The Defective Mechanic's Lien

A mechanic's lien, which completely misidentified the owner of the real property, was fatally defective and thus dismissed. This was the decision in Minos Renovations v. Mersentes where the lienor was still permitted to pursue a claim for the value of services rendered.

This action arose out a home improvement contract between plaintiff Minos Renovations and defendant K. Alexis Mersentes. Defendants Mersentes and The Ritz Tower. moved to dismiss the complaint, under the CPLR, for failure to allege that Minos had a valid home improvement contractor's license. It also moved for summary judgment discharging the notice of lien and the notice of pendency, and dismissing those sections of the complaint seeking to enforce the lien, under the CPLR and lien law section 9, based on alleged jurisdictional defects in the lien.

Minos filed a cross-motion for leave to amend its verified complaint, to plead that it had a valid contractor's license, and, under section 12 of the lien, to amend the notice of lien.

Minos was a New York corporation and construction contractor with offices in Flushing, Queens. Mersentes was a resident of apartment 34E, which was in a cooperative apartment building, known as The Ritz Tower, located at 465 Park Avenue in New York City. Mersentes was a shareholder in The Ritz and a proprietary lessee of Apt. 34E. The Ritz was the owner of the residential condominium unit of The Ritz Tower.

In October 1999, Mersentes executed a written home improvement contract with Minos, under which Minos was to perform extensive renovations to Apt. 34E, over a 16-week period, at a cost of $225,000. Martin Katsamanis, Minos' president, signed the contract on its behalf, and Mersentes signed on his own behalf. Mersentes submitted an affidavit, alleging that, 11 months after the contract was signed, he barred Minos from his apartment because of its defective, substandard, and incomplete work.

On January 6, 2001, under the lien law, Minos filed a notice of lien, seeking to recover a balance of $128,800, for labor and materials allegedly expended in Apt. 34E. The notice listed defendants Jamestown 17, LP and Mersentes as the owners of the property, which was described as being "situated in the Borough of Manhattan, County of New York, City of New York, known as number 465 Park Avenue, New York, New York 10022, Unit 34E, Block - 1312 Lot - 1301."

On January 14, 2002, Minos served the complaint and the notice of pendency on Mersentes and Jamestown. The complaint contained five causes of action: the first sought to enforce the lien, the second and third alleged breach of the construction contract, while the fourth and fifth alleged unjust enrichment and conversion, respectively.

The complaint describes the disputed premises as "Block 1312, Lot 1301," and alleged that Minos provided goods and services to Jamestown and Mersentes, who were both served with the notice of lien. According to the complaint, Mersentes barred Minos from entering the property in September 2000, and had not allowed Minos to recover tools, materials, and equipment from the property. The Ritz was never served with the notice of lien.

Mersentes submitted documents from Northwoods Abstract Ltd./Chicago Title Insurance Company indicating that the New York county clerk's records described The Ritz's property as number 465 Park Avenue, New York, N.Y., Block 1312, Lot 1302. The Northwoods abstract listed defendant Jamestown as the owner of record of the commercial portion of the condominium located at 465 Park Avenue, Block 1312, Lot 1301.

Minos submitted a proposed amended verified complaint alleging that it was licensed to conduct business as a home improvement contractor, with license number 1035822, which was issued by the Department of Consumer Affairs. Minos submitted a copy of the license, which indicated that it was issued on November 8, 2000, with a start date of May 30, 2000, and an expiration date of December 31, 2002.

Minos also proffered a proposed amended notice of lien listing "The Ritz and/or Mersentes" as the owners of the disputed property. The descriptions of the property in the proposed complaint and in the proposed notice match that in the Northwoods abstract.

Mersentes and The Ritz asked the court to vacate the lien and dismiss the foreclosure action, pursuant to section 9 of the lien law, since Minos misdescribed the property subject to the lien, and misidentified Mersentes and Jamestown as the owners of the real property in the lien. The Ritz maintained that it was a legal entity, separate and distinct from Jamestown.

In addition, Mersentes and The Ritz argued that the deficiencies in the original notice of lien compelled denial of Minos' motion for leave to amend the notice. The Ritz claimed that it would be prejudiced if the court approved service of the amended notice of lien, in this action, when it never received notice, or service, of the original notice of lien.

Section 9(2) of the lien law requires that a notice of lien set forth "(t}he name of the owner of the real property against whose interest therein a lien is claimed." However, section 9(7) provides that "[a] failure to state the true owner...or a misdescription of the true owner shall not affect the validation of the lien."

Minos conceded the defects in the lien, which the defendants cited; however, Minos argued that the defects were small, and did not affect the validity of the lien under lien law section 9(7), and may be corrected under section 12-a(2) of the lien law, which states, in pertinent part that "[i]n a proper case, the court may, upon five days' notice to existing lienors, mortgagees and owner, make an order amending a notice of lien ... nunc pro tunc. However, no amendment shall be granted to the prejudice of an existing lienor, mortgagee or purchaser in good faith ..."

