In the Matter of Navillus Tile, Inc.,, Respondent,v.LC Main, LLC, Appellant.

Brief

N.Y.October 10, 2013

To be Argued by: BRIAN T. BELOWICH (Time Requested: 30 Minutes) Westchester County Clerk’s Index Nos. 13324/10 and 13325/10 Appellate Division–Second Department Docket Nos. 2010-08721, 2010-11676, 2011-02658 and 2011-02661 Court of Appeals of the State of New York In the Matter of the Application of NAVILLUS TILE, INC., doing business as NAVILLUS CONTRACTING, Respondent, – against – LC MAIN, LLC, Appellant. For an Order Pursuant to Lien Law Section 17 of the Lien Law continuing a Certain Notice Under Mechanic’s Lien Law against Premises known as 221 Main Street, Tower B, White Plains, New York, Section 125067, Block 7, Lot 7. BRIEF FOR APPELLANT BRIAN T. BELOWICH MICHAEL J. SCHWARZ Of Counsel DELBELLO DONNELLAN WEINGARTEN WISE & WIEDERKEHR, LLP Attorneys for Owner-Appellant The Gateway Building One North Lexington Avenue, 11th Floor White Plains, New York 10601 Tel.: (914) 681-0200 Fax: (914) 684-0288 Date Completed: February 15, 2013 COURT OF APPEALS OF THE STATE OF NEW YORK ----------------------------------------------------------------------)( In the Matter of the Application of NA VILLUS TILE INC. d/b/a NA VILLUS CONTRACTING, -against- LC MAIN, LLC, Lienor-Appellant, Owner-Respondent For an Order Pursuant to Lien Law Section 17 Of the Lien Law continuing a Certain Notice Under Mechanic's Lien Law Against Premises known as 221 Main Street, Tower B, White Plains, New York, Section 125067, Block 7, Lot 7. ----------------------------------------------------------------------)( Appellate Division Docket Nos. 2010-8721, 2010-11676, 2010-02658, and 2010-02661 CORPORATE DISLOSURE STATEMENT Pursuant to the Rules of Practice of the New York Court of Appeals Owner- Respondent LC Main, LLC (hereinafter, "LC Main") states that LC Main is a limited liability company organized and existing under the laws of the State of New York. The following are the members of LC Main: • Fuller White Plains III, LLC • 221-BCH LLC • Fuller White Plains III Pledge, LLC • Cappelli Group III, LLC Dated: White Plains, New York February 14, 2013 DELBELLO DONNELLAN WEINGARTEN WISE & WIEDERKEHR, LLP \ ~~-• Brian T. Belowich 1 North Lexington Avenue White Plains, New York 10601 (914) 681-0200 Attorneys for Owner-Respondent LC Main, LLC TABLE OF CONTENTS TABLE OF AUTHORITIES ................................................................ .i PRELIMINARY STATEMENT ............................................................ ! QUESTIONS PRESENTED ................................................................ 3 STATEMENT OF CASE, PROCEDURAL HISTORY AND BACKGROUND FACTS ................................................................... 6 JURISDICTIONAL STATEMENT ........................................................ 9 LEGAL ARGUMENT ..................................................................... 1 0 I. The Mere Filing Of An Application To Extend A Mechanic's Lien Is Insufficient To Preserve The Lien .............. lO II. Strong Public Policy Concerns Balance Against Nunc Pro Tunc Extensions Of An Expired Mechanic's Lien .......... 19 III. The Second Department's Reliance Upon CPLR § 2004 Was Improper ................................................................ 22 IV. The Second Department's Holding Leaves Uncertainty Surrounding The Efficacy OfNavillus's Liens ........................... 25 CONCLUSION .............................................................................. 27 TABLE OF AUTHORITIES Binghamton Masonic Temple Inc. v. Armon Elevator Co, Inc., 186 A.D.2d 338 (3d Dept. 1992) ............................................. .14, 15 Carassavas v. New York State Dept. of Social Services, 90 A.D.2d 630 (3d Dept. 1982) ................................................... 23 Conch Associates, Inc. v. Mercury, Inc., 245 A.D.2d 538 (2d Dept. 1997) .................................................. 24 Contelmos 's Sand & Gravel, Inc. v. J&J Milano, Inc., 96 A.D.2d 1090 (2d Dept. 1983) ...... .......................................... passim First Nat. Stores v. Yellowstone Shopping Center, 21 N.Y.2d 630 (1968) ............................................................... 18 Gelles-Berger Co. v. Boynwat Properties, Inc., 234 N.Y.S.2d 234 (Sup. Ct. Bronx County 1962) .......................... 14, 16 Greenbrier Farms, Inc. v. Central Jersey Landscape Co., 30 A.D.2d 672 (2d Dept. 1968) ................................................... 12 Hanson Heating & Plumbing, Inc. v. Stout, 88 Misc.2d 241 (Sup. Ct. Albany County 1976) ............................... .12 Kellett's Well Boring, Inc. v. City of New York, 292 A.D.2d 179 (1st Dept. 2002) ................................................ .13 Makovic v. Aigbogun, 41 A.D.3d 342 (1st Dept. 2007) ................................................... 10 Matter of Monahan v. Hartka, 17 A.D.3d 758 (3d Dept. 2005) ................................................... 23 Matter of Sakow, 97 N.Y.2d 436 (2002) ........................................................... 17, 18 1 Modular Steel Systems, Inc. v. Avlis Contracting Corp., 89 A.D.2d 891 (2d Dept. 1982) .................................. ............. passim Place v. Albanese, 342 N.Y.S.2d 699 (Sup. Ct. Fulton County 1973) ......................... 24, 25 Powers v. Foley, 25 A.D.2d 525 (2d Dept. 1966) ................................................... 24 Tewari v. Tsoutsouras, 75 N.Y.2d 1 (1989) .................................................................. 23 Triple Cities Constr. Co. v. Dan-Bar Contr. Co., 285 A.D. 299 (3d Dept. 1954) ................ 21, 22 Zoerb and Co., Inc. v. Young Fried Equipment, Co., 134 A.D.2d 826 (4th Dept. 1987) .... ........................................... passim STATUTES: CPLR § 2004 ........................................................ ...................... passim CPLR § 5513(b) .............................................................................. 10 Lien Law § 17 ......................................................................... . passim OTHER AUTHORITIES: Alexander, Practice Commentaries, McKinney's Cons Laws ofNY Book 7B CPLR C2004:2 ............................................................ 24 Bowmar, 34 N.Y. Prac., Mechanics' Liens in New York§ 4:4 (2012) ............. .13 Warren's Weed New York Real Property, Mechanics Liens§ 3.05[3][a] .... J7assim Warren's Weed New York Real Property, Mechanic's Liens§ 9.05 ........... .13, 17 11 Warren's Weed New York Real Property§ 92.18 [3][a] (5th Ed. 2012) ....... 19, 20 lll Owner-Appellant LC Main, LLC ("LC Main"), by its attorneys, DelBello Donnellan Weingarten Wise & Wiederkehr, LLP, respectfully submits this Brief in support of its appeal from a Decision and Order of the Appellate Division, Second Judicial Department (the "Second Department"), dated and entered on September 12, 20 12 (the "Decision and Order"), which reversed certain Orders issued by the Supreme Court, Westchester County (the "trial court"), denying the ex parte applications of Lienor-Respondent Navillus Tile Inc. d/b/a Navillus Contracting ("Navillus") for a further extension, nunc pro tunc, of two mechanic's liens. PRELIMINARY STATEMENT The underlying proceedings involved two ex parte applications by Navillus to further extend, nunc pro tunc, two mechanic's liens (the "Mechanic's Liens"). The term of the Mechanic's Liens had previously been extended by Navillus under Lien Law § 17 for a period of one (1) year by the filing of an automatic extension notice. The ex parte applications at issue herein (for a second extension of the Mechanic's Liens) were filed by Navillus approximately three business days before the Mechanic's Liens were due to expire by operation of law. The trial court properly denied the ex parte applications, holding that it lacked the authority to further extend the Mechanic's Liens because the liens had already expired by virtue of the fact that extension orders had not been "granted" 1 prior to the expiration of the initial one-year automatic extension period as required by Lien Law § 17. (See R. at 7, 15).1 The Second Department reversed the Orders of the trial court and, in so doing, effectively held that the mere filing of an ex parte application with the county clerk's office prior to the expiration of a mechanic's lien is sufficient, ipso facto, to extend the term of a mechanic's lien nunc pro tunc. The Second Department further held that a court has the inherent authority under CPLR § 2004 to issue an order granting the extension of an already expired lien, nunc pro tunc. It is respectfully submitted that the Decision and Order issued by the Second Department contravenes Section 17 of the Lien Law, which clearly provides that the only way to extend a mechanic's lien for a second time is to either: (i) commence an action to foreclose upon the lien prior to the conclusion of the original one-year extension period; or (ii) obtain a court order granting an extension of the lien prior to the expiration of the one-year extension period. Navillus failed to do either of these things. The Mechanic's Liens therefore expired by operation of law on May 22, 2010. The Second Department's Decision and Order also disregards the rule that an expired mechanic's lien is a "nullity," which cannot be revived nunc pro tunc. 1 References to the Record on Appeal are made by denoting the page number preceded by the phrase "R. at" as follows: "R. at_". 2 Finally, to the extent that the Second Department relied upon CPLR § 2004 in extending the expired Mechanic's Liens, nunc pro tunc, such reliance was in error, and was in clear conflict with this Court's prior rulings, as well as the rulings by the Appellate Division, which limit the scope of CPLR § 2004. In addition to the foregoing, this appeal involves important questions of law which have far reaching ramifications and are of great public importance given the fact that mechanic's liens act as clouds on title and otherwise threaten the sanctity of real property transactions in the State of New York. Accordingly, it is respectfully submitted that this Court should reverse the Decision and Order issued by the Second Department on September 12, 20 12 and affirm the Orders of the trial court, dated August 9, 2010 and February 14, 2011, which properly denied Navillus' applications to further extend the expired Mechanic's Liens, nunc pro tunc. QUESTIONS PRESENTED 1. Is the mere filing of an ex parte application to extend a mechanic's lien with the county clerk's office sufficient, in and of itself, to preserve the lien which was previously extended under Lien Law § 17?2 2 This issue has been preserved for review on appeal, having been argued in the courts below. (SeeR. at 21-22, 26-27; See also, R. at 149-150; Respondent's Brief on appeal, pp. 6-7). 3 ANSWER: No. The filing of an ex parte application with the county clerk's office to further extend the duration of a mechanic's lien does not, in and of itself, preserve the lien. In order to obtain a second (or subsequent) extension of mechanic's lien under Lien Law § 17 the lienor must file an action to foreclose on the lien, or obtain a court order granting the extension, prior to the expiration of the extension period. Nothing else can extend the duration of a mechanic's lien. 2. May a court can extend an expired mechanic's lien, nunc pro tunc, where an extension order has not been "granted" prior to the expiration of the statutory one year extension period? 3 ANSWER: No. A mechanic's lien which has expired without proper extension under Lien Law § 17 is a nullity, and may not be extended or revived by the court nunc pro tunc. The edicts of Lien Law § 17 are unequivocal; a mechanic's lien may only be extended by the commencement of an action to foreclose, or an order granting an extension, prior to the expiration of the one-year statutory period. 3 This issue has been preserved for review on appeal, having been argued in the courts below. (SeeR. at 21-22, 26-27; See also, R. at 149-150; Respondent's Brief on appeal, pp. 6-7). 4 3. Did the Second Department err in reversing the Orders of the trial court, and granting Navillus' applications under Section 17 of the Lien Law, to extend the duration of the Mechanic's Liens nunc pro tunc, where no court order was "granted" to extend the duration of the Mechanic's Liens, and where no action was commenced to foreclose upon the Mechanic's Liens, prior to expiration of the one year statutory extension period? 4 Answer: Yes. The Second Department erred in reversing the Orders of the trial court, and in directing an extension of the the expired Mechanic's Liens, nunc pro tunc. It is well established that a mechanic's lien which has expired by operation of law is a "nullity," which cannot be extended (or revived) nunc pro tunc. The Second Department's holding disregards the settled authority which prohibits the extension of an expired mechanic's lien nunc pro tunc. 4. Was the Second Department permitted to rely upon CPLR § 2004 to revive and extend the expired Mechanic's Liens nunc pro tunc? 5 4 This issue has been preserved for review on appeal, having been raised by the Second Department in its Decision and Order. (See R. at 149-150). 5 This issue has been preserved for review on appeal, having been raised by the Second Department, sua sponte for the first time in its Decision and Order. (See R. at 149-150). 5 ANSWER: No. CPLR § 2004 cannot be used to alter or extend the substantive requirements of the Lien Law § 17 concerning the preservation, extension or expiration of a mechanic's lien. As established by this Court's precedent, CPLR § 2004 may only be used to extend the timelines for performing a procedural act under the CPLR. STATEMENT OF CASE, PROCEDURAL HISTORY AND BACKGROUND FACTS On or about May 29, 2008, Navillus filed two Mechanic's Liens in the Westchester County Clerk's office. (SeeR. at 32, 39). On or about May 22, 2009, Navillus filed two Extensions of Mechanic's Liens, pursuant to Lien Law § 17, which automatically extended the duration of the Mechanic's Liens as of right for a period of one (1) year, through May 22, 2010. (SeeR. at 33, 40). Navillus alleges that, on May 19, 2010 (approximately three business days before the Mechanic's Liens were due to expire by operation of law), Navillus filed two applications with the county clerk to extend the Mechanic's Liens a second time pursuant to Lien Law§ 17. (SeeR. at 49-50, ,-r 9; R. at 121-122, ,-r 9). Navillus failed to advise the trial court that its application required expedited treatment (See R. at 6-7, 14-15), and failed to secure a court order granting an 6 extension of the term of its Mechanic's Liens (temporarily or otherwise) prior to their expiration on May 22, 2010. (See id). Navillus alleges that, on or about May 25, 2010, the trial court asked Navillus to submit a memorandum of law in support of its applications to further extend the Mechanic's Liens. (SeeR. at 50, ,-r 11; R. at 122, ,-r 11). On or about June 16, 2010, Navillus submitted a memorandum of law in which it argued that the Mechanic's Liens could be further extended "nunc pro tunc after the expiration dates since the Applications were timely filed with the clerk of the court prior to the expiration dates ... but not reviewed by the court until after the expiration dates." (R. at 42). On August 9, 2010, the trial court denied Navillus' applications to further extend the Mechanic's Liens nunc pro tunc. (SeeR. at 6-7, 14-15). In denying Navillus' applications, the trial court stated: The instant application, to extend the lien for an additional year, was filed with the County Clerk on May 19, 2010. However, the application was not assigned to the undersigned until May 25, 2010, beyond the one year statutory period. At issue now is whether the Court may still entertain the application and grant an extension nunc pro tunc. Contrary to the view of lienor, the answer is it may not. An Order granting an extension under Lien Law section 17 must be actually "granted" prior to the expiration of the lien. If not, the lien expires by operation of law (Binghampton Masonic Temple Inc. v. Armor Elevator Co., Inc., 186 A.D.2d 207; Zoerb and Co. v. Young Fire Equipment Co., 134 A.D.2d 286). Once the lien expires, it may not 7 be extended nunc pro tunc (Thermal Design, Inc. v. Gorman, 162 Misc.2d 519). In the case at bar, as noted above, the lien lapsed, by operation of law prior to the assignment to the undersigned. Accordingly, the Court lacks authority to further extend the lien. Given the time constraints of Lien Law section 17, it is incumbent on a lienor seeking an extension to apply for an extension sufficiently in advance of the expiration date to allow the Court time to determine the application. If necessary, lienor should advise the Court of the need to expedite the decision prior to expiration of the lien. Alternatively, although notice is not required, the movant may nonetheless proceed by Order to Show Cause including therein a temporary extension of the lien pending the determination of the motion. (R. at 6-7, 14-15) (emphasis added). Navillus appeal~d to the Second Department from the Orders issued by the trial court on August 9, 2010. (SeeR. at 1-15). Navillus then filed motions for leave to renew and reargue its prior applications and, upon renewal and reargument, for an Order: (i) vacating the August 9, 2010 Orders; and (ii) extending the Mechanic's Liens for an additional period of one year. (SeeR. at 46-4 7' 118-119). By Orders dated February 14, 2011, the trial court granted Navillus' motions to renew and reague and, upon renewal and reargument, adhered to its prior Orders denying Navillus' applications to further extend the duration of the expired Mechanic's Liens nunc pro tunc. (SeeR. 21-22, 26-27). Adhering to its prior orders, the trial court explained: 8 Petitioner continues to maintain that the mere filing of an application for an extension of lien preserves the lien for extension even after the statutory period expires. Nothing in Lien Law section 17, however, extends a lien merely upon filing for an extension. To preserve the lien beyond the initial one-year extension period, "the lienor must within that first one-year extension period obtain a court order continuing the lien... (emphasis added)" (Binghampton Masonic Temple Inc. v. Armor Elevator Co., Inc., 168 AD2d 338; see also, Conelmo 's Sand & Gravel v. J&J Milano, 96 AD2d 1 090). Absent an Order granting an extension within the statutory period, the lien lapses, by operation of law, and may not be further extended (Zoerb and Co., Inc. v. Young Fire Equipment Co., 134 AD2d 826). (ee R. 21-22, 26-27) (emphasis added). Navillus appealed to the Second Department from the February 14, 2011 Orders issued by the trial court. (SeeR. at 17-27). JURISDICTIONAL STATEMENT By Decision and Order dated September 12, 20 12, the Second Department dismissed Navillus' appeals from the August 10, 2010 Orders, reversed the trial court's February 14, 2011 Orders, and granted Navillus' petitions to extend the Mechanic's Liens nunc pro tunc. (R. at 148-150). On September 21, 2012, Navillus served LC Main by mail with notice of entry of the Second Department's Decision and Order. See Exhibit A to LC Main's notice of motion for leave to appeal to the Court of Appeals, dated October 22, 2012 (the "Motion Papers"). On October 22, 2012, LC Main filed a motion for leave to appeal the Second Department's Decision and Order on grounds that the 9 Decision and Order finally determined the underlying actions (namely, Navillus' applications to further extend the Mechanic's Liens nunc pro tunc). LC Main's motion was timely under CPLR § 5513(b), having been made within thirty (30) days of service of the Decision and Order with notice of entry. See id. By Decision and Order dated December 18, 2012, this Court granted LC Main's motion for leave to appeal. (R. at 146-147). LEGAL ARGUMENT I. The Mere Filing Of An Application To Extend A Mechanic's Lien Is Insufficient To Preserve The Lien In its Decision and Order, the Second Department held that "nothing the text of Lien Law § 17 prohibits the granting of an application for an extension of the term of a lien where the application is timely filed .... " (See R. at 149) (citing Makovic v. Aigbogun, 41 A.D.3d 342 [1st Dept. 2007]).6 The Second Department also held that a further extension of the Mechanic's Liens could be granted nunc pro tunc because the applications for extension were timely filed with the county clerk's office. See R. at 149. The necessary inference from the Second 6 Makovic is inapposite, and lacks determinative significance. In Makovic, unlike this case, the plaintiff moved by order to show cause to extend its expiring notice of pendency almost two and a half months before it expired. Here, Navillus submitted its ex parte application only days before the Mechanic's Liens expired. (R. at 22, 27). Furthermore, Navillus, unlike the plaintiff in Makovic, did not to move by order to show cause seeking a temporary extension of its liens to avoid expiration (R. at 7, 15), nor did Navillus advise the trial court that it required expedited relief on its applications. See id. 10 Department's holding is that the timely filing of an ex parte application to extend a mechanic's lien under Section 17 of the Lien Law, without a court order "granting" an extension prior to the expiration of the one-year extension period, is sufficient, in and of itself, to avoid the expiration of a mechanic's lien by operation of law. The Second Department's holding cannot possibly be squared with the express language found in the Lien Law, or long-standing precedent.7 Section 17 of the Lien Law gives a lienor the extraordinary right to file one extension of a mechanic's lien (which acts as a cloud on title), without leave of court, and without notice to a property owner. See Lien Law § 17. The mechanic's lien so extended is valid for only one year from the date of filing of the extension. See id. ("[ n ]o lien shall be continued by [an] extension for more than one year from the filing thereof'). Under the express language of the statute, a mechanic's lien so extended may be further extended if"an order [is] granted by a court of record or a judge or justice thereof, continuing such lien" within the initial 7 The Second Department noted in its Decision and Order that there "may be a gap between the signing of the extension order and its filing, during which the one-year term of the lien may expire without affecting the validity of the lien." See R. at 49. While it may be the law that a lien extension order can be docketed and recorded by the county clerk after the expiration of the extension period if an order extending the mechanic's lien is timely "granted" before the expiration of the extension period (see Lien Law § 17), that situation simply was not (and is not) presented in this case. As detailed herein, no extension order was "granted" prior to the expiration of the extension period, the Mechanic's Liens expired by operation of law, and could not be revived or extended nunc pro tunc. The Lien Law does not provide for a second extension of a mechanic's lien by the mere filing of an application for an extension of the lien. 11 one-year extension period. See id. (emphasis added). Alternatively, the lien may be further extended by the lienor through the commencement of an action within the initial one-year extension period. See id. ("In the event an action is not commenced to foreclose the lien within such extended period ... such lien shall be extinguished ... "). If the lienor fails to either obtain a court order granting an extension of the mechanic's lien or commence an action to foreclose the lien prior to the expiration of a mechanic's lien, then the mechanic's lien "shall be extinguished" by operation of law. See id. (emphasis added) Here, no action was commenced to foreclose upon the Mechanic's Liens. As such, Navillus was required under the statute to secure a court order "granting" a continuation of its Mechanic's Liens prior to the expiration of the one year extension period. See Lien Law§ 17. See also Zoerb and Co., Inc. v. Young Fried Equipment, Co., 134 A.D.2d 826, 826 (4th Dept. 1987) (absent an order granting an extension within the one year statutory period a lien lapses by operation of law, and may not be further extended); Contelmos 's Sand & Gravel, Inc. v. J&J Milano, Inc., 96 A.D.2d 1090, 1090 (2d Dept. 1983) (same); Greenbrier Farms, Inc. v. Central Jersey Landscape Co., 30 A.D.2d 672, 672 (2d Dept. 1968) ("order extending the lien was invalid by reason of its entry after the expiration date of the lien ... "); Hanson Heating & Plumbing, Inc. v. Stout, 88 Misc.2d 241, 242 (Sup. Ct. Albany County 1976) ("Once the lien has lapsed any order purporting to 12 continue such lien is ineffective"). See generally, Warren's Weed New York Real Property, Mechanic's Liens § 3.05[3][a], p. MECH L-155 (4th ed. 1995) ("The court order of extension of a lien must be granted prior to the expiration of the lien, or the lien will lapse without the possibility of revival") (citing cases); Bowmar, 34 N.Y. Prac., Mechanics' Liens in New York § 4:4 (Westlaw 2012) ("the lien will be extinguished at the end of such period unless, within such period, a court order [is] granted continuing such lien") (emphasis added) (citing cases). 8 Navillus will undoubtedly argue in its answering brief, as it argued below, that the Lien Law is to be "liberally construed" to fulfill its intended purpose. However, the "rules of liberal construction and substantial compliance cannot supplant the mandatory language" of the Lien Law. See Kellett's Well Boring, Inc. v. City of New York, 292 A.D.2d 179, 181 (1st Dept. 2002).9 Nothing in the Lien Law permits the extension of a mechanic's lien merely upon the filing of an application with the county clerk's office for an extension 8 As the trial court correctly noted, Navillus could have simply made an ex parte application by order to show cause seeking temporary orders extending its Mechanic's Liens pending the determination of its application, as is commonly done when a motion is made to extend the duration of a an expiring notice of pendency. Certainly, such an order would have been sufficient to satisfy the exacting requirements of Lien Law § 17, which requires more than a simple "application" to extend the duration of a previously extended mechanic's lien. 9 While Kellett's involved extension of a lien on a public improvement contract, it should be noted that the courts "frequently utilize the reasoning in public and private improvements lien cases interchangeably on the issue of the method for extending liens." See Warren's Weed New York Real Property, Mechanic's Liens § 9.05, p. MECH-L 296 at fu. 25 (4th ed. 1995). The reasoning in that case is equally applicable here. 13 order; the mandates of the statue are far more exacting. Under the express language of the statute, a mechanic's lien which has been automatically extended by a lienor "shall be extinguished [after a period of one year] unless an order [is] granted by a court of record or a judge or justice thereof, continuing such lien" or an action is commenced to foreclose the lien is commenced. See Lien Law § 1 7 (emphasis added). The requirements of Lien Law 17 are "self-executing," and the expiration of the initial one-year extension period without a court order granting a continuation of the lien, or the commencement of an action to foreclose the lien, has the effect of extinguishing the un-extended mechanic's lien by operation of law. See Gelles- Berger Co. v. Boynwat Properties, Inc., 234 N.Y.S.2d 234, 235 (Sup. Ct. Bronx County 1962) ("The one year period set forth in the Lien Law is self-executing, and the expiration of that period, without obtaining an order continuing the lien or commencing the action to foreclose, extinguishes the lien"). See also Binghamton Masonic Temple Inc. v. Armon Elevator Co, Inc., 186 A.D.2d 338, 338 (3d Dept. 1992); Zoerb and Co., Inc., 134 A.D.2d at 826 (absent an order granting an extension within the one year statutory period a lien lapses by operation of law, and may not be further extended); Contelmos 's Sand & Gravel, Inc., 96 A.D.2d at 1090. Cf Gallo Brothers Construction Inc. v. Peccolo, 281 A.D.2d 811, 813 (3d 14 Dept. 2001) (a lien which is not properly extended prior to the end of the extension period expires by operation of law). Once the initial extension period expires without an order granting an extension (or the commencement of an action to foreclose), courts routinely deny applications to further extend the term of a mechanic's lien because any extension granted after the extension period is a "nullity," which cannot be revived. In Binghamton Masonic Temple, for example, the Appellate Division, Third Judicial Department, held that a lien had expired where, as here, the lienor failed to procure an order granting the extension prior to the expiration of the one-year statutory extension period. In so holding, the Third Department explained: [A]n initial extension can be obtained by simply filing the extension within one year of filing the original notice of lien. To preserve the lien beyond the initial one-year extension period, however, the lienor must within that first one-year extension period obtain a court order continuing the lien. Binghamton Masonic Temple, 186 A.D.2d at 338 (emphasis added). Similarly, in Contelmos 's Sand & Gravel, the Second Department, held: A notice of mechanic's lien is valid for one year, but may be renewed (while still valid) for another year by court order, one year at a time. (See Lien Law, § 17). The complaint herein alleges that the lien, originally filed on April 12, 1976, was thereafter renewed on March 21, 1977, March 17, 1978, March 17, 1979 and March 24, 1980. However, on March 17, 1980, the lien expired; therefore, on March 24, 1980, when it was allegedly renewed, it was no longer valid, and the purported renewal is thus a nullity. 