Be Careful What You Lien For or You May Not Get It

Mechanic’s liens are a way for architects and engineers to protect themselves for work that they have performed and not yet been paid for. But what work can architects and engineers actually claim in a mechanic’s lien? When filing a lien in New York, the property owner against which the lien was filed has the right to ask for an Itemized Statement, outlining all the items, materials, and labor that are being claimed within the lien. (Lien Law § 38). Your description of the work performed or services provided can possibly form the basis for the lien to be disputed?

This type of dispute arose in a recent decision (1/6/16) in the case of Maverick Construction Services LLC v. 868 Broadway Corp.. The case began with an agreement between Defendants, Douglas Dey and 868 Broadway Corp., and Third-Party Defendant, Walter Sedovic Architects (WSA), whereby WSA agreed to provide certain architectural services for renovations and improvements to the premises at 868 Broadway, NY, NY. On July 7, 2011, WSA filed a Notice of Mechanic’s lien (the Lien) claiming that they were still owed $122,621.83 for services performed. On or about December 1, 2011, WSA assigned their rights, title, and interest in their claim against the Defendants, as well as the lien, to the Plaintiff, Maverick Construction Services LLC.

On August 27, 2013, in response to a Lien Law § 38 Demand, Maverick served an Itemized Statement setting forth the labor and materials for which WSA claimed a lien. On 1/24/14, per Lien Law§19(4) the mechanic’s lien was discharged by substitution of bond in the amount of $134,884, representing 110% of the amount claimed.  Upon Plaintiff’s filing of a motion per Lien Law §19(4) and CPLR §2508 for an order directing Defendants to post further security, the Defendants filed a cross-motion for summary judgment and argued that the Lien was defective and should have been cancelled and vacated pursuant to Lien Law § 19. Specifically, the Defendants argued that the work itemized by WSA and the Plaintiff, in its Itemized Statement, consisted almost entirely of generic charges for “construction administration” work, which does not qualify as “architectural work.” In order for the charges to be a valid basis for a mechanic’s lien filed by the architect, the Defendants argued that the work needed to specifically include supervision, management and control of the construction project. In opposition to the Defendants’ claims, the Plaintiff argued that the Lien is subject to a liberal construction, and that the validity of specific charges in the itemized statement are issues for trial.

The court ruled that the Lien met all the statutory requirements of Lien Law § 9; therefore the Lien was valid on its face. The court also concluded that because the Lien was valid on its face, the validity of specific “architectural service” charges under the Lien were to be determined at trial. Therefore, Defendants’ motion for summary judgment to dismiss the lien was denied.

Although the architect in Maverick dodged the dismissal of its lien, the case serves to warn against filing a lien for services which do not fall under the Lien Law, and further demonstrates the importance of clearly itemizing the work that was performed and the services provided to ensure that it falls within the confines of the Lien Law.  In other matters, the courts have looked at statements provided by parties in support of liens. For example in Sperry v. Miller a statement furnished by a lienor which did not specify all items of skilled and unskilled labor furnished by the lienor and the various kinds of materials furnished for improvement failed to  comply with the requirements of Lien Law § 38. 5 N.Y.S.2d 249, 249-50 819 (App. Div. 1938). Additionally, itemized statements of the lienor consisting of copies of invoices, which the lienor asserted included all items of materials furnished, and lump sum statement of money representing labor furnished was also insufficient for the courts. Application of Seid, 219 N.Y.S.2d 962, 963 (Sup. Ct. 1961).

In order to protect your lien rights, make sure the services provided are allowable under the Lien Law and be very specific as to the services performed. Organization and proper documentation are the key.   

If you would like more information regarding this topic please contact Paul G. Ryan at pryan@wbgllp.com or call (914) 607-6450