| JC Ryan EBCO/H&G, LLC v Lipsky Enters., Inc. |
| 2010 NY Slip Op 08073 [78 AD3d 788] |
| November 9, 2010 |
| Appellate Division, Second Department |
| JC Ryan EBCO/H&G, LLC, Respondent, v LipskyEnterprises, Inc., et al., Appellants. |
—[*1] Elias C. Schwartz, Great Neck, N.Y. (Michelle Englander of counsel), forrespondent.
In an action to recover damages for breach of contract and to recover on a labor and materialpayment bond, the defendants appeal from an order of the Supreme Court, Suffolk County(Baisley, J.), dated April 14, 2009, which denied their motion to dismiss the complaint pursuantto CPLR 3211 (a) (5) as time-barred.
Ordered that the order is affirmed, with costs.
In 2006 the defendant Lipsky Enterprises, Inc. (hereinafter Lipsky), a general contractor, wasawarded a contract to perform certain renovation and/or construction work at a SuffolkCommunity College (hereinafter SCC) campus. In connection with this project, Lipsky and thedefendant Arch Insurance Company (hereinafter Arch), as surety, executed and delivered a laborand material payment bond to SCC. That bond provides, in relevant part, that a lawsuit by aclaimant thereunder must be filed within one year of the date "on which the last labor or servicewas performed by anyone or the last materials or equipment were furnished by anyone under theConstruction Contract."
In connection with the SCC project, on or about June 6, 2006, Lipsky entered into asubcontract with the plaintiff, JC Ryan EBCO/H&G, LLC (hereinafter JC Ryan). JC Ryanprovided doors, door frames, other materials, and certain labor services at this project. Thesubcontract includes a clause commonly known as a "pay-when-paid" clause which provides,inter alia, that the "payment by the Owner of any progress or final payment is a conditionprecedent to Contractor's obligation to make payment to the Subcontractor." This same clausefurther states that the "Subcontractor agrees to pursue lien foreclosure action to final judgment asa condition precedent to commencing any action against the Contractor." The subcontract alsocontains a six-month limitations provision. Specifically, it states that any action by thesubcontractor "relating in any way to the performance or breach" of the subcontract, including acause of action "for the enforcement of any trust which may be imposed by any applicable lawupon assets in the hands of the Contractor," must be commenced within six months, among otherthings, "after the Work of the Subcontractor has been substantially completed."
On or about February 5, 2008, JC Ryan sent to SCC a "Notice Under Mechanic's Lien Lawfor Account of Public Improvement." That notice states that as of February 5, 2008, [*2]Lipsky Enterprises owed JC Ryan the sum of $47,544.78.
JC Ryan commenced this action against Lipsky and Arch by summons and complaint datedMay 8, 2008. The defendants moved to dismiss the complaint as time-barred pursuant to CPLR3211 (a) (5), arguing, inter alia, that the action was untimely because it had not been commencedwithin six months of the date of substantial completion of JC Ryan's work.
We agree with the conclusion by the Supreme Court that a "pay-when-paid" clause, such asthe one herein, "which forces the subcontractor to assume the risk that the owner will fail to paythe general contractor is void and unenforceable as contrary to public policy set forth in the LienLaw § 34" (West-Fair Elec. Contrs. v Aetna Cas. & Sur. Co., 87 NY2d 148, 158[1995]; see Certified Fence Corp. v Felix Indus., 260 AD2d 338, 339 [1999]). Inaddition, the six-month limitations clause in the subcontract conflicts with the pay-when-paidclause since the subcontractor's right to bring an action against the contractor and/or its right tobring an action to foreclose a mechanic's lien might not ripen until after the expiration of thesix-month limitations period (see West-Fair Elec. Contrs. v Aetna Cas. & Sur. Co., 87NY2d 148 [1995]; Certified Fence Corp. v Felix Indus., 260 AD2d 338 [1999]).Moreover, contrary to the defendants' contention, the "pay-when-paid" clause and the contractuallimitations clause are not severable (see generally Christian v Christian, 42 NY2d 63, 73[1977]). Therefore, the Supreme Court correctly concluded that the action was not time-barred asa result of the contractual six-month limitations clause. Further, since the defendants' motion didnot seek to dismiss the action as untimely pursuant to State Finance Law § 137 (4) (b),Arch's contention regarding this statute as a basis for dismissal is not properly before this Court(see Ross v Gidwani, 47 AD3d912 [2008]; Vera v Soohoo, 41AD3d 586 [2007]).
The defendants' remaining contentions are without merit.
Accordingly, the defendants' motion to dismiss the complaint was properly denied Skelos,J.P., Fisher, Santucci and Leventhal, JJ., concur.