New York

A Day Late and a Dollar Short

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A comprehensive medical practice was opening up in an office building and needed extensive renovations in the space. The medical practice hired a construction company to handle the build-out of the office at a cost of over $250,000. The construction contract specified that the contractor would achieve “ substantial completion ” of the project within 3 months after work began in April 2012. Unfortunately, the project took a lot longer than anticipated (about 9 months). Finally, on January 16, 2013, the project was confirmed by the contractor as complete, and the work was approved by the county. There was even a confirming email from the contractor to the medical provider stating “ We Passed!!! ” An invoice marked “ Final Billing ” was rendered, and a Certificate of Compliance was issued by the Building Inspector on January 31, 2013.

Since the project took much longer to complete than anticipated and agreed-upon in the construction contract, the medical provider withheld final payment, claiming it suffered heavy losses including loss of business, substantial rent payments to the landlord for the unusable space and additional overhead expenses.

Mechanic’s Lien Filed

Instead of directly addressing the client’s concerns, on October 8, 2013, the contractor simply filed a “ Notice of Mechanic’s Lien ” with the County Clerk. New York’s Lien Law Section 10 provides a powerful collection tool to a home improvement or commercial contractor—the right to place a lien upon someone’s house or building:

§10(1) Notice of lien may be filed at any time during the progress of the work and the furnishing of the materials, or, within eight months after the completion of the contract, or the final performance of the work, or the final furnishing of the materials, dating from the last item of work performed or materials furnished; provided, however, that where the improvement is related to real property improved or to be improved with a single family dwelling, the notice of lien may be filed at any time during the progress of the work and the furnishing of the materials, or, within four months after the completion of the contract, or the final performance of the work, or the final furnishing of the materials, dating from the last item of work performed or materials furnished.

The “Eight Month” Rule

One of the fundamentals of the Lien Law is that its procedures are to be strictly followed by the lienor. Unlike other areas of law, in which harmless errors can be glossed over, the Lien Law requires punctilious compliance; otherwise, the lien will be invalid. This is mainly because the right to place a lien on someone’s house is such a harsh remedy.

After being directed by the landlord to remove the mechanic’s lien, the medical provider retained Richard A. Klass, Your Court Street Lawyer. The first step was to analyze the lien notice itself—and determine whether a proceeding could be brought to discharge the mechanic’s lien under Lien Law §19(6) for being “ facially invalid. ” This means that, from looking at the face of the notice of lien itself, it may be determined that the lienor does not have a valid lien.

In the lien notice, the contractor had stated that the last item of work was performed on “ February 13, 2013. ” However the court ruled that all work was completed by January 31, 2013. Thus, the October 8, 2013, lien notice was filed more than 8 months afterward (late filing). This late filing would make the mechanic’s lien invalid under the Lien Law. In Ren. Reh. Systems Co., Inc. v. Faulkner, 85 AD3d 752 [2 Dept. 2011], the court held that the failure of a mechanic’s lien to be timely filed pursuant to the Lien Law was fatal to the mechanic’s lien.

Extra Work Doesn’t Count

In response to the proceeding brought by the medical provider to discharge the mechanic’s lien, the contractor claimed that it sent a subcontractor to the premises to perform some work in March 2013; thus, its filing of the lien was timely. The medical provider challenged this claim by showing the court that the subcontractor only performed a normal service call for “ no heat. ” It was argued that the court should follow the rule in Nelson v. Schrank, 273 AD72 [2 Dept. 1947], that a mechanic’s lien is not timely filed when measured from the last date that extra work was performed when the extra work was not part of the original contract, anticipated when the original contract was made, or done in continuance of the work under the contract.

In discharging the mechanic’s lien, the court held that there was no proof that the extra work completed was part of the original contract, was anticipated when the original contract was made, or constituted work completed under the original contract. Accordingly, the court granted the petition to discharge the mechanic’s lien.

copyr. 2015 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-mail to RichKlass@courtstreetlaw.comcreate new email with any questions.
Prior results do not guarantee a similar outcome.

Credits: Photo of Richard Klass by Robert Matson, copyr. Richard A. Klass, 2011.
Marketing services by The Innovation Works, Inc. www.TheInnovationWorks.com.
Image at top: Felicitas, by Anton von Werner, 1872.

R. A. Klass
Your Court Street Lawyer

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Cause of Action for Interference with Contract

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A cause of action is properly alleged against defendants for their interference with contract when the following elements are set forth:

The Second Department held, in Miller v. Theodore-Tassy, 92 AD3d 650 [2012], that:

To prevail on a cause of action alleging tortious interference with contract, a plaintiff must establish “the existence of a valid contract between the plaintiff and a third party, defendant’s knowledge of that contract, defendant’s intentional procurement of the third-party’s breach of the contract without justification, actual breach of the contract, and damages resulting therefrom” citing Lama Holding Co. v. Smith Barney, 88 NY2d 413, 424.