15 Contelmo 's Sand & Gravel, 186 A.D.2d at 1090 (emphasis added). See also, Zoerb and Co., Inc., 134 A.D.2d at 826; Gelles-Berger Co., 234 N.Y.S.2d at 235. The authority cited above makes clear that the mere filing of an application with the county clerk's office for an order further extending the duration of a mechanic's lien cannot, and does not, effect an extension of the lien under Section 17 of the Lien Law. Only the commencement of an action to foreclose (and the filing of a notice of pendency) or the issuance of an order "granting" a further extension of the lien within the one year period can effect an extension of the lien. See Lien Law § 17. The Second Department committed reversible error by ignoring the mandatory language of the Lien Law and by extending the Mechanic's Liens nunc pro tunc based solely upon the filing of an application for a second extension with the county clerk's office. The Second Department's Decision and Order conflicts directly with the requirements set forth in Lien Law § 17. It also conflicts with holdings from other departments of the Appellate Division (as well as its own prior precedent) and should therefore be reversed. Clearly, the trial court lacked any power or "discretion" to extend the already expired Mechanic's Liens. Cf Modular Steel Systems, Inc. v. Avlis Contracting Corp., 89 A.D.2d 891, 891 (2d Dept. 1982) (reversing decision of trial court which denied a motion to cancel an expired 16 notice of mechanic's lien in the "exercise of its discretion"). As stated in one preeminent treatise: Once a lien has expired, it cannot be renewed or extended. A court has no inherent power or authority to renew a lien nunc pro tunc to permit an expired lien to become viable. An order attempting to accomplish such an end will be treated as a nullity. Warren's Weed New York Real Property, Mechanic's Liens§ 3.04[1], p. MECH- L 150 (4th ed. 1995). If the Second Department's holding is permitted to stand, it will eviscerate the rule that forbids nunc pro tunc extensions of expired mechanic's liens. Finally, it should be noted that the expiration of a mechanic's lien is akin to the expiration of a notice of pendency, which, like a mechanic's lien, is a right afforded by statute which is of limited duration. If a notice of pendency expires without an order extending it, courts of this state are loath to reinstate the same, nunc pro tunc, after expiration. 10 See Matter of Sakow, 97 N.Y.2d 436, 442 (2002) ("A lapsed notice of pendency may not be revived"); Modular Steel Sys. v. Avlis Contr., Corp., 89 A.D.2d 891, 891 (2d Dept. 1982) (where a notice of pendency expires, it lapses, as does the mechanic's lien extended thereby; both the 10 It should be noted, however, that under certain circumstances, such as in a mortgage foreclosure action, a mortgagee is permitted to re-file an expired notice of pendency by the statutory authority governing mortgage foreclosure actions. No similar authority exits within the confines of the Lien Law to permit are-filing or extension of an expired notice of pendency or mechanic's lien. 17 notice of pendency and mechanic's lien must be cancelled without the possibility of revival). 11 This is so because, once the right has lapsed, it cannot be revived by the court nunc pro tunc. See Matter of Sakow, 97 N.Y.2d at 442; Modular Steel Sys., 89 A.D.2d at 891. It should also be noted that Navillus could have easily prevented the Mechanic's Liens from expiring by either filing its applications earlier, 12 or by moving by order to show cause seeking a temporary extension of the Mechanic's Liens while the applications for an extension were sub judice. (SeeR. at 7, 15, 111-112). Navillus did neither of these things. Likewise, Navillus failed to advise the trial court that it required expedited relief. See id. Instead of taking appropriate steps to ensure the continuity of its liens (by either securing an actual order granting an extension of the same, or by commencing a foreclosure action), Navillus elected to rely upon an alleged unwritten "practice" in Westchester County where judges purportedly grant unopposed applications to extend mechanic's liens nunc pro tunc, after the expiration date. Assuming such a 11 Likewise, in another somewhat analogous circumstance involving Yellowstone injunctions, courts have held that if a lease default is not cured within the period of the injunction, the lease is deemed to expire and cannot be reinstated. First Nat. Stores v. Yellowstone Shopping Center, 21 N.Y.2d 630 (1968). 12 Lienors such as Navillus have been forewarned against making last minute applications for extensions. As noted by Warren's Weed on real property, an application to extend a lien "should be made sufficiently in advance to ensure adequate time to obtain, enter and file the court order with the county clerk prior to the time when the lien would lapse." Warren's Weed New York Real Property, Mechanic's Liens§ 3.05[3][a], p. MECH-L 156 (4th ed. 1995). 18 practice existed (there is no evidence in the Record to support such an assumption), it was, and is, impermissible inasmuch as an order "granted" after the expiration of the extension deadline is a "nullity." See Zoerb and Co., Inc., 134 A.D.2d at 826.13 The trial court lacked authority to extend the Mechanic's Liens, nunc pro tunc, and properly denied Navillus' applications. It is respectfully submitted that the Decision and Order issued by the Second Department should be reversed in all respects and that the Orders of the trial court should be reinstated. II. Strong Public Policy Concerns Balance Against Nunc Pro Tunc Extensions of An Expired Mechanic's Lien The Second Department's holding -- which sanctions the nunc pro tunc extension of an expired mechanic's lien so long as the extension application is timely filed with the county clerk's office within the one-year extension period-- threatens the sanctity of real property transactions throughout the State of New York, and raises serious public policy concerns. Without question, Lien Law § 17 imposes stringent requirements on second and further extensions of a mechanic's lien in order to "limit the duration of any 13 In Zoerb, the Appellate Division, Fourth Department, held that a mechanic's lien expired by operation of law where no extension order was issued between April 1, 1982 (the date a continuation order was issued in favor of the lienor) and April 1, 1983 (the date the lien expired under Lien Law § 17). The Fourth Department further held that several extension orders granted after the expiration date of the mechanic's lien were nullities. The same is equally true in this case, and the Second Department erred in extending Navillus' liens, nunc pro tunc. 19 cloud on title" caused by the mechanic's lien. See 8-92 Warren's Weed New York Real Property § 92.18[3][a] (5th Ed. 2012). Its purpose is to curtail abuses by lienors, like Navillus, who let their liens languish without taking action to prosecute their claims. 