Opinion
No. 1673–2012.
2013-02-5
PIETRZAK & PFAU ENGINEERING AND SURVEYING, LLC, Plaintiff, v. YAEL, LLC, Lemi, LLC, Manchester Capital, LLC, and “John Does,” et al., Defendants.
Gardiner S. Barone, Esq., Blustein, Shapiro, Rich & Barone LLP, Goshen, for Plaintiff. Jerold Probst, Esq., Lawrence, Eliot Greenberg, Esq., Rosner, Nocera & Ragone, LLP, New York, for Defendants Yael, LLC and Lemi, LLC.
Gardiner S. Barone, Esq., Blustein, Shapiro, Rich & Barone LLP, Goshen, for Plaintiff. Jerold Probst, Esq., Lawrence, Eliot Greenberg, Esq., Rosner, Nocera & Ragone, LLP, New York, for Defendants Yael, LLC and Lemi, LLC.
Hanig & Schutzman, LLP, Poughkeepsie, for Defendant Manchester Capital, LLC.
FRANK J. LaBUDA, J.
Defendants Yael, LLC and Lemi, LLC (hereinafter, “Yael & Lemi”), by motion dated October 12, 2012, and filed (receive-stamped) October 26, 2012, move for summary judgment against Plaintiff. Plaintiff cross-moves for summary judgment against Yael & Lemi, and Defendant Manchester Capital, LLC (hereinafter, “Manchester”), by motion dated November 20, 2012, and filed (receive-stamped) November 26, 2012. Manchester cross-moves for summary judgment, supported by a memorandum of law, against Plaintiff by motion dated November 20, 2012, and filed (receive-stamped) November 26, 2012. Plaintiff's cross-motion for summary judgment is also in opposition to Yael & Lemi's motion for summary judgment. Yael & Lemi filed a reply to Plaintiff's cross-motion for summary judgment, to which Plaintiff filed a sur-reply and Yael & Lemi filed a sur-reply. Plaintiff filed an affirmation in opposition to Manchester's cross-motion for summary judgment; Manchester filed a reply thereto. The attorneys for Plaintiff and Yael & Lemi additionally filed correspondence addressed to the Court in regard to their respective motions.
Yael & Lemi's motion for summary judgment (1) seeks dismissal of Plaintiff's first cause of action, foreclosure of mechanic's lien, alleging Plaintiff's filing of a mechanic's lien was improper; (2) seeks dismissal of Plaintiff's second cause of action, breach of contract, based on their interpretation of correspondence dated July 17, 2008 (hereinafter, “7/17/08 letter”), regarding the timing of payments; (3) seeks dismissal of Plaintiff's third cause of action for an account stated and reasonable value of services rendered, based on their interpretation of the 7/17/08 letter regarding the timing of payments; (4) seeks dismissal of Plaintiff's fifth cause of action, unjust enrichment, alleging Plaintiff was not entitled to payment because it failed to obtain final approval of the project;
(5) seeks dismissal of Plaintiff's second fifth cause of action,
There was no Fourth cause of action in the complaint; there appears two Third Causes of Action.
constructive fraudulent conveyance, alleging ownership of the land was legally separated from ownership of the condominium development was done years ago on the advice of counsel.
There appears to be two Fifth Causes of Action in the complaint.
Plaintiff's cross motion for summary judgment seeks summary judgment for Plaintiff on the following grounds: (1) the amount demand in the complaint on the ground Plaintiff has an account stated; (2) claim to foreclose a valid mechanic's lien; (3) Defendants Lemi & Yael breached their contract with Plaintiff and Plaintiff suffered damages; (4) Plaintiff provided valuable services for which it was not paid; (5) unjust enrichment; (6) dismissing Yael & Lemi's counterclaim of willful exaggeration; and (7) the remainder of Yale & Lemi's defenses are without merit.
Manchester's cross motion for summary judgment seeks dismissal of the complaint on the ground that Manchester's interest in the subject property is superior to that of Plaintiff because Manchester recorded its mortgage and filed a Notice of Pendency before Plaintiff filed its mechanic's lien.
FACTUAL & PROCEDURAL BACKGROUND
Plaintiff commenced this action on or about June 18, 2012, by filing a summons and complaint, and a notice of pendency. Plaintiff had previously filed a mechanic's lien on or about February 8, 2012. This action is to foreclose on the mechanic's lien and for money damages based on engineering services provided by Plaintiff to Yael & Lemi dating back to 2008. The project involved the design and construction of a residential condominium complex in Sullivan County, New York (hereinafter, the “project”).
