Fountainview at Coll. Rd., Inc. v Pearl Riv. Plumbing, Heating & Elec., Inc.

[*1] Fountainview at Coll. Rd., Inc. v Pearl Riv. Plumbing, Heating & Elec., Inc. 2006 NY Slip Op 50658(U) [11 Misc 3d 1082(A)] Decided on April 20, 2006 Supreme Court, Rockland County Weiner, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on April 20, 2006
Supreme Court, Rockland County

Fountainview at College Road, Inc., Petitioner,

against

Pearl River Plumbing, Heating & Elecric, Inc., d/b/a Bertussi's, Respondent.



9518/05



Phillips & Millman LLP

Attorneys for Respondent

Donald Tirschwell, Esq.

Attorney for Petitioner

Alfred J. Weiner, J.

Petitioner is the owner of certain real property located in Monsey, New York and has petitioned this Court to grant an order pursuant to §17 of the Lien Law discharging Respondent's mechanic's lien against its property. Petitioner contends that the lien must be discharged because of Respondent's failure to file a notice of pendency of an action to foreclose the lien within the required one year period. The lien was filed on August 6, 2004 and, according to Petitioner expired one year later.

Respondent has opposed the petition to discharge it's lien.

In it's defense, Respondent contends that on or about March 1, 2004, it entered into an agreement with a general contractor "CRM Energy Technologies, Inc./CRM International, Inc." to perform gas, electrical, plumbing and other utility-related work that benefited Petitioner. Respondent contends that it is owed $178,344 and, as a consequence, it filed the subject mechanic's lien. [*2]

It is undisputed that CRM International, Inc. subsequently filed bankruptcy pursuant to Chapter 11 of the Bankruptcy Code. Respondent contends that because CRM International, Inc. was in bankruptcy all proceedings against it were automatically stayed pursuant to 11 USC 362(a). Consequently, Respondent argues, it could neither extend the mechanic's lien prior to the expiration of one year nor file a notice of pendency. Respondent, further contends that because of the Bankruptcy Court stay, it has an extended period of time within which to continue the mechanic's lien or file a notice of pendency pursuant to (11 USC 108).

Lien Law § 17 provides, in relevant part, as follows: "No lien specified in this article shall be a lien for a longer period than one year after the notice of lien has been filed, unless within that time an action is commenced to foreclose the lien, and a notice of the pendency of such action, ..., is filed with the county clerk of the county in which the notice of lien is filed,.....; or unless an extension to such lien, ..., is filed with the county clerk of the county in which the notice of lien is filed within one year from the filing of the original notice of lien, ..."

In Matter of State of New York State v. DeFranco Ford, Inc., 202 AD2d 593, 609 N.Y.S.2d 266, 2nd Dept.,1994., (at 594) the Appellate Division stated "The clear language of 11 USC § 362 indicates that the provisions of the statute will only serve to stay proceedings against the debtor (see, Carley Capital Group v. Fireman's Fund Ins. Co., 889 F.2d 1126). An automatic stay of proceedings accorded by 11 USC § 362 may not be invoked by entities such as sureties, guarantors, co-obligors, or others with a similar legal or factual nexus to the debtor (see, Lynch v. Johns-Manville Sales Corp., 710 F.2d 1194; see also, Rosenbaum v. Dane & Murphy, 189 AD2d 760, 592 N.Y.S.2d 391)."

In Strober Bros., Inc. v. Kitano Arms Corp., (224 AD2d 351, 638 N.Y.S.2d 90, 1st Dept.,1996) the Appellate Division recognized that while a contractor may be a proper party to a lien foreclosure proceeding brought by a subcontractor, neither the Bankruptcy Code nor the CPLR compels a stay of the lien foreclosure action against the owner of the real estate when the contractor is in bankruptcy. The court determined that the owner of real estate has a legal interest that is distinct from the bankrupt contractor and, therefore, the owner of real estate cannot claim that the foreclosure of a mechanic's lien by a sub-contractor is prohibited by the bankruptcy stay 11 U.S.C. § 362.

It follows, therefore, that if the owner of real estate cannot prevent the enforcement of the mechanic's lien (Strober, id.), then the converse must also be true. The subcontractor cannot claim it is bound by the contractor's Bankruptcy Court stay in order not to foreclose the lien (State v DeFranco Ford, id.)

Notwithstanding the arguments of Respondent regarding its inability to proceed against CRM because of its bankruptcy filing, the Court finds that Respondent could have foreclosed it's mechanic's lien or lengthened its duration by simply filing an extension of such lien with the county clerk. Respondent failed to proceed in either manner. Accordingly, the petition is granted.

Submit order.

Dated:New City, New YorkE N T E R:

April 20, 2006

__________________________

ALFRED J. WEINER

Justice of the Supreme Court

APPEARANCES: