| G. Rama Constr. Enters., Inc. v 80-82 Guernsey St. Assoc.,LLC |
| 2007 NY Slip Op 06631 [43 AD3d 863] |
| September 11, 2007 |
| Appellate Division, Second Department |
| G. Rama Construction Enterprises, Inc., Appellant, v 80-82Guernsey Street Associates, LLC, et al., Respondents, et al.,Defendants. |
—[*1] Heller, Horowitz & Feit, P.C., New York, N.Y. (Jacob W. Heller, Richard F. Horowitz, andAllen M. Eisenberg of counsel), and King & King, LLP, Long Island City, N.Y. (Peter M. Kutilof counsel), for respondents (one brief filed).
In an action, inter alia, to recover damages for breach of contract and to foreclose amechanic'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 seekingpayment of a bond securing its mechanic's lien and granted the cross motion of the defendants80-82 Guernsey Street Associates, LLC, Nova Casualty Company, and Eric Mann for summaryjudgment 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 November17, 2003, in which it claimed the amount of $473,000 allegedly due and owing for "extra" workperformed on the construction of a condominium building on property owned by the defendant80-82 Guernsey Street Associates, LLC (hereinafter GSA). In its complaint, the plaintiff allegesthat in October 2002 it entered into "a series of oral agreements" with GSA and itsvice-president, the defendant Eric Mann, to furnish and supply labor, equipment, and materialsfor excavation, foundation, and construction work on the project, and that GSA and Mann failedto 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 [*2]plaintiff now sought payment of thatamount from a bond secured by GSA from the defendant Nova Casualty Company (hereinafterNova).
In answer to the complaint, the defendants GSA, Mann, and Nova (hereinafter thedefendants) denied that they owed any payments to the plaintiff or that they ever authorized orapproved of any extra work. They also averred that the project was governed by a writtenconstruction contract entered into by the plaintiff and Mann on October 11, 2002, pursuant towhich all claims for extra work and change orders needed to be memorialized in writing. Thedefendants also denied that the JHO established the validity of the plaintiff's lien. Rather, theyclaimed that the JHO's decision merely denied their underlying motion to void the lien for willfulexaggeration under section 39 of the Lien Law and denied the plaintiff's underlying cross motionto 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 thisaction or in the related action." The defendants also asserted a counterclaim alleging breach ofcontract and seeking damages in excess of $1.5 million.
The plaintiff moved for partial summary judgment seeking to foreclose on its lien in theamount of $469,000 on the basis that the JHO judicially established the validity and amount ofthe lien, entitling it to res judicata effect against the surety. The defendants opposed the motionand cross-moved for summary judgment on the ground that the plaintiff's claim was barred by theparties' written contract, which precluded any claims for oral extras and change orders notdocumented in writing.
The Supreme Court properly denied the plaintiff's motion. Contrary to the plaintiff'scontention, the court properly found that the validity and amount of the lien was not judiciallyestablished by the ruling of the JHO. A JHO derives his or her authority from an order ofreference 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 determinationof the parties' respective motions in the underlying third-party action. Accordingly, the JHO'sdetermination that the plaintiff's lien was not willfully exaggerated under Lien Law § 39and that the plaintiff was not entitled to amend its lien upward nunc pro tunc did not judiciallyestablish the lien for purposes of securing payment on the bond secured by Nova.
"A valid mechanic's lien must be judicially established before a surety may be made to paypursuant to its bond" (Royal Ins. Co. of Am. v Citizens Devs. of Oneonta, 200 AD2d804, 806 [1994]; see J. Castronovo, Inc. v Hillside Dev. Corp., 160 AD2d 763, 765[1990]; Martirano Constr. Corp. v Briar Contr. Corp., 104 AD2d 1028, 1031 [1984]).Here, since the lien had yet to be judicially established, Nova was not bound to pay.
Additionally, the court properly determined that the defendants were not collaterallyestopped from challenging the validity of the lien. "The doctrine of collateral estoppel, anarrower species of res judicata, precludes a party from relitigating in a subsequent action orproceeding an issue clearly raised in a prior action or proceeding and decided against that party orthose in privity, whether or not the tribunals or causes of action are the same" (Ryan v NewYork Tel. Co., 62 NY2d 494, 500 [1984]). The party seeking the benefit of collateralestoppel must prove that the identical issue was necessarily decided in the prior action and isdecisive in the present action, and the party attempting to defeat its application has the burden ofestablishing the absence of a full and fair opportunity to contest the prior determination (seeD'Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659, [*3]664 [1990]; Kaufman v Eli Lilly & Co., 65 NY2d 449, 456[1985]). Contrary to the plaintiff's contention, the hearing before the JHO was limited in scopeand did not actually determine the merits of the defendants' defenses. Accordingly, the trial courtproperly concluded that the defendants were not precluded from raising their defenses to theplaintiff's lien in the instant action.
The Supreme Court also properly granted the defendants' cross motion for summaryjudgment. The defendants demonstrated their prima facie entitlement to judgment as a matter oflaw (see generally Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; see alsoMartin Iron & Constr. Corp. v Howell Co., 242 AD2d 608, 609 [1997]). In support of theircross motion, the defendants submitted the parties' written contract, which expressly precludedoral extras or change orders not documented in writing, as well as an affidavit by Mann, in whichhe stated that the plaintiff's claims for alleged extras and change orders were never approved orauthorized. In opposition, the plaintiff failed to raise a triable issue of fact sufficient to defeatsummary judgment (see Zuckerman v City of New York, 49 NY2d 557, 562 [1980];Martin Iron & Constr. Corp. v Howell Co., supra).
The plaintiff's remaining contentions either are improperly raised for the first time in its replybrief on appeal, or are without merit (seeCappiello v Johnson, 21 AD3d 921 [2005]). Miller, J.P., Goldstein, Fisher and Covello,JJ., concur.