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Spring Sheet Metal & Roofing Co. v. County of Monroe Industrial Development Agency
Citations: 226 A.D.2d 1064; 641 N.Y.S.2d 955; 1996 N.Y. App. Div. LEXIS 5520
Court: Appellate Division of the Supreme Court of the State of New York; April 19, 1996; New York; State Appellate Court
The order has been modified and affirmed without costs. The Hyatt Regency Hotel project in Rochester, constructed on land owned by the County of Monroe Industrial Development Agency (COMIDA), began in the mid-1980s but was left unfinished until CORH Associates, L.P. (CORH) completed it in 1990. CORH contracted with Flower City Glass Company, Inc. (Flower City), which in turn subcontracted with the plaintiff to provide metal facings. Flower City secured a labor and materials payment bond from USF&G, stipulating that any claims must be initiated within one year after Flower City ceased work. The project was completed on March 3, 1992, and the plaintiff filed a mechanic’s lien for $85,130 on March 16, 1992. Flower City subsequently discharged this lien on May 4, 1992, using a $100,000 lien bond issued by USF&G. The plaintiff filed a lawsuit on July 23, 1992, to recover on the lien bond. After Flower City filed for bankruptcy in March 1994, the plaintiff sought to amend the complaint to add a claim against USF&G related to the payment bond. USF&G moved for summary judgment, asserting the mechanic’s lien was invalid and that the plaintiff's claim on the payment bond was time-barred. The Supreme Court dismissed the plaintiff's motion to amend and granted USF&G’s summary judgment motion. However, the court found that the original complaint adequately notified the transaction related to the proposed cause of action, as both bonds pertained to the same project and payments due. The bond and contract were treated as a single instrument, allowing the proposed cause of action to relate back to the initial complaint. USF&G did not demonstrate that permitting the amendment would cause it prejudice. Therefore, the cause of action based on the lien bond was properly dismissed. COMIDA, a public entity, owns the land for the project, and under the Lien Law, a mechanic’s lien cannot be filed against projects on publicly owned land, even if leased to a private entity for private use. This principle is supported by case law, including Paerdegat Boat & Racquet Club and Plattsburg Quarries. Additionally, a valid public improvement lien cannot be established since the commercial improvement was built by a private entity, not a public agency, on publicly owned land, as noted in Matter of Demilo Corp. The plaintiffs' arguments for estoppel against the defendants and claims of waiver by USF&G regarding the lien's validity were rejected. The invalidity of the lien does not need to be raised as an affirmative defense, and USF&G's issuance of the lien bond does not imply the lien's validity. As surety, USF&G can challenge the lien's validity whenever the lienor attempts to enforce it. The order has been modified to allow the plaintiffs to amend the complaint while otherwise affirming the ruling.