Grill and Gise Ring in the New Year with Resounding Lien Law Victory

David Grill and David Gise won a critical victory to usher in 2024 for a major New York City restaurateur from Hon. Arthur F. Engoron of the New York Supreme Court related to a complex but important dispute over the right of a lienor to file multiple mechanic’s liens when the initial lien had been dismissed with prejudice.

Following service of demand for an itemized statement of a mechanic’s lien filed by a contractor hired to build out the client’s restaurant space, Rivkin Radler brought a special proceeding to dismiss the mechanic’s lien with prejudice for failure to comply with the demand. The lienor, despite written notice of the proceeding, failed to appear or defend itself, and Justice Engoron dismissed the mechanic’s lien with prejudice. The lienor then filed a second mechanic’s lien and commenced an action to foreclose on the lien. Rivkin Radler moved to dismiss the foreclosure claim on the grounds that the dismissal with prejudice barred filing of a successive mechanic’s lien.

The lienor contended that, because the filing was within the eight-month period permitted by statute to file a lien, it had the right to do so, and the “with prejudice” language in Justice Engoron’s decision did not bar the filing. Justice Billings conditionally granted the motion to dismiss in the second proceeding, affording the lienor the opportunity to ask Justice Engoron to modify his order of dismissal to remove the “with prejudice” portion of the decision.

The lienor then filed a motion in the initial action to have the original dismissal order modified, arguing that the “with prejudice” language was a defect or irregularity in the papers that could be cured by the Court under CPLR 5019. Rivkin Radler opposed, arguing, among other things, that CPLR 5019 does not apply where a party’s rights would be affected by the modification, and that the lienor had not set forth a reasonable excuse for its prior default, nor a meritorious defense, and so could not have the order vacated or modified under CPLR 5015. Justice Engoron agreed with Rivkin Radler and denied the lienor’s motion, holding both that CPLR 5019 was not applicable to the modification of the order sought by the lienor, and that the requirements of CPLR 5015 were not met.

This decision is significant in that it clarifies that a lienor who fails to comply with a demand for an itemized statement and has its mechanic’s lien dismissed with prejudice is not entitled to file a successive mechanic’s lien, strengthening the demand for an itemized statement as a significant tool for owners faced with mechanic’s liens from contractors seeking leverage.

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