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THE PERSONAL PROPERTY IN PLAINTIFF’S RENTED STORAGE FACILITY WAS SOLD AT AUCTION BASED ON PLAINTIFF’S PURPORTED FAILURE TO PAY RENT; WHEN THE DEFENDANT STORAGE FACILITY OWNER REALIZED THE RENT HAD BEEN PAID BY PLAINTIFF’S PARTNER, DEFENDANT RESCINDED THE SALE OF PLAINTIFF’S PROPERTY, WAIVED LATE FEES, RETURNED THE MONEY TO THE BUYER AND ADVISED THE BUYER TO RETURN THE PROPERTY TO PLAINITFF; ALLEGING PROPERTY WAS MISSING, PLAINTIFF SUED UNDER LIEN LAW 182 FOR “WRONGFUL SALE” OF THE PROPERTY; AFTER AN EXTENSIVE STATUTORY ANALYSIS, THE SECOND DEPARTMENT DETERMINED LIEN LAW 182 DOES NOT CREATE A PRIVATE RIGHT OF ACTION FOR “WRONGFUL SALE” (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Wooten, affirming Supreme Court, determined defendant could not maintain an action against defendant storage facility based on a violation of Lien Law section 182. Defendant storage facility had not noticed that payments made by plaintiff’s partner, who rented a separate storage facility, were supposed to be applied to plaintiff’s rent. At the time defendant learned of the payments made by plaintiff’s partner, defendant had sold the items in plaintiff’s storage facility at an auction. Defendant rescinded the sale, waived the assessed late fees, returned the money paid by the buyer of plaintiff’s personal property, and advised the buyer to return the property. Plaintiff then sued for “wrongful sale” pursuant to Lien Law 182, alleging that some of his property was missing. Lien Law 182(7)(a) provides that any person claiming an interest goods to be sold at auction can bring a special proceeding within 10 days of the service of notice of the auction. No such special proceeding was brought by plaintiff. Both Supreme Court and the Second Department held that Lien Law 182 does not create a cause of action for “wrongful sale:”

Here, Lien Law § 182 provides that the remedy where a person “disputes the validity of the lien, or the amount claimed,” is to “bring a proceeding hereunder within ten days of the service of the notice” (id. § 182[7][a]), for which the remedy, if the person who commences the proceeding prevails, is “the entry of judgment cancelling the lien or reducing the amount claimed thereunder,” and a directive that “the person shall be entitled to possession of the property” if the lien is canceled (id. § 182[9]). The statute also provides for a “[p]rivate right of action” “for recovery of damages and the return of [the] goods” for “[a]ny occupant damaged by an unlawful detention of his [or her] goods or any other violation of this section” (id. § 182[4][a]).

To the extent the plaintiff attempts to equate his allegation of a wrongful sale with an “unlawful detention,” for which the statute recognizes a “[p]rivate right of action” (id. § 182[4][a]), the plaintiff’s contention is without merit. An “unlawful detention of goods” is unambiguously defined under the statute as an owner’s “refus[al] to surrender goods stored by him [or her] for an occupant upon payment by the occupant of the occupancy fees permitted by this section” (id. § 182[3]). That definition does not mention or reference the sale of goods stored by an owner, and thus, the phrase “unlawful detention” cannot be read as encompassing the plaintiff’s allegation of a wrongful sale. Heins v Public Stor., 2025 NY Slip Op 06605, Second De[t 11-26-25

Practice Point: Lien Law 182 provides that a person with an interest in property to be sold at auction pursuant to the Lien Law may bring a special proceeding to dispute the validity of the lien or the amount claimed within ten days of service of notice of the auction (which was not done here). Lien Law 182 does not create a private right of action for “wrongful sale” of the property at the action. Therefore plaintiff’s “wrongful sale” cause of action was properly dismissed after trial pursuant to CPLR 4401.​

 

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AN ELECTRICAL SUBCONTRACTOR WHICH IS NOT LICENSED IN NEW YORK CITY CANNOT SUE FOR PAYMENT FOR WORK DONE IN THE CITY AND CANNOT FORECLOSE ON RELATED MECHANIC’S LIENS (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined plaintiff electrical subcontractor, Mikoma Tech, did not prove it was licensed to perform electrical work in New York City. Therefore plaintiff could not sue for breach of contract or under a quantum meruit theory and could not foreclose on mechanic’s liens:

… [T]he complaint … failed to allege that Mikoma Tech was licensed to perform electrical work in New York City. As Mikoma Tech was not licensed to perform electrical work in the City, it may not recover against the defendants under a breach of contract or quantum meruit theory and has forfeited the right to foreclose on mechanic’s liens … . Mikoma Elec., LLC v Otek Bldrs., LLC, 2024 NY Slip Op 06332, Second Dept 12-18-24

Practice Point: The rule requiring a license to perform electrical work in New York City is strictly construed. The unlicensed contractor cannot sue for payment and cannot foreclose mechanic’s liens.