It appears that Yael & Lemi had problems paying for the engineering services early on in the project, although they had obtained substantial financing in the form of a land loan from Manchester. Despite Plaintiff modifying the payment schedule for Yael & Lemi on several occasions, Yael & Lemi completely stopped making payments to Plaintiff in 2011. Yael & Lemi claim they stopped making payments because Plaintiff failed to meet the conditions for payment under the contract for services. Plaintiff claims it fulfilled all of its obligations, and furthermore accommodated Yael & Lemi by modifying the payment schedule. Central to the parties' dispute is the interpretation of the contract language regarding whether certain payments were due upon “conditional” or “final” approval of the project.
Manchester's mortgage in the principal amount of $4,000,000.00 was recorded with the Sullivan County Clerk's Office on or about May 14, 2008. It appears that Yael & Lemi also failed to make payments to Manchester, as Manchester instituted a foreclosure action on or about October 5, 2011. The property was sold at a foreclosure sale on December 6, 2012.
On or about May 3, 2012, Defendant Lemi, LLC and Jerold Probst (one of Yael's & Lemi's attorneys in the instant action) filed an action against Plaintiff in New York County alleging, inter alia, breach of contract and detrimental reliance (New York County Index No. 651511/2012). Plaintiffs in the New York County action then filed an amended complaint, dated May 15, 2012, in which the caption included Yael, LLC, as a named plaintiff. Plaintiff in the Sullivan County action filed an answer with affirmative defenses, dated June 12, 2012, to the amended complaint in the New York County action. A review of the pleadings indicates the New York County action is based on the exact same transactions, facts and issues raised in the case Plaintiff filed in Sullivan County one month later to foreclose on the mechanic's lien and for other monetary damages.
DISCUSSION
I. SUMMARY JUDGMENT
On a motion for summary judgment, the movant must establish by admissible proof, the right to judgment as a mater of law. Alvarez v. Prospect Hospital, 68 N.Y.2d 320 [1986]. The burden then shifts to the opponent of the motion to establish by admissible proof, the existence of genuine issues of fact. Zuckerman v. City of New York, 49 N.Y.2d 557 [1980].
It is well established that on a motion for summary judgment, the court's function is issue finding, not issue determination. Barr v. County of Albany, 49 N.Y.2d 557 [1980]. All evidence must be viewed in the light most favorable to the opponent to the motion. Crosland v. New York City Transit Auth., 68 N.Y.2d 165 [1986].
In opposing a motion for summary judgment, one must produce evidentiary proof in admissible form ... mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient. Zuckerman, supra at 562. It is incumbent upon the non-moving party to lay bare his or her proof in order to defeat summary judgment. O'Hara v. Tonner, 288 A.D.2d 513 [3rd Dept.2001]. Mere conclusory assertions, devoid of evidentiary fact, are insufficient to raise a genuine triable issue of fact on a motion for summary judgment as is reliance upon surmise, conjecture or speculation. Banco Popular North America v. Victory Taxi Management, Inc., 1 NY3d 381 [2004].
Manchester's Cross–Motion for Summary Judgment
Pursuant to the New York Lien Law, a mechanic's lien is subordinate to a prior recorded mortgage. Lien Law § 13(1); W.L. Development Corp. v. Trifort Realty, Inc., 44 N.Y.2d 489 [1978];Lamparelli Constr. Co. Inc. v. Berkley Sq. of Hamburg, Inc., 21 AD3d 1263 [4th Dept.2005]. Furthermore, a party who files and records an incumbrance subsequent to a notice of pendency is subordinate and bound by all proceedings taken in the action as if a party. CPLR § 6501; Makhoul v. 115 96th Street Holding Corp., 263 A.D.2d 470 [2nd Dept.1999].
In the instant matter, Plaintiff did not file its mechanic's lien until February 8, 2012, four years subsequent to Manchester recording its secured mortgage and four months after Manchester filed the notice of pendency and action for foreclosure. Therefore, Plaintiff's mechanic's lien was subordinate to Manchester's prior recorded mortgage and notice of pendency. W.L. Development Corp. v.. Trifort Realty, Inc., 44 N.Y.2d 489, 499. In addition, because Plaintiff filed its mechanic's lien after Manchester filed its notice of pendency, Plaintiff was bound by all proceedings taken in the foreclosure action.
