [Sup Ct, NY County 1960].)

The lien is expired. An action on the bond may not be maintained. (See Hensel v Metropolitan Cas. Ins. Co. of New York, 237 AD 739, 739—740 [1st Dept 1933].) The owner of the property and the surety on the bond are relieved from its obligation. (Id.) As such, it is appropriate for this court to issue an order vacating and cancelling the lien and discharging the associated surety bond.

Plaintiffs also seek a preliminary injunction against the defendants that would restrain them from filing a new mechanic's lien or otherwise trying enforce claims to payment arising out of the project. In moving for this relief, plaintiffs also sought similar interim relief. This court denied that request for a TRO pending the hearing of this motion, on the ground that plaintiffs did not give a reason to believe that defendants planned to file another mechanic's lien or that plaintiffs would suffer irreparable harm absent a TRO. (NYSCEF No. 73 at 4.)

On reply, plaintiffs contend, in effect, that this court's TRO ruling overlooked reasons to believe that the claimed irreparable harm is "substantial and clearly defined." (NYSCEF No. 80 at ¶ 7.) In making this contention, plaintiffs point to three asserted sources of harm: (1) the threatened loss of a lease; (2) that the filing of another improper mechanic's lien would potentially trigger eviction proceedings; and (3) that the filing of another lien would severely impair their ability to meet essential business obligations, because plaintiffs would have to encumber their operating capital to take out a new surety bond.

Plaintiffs do not show irreparable harm. Irreparable harm cannot be "wholly speculative and abstract." (Matter of New York State Inspection, Sec. & Law Enforcement Empls., Dist. Council 82, AFSCME, AFL-CIO v Cuomo, 64 NY2d 233, 235 [1984].) Mere potential for a harm is speculative and not grounds for preliminary injunction. (See Bolofsky v City of New York, 205 AD3d 515, 516 [1st Dept 2022].) To rise to the level of irreparable harm for the purpose of a preliminary injunction, a plaintiff must show the harm-causing action (1) is already happening, (See e.g. Suttongate Holdings Ltd. v Laconm Mgmt N.V., 159 AD3d 514, 515 [1st Dept 2018]); or (2) that it is is likely to occur (see White v. F.F. Thompson Health Sys., Inc., 75 AD3d 1075, 1077 [4th Dept 2010]). Plaintiff has shown neither. Defendants' mechanic's lien is expired and Lien Law § 10 would bar defendants from filing a new mechanic's lien. Plaintiffs have offered no other evidence that defendants are likely to file a new lien, beyond that defendants have not expressly disclaimed any intent to do so.

In their reply, plaintiffs provide caselaw to endorse their argument that the potential for eviction is an irreparable harm recognized by the First Department. Plaintiffs rely on Second Café, Inc. v Hing Sing Trading, Inc. (66 AD3d 255, 272 [1st Dept 2009]) and 1234 Broadway LLC v West Side SRO Law Project (86 AD3d 18, 23-24 [1st Dept 2011]). But those cases differ [*3]from this one. In both cases, the harmful actions are ongoing, not some potential future event. In Second Café, a tenant sought a preliminary injunction from a partial eviction by their landlord. Although in the present case defendants' actions could potentially affect plaintiffs' lease, this case is not analogous to a landlord/tenant controversy. Further, as defendants point out, the lease plaintiff claims to be in jeopardy is in the name of a different company that, although owned by plaintiff Lin, is not a party here. (See NYSCEF No. 33.)

Plaintiffs further point to the harm caused by having their operating capital tied up, both currently in the surety bond for the expired mechanic lien or hypothetically if they are required to take out a new bond for a new lien. As for the existing surety bond, plaintiffs' money has been tied up since they took out the bond in December 2023. (See NYSCEF No. 75 at ¶ 3.) This is not a basis for imminent and irreparable future harm. And once this court discharges the bond, plaintiffs will have their money returned. Plaintiffs could potentially be harmed if they were required to take out another surety bond for another mechanic's lien. But, once again, they have not shown reason to believe that defendant is likely to file a new lien.

Plaintiff have not met the standard to show irreparable harm that is actual and imminent. The preliminary-injunction motion is denied. The court therefore does not reach defendants' First Amendment argument opposing the injunction nor plaintiff's request to waive the undertaking requirement.

Although plaintiffs' motion is without merit, the court is not persuaded that it is frivolous within the meaning of 22 NYCRR 130-1.1. Defendants' request in their opposition papers for sanctions is denied.

Plaintiffs claim that because defendants sought payment for work never performed, plaintiffs are entitled to recover attorney fees under to Lien Law § 39-a. Defendants respond that this court previously dismissed plaintiffs' claim of willful exaggeration (see FiDi Creatives, 2024 NY Slip Op 50438[U], *3), and plaintiffs have offered no proof that the lien was for an exaggerated amount. Plaintiffs concede that this court dismissed their claim previously, but contend that the dismissal was on procedural grounds (i.e., that defendants had not brought a lien-foreclosure action), and therefore that this court may (and should) now address the merits of the willful-exaggeration issue. (NYSCEF No. 80 at ¶ 12.) This court disagrees.

Lien Law § 39 begins, "In any action or proceeding to enforce a mechanic's lien upon a private or public improvement or in which the validity of the lien is an issue. . . ." Willful exaggeration must be established in the context of a lien-foreclosure action. (See Durand Realty Co. v Stolman, 197 Misc. 208, 211 [Sup Ct, NY County 1949], affd 280 AD 758 [1st Dept 1952].) Defendants still have not brought an action to foreclose the lien. This court's previous basis for dismissing plaintiffs' willful-exaggeration claim remains in effect. And damages may not be awarded for willfully exaggerating the lien unless the lien has been discharged for willful exaggeration. (See Joe Smith, Inc. v. Otis-Charges Corp., 279 AD 1, 4 [4th Dept 1951], affd 304 NY 684 [1952].) Plaintiffs' lien is discharged on the basis of its expiration—not for willful [*4]exaggeration. Plaintiffs therefore may not recover attorney's fees under Lien Law § 39-a. (Id.)

Accordingly, it is

ORDERED that the branch of plaintiffs' motion seeking an order canceling the mechanic's lien on the premises and discharging the related surety bond is granted; and it is further

ORDERED that the branch of plaintiffs' motion seeking injunctive relief is denied; and it is further

ORDERED that defendants' request for sanctions under 22 NYCRR 130-1.1 is denied; and it is further

ORDERED that the branch of plaintiffs' motion seeking an award of attorney fees under Lien Law 39-a is denied; and it is further

ORDERED that plaintiffs serve a copy of this order with notice of its entry on all parties; and on the office of the County Clerk (using the NYSCEF document type "Notice to the County Clerk - CPLR § 8019 (c)"); and it is further

ORDERED that upon service of notice of entry, the County Clerk is directed

(i) to discharge, vacate, and cancel the mechanic's lien filed on November 28, 2023, by Skapos LLC, in the amount of $86,169.96, against the property located at 106 Fulton Street, 3F, New York, NY 10038, Block 78, Lot 20;

(ii) to discharge, vacate, and cancel Bond No. 800161935, dated December 20, 2023, and filed in the office of the County Clerk on January 4, 2024, in the amount of $94,786.96, executed by FiDi Creatives LLC (principal) and Atlantic Specialty Insurance Company, and to return the original bond to plaintiffs; and

(iii) to enter judgment accordingly.