8th Avenue Recoveries Corp. v. 111 Stellar 8 Owner, LLC, 9927/11
Cite as: 8th Avenue Recoveries Corp. v. 111 Stellar 8 Owner, LLC, 9927/11, NYLJ 1202640082957, at *1 (Sup., KI, Decided January 15, 2014)
Justice Carolyn E. Demarest
Decided: January 15, 2014
Attorney for Plaintiff: Mendel Zilberger Esq., Mendel Zilbergerg & Associates, PC.
Attorney for Defendants: Conseulo Alden Vasquez, Esq., Pepper Hamilton, LLP.
NYSCEF Papers Numbered
Notice of Motion/Order to Show Cause/Petition/ Cross Motion and Affidavits(Affirmations)Annexed 20-21, 23-24
Opposing Affidavits (Affirmations) 25-48
Reply Affidavits(Affirmations) 51
Other Papers (Memoranda of Law) 22, 49, 52
DECISION AND ORDER
Defendant moves for summary judgment pursuant to CPLR 3212 to dismiss the complaint.
This action arises out of the construction of a condominium project ("Project") located at 103-117 Kent Avenue, Brooklyn ("Property"). The building was to include approximately 60 condominium units, underground parking, and a lobby. On December 20, 2006, non-parties 8th Avenue Builders Corp. ("Builders") entered a contract ("Contract") with non-parties 117 Kent Avenue LLC and 66-68 Washington Avenue LLC ("Kent"), the owners of the Property at the time of the contract, whereby Builders would act as the general contractor for the Project. Builders' final payment application, which included a request for the retainage, was dated September 2, 2010, for the period of work up to March 26, 2010 ("Requisition 27"). On November 3, 2010, Kent transferred the Property to defendant Garrison Kent LLC ("Garrison Kent"). On February 2, 2011, Builders filed a notice of mechanic's lien against the Property in the amount of $1,180,188.85 for labor alleged to have been performed on the Project
("Lien").1 The Lien states that, "the time when the last items of material were furnished or labor performed was November 2, 2010." On March 9, 2011, Garrison Kent transferred ownership of the Property to defendant 111 Stellar 8 Owner, LLC ("Stellar 8").2 On May 2, 2011, two months after the transfer of the Property to Stellar 8, Builders assigned the Lien to the Plaintiff who commenced this mechanic's lien foreclosure action the next day, May 3, 2011. On June 1, 2011, Stellar 8 bonded the Lien in the sum of $1,298,208.00 and the Lien was discharged.
By notice of motion dated March 28, 2012, Stellar 8 moved to dismiss the complaint pursuant to CPLR 3211(a)(1), (5), and (7) after conducting limited pre-answer discovery. Stellar 8 argued that Builders did not perform work on the project after March 26, 2010 and that any lien filed after November 26, 2010 was untimely pursuant to Lien Law §10(1). By short form order on May 16, 2012, this court denied the motion noting:
The evidence adduced at deposition creates issues of fact as to when work at the site was concluded, precluding a finding that the filing was untimely. Issue has not yet been joined and additional discovery is warranted. A [preliminary conference] is scheduled for [July 18, 2012].
After numerous conferences and discovery orders by this court, the parties completed discovery3 and defendant moved for summary judgment dismissing the compliant pursuant to CPLR 3212. Defendant argues that there are no issues of fact and that plaintiff is unable to demonstrate any proof that lienable work was conducted on the Project after March 9, 2010, more than eight months prior to the filing of the Lien. Plaintiff opposes the motion alleging that there are issues of fact as to whether Builders conducted work on the Project between April and November of 2010. Plaintiff also argues that the defendant
should not be permitted to make a second motion for summary judgment and, although no cross-motion was made and it simultaneously argues that there are issues of fact, that plaintiff should be granted summary judgment, including the dismissal of defendants' counterclaims for willful exaggeration. Plaintiff argues that defendant is unable to disprove plaintiff's assertion that work was conducted within eight months of the Lien being filed.
