{"id":903764,"date":"2024-12-26T16:57:52","date_gmt":"2024-12-26T23:57:52","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=903764"},"modified":"2024-12-26T16:58:32","modified_gmt":"2024-12-26T23:58:32","slug":"mechanics-lien-boundries-of-surety-roles","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/mechanics-lien-boundries-of-surety-roles\/","title":{"rendered":"Appellate Court Ruling Clarifies Legal Boundaries of Surety Roles in\u00a0Mechanic\u2019s\u00a0Liens"},"content":{"rendered":"\n<p>Jose A. Aquino | <a href=\"https:\/\/blogs.duanemorris.com\/constructionlaw\/2024\/12\/14\/appellate-court-ruling-clarifies-legal-boundaries-of-surety-roles-in-mechanics-liens\/#page=1\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Duane Morris<\/a><\/p>\n\n\n\n<p>The Supreme Court, Appellate Division, First Department, New York, recently issued a decision in\u00a0<em><a href=\"https:\/\/www.nycourts.gov\/courts\/ad1\/calendar\/List_Word\/2024\/12_Dec\/12\/PDF\/Thorobird%20Grand%20%20v%20%20M.%20Melnick%20%20Co.%20(2023-05190).pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Thorobird Grand LLC et al. v. M. Melnick &amp; Co., Inc., et al.<\/a><\/em>, affirming the lower court\u2019s ruling that granted the plaintiffs\u2019 motion for summary judgment on their cause of action alleging willful exaggeration of <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/mechanics-lien-are-they-the-be-all-end-all-of-construction-collections\/\">mechanic\u2019s liens<\/a> by the defendant Surety.<sup><a href=\"https:\/\/blogs.duanemorris.com\/constructionlaw\/2024\/12\/14\/appellate-court-ruling-clarifies-legal-boundaries-of-surety-roles-in-mechanics-liens\/#_ftn1\"><sup>[1]<\/sup><\/a><\/sup>\u00a0The court invalidated and discharged the Surety\u2019s liens but denied the plaintiffs\u2019 claim for damages under Lien Law \u00a7 39-a.<\/p>\n\n\n\n<p>The court determined that the plaintiffs had demonstrated the Surety did not meet the statutory definition of a contractor under Lien Law \u00a7 2, thereby invalidating its liens. The plaintiffs had engaged M. Melnick &amp; Co., Inc. as their general contractor for certain projects. In accordance with their agreement, Melnick, along with the Surety acting as Melnick\u2019s guarantor, executed payment and performance bonds. Upon Melnick\u2019s termination, which triggered the Surety\u2019s obligations under the performance bond, the Surety elected to retain Melnick to complete the project.<\/p>\n\n\n\n<p>Subsequently, the plaintiffs initiated an action asserting breach of contract claims against both Melnick and the Surety. In response, the Surety filed three mechanic\u2019s liens for unpaid work, while Melnick filed its own liens. The Surety also counterclaimed against the plaintiffs and additional counterclaim defendants, asserting causes of action for breach of contract, quantum meruit, unjust enrichment, declaratory relief, and lien foreclosures. The plaintiffs then filed an amended complaint that included, among other claims, a cause of action for willful exaggeration of liens.<\/p>\n\n\n\n<p>The plaintiffs moved for partial summary judgment on the willful exaggeration claim, contending that the Surety\u2019s liens were invalid as a matter of law because sureties lack the right to file mechanic\u2019s liens. In opposition, the Surety argued that it qualified as a contractor with standing to file liens and had not waived its lien rights by contract.<\/p>\n\n\n\n<p>The court concluded that the takeover agreement between the parties was clear and unambiguous, establishing that the Surety remained in its capacity as a surety and did not assume the role of a contractor. As a result, the court found the Surety lacked standing to file mechanic\u2019s liens. However, it declined to award damages to the plaintiffs under Lien Law \u00a7 39-a, noting that such damages are unavailable when a lien is discharged for reasons other than willful exaggeration.<\/p>\n\n\n\n<p>This decision underscores the importance of precise contractual language and the legal distinction between a surety and a contractor in disputes involving mechanic\u2019s liens.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Jose A. Aquino | Duane Morris The Supreme Court, Appellate Division, First Department, New York, recently issued a decision in\u00a0Thorobird Grand LLC et al. v. M. Melnick &amp; Co., Inc., et al., affirming the lower court\u2019s ruling that granted the plaintiffs\u2019 motion for summary judgment on their cause of action alleging willful exaggeration of mechanic\u2019s&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/mechanics-lien-boundries-of-surety-roles\/\">Continue reading <span class=\"screen-reader-text\">Appellate Court Ruling Clarifies Legal Boundaries of Surety Roles in\u00a0Mechanic\u2019s\u00a0Liens<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[10772],"tags":[9895,441],"class_list":["post-903764","post","type-post","status-publish","format-standard","hentry","category-mechanics-lien-law","tag-advise-consult","tag-mechanics-liens","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Appellate Court Ruling Clarifies Legal Boundaries of Surety Roles in\u00a0Mechanic\u2019s\u00a0Liens - Advise &amp; 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