Opinion
64031/16
03-10-2017
Special Breaks, LLC, Plaintiff, v. 201 Murray Avenue, LLC, Defendant.
Steinvyrzek & Levy Law Group 34 S. Broadway White Plains, NY 10601 Law Office of Matthew T. Worner, Esq. 470 Mamaroneck Avenue White Plains, NY 10605
Steinvyrzek & Levy Law Group 34 S. Broadway White Plains, NY 10601 Law Office of Matthew T. Worner, Esq. 470 Mamaroneck Avenue White Plains, NY 10605 David F. Everett, J.
The following papers were read on the motion: Notice of Motion/Affirmation in Supp/Affidavit in Supp/Exhibits A-E/ Memorandum of Law Aff in Opp/Exhibits 1-6/Memorandum of Law Reply Affirmation/Reply Affidavit
Defendant 201 Murray Avenue, LLC (201 Murray) moves for an order, pursuant to CPLR 3211, dismissing the entire action on the basis that plaintiff Special Breaks, LLC (SB) lacks standing to sue in New York, because it is an out-of-state entity, not authorized to do business in New York State. Alternatively, 201 Murray asserts that the mechanic's lien filed by SB is defective and that the lien, together with the above-captioned cause of action, should be dismissed. SB opposes both aspects of the motion. Upon the forgoing papers, the motion is denied to the limited extent set forth below, and is otherwise granted.
The following facts are taken from the pleadings, motion papers, affidavits, documentary evidence and the record, and are undisputed unless otherwise indicated.
Plaintiff, a Connecticut limited liability company with a principal place of business in Southington, Connecticut, commenced the instant action, by filing a summons and complaint in the Office of the Westchester County Clerk on September 29, 2016, to recover $75,554.22, plus interest, costs, disbursements and attorneys' fees, stemming from certain work it performed at real property owned by 201 Murray and located at 201 Murray Avenue, Larchmont, New York (Property). The complaint sounds in breach of contract, unjust enrichment, account stated and foreclosure on a mechanic's lien. In response to the summons and complaint, 201 Murray served the instant pre-answer dismissal motion. The underlying facts, as relevant to the motion, are as follows.
201 Murray, a New York limited liability company with an official business address at 68 Sarles Lane, Pleasantville, New York (Pleasantville address), wanted to have certain rock removal work done at the Property, so that it would be able to construct a house with an expanded basement. According to the complaint, when the hydraulic hammers used by another subcontractor proved inadequate to break the rock, 201 Murray entered into discussions with SB, which proposed a different method for breaking up the rock. By written contract dated August 14, 2015, 201 Murray hired SB to do the work. Pursuant to the contract SB agreed to provide the necessary personnel, materials, and equipment, and to start the work as of August 17, 2015. Over the course of several weeks, SB performed work and invoiced 201 Murray on a weekly basis by sending invoices to 201 Murray's managing member, Cosmo Marfione (Marfione), at 118 North Bedford Road, Mount Kisco, New York (Mt. Kisco address).
When 201 Murray failed to pay the total amount invoiced, SB filed a mechanic's lien against 201 Murray in the Office of the Westchester Count Clerk the sum of $75,554.22, on October 2, 2015. According to SB, after a failed first attempt to serve a copy of the lien on 201 Murray at the Pleasantville address, it completed service by serving a copy of the lien on 201 Murray at the Mt. Kisco address on or about October 16, 2015, and by filing an affidavit of service with the Westchester County Clerk on November 3, 2015.
Addressing the issue of standing, 201 Murray argues that, under Business Corporation Law § 1312, SB is barred from maintaining this action in New York, because it is not authorized to do business within the State. 201 Murray support this assertion with a copy of a document from the State of New York Department of State certifying that it has no record of an application from SB to do business in the State of New York (notice of motion, exhibit C). In opposition, SB argues that 201 Murray is misreading Business Corporation Law §1312, as it was never intended to bar all foreign corporations from access to New York's courts, only those which are actually "doing business" within the State. To this end, SB submits the sworn affidavit of William McGloin (McGloin), the principal of SB, who confirms that SB is, and has been for the last 31 years, a Connecticut limited liability company with its sole and principal place of business at 312 Mill Street, Southington, Connecticut. McGloin denies having a New York office, a New York bank account, or a New York telephone/fax number, or owning any property within the state. McGloin explains that, since its inception, SB has worked primarily in Connecticut, stores its equipment in a warehouse in Connecticut, and that it was a different (non party) contractor working with 201 Murray that contacted SB in connection with the job at the Property. SB contends that, based on its limited activities in New York, it cannot be considered to be "doing business" within the meaning of Business Corporation Law § 1312, and it therefore, is not barred from the New York courts in its efforts to recover on a debt.
In reply, defendant submits a further affidavit in which Marfione avers that SB worked on the Property for at least 12 days, and contends that the 12 day period is sufficient for statutory "doing business" purposes.
That aspect of 201 Murray's motion that seeks a dismissal on standing grounds is denied. Business Corporation Law § 1312 (a) provides, in pertinent part, that: "[a] foreign corporation doing business in this state without authority shall not maintain any action or special proceeding in this state unless and until such corporation has been authorized to do business in this state and it has paid to the state all fees and taxes imposed." Under well settled New York case law, the question of:
"[w]hether a foreign corporation is 'doing business' within the purview of section 1312 of the Business Corporation Law so as to foreclose access to our courts depends upon the particular facts of each case with inquiry into the type of business activities being conducted. In connection with such determination it is to be recognized that, while some activities might constitute 'doing business' pursuant to CPLR 301 and so subject a foreign corporation to the jurisdiction of New York courts, such a finding would not necessarily render a corporation liable to the qualification requirements of section 1312 of the Business Corporation Law. The purpose of section 1312 of the Business Corporation Law and its predecessor statutory provisions is not to enable defendants to avoid contractual obligations but to regulate such foreign corporations which are in fact conducting business within the State so that they shall not be doing business under more advantageous terms than those allowed a corporation of this State"(Von Arx, A.G. v Breitenstein, 52 Ad2d 1049, 1049-1050 [4th Dept 1976], affd 41 NY2d 958, 960 [1977]).
Furthermore, for the Court to find that SB lacks standing, the burden rests with 201 Murray to prove that SB's business activities within the state:
"were not just casual or occasional, but so systematic and regular as to manifest continuity of activity in the jurisdiction. Absent sufficient evidence to establish that a plaintiff is doing business in this state, the presumption is that the plaintiff is doing business in its State of incorporation and not in New York"(Highfill, Inc. v Bruce & Iris, Inc., 50 AD3d 742, 743-744 [2d Dept 2008] [internal quotation marks and citations omitted]).
Defendant's argument notwithstanding, this Court finds that a single 12 day job does not constitute systematic and regular activity in New York, as is required to establish "doing business" within the meaning of Business Corporation Law § 1312. 201 Murray has failed to overcome the presumption that SB is doing business in Connecticut, its state of incorporation, rather than New York, and accordingly, the aspect of defendant's motion that challenge's SB's standing to bring suit is denied.
Also denied is defendant's motion to dismiss the cause of action to foreclosure on the mechanic's lien.
Defendant challenges the validity of the mechanic's lien on the grounds that the notice of lien lacks sufficient information, and because it was not properly served.
A valid mechanic's lien requires the lienor to file a notice of lien that complies with Lien Law § 9. The notice of lien must state:
"1. The name and residence of the lienor; and if the lienor is a partnership or a corporation, the business address of such firm, or corporation, the names of partners and principal place of business, and if a foreign corporation, its principal place of business within the state.
1-a. The name and address of the lienor's attorney, if any.
2. The name of the owner of the real property against whose interest therein a lien is claimed, and the interest of the owner as far as known to the lienor.
3. The name of the person by whom the lienor was employed, or to whom he furnished or is to furnish materials; or, if the lienor is a contractor or subcontractor, the person with whom the contract was made.
4. The labor performed or materials furnished and the agreed price or value thereof, or materials actually manufactured for but not delivered to the real property and the agreed price or value thereof.
5. The amount unpaid to the lienor for such labor or materials.
6. The time when the first and last items of work were performed and materials were furnished.
7. The property subject to the lien, with a description thereof sufficient for identification; and if in a city or village, its location by street and number, if known. A failure to state the name of the true owner or contractor, or a misdescription of the true owner, shall not affect the validity of the lien. The notice must be verified by the lienor or his agent, to the effect that the statements therein contained are true to his knowledge except as to the matters therein stated to be alleged on information and belief, and that as to those matters he believes it to be true."
Here, 201 Murray asserts that, because SB is a foreign corporation, it was required, under subsection one, to list either its principal place of business within the state, or the name and address of its attorney, neither of which it did (see Matter of New Jersey Window Sales [Precision Specialist Metal & Glass, 190 Misc 2d 654 [Sup Ct, NY County 2002]). 201 Murray also asserts that the notice of lien does not comply with subsection seven, in that it lacks a verification. The third criticism is that the line does not comply with subsection four, in that it does not specify the labor, equipment and materials referenced in the notice of lien.
SB contends that none of the objections have merit, and that the motion should be denied because the mechanic's lien substantially complies with Lien Law § 9.
New York's Lien Law § 23 states that: "[a] substantial compliance with its several provisions shall be sufficient for the validity of a lien and to give jurisdiction to the courts to enforce the same," and New York case law dictates that: "substantial compliance with the provisions of Lien Law § 9 is all that is required" (Schoenborn v Kauffman, 220 AD2d 966, [3rd Dept 1995], and see Matter of Rigano v Vibar Constr., Inc., 24 NY3d 415, 419 [2014]).
An examination of the notice of mechanic's lien confirms substantial compliance with the statute. Contrary to 201 Murray's assertion, SB included sufficient information to satisfy Lien Law § 9 (4), as the notice of mechanic's lien indicates that it pertains to the labor and services it rendered at 201 Murray Avenue, Larchmont, New York, between August 17, 2015 and September 1, 2015, for which it is owed $75,504.22. Next, the lack of a verification is not fatal to the notice of lien. Instead of a verification, the notice of lien contains McGloin's notarized signature, and the notary public's statement that McGloin: "made solemn oath to the truth of the same and the amount before me." This satisfies the intent of, and demonstrates substantial compliance with, Lien Law § 9 (7).
This Court further finds that the lack of a principal place of business within New York State is not fatal to the mechanic's lien. As noted by the motion court in Brothers, Inc. v D.C.M. of New York, LLC (38 Misc 3d 1235[A], 2013 NY Slip Op 50395[U], *3 [Sup Ct, Kings County 2013] [internal citation omitted]), "when a foreign corporation lacks a principal place of business within the state, it is not required to give a fictitious address." However, after finding that it was acceptable for the foreign lienor to list its business address, the motion court concluded, as did the motion court in Matter of New Jersey Window Sales [Precision Specialist Metal & Glass] (190 Misc 2d 654 [Sup Ct, NY County 2002]), that the foreign lienor must specify an attorney upon whom service could be made within the state of New York (id.). Without reaching the merits of that decision, this Court does not find it unreasonable to require SB, a foreign corporate lienor being represented by New York counsel, to amend its notice of mechanic's lien to include the name and address of its (in-state) counsel.
The last issue is that of service. Defendant contends that the mechanic's lien is invalid, because the notice of mechanic's lien was not served upon it at its business address. To this end, 201 Murray submits Marfione's sworn affidavit attesting to the fact that, while he maintains the Mt. Kisco address for certain other entities and for certain personal matters, that the Mt. Kisco address was never used for 201 Murray, and that its business address is the Pleasantville address. 201 Murray also submits a copy of a printout from the State of New York Department of State listing the Pleasantville address as the business address, and a copy of the deed transferring title of the Property to 201 Murray, at the Pleasantville address (notice of motion, exhibits D, E).
In response, SB submits proof that: (1) service at the Pleasantville address, by certified mail, return receipt requested, was attempted and returned by the United States Post Office marked "return to sender/ unclaimed/ unable to forward"; (2) SB's next effort to serve SB, at the address provided to SB for contact and invoice purposes by 201 Murray's managing partner, Cosmo Marfione (Marfione), that being the Mt. Kisco address, was successful; and (3) the invoices were sent to, and received by, 201 Murray at the Mt. Kisco address (aff in opp, exhibits 1-3, 5, 6). There is little question that service was effected upon 201 Murray, as required under Lien Law § 11, and that jurisdiction was properly obtained.
ORDERED that the aspect of defendant's motion that seeks to dismiss the complaint is granted only to the extent that SB is granted leave to serve an amended notice of mechanic's lien to include the name and address of its instate counsel, nunc pro tunc, within 14 days of service of this order with notice of entry, and defendant's motion is otherwise denied; and it is further
ORDERED that plaintiff serve a copy of this order with notice of entry upon defendant within 20 days of entry; and it is further
ORDERED that defendant shall serve an answer to the complaint within 20 days from the date of said service; and it is further
ORDERED that counsel are directed to appear for a preliminary conference in courtroom 811, Westchester County Courthouse, 111 Dr. Martin Luther King, Jr. Blvd., White Plains, New York, on Monday, April 10, 2017, at 9:30 a.m.
This constitutes the decision and order of the Court. Dated: March 10, 2017 White Plains, New York ENTER: _______________________________ HON. DAVID F. EVERETT, A.J.S.C.