14 Unfortunately, the Second Department's holding drastically expands the "rights" afforded to lienors well-beyond what is provided under Lien Law § 17 by allowing them to further extend their mechanic's liens, not based upon the requirements set forth in the statute, but by the mere filing of an ex parte application for an extension of the mechanic's liens within the one- year extension period. The Second Department's holding will allow lienors such as Navillus to more easily cloud title on real property to the prejudice and detriment of landowners, such as LC Main. 15 The Second Department's holding will be prejudicial not just to owners of real property, but to purchasers as well. In most real property transactions, a purchaser secures a lien search just prior to closing in order to insure that there are no superior liens against the property being purchased and to confirm that any 14 It should be noted that Navillus failed to explain to the trial court the reason(s) why it had not yet commenced an action to foreclose its Mechanic's Liens which were initially filed in May of 2008 (R. at 29-31, 36-38). Extension of a mechanic's lien may be denied where, as here, "lienor has no justification for his failure to foreclose ..... " Warren's Weed New York Real Property, Mechanic's Liens§ 3.05[3](b], p. MECH-L 157 (4th ed. 1995). 15 The Second Department's conclusion that LC Main would not be prejudiced by reinstatement of the Mechanic's Lien is not only incorrect, it is contradicted by the record. SeeR. at 111. 20 liens filed against the property have expired by operation of law, thereby rendering them unenforceable as against the purchaser. 16 If extensions are permitted nunc pro tunc, then bona fide purchasers for value will no longer be able to rely upon lien searches to protect them. Furthermore, the reinstatement of mechanic's liens nunc pro tunc will allow a lienor to claim a superior priority interest in the real property at issue over that by the purchaser (as well as any lender financing a purchase), to the detriment of the purchaser (and their lender(s)). This IS a fundamentally unfair result, which cannot and should not be countenanced. Furthermore, the Second Department's holding will undoubtedly cause turmoil for the title insurance industry in the State of New York. Policies of title insurance are underwritten based upon a review of documents affecting title which exist as of the date of closing. The title insurance industry generally relies on the statutory limitations periods established by the Lien Law (such as that set forth under Lien Law § 17) in underwriting policies of title insurance. Once a mechanic's lien has expired by operation of law, it no longer acts as an obstacle to clear title to real property, and title insurance companies generally omit exceptions relating to such liens because they are legal nullities. If the Second Department's 16 Once a mechanic's lien expires, it is ineffective by operation of law without need for a court order. Cf, Triple Cities Constr. Co. v. Dan-Bar Contr. Co., 285 A.D. 299, 306 (3d Dept. 1954) aff'd. 309 N. Y. 665 (1955) (holding that there is no requirement for an order to cancel a lien which has already lapsed). 21 holding is permitted to stand, title insurance underwriters will be less likely to insure transactions where there is an unexpired mechanic's lien of record. This will adversely impact the sale of commercial real estate in the State of New York. Moreover, in order to resolve lingering title concerns, sellers and/or purchasers will undoubtedly be compelled to file applications with the courts to declare expired liens to be nullities, which will put a significant strain on the already overburdened court system of the State ofNew York. Based upon the foregoing, and for the additional reasons set forth herein, the Decision and Order issued by the Second Department should be reversed, and the Orders of the trial court reinstated. III. The Second Department's Reliance Upon CPLR § 2004 Was Improper Even though Navillus did not make an application below for relief under CPLR § 2004, the Second Department relied upon CPLR § 2004 in concluding that an extension of a mechanic's lien may be granted "before or after the expiration ofthe time fixed" therefore under Lien Law§ 17. (SeeR. at 149). In reaching this erroneous conclusion, the Second Department reasoned that a further extension of the already expired Mechanic's Liens nunc pro tunc was not "otherwise expressly prescribed by law." (See R. at 149). The Second 22 Department's decision to grant an extension nunc pro tunc pursuant to CPLR § 2004 was clearly improper. This Court has ruled that CPLR § 2004 "merely confers discretion upon the courts to either grant or deny a motion to extend time limits set in the CPLR." Tewari v. Tsoutsouras, 75 N.Y.2d 1, 9 (1989). Importantly, CPLR § 2004 does not confer the discretion upon courts to extend the statutory time limits set forth in Lien Law§ 17. See Tewari, 75 N.Y.2d at 9. See also Carassavas v. New York State Dept. of Social Services, 90 A.D.2d 630 (3d Dept. 1982) (CPLR § 2004 "has no application to time limits set forth in statutes or regulations other than those contained in CPLR"); Matter of Monahan v. Hartka, 17 A.D.3d 758, 759 (3d Dept. 2005) (same). Without question, the applicability of CPLR § 2004 is expressly limited by its