In addition, Minos asserted that as defendants could not claim prejudice under 12-a(2) of the lien law, as none of them were an existing lienor, mortgagee or a purchaser in good faith.

The notice of lien listed Mersentes and Jamestown as the owners of the property, which was actually owned by The Ritz. Minos did not dispute the moving defendants' contention that Jamestown and The Ritz were separate and distinct legal entities, or alleged that notice to Jamestown sufficed as notice to The Ritz,

Thus, the lien notice did not merely misdescribe the owner of the property, which is a defect not affecting the validity of the lien under lien law section 9(7), but completely misidentified the owner of the disputed property. Under these circumstances, the court said that the lien was jurisdictionally defective and void, and prejudice did not need to be shown as such a defect could not be cured by an amendment.

The notice of lien was also invalid for failing to adequately describe the property subject to the lien. Therefore, the motion to dismiss the notice of lien, to discharge the notice of pendency, and to dismiss the complaint insofar as it sought to foreclose on the lien, was granted; and the cross-motion to amend the notice of lien was denied.

Minos asserted that it could recover those amounts expended renovating apartment 34E, based on the parties' contract and on a theory of quantum meruit. Mersentes contended that the court should deny this claim, and dismiss the complaint for failure to plead that Minos had a valid contractor's license, under CPLR 3015(e) and the New York City administrative code. Mersentes also opposed Minos' bid to amend the complaint to correct this deficiency.

The court said that the administrative code of the city of New York, section 20-387-(a), provides that "[n]o person shall solicit, canvass, sell, perform or obtain a home improvement contract as a contractor or salesperson from an owner without a license therefore." Under CPLR 3015(e), a home improvement contractor has the burden of pleading that he or she is licensed. As relevant, CPLR 3015(e) provides that:

[w]here the plaintiffs cause of action against a consumer arises from the plaintiffs conduct of a business which is required by state or local law to be licensed by the department of consumer affairs of the city of New York... the complaint shall allege, as part of the cause of action, that plaintiff is duly licensed and shall contain the name and number, if any, of such license and the governmental agency which issued such license; provided, however, that where plaintiff does not have a license at the commencement of the action the plaintiff may ... amend the complaint with the name and number of an after-acquired license and name of the governmental agency which issued such license or move for leave to amend the complaint... The failure of the plaintiff to comply with this subdivision will permit the defendant to move for dismissal.

Here, the court found that the complaint did not plead that plaintiff was a duly licensed home improvement contractor. Moreover, although CPLR 30 15(e) permitted a contractor to "amend the complaint with the name and number of an after-acquired license," the court of appeals had interpreted this provision in 1990 as "only applicable where the contractor was validly licensed at the time that the work was done."

There was no dispute that Minos did not have a contractor's license when it signed the contract with Mersentes in October 1999, but that it submitted evidence that a license was issued in November 2000, which was valid from May 30, 2000 to December 2002. This time frame encompassed the period when Minos was still performing the construction contract at Mersentes' apartment.

There was case authority holding that a home improvement contractor must be licensed both at the time of contracting and when the work is done in order to recover money for work performed. But a leading case in 1990, which emphasized the need to be licensed when the work was performed, apparently rejected this earlier authority.

Moreover, since the 1990 decision, home improvement contractors have been permitted to recover in quantum meruit for work performed during the period after the contractors were licensed, even if they were not licensed at the time of contracting with the consumer.

The court recognized that Minos did not acquire the license until after the work was performed, as Minos had submitted proof that it was a licensed home improvement contractor when it was performing the renovations to apartment 34E (and also when it initiated this suit). Under the liberal requirements of the CPLR, the court held that Minos should be permitted to amend the complaint to seek to recover for the work.

Therefore, Minos' cross-motion for leave to amend the complaint was granted to the extent that Minos was permitted to amend its complaint to seek to recover in quantum meruit for the work performed during the period that Minos was a licensed home improvement contractor and was otherwise denied.

The court issued the following order:

(9) The motion of defendants K. Alexis Mersentes and The Ritz Tower was granted to the extent of discharging the notice of mechanic's lien and the notice of pendency.

(10) The clerk was directed to strike the notice of lien, dated January 5, 2002, and filed against the premises at 465 Park Avenue, unit 34E, New York, N.Y. block 1312, lot 1301.

(11) The complaint's first cause of action was severed and dismissed.

(12) The cross-motion of Minos was granted to the extent of granting Minos leave to amend the complaint, consistent with the opinion, and a revised amended complaint should be served in a timely fashion upon the defendants.

Comment: The Ritz Tower is a two-unit condominium. A cooperative housing corporation owns the residential unit. A mechanic's lienor got confused between the tax lots of the residential unit and the commercial unit and filed the lien against the wrong lot. This was a fatal defect and the lien was thus null and void. The lienor also failed to have the requisite New York City home improvement license at the inception of the job. However, the court allowed the license requirement to be satisfied because the lienor obtained the license during the course of the work. This enabled the lienor to proceed with an action for the value of the work against the shareholder whose apartment benefited from the improvements.