 

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HERE THE MARINA OWNER SERVED THE BOAT OWNER WITH A NOTICE OF SALE (FOR FAILURE TO PAY STORAGE FEES) BY MAIL; THE LIEN LAW REQUIRES AN INITIAL ATTEMPT AT PERSONAL SERVICE OF THE NOTICE OF SALE BEFORE RESORTING TO SERVICE BY MAIL; THE FAILURE TO MAKE AN ATTEMPT AT PERSONAL SERVICE BEFORE SELLING THE BOAT VIOLATED THE LIEN LAW; THE SALE OF THE BOAT THEREFORE CONSTITUTED CONVERSION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendant did not properly serve the plaintiff pursuant to the Lien Law. Defendant, a marina-owner, sought to satisfy a garagekeeper’s lien by selling plaintiff’s boat because plaintiff had stopped making payments for storage of the boat. Defendant did not attempt personal service, as required by the Lien Law, and instead served plaintiff by mail. Plaintiff was entitled to summary judgment on the conversion cause of action:

A lienor may satisfy a lien against personal property by selling such property … . However, before such sale is held, the lienor “must serve a notice of sale, by personal service, within the county where [the] lien arose, unless the person to be served cannot with due diligence be found within such county” (… see Lien Law § 201). After exercising due diligence in attempting personal service of the notice of sale, a lienor may then resort to service “by certified mail, return receipt requested, and by first-class mail” to the owner’s last known place of residence … . “[I]nasmuch as a garagekeeper’s lien is a statutory creation in derogation of common law,” the failure to comply with the statutory service requirements “renders service defective” … . The unauthorized disposition of property by a lienor to a third party without proper notice to the owner entitles the owner to damages for conversion … . …

… Since the defendant admitted that it had not exercised due diligence in attempting to serve the notice of sale by personal service before resorting to the statutory alternative of service by mail, the defendant failed to raise a triable issue of fact as to whether it properly served the plaintiff with the notice of sale before disposing of the plaintiff’s boat … . Slattery v Strong’s Mar., LLC, 2024 NY Slip Op 04219, Second Dept 8-14-24

Practice Point: The Lien Law requires a garagekeeper to attempt to personally serve a notice of sale before resorting to service by mail. The failure to attempt personal service of the notice of sale essentially nullifies the notice. A subsequent sale of the property to satisfy the garagekeeper’s lien constitutes conversion.​

 

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THERE WAS A SURPLUS AFTER THE FORECLOSURE SALE OF DEFENDANT’S PROPERTY; DEFENDANT HAD ENTERED A HOME EQUITY LINE OF CREDIT WITH CITIBANK; CITIBANK, NOT DEFENDANT, WAS ENTITLED TO THE SURPLUS FUNDS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the defendant, owner of the equity of redemption after a foreclosure sale of defendant’s property, was not entitled to the surplus funds after the sale. Defendant had entered a home equity line of credit with Citibank. Citibank was entitled to the surplus funds:

“‘[S]urplus money proceedings . . . are not collateral to the foreclosure, but are in the action itself[,] [a]nd the rights of lienors subsequent to the mortgage under foreclosure are before the court and must be protected as much as those of the owner of the property'” … . “‘Surplus money from a foreclosure sale is not a general asset of the owner of the equity of redemption, but stands in the place of the property for the purpose of distribution among those having vested interests in or liens on the property. The rights of the parties are fixed at the time of the foreclosure sale, and the rights of a second lienholder are transferred to any surplus'” … . “Under New York law, the lien of a junior mortgagee who is made a party to a foreclosure action brought by a senior mortgagee, although cut-off and extinguished as to the land, continues as a lien upon the surplus funds arising from the foreclosure” … . “‘[U]pon the foreclosure of the first mortgage, the lien of the second mortgage follow[s] the surplus into the hands of the [municipality’s] financial officer, and the remedy of the second mortgagee is to enforce his or her claim in the court by whose direction the foreclosure had taken place'” … . Maspeth Fed. Sav. & Loan Assn. v O’Connell, 2023 NY Slip Op 06037, Second Dept 11-22-23

Practice Point: In addition to the mortgage which was foreclosed, defendant property-owner had entered a home equity line of credit with Citibank. There were surplus funds after the foreclosure sale. Citibank, not defendant, was entitled to the surplus funds.

