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COUNTERCLAIM ALLEGING PLAINTIFFS’ BREACH OF A HOME IMPROVEMENT CONTRACT WAS NOT VIABLE BECAUSE DEFENDANT CONTRACTORS DID NOT COMPLY WITH THE MECHANIC’S LIEN NOTICE REQUIREMENT OF GENERAL BUSINESS LAW 771, PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT ON THEIR LIEN LAW CAUSE OF ACTION SHOULD HAVE BEEN GRANTED (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, determined that defendants-contractors’ breach of contract counterclaim should have been dismissed because defendants did not provide the mechanic’s lien notice required by General Business Law 771 and summary judgment on plaintiffs’ Lien Law cause of action should have been granted. The action concerned home improvement work done by defendants. The notice failure did not preclude defendants’ recovery pursuant to quantum meruit:

… [P]laintiffs established that the contract at issue failed to comply with General Business Law § 771 inasmuch as it did not “contain the following notice to the owner in clear and conspicuous bold face type: Any contractor, subcontractor, or materialman who provides home improvement goods or services pursuant to your home improvement contract and who is not paid may have a valid legal claim against your property known as a mechanic’s lien’ ” … [The] failure “to enter into a signed written home improvement contract in conformity with General Business Law § 771 bars recovery based upon breach of contract” … . …

Plaintiffs met their initial burden [on their Line Law cause of action] … by establishing that … defendants possessed trust funds within the meaning of the Lien Law and failed to keep the records required by that statute. Lien Law § 75 (4) provides that the “[f]ailure of the trustee to keep the books or records required by th[at] section shall be presumptive evidence that the trustee has applied or consented to the application of trust funds actually received by him [or her] . . . for purposes other than a purpose of the trust as specified in section seventy-one of this chapter”  The evidence submitted by … defendants in opposition to the motion … supported the conclusion that they neglected to comply with the … .requirements of Lien Law § 75 … . Weiss v Zellar Homes, Ltd., 2019 NY Slip Op 01024, Fourth Dept 2-8-19

 

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