opening phrase: "[ e ]xcept where otherwise expressly prescribed by law .... " CPLR § 2004. In this matter, the applicable law, Lien Law § 17, specifically provides that "[ n ]o lien shall be continued by [an] extension for more than one year from the filing thereof," and that a lien so extended "shall be extinguished [after a period of one year] unless an order [is] granted by a court of record or a judge or justice thereof, continuing such lien ... ," or an action is commenced to foreclose the lien. See Lien Law § 17. The Lien Law does not permit an extension of a mechanic's lien merely upon the filing of an application for an 23 order extending the mechanic's lien. The Second Department erred by impermissibly expanding the manner in which a mechanic's lien may be extended. Assuming, arguendo, that CPLR § 2004 may be used to extend time limitations for doing an act set by other statutes or acts other than the CPLR (although, LC Main submits that it cannot), the Second Department's reliance upon CPLR § 2004 was still improper. At the outset, it must be noted that Navillus did not make an application for relief under CPLR 2004 (and filed no notice of motion seeking such relief), and the Record is bereft of any "good cause" shown for failure to commence an action or secure a court order extending its Mechanic's Liens prior to the expiration of the one-year extension period. As such, Navillus was not entitled to relief under CPLR § 2004, and the Second Department erred in granting such relief. See Conch Associates, Inc. v. Mercury, Inc., 245 A.D.2d 538, 539 (2d Dept. 1997) (defendant not entitled to relief under CPLR § 2004 where it failed to satisfy the prerequisites for a finding of good cause for such relief). Furthermore, time limitations which are "substantive" in nature found in other acts and statutes (other than the CPLR) are "beyond the reach" of CPLR 2004. See Alexander, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C2004:2, pp. 692 (2007) (citing Powers v. Foley, 25 A.D.2d 525 (2d Dept. 1966). Cf Place v. Albanese, 342 N.Y.S.2d 699, 700 (Sup. Ct. Fulton 24 County 1973) (denying a motion under CPLR § 2004 to extend the lien of a judgment that was more than ten years old), aff'd 43 A.D.2d 817 (3d Dept. 1973). The time limitations imposed by Lien Law § 17 are substantive, rather than procedural, in nature. This is clear from the language selected by the Legislature, which expressly provides that "[n]o lien shall be continued by [an] extension for more than one year from the filing thereof," and that a mechanic's lien so extended "shall be extinguished [after a period of one year] unless an order [is] granted by a court of record or a judge or justice thereof, continuing such lien .... " See id. Since the time limitations set by Lien Law § 17 create and preserve (if properly followed) or terminate (if not followed) the substantive rights of lienors, CPLR § 2004 may not be used to extend the time limitations set by Lien Law § 17. It is respectfully submitted that the Second Department erred in relying upon CPLR § 2004 to extend Navillus' Mechanic's Liens, nunc pro tunc, and its Decision and Order should be reversed. IV. The Second Department's Holding Leaves Uncertainty Surrounding The Efficacy OfNavillus's Liens As a final matter, the Second Department's holding leaves much uncertainty concerning the efficacy of the Mechanic's Liens at issue herein, and the duration of the Mechanic's Liens. The only applications before the trial court were 25 applications by Navillus to extend the Mechanic's Liens nunc pro tunc for a period of one (1) year from May 19, 2010 through and including May 19, 2011. In the event the Court determines that the liens were properly extended by the Second Department (although, LC Main submits they were not), the Court should hold that the Mechanic's Liens were only extended, nunc pro tunc, for a period of one year (1) from May 19, 2010 through May 19, 2011. Since the Mechanic's Liens were not further extended by court order or the commencement of an action (and filing of a notice of pendency) before May 19, 2011, the Mechanic's Liens are now legal nullities, and should be declared as such. If the Court does not limit the extension to one (1) year, the Second Department's Order will have had the effect of extending the Mechanic's Liens for more two (2) years successive (i.e., from May 19, 2010 through at least September 12, 2012). 17 It is black-letter law that a mechanic's lien extended by court order may only be extended for a period of one year. See Lien Law § 17 ("No lien shall be continued by court order for more than one year from the granting thereof .... "). Furthermore, a mechanic's lien extended by court order may only be extended by court order for two successive years. See id. ("a new order and entry may be made 17 Navillus would likely argue that the Second Department's Order had the effect of extending the Mechanic's Liens from May 19, 2010 until September 12, 2013 (one year from the Second Department's Order). 26 in each of two successive years"). Simply put, an extension of the Mechanic's Lien for more than two successive years is prohibited by Statute. See Lien Law § 17. The Second Department's Decision and Order should therefore be reversed. CONCLUSION For all the foregoing reasons, and for the reasons that are apparent from the Record, LC Main, LLC, respectfully requests that the Court issue an Order: (i) reversing the Decision and Order of the Appellate Division, Second Department, dated September 12, 2012; (ii) affirming the Orders of the trial court, dated August 9, 2010 and February 14, 2011; and (iii) awarding to LC Main, LLC such other and further relief as it deems just and proper including, but not limited to, reasonable attorneys' fees, costs and disbursements. Dated: White Plains, New York February 14, 2013 DELBELLO DONNELLAN WEINGARTEN WISE & WIEDERKEHR, LLP Brian T. Belowich Michael J. Schwarz 1 North Lexington A venue White Plains, New York 10601 (914) 681-0200 Attorneys for Owner-Appellant LC Main, LLC 27