Matter of Paik Constr., Inc. v Dienst

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Matter of Paik Constr., Inc. v Dienst 2013 NY Slip Op 30600(U) March 27, 2013 Supreme Court, New York County Docket Number: 100319/13 Judge: Joan B. Lobis Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. SCANNED ON 312812013 [* 1] SUPREME COURT OF+THESTATE OF NEW YORK PRESENT: - NEW YORK COUNTY COB15 PART 6 Justice INDEX NO. MOTION DATE -vMOTION SEQ. NO. MOTION CAL. NO. r The following papers, numbered 1 to ICs I were read on this motion@for camp5 L PAPERSNUMBERED Notice of Motion/ Order to Show Cau&Q--Answering Affidavits Affidavits - Exhibits ... - Exhibits Replying Affidavits Cross-Motion: c Yes ] 0 No Upon the foregoing papers, it is ordered that this motion FINAL DISPOSITION Check one: Check if appropriate: 17NON-FINAL DISPOSITION DO NOT POST c SUBMIT ORDER/ JUDG, 0 REFERENCE 0 SETTLE ORDER/ JUDG. [* 2] h i I Y , i I ! iI . Index No. 100319113 Petitioner, For an Order directing Production of a Verified Statement of the Lien Law Trust Bboks and Records Pursuant to a Lien Law 4 76 Demand Served Upon Decision. Orderrand nt . JILL C. DIENST and DANIEL W.DIENST, 1 Paik Construction, Inc., ("Contractor") brings this petition pursuant to Section 76 of i the Lien Law,by order to show cause, for a verified statement of entries made in a trust account. ! i I Respondents Jill and Daniel Dienst ("Owners") m s maintain a trust account by virtue of ownership ut of a property located at 397 West 12th Street, Unit 4, New York,New York ("Property"). Paik is a construction company that was hired by the Owners to do certain renovations to the Property. Y 1 Respondents have cross-moved to dismiss the petition. For the reasons stated below, the relief requested in the order to show cause and petition is granted, and the cross-motion is denied. i I ! j According to the documents annexed to Respondents' papers, a standard form AIA I agreement was entered into be4een the Contractor &d the Owners on April 19, 2011, for I i I renovatioris of the fifth and sixth flbors of the Property. The agreement includes a clause requiring I 1 ! I I mediation of any dispute arising out of the contract. The relationship between the parties has broken C I I i j I I I down, The Contractor asserts that it is owed in excess of $425,000.00; while the Owners claim that the Contractor breached the contract. A mediation is currently scheduled before the American [* 3] 1 . . I ! I Arbitration Association. 1 I 1 Under the Lien Law, owner of red property is required to hold all monies received an ; in connection with work done on the property from various sources, which include building loans, ! mortgages, home improvement loans, and insurance proceeds, in trust. The law imposes similar I \ ! I duties on contractors and sub_coritractors. The purpose of the trust is to ensure that funds obtained for construction projects are available to assure payments for work on those projects. Lien Law $ 7 1;Asaro Mech. Contr. v. Fleet Bank.N,A., 1 N.Y.3d 324 (2004). As provided in Section.76,the Contractor is entitled to examine the books and records of the trust or to get a verified statement setting forth the entries contained in the books and records upon demand. On December 28,20 12, i the Contractor sent a demand by certified mail for a verified statement to the Owners.A copy of the receipt of certified mailing is attached to Petitioner's reply and opposition to Respondents' crossmotion. When no response to the demand was forthcoming, the Contractor commenced this special ! proceeding by order to show cause and petition. In lieu of answering the petition, Respondents (I cross-moved pursuant to Rule 3211'1(a)(S) of the Civil Practice Law and Rules, asserting that the I i i E Court lacks personal jurisdiction, Pd pursuant to Rule'321l(a)(2) of the Civil Practice Law and Rules, asserting that the C u t lacks subject matter jurisdiction because of the failure to mediate. or They seek to vacate the demand as'anotherbasis to dismiss the petition, All of Respondents' bases to dismiss lack merit. j ! 1 The order to show cause, signed on February 14,2013, required personal service by i I ! February 18,2013. The return date was March 5,2013. Respondent Daniel W. Dienst admits to i -2- [* 4] , * receiving copies of the order to s h o cause, petition, and exhibits f o his doorman on February 17, ~ rm 2013, and copies by mail on February 20,2013. Respondents argue that service was not completed until the filing of the &davit of sehice. As of February 26,2013, the date of the cross-motion, no affidavit of service had been filed, They argue that since there was no filed affidavit, service was not complete and that the Court lacks personal jurisdiction over Respondents. That is not a correct statement of the law, Personal service w s accomplished by the delivery to a person of suitable age a n and discretion and by mailing, The:failureto timely file an affidavit of service is not jurisdictional. * - 66 A.D.3d 947 (2d Dep t 2009); C , 110 A.D.2d 751 (2d Dep t 1985). As long as service of process is made as required, personal jurisdiction is obtained. The requirement of filing an affidavit to complete service is a procedural mechanism for triggering Y responsive pleadings. The cases cited by Respondents all show defects in the mode of service. Thew defects are not present here,,: The requirement to mediate contained in the parties agreement has no impact on the Contractor s rights under Section 76 of the Lien Law, The mediation clause applies to disputes under the contract. While it is conc eivable that information about the trust account may be relevant I to the dispute between the parties, the right to that information is independent of the contract. It is not an issue that is subject to the mediation clause. Finally, the Contractor s attorney attached proof of service ofthe demand by certified mail. This satisfies the notice requirement in the statute. Respondents vacating the premises rm because of damage f o Hurricane Sandy is unfortunate. But it does not provide a legal basis to -3- [* 5] * void this proceeding. Petitioner has established that it complied with its requirement to demand relief prior to commencing a lawsuit, I ' The petition is granted. The Court directs Respondents to comply wt the demand ih for a verified statement within ten (1 0)days of service of a copy of this order wt notice of entry. ih It appears that Respondents have put forward all of their substantive arguments in defense of this petition and did not request additional time to answer the petition. If they have any additional nan- frivolous defenses to the petition, &cy may move by order to show cause for leave to answer the petition prior to the expiration of the ten-day period provided to comply with the Section 76 demand. I This constitutes theldecision and order of this Court. I I Dated: &. a?, 20 13 ENTER: JOAN I -4- LOBIS, J.S.C.

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