Wednesday, February 20, 2002
Supreme Court
Suffolk County
Justice Catterson
- RUTTURA & SONS CONSTRUCTION CO., INC. v. BRECO ENVIRONMENTAL CONTRACTORS INC. ” ORDERED that motion by the defendant Town of Smithtown is granted and the complaint against this defendant alone is dismissed, the surety Liberty Mutual Insurance Company is substituted for the Town, and the Town’s name is hereby struck from the caption. It is further
- ORDERED that the defendant Town of Smithtown is directed to serve a copy of this decision and order with notice of entry upon all parties.
- The controversy in this action stems from a public improvement contract, known as Contract # 99-010 Smithtown Landfill Capping and Closure Cells 1-5 (hereinafter referred to as the “Contract”), entered into by the movant defendant Town of Smithtown (hereinafter referred to as “the Town”), and the co-defendant (general contractor) Breco Environmental Contractors Inc. (hereinafter referred to as “Breco”) for the supply of contour grading material to cap and close a section of the Town’s landfill. A number of subcontractors were hired by Breco, including the plaintiff Ruttura & Sons Construction Co., Inc. (hereinafter referred to as “Ruttura”), to deliver the necessary materials and to perform the related labor. 1
- After allegedly delivering a certain amount of the contracted for materials, Ruttura demanded payment from Breco in the amount of $85,663.50. When requests for payment went unanswered, Ruttura filed a notice of mechanic’s lien with the Town on April 27, 2000 and commenced this action on June 23, 2000 against the Town to foreclose on the lien. On July 10, 2000, pursuant to a petition by Breco, an Order was issued by the Court (Suarez, J.), which approved the posting of an undertaking in the amount of $93, 675.00, and the concomitant discharge of Ruttura’s mechanic’s lien (New York County Supreme Court, Index # 112287/2000). Breco was named as the principal and Liberty Mutual Insurance Company (hereinafter “Liberty Mutual”) as surety.
- The Town now moves pursuant to C.P.L.R. ?§3211(a)(7) for an order dismissing the complaint against it and striking its name from the caption of this action. The issue presently before this Court is whether the Town, as the property owner, remains a necessary party to this action when the lien has been bonded and discharged.
- 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 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. See Riverhead Transit Mix Corp. v. Walsh Construction Corp., et al., 1995 WL 1051649 (Bankr. S.D.N.Y.1995).
- 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.” Riverhead Transit Mix Corp. v. Walsh Construction Corp., 1995 WL 1051649. 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. See Tri-City Electric Co., Inc., v. People, 63 N.Y.2d 969, 483 N.Y.S.2d 990 (1984); Matter of Syracuse Castings Sales Corp., 159 Misc.2d 61, 602 N.Y.S.2d 1003 (1993). 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. See M. Gold & Son Inc., v. A.J. Eckert Inc., 246 A.D.2d 746, 667 N.Y.S.2d 460 (3d Dept. 1998); Norden Electric, Inc. v. Ideal Electrical Supply Corp., 154 A.D.2d 580, 546 N.Y.S.2d 409 (2d Dept. 1989). Indeed, Ruttura’s own counsel recognized this proposition. At oral argument before this Court on June 11, 2001 counsel stated:
Every time I am here there is [sic] more claims. I just think our dispute should be resolved. It’s not involving the Town. Our claim is against the bonding company. The bond is there for a purpose, the purpose is to see that we are paid. We supplied materials on this public project. That’s why there is the State Finance Law Section 137, which is to allow us to get properly paid even if the contractor doesn’t have the money. That’s why there is a bond. That’s why there is a surety.
- (Emphasis added).
- 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. See Lincoln First Bank, N.A. v. Spaulding Bakeries Inc., 117 Misc.2d 892, __, 459 N.Y.S.2d 696, 700 (Sup. Ct. Broome Co.1983), citing Leonard v. City of Brooklyn, 71 N.Y. 498 (1877). 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. See Kennedy & Co. v. New York World’s Fair 1939 Inc., 260 App.Div. 386, 22 N.Y.S.2d 901 (2d Dept. 1940), aff’d 288 N.Y. 494 (1942). 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.
- The above constitutes the decision and judgment in this case.
********** Notes -
