TERRA NOVA CONSTRUCTION INC v. PHILADELPHIA INDEMNITY INSURANCE COMPANY (2020)

Plaintiff Terra Nova Construction, Inc. moves for summary judgment foreclosing on four mechanic's liens against defendants Philadelphia Indemnity Insurance Company Corp. (“Philadelphia Indemnity”) and U.S. Tech Construction Corp. (“US Tech”). In the alternative, in the event this court concludes that there is an issue of fact regarding whether plaintiff is entitled to the amount sought, plaintiff moves for summary judgment on liability.

The amended complaint alleges that plaintiff entered into a subcontract in December 2013 with US Tech and/or the other defendants, not including Philadelphia Indemnity. Plaintiff agreed to provide labor and materials in connection with asbestos removal, demolition, construction debris removal, and other construction work for four different projects. Plaintiff alleges that it fulfilled its contractual duties and that defendants refused to pay it the full amount owed. Plaintiff seeks $86,195.25 under causes of action based on breach of contract, unjust enrichment, and foreclosure of a mechanic's lien on each of the four premises.

The president of plaintiff submits an affidavit in which she states that plaintiff duly performed the work under the subcontract and invoiced US Tech without objection or rejection from US Tech.

The project manager of US Tech submits an opposition affidavit on behalf of US Tech and Philadelphia Indemnity in which he alleges that plaintiff failed to perform all of the work agreed upon and improperly performed some work, forcing US Tech to hire other companies to do the work that plaintiff had agreed to do. He alleges that, because plaintiff committed certain violations on the project site, US Tech had to retain a lead abatement company and pay a fine to New York City. The project manager further alleges that because plaintiff failed to pay payroll taxes and unemployment insurance, US Tech has become obligated for those amounts. The project manager states that US Tech paid over $185,000 to correct plaintiff's work and that the amounts owed on the taxes and insurance exceeds $600,000.

To enforce its lien, the lienor must not be guilty of breach of contract in its performance. Where the record raises triable issues as to whether the lienor breached its contract, the lienor is not entitled to summary judgment on its lien foreclosure claim or breach of contract claim (Ferro Fabricators, Inc. v. 1807—1811 Park Ave. Dev. Corp., 165 AD3d 572, 573—574 [1st Dept 2018]; see Proline Concrete of WNY, Inc. v. G.M. Crisalli & Assoc., Inc., 177 AD3d 1368, 1370 [4th Dept 2019]; L & L Excavating Corp. v. Abcon Assoc., Inc., 191 AD2d 539, 540 [2d Dept 1993] [mechanic's lien canceled where lienor breached its contractual obligation] ). While US Tech and Philadelphia Indemnity do not assert any counterclaims, they demonstrate that there exists a triable issue regarding whether plaintiff breached the subcontract and is thus not entitled to foreclose on the liens. Defendants sufficiently allege that the amount that plaintiff caused them to expend exceeds the amount that they allegedly owe plaintiff.

Summary judgment is denied. The alternative relief for a judgment of liability is also denied, as it is not clear that defendants are liable toward plaintiff.

In conclusion, it is hereby

ORDERED that plaintiff's motion for summary judgment against defendants Philadelphia Indemnity Insurance Company and U.S. Tech Construction Corp. is denied.

Robert R. Reed, J.