Zombie Liens May Haunt New York
At odds with with its own prior case law, the Second Department has granted the continuation of two mechanics’ liens that were extinguished more than two years earlier. Matter of Navillus Tile, Inc., 2012 NY Slip Op 06143(2nd Dept., Sept. 12, 2012) .
Both liens had been properly filed pursuant to Lien Law §10 and properly extended pursuant to Lien Law §17. The problem began when the lienor attempted to obtain a court order continuing the liens beyond the initial extension. The lienor submitted its petitions to the court clerk four days before the liens would be extinguished. The petitions were not delivered to the Supreme Court Justice until three days after the extinguishment date. Supreme Court concluded that it was powerless to continue the extinguished liens.
Relying on CPLR §2004, the Second Department concluded that Lien Law §17 does not preclude a nunc pro tunc continuation “where the application is timely filed but not presented to a judge or justice until after the expiration date.”
The panel distinguished Contelmo's Sand & Gravel v. J & J Milano, Inc., 96 AD2d 1090 (2nd Dept., 1983), saying that it “did not squarely address the issue presented in this case.” But Contelmo explicitly stated that “when [the mechanics’ lien] was allegedly renewed [a week after it expired], it was no longer valid, and the purported renewal is thus a nullity.” The Court also distinguished Matter of Binghamton Masonic Temple, Inc., v. Armor Elevator Company, Inc., 186 A.D.2d 338 (3rd Dept., 1992) as likewise not addressing the issue, but promptly turned around and cited the same case as supporting the holding in the case at bar. Masonic Temple had held that “as long as the court-ordered extension was granted within the one-year time period, the fact that it was not filed [with the County Clerk] within that time does not extinguish the lien” [emphasis supplied].
Lien Law §17 does not explicitly require the filing of a notice of pendency in connection with a continuation petition and it is probably not authorized under CPLR §6501. The opinion does not mention whether one was filed in this case. The Court notes only that the owner “would not be prejudiced by the granting of the extensions nunc pro tunc,” but there is no discussion of the effect this ruling might have on intervening mortgagors, lienors or UCC fixture filers. In the absence of some type of notice, how can one rely on the public record? Merely checking the mechanics’ lien index would yield nothing more than two extinguished liens. Due to the posture of a proceeding of this nature, it is unclear whether a court would, sua sponte, inquire into the existence of intervening interests and require their joinder.
Compounding the surreal aspect of this case, the Court granted the original petitions “nunc pro tunc to May 19, 2010, the date the petitions were filed.” Pursuant to the Lien Law, a continuation is effective for only one year, and no more than two consecutive continuations can be granted in any case. So these liens could never have been continued beyond May 19, 2012. But the Court’s decision (and grant of the petitions) is dated September 12, 2012. On its face, it appears the Court has granted continuations that, themselves, have already expired by operation of law!