Ruttura & Sons Const. Co., Inc. v. Breco Envtl. Contrs. Inc

In Ruttura & Sons Const. Co., Inc. v. Breco Envtl. Contrs. Inc. (2002 WL 34693747 [Sup Ct, Suffolk County, Jan. 28, 2002, index No. 16090/00])) the plaintiff, a subcontractor hired for material and labor with respect to a public improvement contract entered into between codefendants, the Town of Smithtown, and general contractor, Breco Environmental Contractors Inc., commenced an action to foreclose on a mechanic's lien. After the action was commenced, the mechanic's lien was discharged upon the posting of a surety bond by Liberty Mutual Insurance Company. The Town thereafter moved to dismiss the complaint against it and strike its name from the caption. The issue before the court was "whether the Town, as the property owner, remains a necessary party to this action when the lien has been bonded and discharged" (id. 1). In examining the purpose of the Lien Law, the Ruttura court stated: "The Town argues that pursuant to New York Lien Law 37 (7) a municipality must be dismissed from the foreclosure action upon the discharge of the lien. Specifically, that section states that the necessary parties to the foreclosure action include, 'the principal and surety of the bond, the contractor and all claimants who have filed notices of claim prior to the date of filing of the summons and complaint.' "In opposition, Ruttura [the subcontractor plaintiff] maintains that Lien Law 44 should apply to the instant action. That section provides that in an action to enforce a lien against a public improvement, 'all persons appearing by the records in the office of the county clerk or register to be the owner of such real property' are necessary parties defendant. "The apparent conflict between 37 (7) and 44 of the Lien Law is best resolved after a close examination of the decision in Riverhead Transit Mix Corp. That court noted that 'the owner must be joined under Section 44 where the action is one to enforce the lien, but need not be joined where the action is solely to recover upon the bond.' Lien Law 44 requires that the owner of a public improvement against which a lien is claimed be joined as a necessary party in an action to enforce a mechanic's lien against such public improvement. Therefore, it follows that the Town would be a necessary party pursuant to 44 if no bond had been posted to discharge the lien. See id. Upon the posting of such bond, however, the public improvement lien previously filed attaches to the bond, which is substituted for the liened property. Because the substitution of the bond for the mechanic's lien discharges the lien, there no longer exists any claim against the liened property and the property owner is no longer a necessary party . . . . "Moreover, this conclusion is bolstered by an examination of the purpose behind the Lien Law. Traditionally public property, whether it is owned by a municipality or a public benefit corporation, has been immune from execution and seizure to avoid an intolerable burden upon the public comfort and safety. The intent of the Lien Law is that a private lien shall attach to real property privately owned, whereas a public lien attaches solely to the funds of the public corporation due under the contract for the improvement. In the instant case, it is clear that the sole intention of plaintiff is to recover money that it is allegedly owed on the Contract; and, as its claim relates to funds due under a public improvement contract, its sole method of recovery from the Town is against the bond. Therefore, the Town is no longer a necessary party to this particular action. Accordingly, the Town's motion to dismiss the complaint as against it pursuant to the plaintiff's third cause of action is granted, the surety Liberty Mutual is substituted for the Town, and the Town's name is struck from the caption." (Ruttura & Sons Const. Co., Inc. v. Breco Environmental Contractors Inc., 2002 WL 34693747, 2-3 ; see also M. Gold & Son Inc., v. A.J. Eckert Inc., 246 AD2d 746, 667 NYS2d 460 [3d Dept 1998] ["Where the lien no longer attaches to real property due to the filing of a bond under the Lien Law, it has been held that the owners of the real property are no longer necessary parties to the action"]; Melniker v. Grae, 82 AD2d 798, 439 NYS2d 409 [2d Dept 1981] [although mortgagee would be a necessary party to an action to enforce a lien against real property, once an undertaking is executed, there is no longer in existence an action against real property inasmuch as the bond replaces the real property as the security to be attached and, thus, the mortgagee's interest in the real property would no longer require his joinder as a necessary party in the lien foreclosure action]; Bryant Equip. Corp. v. A-1 Moore Contr. Corp., 51 AD2d 792, 380 NYS2d 705 [2d Dept 1976] [where bond has replaced the real property as the security to be attached and attacked, there is no longer in existence an action to enforce a lien against real property, and, thus, complaint, insofar as asserted against subsequent mortgagee, was dismissed as mortgagee is not included among the class of parties to be served under Lien Law 37]; but see Martirano Constr. Corp. v. Briar Contr. Corp., 104 AD2d 1028, 481 NYS2d 105 [2d Dept 1984] [court denied Girl Scouts' motion to dismiss notwithstanding fact that general contractor filed bond discharging mechanic's liens on property owned by the Girl Scouts]; compare Norden Elec. v. Ideal Elec. Supply Corp., 154 AD2d 580, 546 NYS2d 409 [2d Dept 1989] [Norden Court found that, unlike the situation before it, the property owner in Martirano Constr. Corp. v. Briar Contr. Corp. was named a party defendant "because it conceded that it was liable on the underlying debt, and because the lienor in that case sought recovery against the realty itself"].)