It is noted that neither party was actually involved in the construction at issue in this matter or was present on the site at the relevant times at issue, and apparently, as a result of their lack of independent knowledge, neither party has submitted an affidavit by a person with actual knowledge in support of, or in opposition to, the motion. Both parties rely exclusively on the deposition transcripts and documents exchanged during discovery.
Plaintiff's argument, that the motion for summary judgment should be denied because defendant is prohibited from bringing "successive summary judgment motions", is unavailing as defendants' prior motion was a motion to dismiss pursuant to CPLR 3211 that was brought prior to issue being joined. Further, discovery was not complete when the defendants brought the motion to dismiss. Accordingly, defendants are not prohibited from bringing the present motion pursuant to CPLR 3212.
In order to obtain summary judgment, the movant must establish its cause of action or defense sufficiently to warrant a court's directing judgment in its favor as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact (Zuckerman v. City of New York, 49 NY2d 557, 562 ; CPLR 3212 [b]). Where the proponent of the motion makes a prima facie showing of entitlement to summary judgment, the burden shifts to the party opposing the motion to demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action (Vermette v. Kenworth Truck Co., 68 NY2d 714, 717 ). The parties' competing contentions are viewed in the light most favorable to the party opposing the motion (Marine Midland Bank, N.A. v. Dino & Artie's Automatic Transmission Co., 168 AD2d 610 [2d Dept 1990]).
Stellar 8 argues that Builders' final two payment applications were dated March 9, 2010, for the period of work up to March 9, 2010 ("Requisition 26"), and September 2, 2010 for the period of work
up to March 26, 2010 ("Requisition 27"). Stellar 8 argues that Requisition 27 was solely for the retainage on the Project, which is only available upon completion of the work, that Builders did not submit any requests for payment of work completed by Builders after March 26, 2010, and that the Project site was idle from March 26, 2010 until after March 9, 2011, when the Property was transferred to Stellar 8. Stellar 8 submitted a letter dated December 8, 2010, from Morris A. Kompel ("Kompel"), president of Builders, to the "Garrison Investment Group"4 indicating,
I am still owed monies for [Requisition 26] which was submitted to UBS, as well as the balance of retainage. I did not ask for any monies beyond that, even though I had worked at the site a few weeks after the period of the last funding request.
Stellar 8 refers to deposition testimony from John Gulbin ("Gulbin"), who was hired in 2010 as a consultant by Garrison Investment Group to report on the status of the Project and make recommendations of what would be required to finish the work on the Project. Gulbin testified that he visited the Project on April 29, May 12 and May 25, 2010, in addition to dates later in the year, to provide Con Ed with access to the Property. Gulbin testified that, at the time of his visits, a temporary construction fence had been placed around the Property, a padlock with chains was placed on the main entrance, and he never saw anyone at the Property and did not witness any work or evidence of work being performed on the Project between March 26, 2010 and September 2, 2010. Gulbin indicated that he "walked the building every single time that [he] was there, top to bottom…and [he] would have noted any changes whatsoever…to Garrison Investment Group." Stellar 8 also refers to deposition testimony from Michael Muroff ("Muroff"), the Project architect, who indicated that no construction activity took place on the Project between March of 2010 and March of 2011 and that the Building Department permits on the Project had lapsed at that time. A printout from the New York City Department of Buildings, provided by Stellar 8 in support of the motion, confirms that the last building
permit issued to Kompel on the Project expired on June 28, 2010.
In opposition to the motion, plaintiff argues that Builders' employee, Simcha Helfgot ("Helfgot"),5 "testified at his deposition that he performed labor at the jobsite within eight months before the filing of the lien, and that his duty and role was to ensure that the premises were safe. Pursuant to the Contract between Builders and Kent, Builders were obligated to ensure that the site was safe." Plaintiff cites to case law, including Henry & John Associates v. Demilo Constr. Corp., 137 Misc 2d 354 [Sup Ct, Queens County 1987], Carl A. Morse, Inc. v. Rentar Indus. Dev. Corp., 85 Misc 2d 304 [Sup Ct, Queens County 1976], Goldberger-Raabin, Inc. v. 74 Second Ave. Corp., 252 NY 336 , and Stryker v. Cassidy, 76 NY 50 , in support of its position that supervision of construction work may form the basis of a lien. Accordingly, plaintiff argues that there are issues of fact that require the denial of Stellar 8's summary judgment motion.6 Plaintiff does not otherwise contest Stellar 8's contentions that no other work was conducted on the Project after March 2010, or that Builders did not charge the owner for any work conducted after March 2010, or dispute that no work permits were active on the Project after June 28, 2010.
