Mechanic's Lien Unenforceable Because it Was Not Timely Filed

On January 28, 2019, Justice Cohen of the New York County Commercial Division issued a decision in Manhattan Mech. Contrs., Inc. v. Nissan N. Am., Inc., 2019 NY Slip Op. 30223(U), holding that a mechanic's lien was unenforceable because it was not timely filed, explaining:

A mechanic's lien foreclosure action cannot be maintained when the lien is invalid. To be timely, a notice of lien on a private commercial project such as the one at issue here must be filed within eight months of the completion of the contract, or the final performance of work or furnishing of materials under the contract. A lien that has not been filed within this time limit must be cancelled and discharged pursuant to Lien Law§ 19(6). Moreover, the work referenced in the lien must be performed under the contract. Thus, for example, warranty or repair work, or new work performed outside the original contract, does not extend the time to file a lien with respect to the original contract..

In this case, it is undisputed and supported by documentary evidence that general contractor Magin (which was represented by the same counsel representing MMC here) filed a lien against Georgetown in which it indicated that work on the project ceased as of April 13, 2017. Notwithstanding that fact, MMC asserts in its lien that its work as a subcontractor on the same project continued until July 18, 2017, in the form of certain unspecified work on a steam pipe.

MMC filed its lien on January 31, 2018. Accordingly, the lien is timely if MMC's work under the contract ended on July 18, 2017, but untimely if it ended in April 13, 2017 when the general contractor terminated work on the project.

The Court need not resolve any factual disputes as to what work MMC performed on the premises after Magin terminated work on the project as a whole, and whether Georgetown and/or Nissan approved or were aware of such work. The salient point is that any work undertaken by MMC after termination of the project by Magin (the only entity with which MMC is in contractual privity) cannot have been pursuant to its subcontract, which by definition is subject to the scope of the general contract. In Locke v. Goode, 10 Misc.2d 65 (N.Y. Sup. Ct. Suffolk Cnty. 1957), the Court concluded that work by a subcontractor undertaken after abandonment of the main project by the general contractor is deemed to have been purely voluntary, and thus cannot be considered in determining the timeliness of the lien. This Court would phrase it somewhat differently. Any work done after the conclusion of the general contract could, depending on the facts, be subject to compensation - and a separate lien - as a distinct project by the lienor in its own right (i.e., not as Magin's subcontractor under the original project). But MMC cannot bootstrap that follow-on work to extend the time period for filing a lien in connection with the original contract that was terminated by the general contractor. Because MMC's work under its subcontract necessarily was completed when the general contractor terminated the project, that is April 13, 2018, MMC's lien obtained on January 31, 2018 was not timely and is subject to being discharged.

Even assuming there could be a circumstance in which follow-on subcontract work was so substantively connected to the original project as to warrant tacking it on for purposes of extending the time for obtaining a lien, this is not such a case. The Complaint is conclusory as to the nature of the work, and the information submitted by MMC in responding to the instant motion adds little. The affidavit by Mr. Collis simply asserts without elaboration that additional work was done on a pipe several months after the end of the project. In support, MMC produces only a receipt for the purchase of batteries and miscellaneous items with no explanation how either purchase was related to the original project. In sum, MMC offers no more than conclusory assertions that are insufficient to support the dubious assertion that work done months after the general contractor terminated the project should extend the statutory deadline for obtaining a lien with respect to its earlier work as a subcontractor.

(Internal quotations and citations omitted).

We frequently litigate disputes over the sale or leasing of, or construction relating to, commercial property. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you are involved in a dispute regarding a commercial real estate transaction or construction.