G. Rama Construction Enterprises, Inc. v. 80-82 Guernsey Street Associates, LLC

• Decision Date: 11 September 2007
• Docket Number: 2006-08811.
• Citation: 2007 NY Slip Op 06631,841 N.Y.S.2d 669,43 A.D.3d 863
• Parties: G. RAMA CONSTRUCTION ENTERPRISES, INC., Appellant, v. 80-82 GUERNSEY STREET ASSOCIATES, LLC, et al., Respondents, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

43 A.D.3d 863

841 N.Y.S.2d 669

2007 NY Slip Op 06631

G. RAMA CONSTRUCTION ENTERPRISES, INC., Appellant, v. 80-82 GUERNSEY STREET ASSOCIATES, LLC, et al., Respondents, et al., Defendants.

2006-08811.

Appellate Division of the Supreme Court of the State of New York, Second Department.

Decided September 11, 2007.

In an action, inter alia, to recover damages for breach of contract and to foreclose a mechanic's lien, the plaintiff appeals from an order of the Supreme Court, Kings County (Balter, J.), dated August 11, 2006, which denied its motion for partial summary judgment seeking payment of a bond securing its mechanic's

lien and granted the cross motion of the defendants 80-82 Guernsey Street Associates, LLC, Nova Casualty Company, and Eric Mann for summary judgment dismissing the complaint insofar as asserted against them.

Ordered that the order is affirmed, with costs.

The plaintiff brought this action, inter alia, to foreclose a mechanic's lien dated November 17, 2003, in which it claimed the amount of $473,000 allegedly due and owing for "extra" work performed on the construction of a condominium building on property owned by the defendant 80-82 Guernsey Street Associates, LLC (hereinafter GSA). In its complaint, the plaintiff alleges that in October 2002 it entered into "a series of oral agreements" with GSA and its vice-president, the defendant Eric Mann, to furnish and supply labor, equipment, and materials for excavation, foundation, and construction work on the project, and that GSA and Mann failed to make the agreed-upon payments. The plaintiff alleged that in an underlying third-party action, a judicial hearing officer (hereinafter JHO) had upheld the validity of its lien in the amount of $469,000, and the plaintiff now sought payment of that amount from a bond secured by GSA from the defendant Nova Casualty Company (hereinafter Nova).

In answer to the complaint, the defendants GSA, Mann, and Nova (hereinafter the defendants) denied that they owed any payments to the plaintiff or that they ever authorized or approved of any extra work. They also averred that the project was governed by a written construction contract entered into by the plaintiff and Mann on October 11, 2002, pursuant to which all claims for extra work and change orders needed to be memorialized in writing. The defendants also denied that the JHO established the validity of the plaintiff's lien. Rather, they claimed that the JHO's decision merely denied their underlying motion to void the lien for willful exaggeration under section 39 of the Lien Law and denied the plaintiff's underlying cross motion to increase the lien, adjusting it, instead, to $469,000. According to the defendants, the lien was "solely a security interest to permit payment of any judgment that the plaintiff may obtain in this action or in the related action." The defendants also asserted a counterclaim alleging breach of contract and seeking damages in excess of $1.5 million.

The plaintiff moved for partial summary judgment seeking to foreclose on its lien in the amount of $469,000 on the basis that the JHO judicially established the validity and amount of the lien, entitling it to res judicata effect against the surety. The defendants opposed the motion and cross-moved for summary judgment on the ground that the plaintiff's claim was barred by the parties' written contract, which precluded any claims for oral extras and change orders not documented in writing.

The Supreme Court properly denied the plaintiff's motion. Contrary to the plaintiff's contention, the court properly found that the validity and amount of the lien was not judicially established by the ruling of the JHO. A JHO derives his or her authority from an order of reference by the court (see CPLR 4311; Fernald v Vinci, 302 AD2d 354, 355 [2003]). Here, the order of reference limited the scope of the JHO's authority to a determination of the parties' respective motions in the underlying third-party action. Accordingly, the JHO's determination that the...