Commercial Division Blog

Posted: February 14, 2022 / Written by: Jeffrey M. Eilender, Samuel L. Butt, Christopher R. Dyess, Joshua Wurtzel, Hillary S. Zilz / Category Commercial Division Justices

Party Not in Compliance with Lien Law Where Party Failed to Identify With Specificity Which Items Had Already Been Paid

On January 16, 2022, Justice Masley of the New York County Commercial Division issued a decision in Matter of FPG Maiden Lane, LLC v. Pizzarotti, LLC, 2021 NY Slip Op 30098(U), holding that a party was not in compliance with Lien Law § 38 where the party failed to distinguish between charges already paid and charges not paid, stating:

A lienor who has filed a notice of lien shall, on demand in writing, deliver to the owner or contractor making such demand a statement in writing which shall set forth the items of labor and/or material and the value thereof which make up the amount for which he claims a lien, and which shall also set forth the terms of the contract under which such items were furnished." (Lien Law § 38.) The legislative intention of the Lien Law is to provide itemization that allows the owner to check the items claimed in the lien. (819 Sixth Ave. Corp. v T. & A. Assoc., Inc., 24 AD2d 446, 446, 260 N.Y.S.2d 984 [1st Dept 1965].) The lienor must provide the description, quantity, costs, and rates for materials and labor charged. (Id.) The court may cancel and discharge a lien if the lienor fails to property itemize the charges that form the lien. (LV Const. Services LLC v Manhattan Professional Group, Inc., 149 AD3d 640, 641, 53 N.Y.S.3d 275 [1st Dept 2017].)

Respondent filed a supplemental response that itemizes all the material and labor charged for the project. (NYSCEF 34, Supplemental Response, at 4.) To reach the lien amount, respondent simply subtracted the total amount paid to date ($ 47,130,825.50) from the sum of all labor and material charges ($ 80,968,443.84), including those items that have already been paid. (Id.) Respondent's Supplemental Response consists of 45 pages with 2,146 charges listed. (Id.) Clearly much work went into the Supplemental Response. Indeed, respondent indicates that it engaged an expert to decipher its own records from which respondents were unable to determine material, labor, and rates. (NYSCEF 48, Tr at 7:12-23.) While the detail is appreciated, respondent does not distinguish between the charges already paid and which charges were not paid. The lien cannot be for amounts already paid, but the Owner has no way to check the math. The spirit of Lien Law § 38 is to give the owner something that can be checked. (See, 819 Sixth Ave. Corp.) Here, it is impossible for petitioner to decipher which charges form the lien. Respondent must comply with the Lien Law by indicating which items have not already been paid. If respondent does not submit new documentation that enables the owner to clearly identify the charges that actually sum to the amount of the lien, the lien will be discharged and canceled. (See, Matter of Burdick Assoc. Owners Corp., 131 AD2d 672, 516 N.Y.S.2d 750 [2d Dept 1987].) This is not a difference of opinion about methodology; it is about compliance with the Lien Law.

The attorneys at Schlam Stone & Dolan frequently litigate issues related to enforcement of New York’s Lien Laws.  Contact our attorneys at commercialdivisionblog@schlamstone.com if you or a client have questions regarding the enforcement New York’s Lien Law.

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