Stellar 8 argues that the only proof plaintiff has proffered to establish that Helfgot conducted any work on the Project after March 2010 is unsubstantiated self-serving testimony in depositions of Kompel and Helfgot. Kompel testified at a deposition that Helfgot was Builders' representative at the Property after March 26, 2010, and that he hoped that Helfgot went to the Property every day and believed that to be the case since Helfgot would call Kompel and say he was at the Property. At Helfgot's deposition conducted during discovery in this matter, Helfgot testified that he was a "construction supervisor" for Builders and that his duties were to "[b]ascially coordinate between the subcontractors to make sure everything goes smoothly on the job, and if there's anything that I see that needs attention, to address it
to the right people." Helfgot testified that he went to the Property every day between April and November 2010 and spent the full day there. Helfgot testified that the subcontractors' work at the Project stopped at the end of April of 2010 and he could not recall doing anything at the site other than walking around and looking at the Property. Helfgot further testified that he did not prepare any daily records of what he observed at the Project and, other than his memory, there is nothing in writing that would detail what he did at the Property. Stellar 8 argues that plaintiff has not provided any documentation establishing that Builders supplied labor or materials to the Project after June 1, 2010 and, even if viewed in the light most favorable to the plaintiff, and assuming the truth of Kompel and Helfgot's deposition testimony, Helfgot's presence at the Property was insufficient to establish that the Lien was filed timely pursuant to Lien Law §10(1).
Pursuant to Lien Law §10(1), the notice of mechanic's lien must be filed "within eight months after the completion of the contract, or the final performance of the work, or the final furnishing of the materials, dating from the last item of work performed or materials furnished." Pursuant to Lien Law §3, a contractor "who performs labor or furnishes materials for the improvement of real property" may have a lien for the value or agreed price of labor or materials upon the real property improved. As required by Lien Law §9(6), the Lien identified "the time when the last items of material were furnished or labor performed was November 2, 2010." Stellar 8 has established prima facie, that Builders did not perform any construction work for the improvement of the Property after April of 2010 and it is uncontested that Builders did not charge the owner of the Property for work performed for the improvement of the Property after that time. Accordingly, as Stellar 8 has made its prima facie showing of entitlement to summary judgment pursuant to Lien Law §10(1), the burden shifts to the plaintiff to demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action (see Vermette v. Kenworth Truck Co., 68 NY2d 714, 717 ; CPLR 3212[b]). The only evidence plaintiff has submitted in support of its claim that Builders completed work on the Project after April of 2010 was Kompler and Helfgot's testimony that Helfgot walked around and looked at the Project between April and November of 2010. Accordingly, the court must address whether the work allegedly performed by Helfgot raises a genuine issue of fact as to whether the Lien was timely, thus requiring a trial.
Although supervision has long been recognized as work which may form the basis of a lien, in those circumstances where courts have permitted lien claims to survive dismissal, the alleged supervision has been for construction work that improved property and involved disputed issues of fact as to whether the purported supervision improved the property (see Stryker, 76 NY at 53, holding, "an architect who makes the plans and supervises the erection of a building is within the words and reason of the law"; Henry & John, 137 Misc 2d at 356, holding, "the notice of lien filed by the respondent in this case was sufficient to apprise the owner that the management and supervision was of work at the construction site, which was necessary in order to obtain the new building permits and for which a lien may attach"; Carl A. Morse, 85 Misc 2d at 308-309, holding, "[t]he question then is whether the work done by plaintiff is a service in improvement of the real property within the meaning of the Lien Law. The basis of the claimed liens is the general supervision of the project. Such was clearly one of plaintiff's duties as called for in the contract with movants."; Goldberger-Raabin, 252 NY at 343, holding that the lienor was "entitled to a lien for the reasonable value of his services as superintending engineer" including "the reasonable value of his services in superintending the construction of the new building and the tearing down of the old building, providing the old building was torn down as part of the work necessary for construction and for the improvement of the real property.").