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

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Statute Of Limitations For Actions Against Public Authority

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Statute Of Limitations:  A person has one year from the date a claim accrues to commence an action against a public authority such as LIRR (Public Authorities Law Section 1276(2). The complaint must contain an allegation that at least 30 days have elapsed since the authority was presented with a demand or claim and that the authority has neglected or refused to adjust or pay the claim. This “stay” of 30 days is not counted as part of the limitations period and the plaintiff therefore may serve a complaint at any time up to one year and 30 days after the claim has accrued.

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

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An attorney maintains a common law and statutory charging lien in the judgment

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Under common law, an attorney was originally only entitled to a lien upon the judgment but the scope of the charging lien was extended by statute [Judiciary Law §475] to give the attorney a lien upon the client’s cause of action as well. The lien comes into existence, without notice or filing, upon commencement of the action or proceeding. See, Matter of Heinsheimer, 241 NY 361 [1915]. In Matter of Heinsheimer, Judge Cardozo stated,

If the attorney got possession of the fund, he had a general lien. If he did not get possession, his lien was for the services that brought the fund into existence. This charging lien still exists under our statutes. It has been enlarged to the extent that it now attaches to a cause of action even before judgment. ‘From the commencement of an action or special proceeding‘ the attorney now has a lien ‘upon his client’s cause of action, claim or counterclaim, which attaches to a verdict, report, decision, judgment or final order in his client’s favor, and the proceeds thereof in whosoever hands they may come.‘ (Judiciary Law, Cons. Laws, ch. 30, sec. 475.) Except as thus changed, the charging lien is today what it was at common law.

The concept of protecting an attorney’s lien in litigation from inception through and after entry of judgment is an old one. As stated in the decision of Fischer-Hansen v. The Brooklyn Heights Railroad Company, 173 NY 492 [1903].

There is much learning in the books relating to the lien of an attorney upon a judgment for his costs as it existed before the statute, and though now virtually obsolete, it shows the fixed determination of the courts to protect attorneys against fraudulent settlements. The lien upon a judgment was not created by statute, but was ‘a device invented by the courts for the protection of attorneys against the knavery of their clients by disabling their clients from receiving the fruits of recoveries without paying for the valuable services by which the recoveries were obtained.’ Goodrich v. McDonald, 112 NY 157 [1889].

In Peri v. The New York Central and Hudson River Railroad Company, 152 NY 521 [1897], the Court of Appeals held that an attorney’s charging lien is a statutory lien “of which all the world must take notice, and any one settling with a plaintiff without the knowledge of his attorney, does so at his own risk.” In this case, that risk is borne by all of the defendants.

New York Judiciary Law Section 475 provides:

From the commencement of an action, special or other proceeding in any court or before any state, municipal or federal department, except a department of labor, or the service of an answer containing a counterclaim, or the initiation of any means of alternative dispute resolution including, but not limited to, mediation or arbitration, or the provision of services in a settlement negotiation at any stage of the dispute, the attorney who appears for a party has a lien upon his client’s cause of action, claim or counterclaim, which attaches to a verdict, report, determination, decision, award, settlement, judgment or final order in his client’s favor, and the proceeds thereof in whatever hands they may come; and the lien cannot be affected by any settlement between the parties before or after judgment, final order or determination. The court upon the petition of the client or attorney may determine and enforce the lien.

The Court of Appeals noted, in Matter of City of New York (United States of America-Coblentz), 5 NY2d 300 [1959], that the statute gives an attorney a lien on the cause of action which attaches to the judgment from the commencement of the action. In the decision, the Court stated that Section 475, in substance, declares the common law. The origin of an attorney’s lien, whether as retaining or as charging, is obscure, but in all events, irrespective of type, has been recognized and enforced by the courts from very early times (see Fourth Annual Report of N. Y. Judicial Council, 1938, p. 49; 7 C. J. S., Attorney and Client, § 210 et seq.; 5 Am. Jur., Attorneys at Law, § 208 et seq.). The underlying purpose at both common law and now, by statute, is to protect an attorney against the ‘knavery of his client’ (Matter of Rosentover v. Weiss, 247 AD 137 affirmed 272 N.Y 557; Goodrich v. McDonald, 112 NY 157) and, being created by statute, does not require the giving of any notice in order to bring it into existence (Matter of Drake v. Pierce Butler Radiator Corp., 202 Misc. 935) for it is generally regarded as an equitable assignment to the attorney of the fund procured by his efforts to the extent of the amount of his lien (Matter of Herlihy, 274 AD 342).

Other parties do not have the ability to destroy the attorney’s vested property rights in and to the Judgment. See, LMWT Realty Corp. v. Davis Agency, Inc., 85 NY2d 462 [1995] (“Manifestly, then, an attorney’s charging lien is something more than a mere claim against either property or proceeds; an attorney’s charging lien “is a vested property right created by law and not a priority of payment”).