The subject property was sold at a foreclosure sale on December 6, 2012. Because Plaintiff's mechanic's lien was filed after the notice of pendency, it had no rights other than if it were a party to the foreclosure action. Makhoul v. 115 96th Street Holding Corp., supra.
Therefore, Manchester's motion for summary judgment must be granted and all claims against it dismissed.
Had the property not been sold, Manchester would still be entitled to summary judgment and dismissal of this action against it, as Plaintiff's mechanic's lien was recorded four years subsequent to Manchester's mortgage on the subject property, and was therefore subordinate. W.L. Development Corp. v. Trifort Realty, Inc., supra.
Yael & Lemi's Motion for Summary Judgment
A mechanic's lien extends “to the owner's right, title and interest in the real property and improvements, existing at the time of filing of the lien....” Lien Law § 4(1). The filing of a mechanic's lien does not, in and of itself, create a contractual relationship between the parties. See, Contelmo's Sand & Gravel, Inc. v. J & J Milano, Inc., 96 A.D.2d 10190 [2nd Dept.1983]. The lien runs with the property. Id.
Yael & Lemi's motion for summary judgment to dismiss Plaintiff's first cause of action to foreclose the mechanic's lien is granted. The property was foreclosed and has been sold, thereby extinguishing Yael's & Lemi's legal title. Because Yael & Lemi no longer have legal title to the property, Plaintiff has no claim against them.
The remainder of Yael's & Lemi's motion for summary judgment is addressed below.
Plaintiff's Cross–Motion for Summary Judgment
Plaintiff's motion for summary judgment on it's first cause of action, to foreclose the mechanic's lien, is denied for the reasons set forth above regarding the mechanic's lien.
The remainder of Plaintiff's motion for summary judgment is addressed below.
II. COURT'S SUA SPONTE ISSUANCE OF A STAY—CPLR 2201
CPLR § 2201 states, “Except as otherwise prescribed by law, the court in which an action is pending may grant a stay of proceedings in a proper case, upon such terms as may be just.”
Issuance of a stay is discretionary with the trial court. Research Corp. v. Singer General Precision, Inc., 36 A.D.2d 987, 988 [3rd Dept.1971]. A court may grant a stay to provide “an unnecessary multiplicity of suits.” Trieber v. Hopson, 27 A.D.2d 151, 152 [3rd Dept.1967]. When a decision in one action “will determine all the questions in the other action ...” a stay is appropriate. Krubicki Const. Corp. v. Bucon Inc., 282 A.D.2d 796, 797 [3rd Dept.2001]. When resolution of an issue in one case resolves the dominant issue in the other case, a stay of the latter court proceeding is warranted. Research Corp. v. Singer General Precision, Inc., 36 A.D.2d at 988. A court may order a stay, sua sponte, when there is “identity of parties, claims and reliefs sought.” ' Tribeca Lending Corp. v. Crawford, 79 AD3d 1018 [2nd Dept.2010], citing, Green Tree Fin. Servicing Corp. v. Lewis, 280 A.D.2d 642 [2nd dept.2001].
Lemi, LLC, and Jerold Probst (and then Yael, LLC, according to the amended complaint provided by Yael & Lemi) filed an action in New York County Supreme Court against Plaintiff in May, 2012, regarding the alleged work deficiencies, misrepresentation of project costs, delays, failures to obtain approvals, and other issues regarding the interpretation of whether the contract itself required payments upon conditional or final approvals of the project by the appropriate town board. Shortly thereafter, in July, Plaintiff filed the within action, based on exactly the same facts and issues, in Sullivan County, to foreclose the mechanic's lien previously filed in Sullivan County in February, 2012, and for other relief due to alleged damages caused by Yael & Lemi. The core issues to be resolved in both cases are identical and include, inter alia: whether the contract required that Plaintiff obtain conditional or final approval of the project at various intervals in order to trigger Yael's & Lemi's obligation to pay Plaintiff, whether Plaintiff misrepresented or low-balled the estimated cost of the project, whether Plaintiff caused undue delays with the project, whether Yael & Lemi were unjustly enriched by receiving Plaintiff's services and then failing to pay for said services, whether Plaintiff provided the services for which the parties contracted, whether Yael & Lemi breached the contract by failing to make payments as agreed to and then allowing the property to go into foreclosure, and whether Yael & Lemi had any obligation to pay Plaintiff's fees out of the land loan from Manchester. Resolution of these issues, all raised in the New York County action, filed prior to the within action, go to the crux of the matter pending in the Sullivan County. See, Trinity Products, Inc. v. Burgess Steel LLC, 18 AD3d 318, 319 [1st Dept.2005]. It is likely that if the New York County action results in a favorable decision for Yael, Lemi and Jerold Probst, the Sullivan action will be resolved. Krubicki Const. Corp. v. Bucon Inc., supra; Research Corp. v. Singer General Precision, Inc., supra. If Yael, Lemi and Jerold Probst are unsuccessful in their New York County action, then the Sullivan action will move forward.
