Opinion
INDEX No. 158964/2022 MOTION DATE 10/19/2022 MOTION SEQ. No. 001
02-27-2023
In the Matter of the Application of DCG NEW YORK INC., Petitioner, v. 244 E 52 OWNER LLC, Respondent
Unpublished Opinion
MOTION DECISION
DECISION + ORDER ON MOTION
HON. JUDY H. KIM, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 5, 6, 7 were read on this motion for _VERIFIED STATEMENT.
Upon the foregoing papers, petitioner's application for an order, pursuant to Lien Law §76, directing respondent 244 E 52 Owner LLC to furnish a verified statement is denied without prejudice.
In its petition, verified only by counsel, petitioner DCG New York Inc. ("DCG") alleges that
Upon information and belief, Respondent 244 E 52 Owner LLC ("244 E 52 Owner") is a domestic limited liability company ... [and] was the owner of property known and described as 244 East 52nd Street, New York, New York ... On or about September 12, 2019, 244 E 52 Owner, as owner, entered into a written contract with DCG, as construction manager (the "Contract"), pursuant to which DCG agreed to provide, inter alia, supervision, work and materials relating to support of excavation, secant wall, tangent wall, structural piles, substructure, superstructure, concrete masonry, and electrical, plumbing, and construction supervision in connection with the construction of a development at the Premises (the "Project"). The agreed price and value of the labor and materials furnished by DCG was $12,626,193.00.
DCG duly and timely commenced performance under the Contract and fully performed all of the terms and conditions under the Contract.
Upon information and belief, pursuant to the terms of the Contract, 244 E 52 Owner was obligated to pay to DCG the aggregate sum of $12,626,193.00 for the performance of its work on the Project. However, 244 E 52 Owner only paid the sum of $11,074,133.39, leaving a balance of $1,552,059.61 still due and owing to DCG for its work on the Project. Additional monies are also owed to DCG. To date, despite repeated demands, no part of the outstanding monies has been paid to DCG.
(NYSCEF Doc. No. 1 [Petition at¶¶2-6] [emphasis added]).
On or about September 28, 2022, petitioner served respondent with a Demand for Verified Statement directing respondent to provide, pursuant to Article 3-A of the Lien Law, "a verified statement setting forth the entries contained in your books and records with respect to the Lien Law Trust established by Law for the Project" (NYSCEF Doc. No. 3 [Demand for Verified Statement]). Petitioner maintains that respondent failed to provide this verified statement (NYSCEF Doc. No. 1 [Petition at ¶9]).
On October 19, 2022, petitioner commenced this special proceeding seeking an order directing respondent to comply with the Demand for Verified Statement. Petitioner also requests that, in the event a verified statement is not timely furnished, the Court issue an order declaring that respondent unlawfully diverted trust funds from the Project.
DISCUSSION
Under Article 3-A of the Lien Law, when an owner of real property receives funds in connection with a contract for the improvement of that real property-i.e., building loans, home improvement loans, real property contract sale payments, insurance proceeds from destruction of property, or consideration for assignment of rents (See Lien Law §70[5])-these funds become assets of a trust which the property owner must use to pay the expenses and claims of any contractor, architect, engineer, surveyor, subcontractor, laborer, or materialman it has hired to perform the construction work (See Lien Law § §71 [1] and [2] [a]). The "primary purpose of article 3-A ... is to ensure that those who have directly expended labor and materials to improve real property or a public improvement at the direction of the owner or a general contractor receive payment for the work actually performed" (Aspro Meeh, Contr., Inc, v Fleet Bank, N.A., 1 N.Y.3d 324, 328 [2004] [internal citations and quotations omitted]). Should the owner-trustee use trust assets for any other purpose, the beneficiaries of the trust may bring an action against the ownertrustee for breaching its fiduciaiy duties as statutoiy trustee (Id. at 328-329). In anticipation of such an action, a "beneficiary of the trust holding a trust claim" may demand that the owner-trustee produce "a verified statement setting forth the entries with respect to the trust contains in such books or records" after which the owner-trustee has ten days to produce such a verified statement (Lien Law §76[ 1 ], [4]). If the owner-trustee fails to comply, the beneficiary may move the court for an order directing compliance with the demand, and "[s]uch application ... may be determined summarily upon affidavits of the parties" (Lien Law §76[5] [emphasis added]).
On the record before the Court, petitioner has not demonstrated that it is a trust beneficiary entitled to invoke the provisions of a Lien Law §76. Petitioner has not submitted proof that respondent is obligated to petitioner, either by contract or mechanic's lien (See Innovative Drywall, Inc, v Crown Plastering Corp., 224 A.D.2d 664 [2d Dept 1996] Iv to appeal denied 88 N.Y.2d 1016 [1996]; see also Matter of Abjen Properties, L.P, v Ciystal Run Sand &Gravel, Inc., 168 A.D.2d 783, 784 [3d Dept 1990] [without a contract in the record, court could not "say that petitioner is obligated to respondent contractually"]). Petitioner fails to include an affidavit from the petitioner attesting to its relationship with respondent, as required by Lien Law §76(5) (See Isadore Rosen &Sons, Inc, v Conforti &Eisele, Inc., 40 A.D.2d 794, 794 [1st Dept 1972]) but instead relies solely upon its petition. However, as this petition is verified only by counsel it is of no probative value (See e.g., Vance v Parkside Const. Builders Corp., 2021 NY Slip Op 32441 [U], 4 [Sup Ct, NY County 2021] [petition verified only by counsel insufficient to establish petitioner's entitlement to funds forfeited to New York State Insurance Fund by parties that allegedly owed petitioners money for ready-mix concrete supplied in connection with certain construction projects]).
Accordingly, it is
ORDERED that petitioner's application is denied without prejudice. This constitutes the decision and order of the Court.