However, this case is distinguishable from this precedent due to one aspect of this case that is relatively unique in a Lien Law foreclosure action: there are no issues of fact as to whether any construction for the improvement of the Property occurred in the eight months prior to the filing of the Lien. After extensive discovery between the parties, including the exchange of thousands of pages of discovery documents and numerous depositions of individuals that were involved in the Project, the only allegation of work performed by Builders after April of 2010 was Helfgot's "supervision." While supervision of construction work may be the basis of a lien, where the property is not being improved, there is nothing to supervise and thus no basis for a lien (see generally Stryker, 76 NY at 53; Henry & John, 137 Misc 2d at 356; Carl A. Morse, 85 Misc 2d at 308-309; Goldberger-Raabin, 252 NY at 342-343). In this case, the purported supervisor, Helfgot, admitted that no construction took place at the Project after April of 2010 and he could not remember doing anything at the Project other than walking
the site and looking around.
Courts have found supervision to be the basis of a lien only where the lienor supervised actual construction that improved property (see Rinn v. Electric Power Co., 3 AD 305, 307 [2d Dept 1896]). In affirming a lower court decision in which it was held that "it is the part the architect takes during the construction that draws his services within the lien law", the Second Department Appellate Court distinguished Stryker noting in that case, "there was present the element of actual supervision." In Goldberger-Raabin (252 NY at 342), the court held that the lienor, "is not entitled to a lien for his services in aiding or assisting in procuring subcontracts or subcontractors. While this was part of his contract, it is not part of the work of improving property for which the law provides a lien." In Robert Plan Corp. v. Greiner-Maltz Co. (229 AD2d 122, 125 [2d Dept 1997]), the court held, "[s]ince the services were not 'for the improvement of real property', [the lienor] does not have a valid lien, irrespective of whether [the owner] consented to the performance of the services (Lien Law §3)." Further, courts have held that temporary work, such as security services and the installation of temporary fencing, is not subject to a mechanic's lien pursuant to Lien Law §3 even where the temporary work was part of a larger project (see 270 Greenwich St. Assoc. LLC v. Patrol & Guard Enters., Inc., 2010 NY Slip Op 31667(U), *6 [Sup Ct, New York County 2010], holding that, "security guard services do not leave a lasting imprint on the character of the realty. They do not impact on the realty or structure directly, but, rather, are auxiliary, and one step removed from the actual demolition or construction."; Rockledge Scaffold Corp. v. Tessler Dev. LLC, 2013 NY Slip Op 32604(U), * 8 [Sup Ct, New York County 2013], holding that while the installation of a "plywood fence may have protected the Property, it is no more a permanent improvement than the security guard services [that were the subject of the 270 Greenwich St. matter].").
Further, Helfgot's purported presence at the Project, five days a week for seven months on behalf of Builders, was also voluntary, as Kompel testified that Builders never requested payment for Helfgot's purported work. Accordingly, Builder's voluntary security presence, even if proved to be true at trial, could not be used to extend the Lien filing date (see Locke v. Goode, 10 Misc 2d 65, 67 [Sup Ct, Suffolk County 1957]; Ashby Constr. Corp. v. Pentecostal Faith Church, 239 AD2d 283, 284-285 [1st Dept
1997]; 270 Greenwich St. Assoc. LLC, 2010 NY Slip Op 31667(U) at *6; Robert Plan, 229 AD2d at 125).7 As the plaintiff has failed to articulate a genuine issue of fact as to whether Builders performed any work for the improvement of the Property in the eight months prior to the filing of the Lien, the defendants' motion to dismiss the complaint is granted and the Lien is vacated (see Vermette, 68 NY2d at 717; Rinn, 3 AD at 307; Robert Plan, 229 AD2d at 125; 270 Greenwich St., 2010 NY Slip Op 31667(U) at *6; Goldberger-Raabin, 252 NY at 342).