 

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HERE THE DEFENDANT SELF-STORAGE FACILITY DID NOT NOTIFY PLAINTIFF OF THE CHANGED SALE-DATE AND DISPOSED OF PLAINTIFF’S PROPERTY TO A THIRD PARTY AT THE TIME OF THE SALE; PLAINTIFF WAS ENTITLED TO SUMMARY JUDGMENT BASED ON DEFENDANT’S VIOLATION OF THE NOTICE PROVISIONS OF THE LIEN LAW AND DEFENDANT’S SUBSEQUENT CONVERSION OF THE PROPERTY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff was entitled to summary judgment against defendant self-storage facility based upon defendant’s violation of the notice provisions of the Lien Law and conversion of the property:

… [T]he defendants failed to satisfy the notice requirements of Lien Law § 182(7). Specifically, the notice sent to the plaintiff failed to “include the time and place” of the sale of his property … , because the sale did not occur on the date set forth in the notice sent to the plaintiff, but was instead rescheduled without notice to him. …

… [A]lthough the Supreme Court properly determined that the defendants had a valid statutory lien and possessory interest in the plaintiff’s property (see Lien Law § 182[6]), such a showing is not sufficient to defeat the plaintiff’s cause of action for conversion in the case at bar. The plaintiff’s cause of action is not predicated upon the defendants’ unauthorized refusal to relinquish possession of the property upon his demand … , but rather upon the defendants’ unauthorized disposition of the property to a third party without proper notice … . Magomedov v Self Stor. Mgt., LLC, 2023 NY Slip Op 05601, Second Dept 11-8-23

Practice Point: To sell property held by a self-storage facility, the Lien Law requires that the property-owner be notified of the time and date of the sale. Here the date of the sale was changed and plaintiff was not notified of the change. The self-storage facility was liable for the Lien Law violation and for conversion (the sale if the property).

 

FAILURE TO INCLUDE ALL THE INFORMATION REQUIRED BY LIEN LAW 201 IN THE NOTICE OF SALE DID NOT WARRANT CANCELLATION OF THE LIENS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the deficiencies in the notice of sale did not warrant cancellation of the liens:

Pursuant to Lien Law § 201-a, within 10 days after service of a notice of sale, the owner or any person entitled to notice may commence a special proceeding to determine the validity of a lien. Here, while service upon the petitioners of the notices of sale was in accordance with the proprietary lease and the cooperative by-laws, the notices of sale did not contain a statement setting forth “[t]he nature of the debt or the agreement under which the lien arose, with an itemized statement of the claim and the time when due,” as required under Lien Law § 201. Nevertheless, the deficiencies in the notices of sale did not provide a basis for cancellation of the liens … . Matter of Ger v Saxony Towers Realty Corp., 2022 NY Slip Op 06243, Second Dept 11-9-22

Practice Point: Lien law 201 requires the notice sale to state “[t]he nature of the debt or the agreement under which the lien arose, with an itemized statement of the claim and the time when due.” The failure to include that information, however, does not warrant cancellation of the lien.

THE COMPOSITE LIEN ENCOMPASSING SEVERAL PARCELS OF PROPERTY WAS NOT INVALID ON ITS FACE BECAUSE IT WAS NOT SHOWN INDIVIDUAL PROPERTY OWNERS HIRED THE RESPONDENT IN SEPARATE TRANSACTIONS; THE LIEN SHOULD NOT HAVE BEEN SUMMARILY DISCHARGED ON THE GROUND THE AMOUNT WAS WILFULLY EXAGGERATED, A FINDING WHICH CAN ONLY BE MADE IN A FORECLOSURE PROCEEDING (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the composite lien encompassing several parcels of real property was not invalid on its face and had not bee declared void for wilful exaggeration. Therefore the validity of the lien must be determined in a foreclosure proceeding:

… [T]he composite mechanic’s lien was facially valid and the Supreme Court should not have summarily discharged it. … [T]he composite mechanic’s lien was not invalid because of a failure to apportion the work and material furnished between the four parcels of real property that were identified in the composite mechanic’s lien. The requirement to do so “applies where several transactions, involving the improvement of distinct parcels of property, have been effected at the request of independent owners” … . Here, the petitioners failed to establish that the individual and independent lot owners identified in the composite mechanic’s lien hired BKS in separate and distinct transactions. Furthermore, the composite mechanic’s lien was not invalid on its face merely because it identified multiple lots by their respective tax block and lot designations … . …

The Supreme Court also should not have summarily determined that branch of the petition which alleged that the amount claimed in the composite mechanic’s lien was willfully exaggerated. “Pursuant to Lien Law § 39, the court may declare a lien void and deny recovery if the lienor has willfully exaggerated the amount claimed” … . This Court has held that the remedy in Lien Law § 39-a is “available only where the lien was valid in all other respects and was declared void by reason of willful exaggeration after a trial of the foreclosure action” … . Matter of Matrix Staten Is. Dev., LLC v BKS-NY, LLC, 2022 NY Slip Op 02795, Second Dept 4-27-22

Practice Point: Here the lien should not have have summarily discharged on the ground it encompassed several parcels of property because it was not shown the individual property owners hired respondent in separate transactions. The finding that the amount of the lien was wilfully exaggerated is not a ground for summary discharge. Wilful exaggeration will void a lien, but that determination must be made in a foreclosure proceeding.

