FUCHS v. MILLENIUM MECHANICAL SERVICES INC (2023)

The following e-filed documents, listed by NYSCEF document number (Motion 002) 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42 were read on this motion to CANCEL MECHANIC'S LIEN.

This action arises from business dealings between plaintiff, Michael J. Fuchs, and defendant, Millenium Mechanical Services Inc., for the potential replacement of an air-conditioning unit in an apartment owned by Fuchs. At the time of the initial interactions between Fuchs and Millenium, the apartment was a combined penthouse apartment (Units 6A and 7AB). Fuchs made Millenium aware, however, that he intended to split the apartment into its two component units for the purpose of selling Unit 7AB, and that the air-conditioning unit would be installed in that unit.

On May 5, 2022, Fuchs entered into a contract to sell Unit 7AB to a third party and informed Millenium of that contract. (See NYSCEF No. 20 at ¶ 13 [attorney affirmation in support of motion].) On June 28, 2022, Fuchs closed on the sale. (See NYSCEF No. 22 at 1 [deed].) The deed included a covenant, made pursuant to Lien Law § 13 (5), that Fuchs would hold the right to receive the consideration paid by the buyer “as a trust fund to be applied first for the purpose of paying the cost of the improvement,” and that he would do so “before using any part of the total of the same for any other purpose.” (Id. at 3.) The deed was recorded on July 11, 2022. (Id. at 1.)

On June 29, the day after closing, Millenium served by certified mail a mechanic's lien on Fuchs, and filed the lien with the office of the New York County Clerk on July 5, 2022. (See NYSCEF No. 20 at ¶ 17; NYSCEF No. 25 [affidavit of delivery].) The lien applied to both Unit 6A and Unit 7AB. (See NYSCEF No. 40 at 1 [notice of lien], 4 [property description].) It described Fuchs as the sole owner of the property. (See id. at 1.) Millenium did not serve a copy of the notice of lien on the purchaser of Unit 7AB.

Fuchs now moves to cancel the lien. The motion is granted.

DISCUSSION

Lien Law § 11 requires a lienor, within “thirty days after filing the notice of lien” on property, to “serve a copy of such notice upon the owner” of the property. And it provides that the “[f]ailure to file proof of such a service with the county clerk within thirty-five days after the notice of lien is filed shall terminate the notice as a lien.”

Fuchs argues that the notice of lien must be canceled for failure to comply with Lien Law § 11. This court agrees.

Given the closing of the sale of Unit 7AB before the filing of the lien against the property, Millenium was required under Lien Law § 11 to serve a copy of the notice of lien on the party that purchased the unit. But Millenium undisputedly did not do so—even though the deed of sale was recorded before the expiration of Millenium's 30-day period to effect service. That lack of service requires cancellation of the lien—a ground Millenium's opposition papers do not address. (See LV Constr. Servs. LLC v Manhattan Professional Group, Inc., 149 AD3d 640, 641 [1st Dept 2017].)

Fuchs also contends that the lien must be discharged under Lien Law §§ 9 (2) and 19 (6) because the notice of lien lists him as the sole owner of the property, notwithstanding that he had relinquished his ownership interest before Millenium filed the lien. Given the court's disposition of Fuchs's Lien Law § 11 argument, the court does not reach this contention.¹

Accordingly, it is

ORDERED that Fuchs's motion to cancel Millenium's mechanic's lien is granted; and it is further

ORDERED that Fuchs serve a copy of this order with notice of its entry on Millenium and on the office of the County Clerk; and it is further

ORDERED that upon service of notice of entry, the County Clerk, is directed to cancel the mechanic's lien filed on July 5, 2022, by Millenium Mechanical Services Inc. in the amount of $61,000 against the property known as 130 East 13th Street, PH (Units No.6A and #7AB), New York, NY 10003, block 556, lots 1010 and 1012; and the County Clerk shall enter judgment accordingly.

FOOTNOTES

1.   One might argue that under Lien Law § 13 (5), Fuchs's covenanting to maintain the sale proceeds as a trust fund to pay the cost of an improvement would make him, rather than the purchaser of Unit 7AB, responsible for clearing the lien, even though it was filed after the sale closed. (See Leonard Eng'g v Zephyr Petroleum Corp., 135 AD2d 795, 796-797 [2d Dept 1987] [holding that because the property conveyance included a Lien Law § 13 (5) covenant, the lien was not valid as against the purchasers of the property].) In that circumstance, it is conceivable that Fuchs still retained enough of an ownership interest, at least for purposes of the lien, that the notice of lien's listing him as an owner of Unit 7AB would remain consistent with Lien Law § 9 (2). But Millenium has not raised the issue of the interaction among Lien Law §§ 9 (2), 13 (5), and 19 (6). In any event, the possibility of a live dispute between Fuchs and the Unit 7AB purchaser over responsibility for the lien underscores why Millenium was required under Lien Law § 11 to serve the notice on both Fuchs and the purchaser, so that all potentially affected parties would be put on notice of the lien and could proceed accordingly.

Gerald Lebovits, J.