Court Reminds Lienors That an Itemized Statement of Lien Must Detail Both Extra And Base Contract Work

This column has often extolled the virtues of the mechanic’s lien as a powerful tool to assist unpaid contractors to get paid for their work. This tool, as a creation of statute, balances the power of the lien by offering protections for the party against whom the lien is filed. One of these protections is the ability of the party against whom the lien is filed to demand an itemized statement of the items comprising the lien, which is to be sworn to by the lienor. Section 38 of the Lien Law specifically provides that upon such a demand, the lienor “shall set forth the items of labor and/or material and the value thereof which make up the amount for which he claims a lien, and which shall also set forth the terms of the contract under which such items were furnished”. A court, in the recent case of CPARE LLC v Trinchese Iron Works & Construction, Inc., reminds us that where the owner or upstream contractor is not only disputing extra work, but also the performance of the base contract work, the response to a demand for an itemized statement of lien must provide details as to all of the work at issue.

Background

CPARE is the owner of a property on East 6th Street in Manhattan. In February of 2021, CPARE hired The J360 Construction Co. as its construction manager for a construction project at the property. J360, in turn, retained Trinchese Iron Works & Construction as a subcontractor to perform certain iron work at the project. Trinchese ceased its work at the project in June of 2021, with CPARE arguing that Trinchese abandoned the project. Trinchese filed a $40,000 mechanic’s lien against the property in November of 2021, which lien was extended in October of 2022. In April of 2023, CPARE served a demand, pursuant to Section 38 of the Lien Law, for an itemized statement of the lien. In response, Trinchese provided a copy of the contract and a copy of its invoice. Upon the receipt of the bare bones response, CPARE brought a special proceeding to compel a more definite statement or, if Trinchese refused, to cancel its lien.

Decision

The court granted the petition and ordered Trinchese to provide a more definite statement of its lien. In doing so, the court analyzed Trinchese’s response—which would have been sufficient had the lump sum contract been completed—but noted that as there was a dispute as to the nature and value of the work, it was necessary for Trinchese to apprise CPARE of the details of the entirety of its claim. The court, however, did not go so far as to cancel the lien as a response was provided, noting that such a harsh remedy would only be appropriate if Trinchese was unwilling or unable to provide the required statement.

Comment

As the CPARE Court noted, the purpose of an itemized statement of lien is to apprise the demanding party of all of the items of materials and labor which comprise the lien. As a practical matter, the response should look like a time and materials statement. Clearly, particularly on a larger project, this can be quite a time consuming endeavor—especially in light of the statute’s short five-day period for responding to the demand. Accordingly, where there is a lump sum contract involved, the temptation for the lienor is to provide, as Trinchese did here, a copy of the contract and a copy of its invoice. In such cases, the fight is often over whether or not the job was substantially complete such that a contract and invoice response would be sufficient. Because the target of the lien will argue that there are issues with the performance of the base contract work, it is not often that a lienor can get away with such a simple response. Accordingly, lienors would be well advised to keep sufficient records to enable them to fully respond to a demand for an itemized statement of the lien. Failing such, a court has the ability to cancel the lien and leave the lienor to its contract rights, if any.

If you would like more information regarding this topic please contact Thomas H. Welby at twelby@wbgllp.com or call (914) 428-2100