As a result of the vacature of the Lien, defendants' counter claims for wilful exaggeration must also be dismissed as a claim for wilful exaggeration is precluded if a lien is found to be invalid based upon any reason other than the wilful exaggeration (Atlas Refrigeration Aid Conditioning, Inc. v. Lopinto, 33 AD3d 639 [2d Dept 2006]).
Accordingly, defendants' motion for summary judgment is granted and the complaint is dismissed. Defendants' counterclaims are dismissed.
This constitutes the decision and order of the court.
1. Builders filed a second mechanic's lien on April 29, 2011 that is identical to the Lien in all material respects.
2. Counsel for Stellar 8 also represents Stellar 8's surety, defendant U.S. Specialty Insurance Company. Accordingly, all references to Stellar 8's motion also includes reference to U.S. Specialty having joined in making the motion.
3. On April 3, 2013, this court extended the Note of Issue date to May 10, 2013 and noted, "No further extensions will be granted." On the day before the Note of Issue date, May 9, 2013, plaintiff wrote to this court indicating that there was a discovery dispute with respect to an issue of "attorneyclient privilege." The plaintiff did not timely file the Note of Issue, did not make a motion with respect to the purported discovery dispute, and did not raise the discovery issue in its opposition papers or at oral argument on the present motion. Plaintiff has not made any further application to this court with respect to any purported outstanding discovery and, in fact, sought summary judgment itself in its opposition papers. Accordingly, as both parties have sought summary judgment after the Note of Issue date expired, discovery is deemed complete.
4. No explanation is given as to the relationship between "Garrison Investment Group" and Garrison. However, according to the November 3, 2010 "Settlement Agreement", a letter from Kompel dated December 8, 2010, and Gulbin's deposition testimony, that were submitted in support and opposition to the motion, it appears that Garrison Investment Group is essentially the same party as, or controlled by, Garrison and its purpose was to determine how to proceed with the Project after Garrison Commercial Funding IV REO LLC acquired the original loan documents for the Project on April 3, 2010. Similarly, it appears that Garrison Commercial Funding IV REO LLC is essentially the same party as, or controlled by, Garrison. For the purposes of this decision, however, the corporate relationships between these various entities are irrelevant.
5. According to Stellar 8's motion papers and his own deposition transcript, Helfgot is spelled with two t's. According to Kompel's deposition transcript and plaintiff's initial motion papers, Helfgot is spelled with one t.
6. Plaintiff also argues that, "since it is un-rebutted that Mr. Helfgot was at the site conducting labor within eight months before the filing of the lien, and because said labor is lienable under New York law, judgment should enter on behalf of the plaintiff." Plaintiff has not cross-moved for summary judgment and, in any event, plaintiff has not demonstrated prima facie evidence of its claims. Accordingly, plaintiff's request for judgment in its favor is denied.
7. Plaintiff's citation to two matters, for the first time at oral argument, in support of the proposition that "stand-by" time work is subject to a lien is unavailing in this matter. In L. B. Foster Co. v. Terry Contracting, Inc., 34 AD2d 638, 639 [1st Dept 1970], unlike the present case, the court found that the charged "work was done and led to the ultimate improvement of the property." In Bryan's Quality Plus, LLC v. Dorime, 80 AD3d 639, 640 [2d Dept 2011], the Second Department held that the Supreme Court improperly discharged a notice of lien in a pre-answer motion as the lien "included charges by the plaintiff subcontractor for standby time [and] such charges may be the subject of a lien." It is noted that this court did deny a pre-answer motion in this matter on the basis of plaintiff's claims of supervision which, as discussed supra, may be the subject of a lien. However, one person present at an inactive construction site for approximately seven months, who admittedly does not recall anything other than walking to the site and looking around, and whose purported work was not charged to the owner, is distinguishable from the facts in L. B. Foster and Bryan's Quality Plus.