 

PETITIONER, PURSUANT TO LIEN LAW 38, HAS A RIGHT TO AN ITEMIZED STATEMENT BREAKING DOWN THE AMOUNT OF A MECHANIC’S LIEN; THE INFORMATION PROVIDED BY THE RESPONDENT HERE WAS DEEMED INSUFFICIENT TO SATISFY LIEN LAW 38 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the petition seeking an itemized statement breaking down the amount of a mechanic’s lien should have been granted:

Lien Law § 38 provides, in relevant part, that “[a] lienor who has filed a notice of lien shall, on demand in writing, deliver to the owner or contractor making such demand a statement in writing which shall set forth the items of labor and/or material and the value thereof which make up the amount for which he [or she] claims a lien, and which shall also set forth the terms of the contract under which such items were furnished.” The documents provided by the respondent in opposition to the petition failed to comply with the requirements of Lien Law § 38. The documents, among other things, failed to sufficiently set forth “‘the items and cost of labor, or the items and cost of materials'” … . Matter of Red Hook 160, LLC v Borough Constr. Group, LLC, 2022 NY Slip Op 02267. Second Dept 4-6-22

​Practice Point: When a notice of a mechanic’s lien is filed the contractor or owner, pursuant to Line Law 38, has the right to request a statement breaking down the items and cost of labor or the items and cost of materials.

 

THE TIMELY FILING OF A SECOND MECHANIC’S LIEN TO CORRECT PROBLEMS WITH THE FIRST MECHANIC’S LIEN WHICH HAD BEEN CANCELLED BY THE COURT IS NOT PROHIBITED BY THE LIEN LAW (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the Lien Law does not prohibit a second filing of a mechanic’s lien after the cancellation of the first:

Lien Law § 38 requires a lienor, upon demand, to provide a statement in writing setting forth, among other things, “the items of labor and/or material and the value thereof which make up the amount for which he [or she] claims a lien.” The statute further authorizes the commencement of a special proceeding upon a lienor’s failure to comply, and ultimately permits a court to cancel a lien if the lienor does not sufficiently comply with a court order requiring itemization … . The statute, however, does not prohibit a lienor from filing a new lien on the same claim following such cancellation … , and the courts have generally recognized that the timely filing of a successive lien on the same claim is permissible to cure an irregularity … . Matter of Red Hook 160, LLC v 2M Mech., LLC, 2022 NY Slip Op 01794, Second Dept 3-16-22

Practice Point: It is OK to file a second mechanic’s lien correcting problems in the first mechanic’s lien which was cancelled by the court.

 

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THE MOTION TO DISMISS THE ARBITRATION IN THIS ACTION ALLEGING NONPAYMENT FOR CONSTRUCTION WORK SHOULD NOT HAVE BEEN GRANTED; THE ARBITRATOR RULES ON PAYMENT FOR LABOR AND MATERIALS; COURTS RULE ON THE VALIDITY OF MECHANIC’S LIENS (FIRST DEPT).

The First Department noted that an arbitrator’s ruling on the value of labor an materials is conclusive for all parties, but it is not conclusive on the validity of the underlying mechanic’s lien itself. Here the contactor, Flowcon, filed mechanic’s lens alleging defendant, Andiva, failed to pay for construction work on Andiva’s townhouse. The construction contract required arbitration and granted the arbitrator broad powers. Supreme Court granted Andiva’s motion to dismiss the arbitration and the First Department reversed, compelled arbitration and stayed the LIen Law counterclaims:

The AAA’s Construction Industry Arbitration Rules provide that the arbitration tribunal shall rule on its own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement. Thus, the threshold issue of the arbitrability of Flowcon’s claims alleging nonpayment is one for the arbitrator, not the courts, particularly given the parties’ broad arbitration clause … . To the extent Andiva argues that arbitration would usurp the court’s “gatekeeper” role of ruling upon the validity of a lien and undermine the public policy underlying the remedies afforded a lienee under Lien Law §§ 39 and 39-a since its allegation of lien exaggeration would be effectively resolved by an arbitrator rather than a court, the argument is unavailing. This Court has held that an arbitrator’s decision as to the value of labor and materials is conclusive as to all parties to the arbitration but not conclusive as to the validity of the mechanic’s lien itself … . Flowcon, Inc. v Andiva LLC, 2021 NY Slip Op 06756, First Dept 12-2-21

 

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