The two pending cases have substantially identical issues and facts. The parties are also, in substance, identical. Both actions involve Yael, LLC, Lemi, LLC, and Pietrzak & Pfau Engineering and Surveying, PLLC. Jerold Probst is named as a Plaintiff in the New York County action; he is one of the attorneys for Yael & Lemi in the Sullivan County action and integral to both actions. Manchester is longer involved in the matter. Green Tree Fin. Servicing Corp. v. Lewis, supra.
With the dismissal of the causes of action involving the mechanic's lien, the ultimate relief sought in both actions is now substantially the same: a resolution and clarification of the contractual language, determination of the conditions for payment, determination of the requirements and obligations of the parties and whether either party breached the contract, and resolution of the intent of the parties through their various correspondence regarding the project and payment schedule. Trinity Products, Inc. v. Burgess Steel LLC, 18 AD3d 318, 319. There is no indication that the New York County action was filed in bad faith or that the plaintiffs in that action do not intend to diligently pursue their claims. Id. Most important, “neither party will suffer undue detriment or gain undue advantage by having [the New York County] action decided first....” Id. While the two cases are not exactly identical, “a stay is a provident exercise of discretion [because there are] overlapping issues and common questions of law and fact and the determination of the prior [New York] action” ' that will dispose of or limit the issues involved in the Sullivan County action. Chan v. Zoullas, 34 Misc.3d 1210A [Sup.Ct. New York Co.2012].
Based on the above, it is therefore
ORDERED that Defendant Manchester's cross-motion for summary judgment is granted in its entirety; and it is further
ORDERED that Defendants Yael, LLC's and Lemi, LLC's motion for summary judgment to dismiss Plaintiff's first cause of action is granted; and it is further
ORDERED that Plaintiff's cross-motion for summary judgment on its first cause of action to foreclose the mechanic's lien is denied as moot; and it is further
ORDERED that all further proceedings in this action, except upon leave of this Court, are stayed until determination of the action brought by Lemi, LLC, Jerold Probst, and Yael, LLC, in Supreme Court, New York County, Index No. 651511/2012.
This shall constitute the Decision and Order of this Court.
Papers Considered:
Motion for Summary Judgment with Exhibits, Affirmation of Jerold Probst, Esq., dated October 12, 2012
Cross-motion for Summary Judgment, Affidavit of Gardiner S. Barone, Esq., dated November 20, 2012
Affidavit in Support of cross-motion for Summary Judgment of Vincent A. Pietrzak, dated November 20, 2012
Reply Affirmation with Exhibits, by Jerold Probst, Esq., undated
Sur-reply Affidavit of Michael R. Frascarelli, Esq., dated December 20, 2012
Sur-reply Affidavit of Gardiner S. Barone, Esq., dated December 20, 2012
Sur-reply Affirmation in Opposition to Plaintiff's Cross-motion, by Jerold Probst, Esq., dated December 27, 2012
Supplemental Affidavit from Manchester Capital, LLC, by Adrienne Odierna, Esq., dated December 3, 2012
Plaintiff's Memorandum of Law in Support of Plaintiff's Cross-motion, by Michael R. Frascarelli, Esq.
Plaintiff's Exhibits in Support of Cross-motion for Summary Judgment
Cross-motion for Summary Judgment with Exhibits, dated November 20, 2012
Affidavit in Support of Manchester's Cross-motion, by Adrienne Odierna, Esq., dated November 20, 2012
Affidavit in Support of Manchester's Cross-motion, by Robert Gottesman, dated November 16m 2012
Affirmation in Opposition to Manchester's Cross-motion, by Michael R. Frascarelli, Esq., dated November 26, 2012
Reply Affirmation, by Adrienne Odierna, Esq., dated November 28, 2012