In enforcing the charging lien, the attorney is not required to solely chase after his client for the money he is owed; he can also pursue the other defendants. In Haser v. Haser, 271 AD2d 253 [1 Dept. 2000], the court held that, under New York law, a plaintiff’s attorney may enforce her statutory charging lien against the defendant’s own assets, if he still possesses the settlement proceeds or knowingly paid them to the plaintiff so as to deprive the attorney of her compensation (citing to Kaplan v Reuss, 113 AD2d 184, 186-187, affd 68 NY2d 693; Fischer-Hansen v Brooklyn Hgts. R. R. Co., 173 NY 492, 502). The lien which attaches in the attorney’s favor cannot be impaired by a collusive settlement.

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

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Commercial tenants/Sublessors are responsible entities under the Labor Law

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Pursuant to binding Court of Appeals precedents, as well as Appellate Division, First and Second Department precedents, commercial tenants/sublessors are responsible entities for purposes of Labor Law Section 240(1).

See Glielmi v. Toys “R” Us, Inc., 62 N.Y.2d 664, 666, 476 N.Y.S.2d 283, 284, 464 N.E.2d 981, 982 (1984) (“The jury was charged that the owner trustees and the tenant were to be considered a single unit for purposes of determining liability to the injured plaintiff. There was evidence from which the jury could properly have found that both were absolutely liable under subdivision 1 of section 240 of the Labor Law”); Godoy v. Baisley Lumber Corp., 40 A.D.3d 920, 921, 837 N.Y.S.2d 682, 683- 684 (2d Dep’t 2007); Murphy v. Sawmill Construction Corp., 17 A.D.3d 422, 424, 792 N.Y.S.2d 616, 618 (2d Dep’t 2005) (“We note that the term ‘owner,’ for purposes of Labor Law §§ 240(1) and 241(6), has been construed to include not only property owners but, under certain circumstances, also those who have an interest in property, such as easement holders and lessees (see Kane v. Coundorous, 293 A.D.2d 309, 739 N.Y.S.2d 711;  Copertino v. Ward, 100 A.D.2d 565, 473 N.Y.S.2d 494).”); Bell v. Bengomo Realty, Inc., 36 A.D.3d 479, 480, 829 N.Y.S.2d 42, 44 (1st Dep’t 2007) (“Summary judgment in favor of plaintiff on the issue of liability under Labor Law Section 240 (1) should have been granted as against Bengomo Realty as the owner of the property); see Coleman v. City of New York, 91 N.Y.2d 821, 822-823, 666 N.Y.S.2d 553, 689 N.E.2d 523 [1997]; Spagnuolo v. Port Auth. of N.Y. & N.J., 8 A.D.3d 64, 778 N.Y.S.2d 23 [2004] ), and Willow Media who, as lessee, contracted for the work (see Guzman v. L.M.P. Realty Corp., 262 A.D.2d 99, 691 N.Y.S.2d 483 [1999] ).”); Meade v. Rock-McGraw, Inc., 307 A.D.2d 156, 158-159, 760 N.Y.S.2d 39, 41-42 (1st Dep’t 2003) (“After discovery, plaintiff moved for summary judgment against defendants, Rock-McGraw, Inc., the building owner, McGraw-Hill Companies, Inc., the building lessee, and Morgan Stanley & Co., Incorporated, the sublessee of the 44th floor, on his Labor Law § 240(1) claim, arguing that the ladder was not secured by another worker, that the ladder fell because the floor was slippery and the ladder lacked footings and that defendants had breached their duty to insure that the ladder was placed so as to give him proper protection. …Depending on the fact finder’s determination, plaintiff may, however, establish a section 240(1) violation for failure to provide a proper safety device.”); Kane v. Coundorous, 293 A.D.2d 309, 311, 739 N.Y.S.2d 711, 714 (1st Dep’t 2002) (“A lessee of property under construction is deemed to be an ‘owner’ for purposes of liability under Article 10 of New York’s Labor Laws (see, e.g., Glielmi v. Toys “R” Us, 62 N.Y.2d 664, 476 N.Y.S.2d 283, 464 N.E.2d 981; Bart v. Universal Pictures, 277 A.D.2d 4,5, 715 N.Y.S.2d 240; Tate v. Clancy Cullen Storage Co., 171 A.D.2d 292, 295, 575 N.Y.S.2d 832; Copertino v. Ward, 100 A.D.2d 565, 566, 473 N.Y.S.2d 494).”); Wehmeyer v. Port Authority of New York and New Jersey, 248 A.D.2d 187, 188, 669 N.Y.S.2d 578, 579 (1st Dep’t 1998).

copyr. 2014 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.comcreate new email with any questions.
Prior results do not guarantee a similar outcome.

R. A. Klass
Your Court Street Lawyer

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