Articles Posted in Lien Law

When a subcontractor files a mechanic’s lien against a property, pursuant to Lien Law Section 19(6), the owner or any other party in interest (i.e., a general contractor), may apply for an order summarily discharging of record the alleged lien. In conjunction with the Lien Law, CPLR 402 states that a petition must comply with the requirements of a complaint. Typically, owners or general contractors attempt to discharge a subcontractor’s mechanic’s lien by commencing a special proceeding and filing a petition to discharge the lien with the court in the county in which the lien was filed. But what if the party seeking to discharge the mechanic’s lien files a complaint instead of a petition?

The Supreme Court of Kings County recently found, in G-Builders/F-Int. LLC v. Reliable Plumbing NYC Corp., 79 Misc. 3d 1242(A) (Sup. Ct. Kings Co. 2023) that the procedural requirements to discharge a mechanic’s lien, pursuant to Lien Law Section 19 and CPLR Section 402, are met even if a party brings the action in the form of a complaint rather than a petition.

In G-Builders, a subcontractor and general contractor entered into an agreement in which the subcontractor was to perform plumbing and sprinkler work for a project. After being paid for a portion of its work, the subcontractor abandoned the project and later filed a notice of mechanic’s lien against the property. The general contractor filed a bond to satisfy the lien and subsequently commenced a proceeding by the filing of a summons and complaint against the lienor-subcontractor. The subcontractor argued that the matter be dismissed because the general contractor failed to bring a special proceeding in accordance with CPLR 402 because it did not file a verified petition to discharge the lien.

A recent decision handed down by the Suffolk County Supreme Court (Hon. Sanford Neil Berland, J.) in the matter of Sweeney v. Waitz and Artisan Builders of the North Fork, Inc. (66 Misc.3d 384) reminds us of the rights and risks that homeowners and home improvement contractors must confront when the home improvement contractor is doing business in the corporate form.

Many are familiar with the principle that an individual who incorporates a business generally has no personal liability for the obligations of the corporation.  Incorporation creates a legal entity which is distinct from the individual incorporator.  When transacting business, the individual acts in the capacity as an agent for the corporation.  So long as the homeowner is made aware that the individual is acting as an agent on behalf of the corporate entity and the individual has not specifically agreed to personally assume any obligations, the individual cannot be held liable for the obligations of the company.

In Sweeney, the homeowner filed an action against the corporate defendant and its individual/principal in connection with a home improvement contract for the renovation of a personal residence.  The individual defendant made a motion for summary judgment asking the Court to dismiss the claims which were asserted personally against the individual based on the principle that an individual acting as an agent for a disclosed principal generally has no personal liability.  The individual defendant established that he always disclosed that he was acting as an agent for the corporate principal and that he never assumed any personal liability.

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