J. Castronovo, Inc. v. Hillside Development Corp.

160 A.D.2d 763, 553 N.Y.S.2d 481, 1990 N.Y. App. Div. LEXIS 4293
CourtAppellate Division of the Supreme Court of the State of New York
DecidedApril 9, 1990
StatusPublished
Cited by5 cases

This text of 160 A.D.2d 763 (J. Castronovo, Inc. v. Hillside Development Corp.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
J. Castronovo, Inc. v. Hillside Development Corp., 160 A.D.2d 763, 553 N.Y.S.2d 481, 1990 N.Y. App. Div. LEXIS 4293 (N.Y. Ct. App. 1990).

Opinion

an action to foreclose a mechanic’s lien, in which the plaintiff moved to confirm an arbitration award dated September 6, 1988, (1) the defendant Hillside Development Corp. appeals from a judgment of the Supreme Court, Westchester County (Palella, J.), entered March 17, 1989, which, upon confirmation of an arbitrator’s award dated September 6, 1988, is in favor of the plaintiff and against it in the principal sum of $80,967.75; and (2) the defendants Hillside Development Corp. and Aetna Casualty & Surety Company appeal, as limited by their brief, from so much of an order and resettled judgment (one paper) of the same court, entered August 15, 1989, as, upon confirmation of the arbitration award, dated September 6, 1988, granted that branch of the plaintiff’s motion which was to resettle the judgment entered March 17, 1989, to provide for entry of judgment against the defendant Aetna Casualty & Surety Company, and is in favor of the plaintiff and against them in the principal sum of $80,967.75.

Ordered that the appeal from the judgment entered March 17, 1989, is dismissed as that judgment was superseded by the order and resettled judgment (one paper), made upon the plaintiff’s motion for resettlement; and it is further,

Ordered that the order and resettled judgment (one paper), entered August 15, 1989, is modified, on the law and as a matter of discretion, (1) by deleting the provision thereof which granted that branch of the plaintiff’s motion which was to resettle the judgment entered March 17, 1989, to provide for entry of judgment against the defendant Aetna Casualty & Surety Company, and by substituting therefor a provision granting that branch of the plaintiff’s motion which was for the alternative relief of severing the action against the defendant Aetna Casualty & Surety Company, and (2) by deleting the provision thereof which is in favor of the plaintiff and against the defendant Aetna Casualty & Surety Company in the principal sum of $80,967.75; as so modified, the order and [764]*764resettled judgment (one paper) is affirmed insofar as appealed from; and it is further,

Ordered that the action against the defendant Aetna Casualty & Surety Company is severed and its time to serve an answer to the amended complaint is extended until 30 days after service upon it of a copy of this decision and order, with notice of entry; and it is further,

Ordered that the defendant Aetna Casualty & Surety Company is awarded one bill of costs payable by the plaintiff.

In 1985, the plaintiff contractor filed a mechanic’s lien with respect to certain property located in Greenberg, New York, and allegedly owned by defendant Hillside Development Corp. (hereinafter Hillside). In its amended notice of mechanic’s lien, the plaintiff claimed that it was owed $216,584 for certain labor which it had performed in connection with a construction project at that location. The plaintiff subsequently commenced the instant action to foreclose on the mechanic’s lien.

In July 1985, the court, upon the application of Hillside, fixed $220,000 as the amount of the undertaking needed in order to discharge the lien. A bond in this amount was subsequently issued by the defendant Aetna Casualty & Surety Company (hereinafter Aetna) and, by order dated August 22, 1985, the lien was discharged. The plaintiff later served an amended complaint, dated September 17, 1985, naming Aetna as a party defendant, and demanding, inter alia, a judgment in the sum of $216,584 against both Hillside and Aetna. It is not clear when or how this amended complaint was served. Aetna has not yet answered this amended complaint.

In October 1985, Hillside moved to compel the plaintiff to arbitrate its claim and for a stay of the foreclosure action. By order dated December 6, 1985, the court granted Hillside’s application, referred the matter to arbitration, and stayed all proceedings in the foreclosure action "pending the outcome of arbitration”. On September 6, 1988, an arbitrator made an award in favor of the plaintiff and against Hillside, which was confirmed by the court by order dated February 22, 1989. The confirmed arbitration award was subsequently incorporated in a judgment entered March 17, 1989, in favor of the plaintiff and against Hillside in the principal sum of $80,967.75.

On March 1, 1989, the plaintiff made a motion, inter alia, for "resettlement” of the order dated February 22, 1989, "so as to provide for entry of judgment against” Aetna, in effect, [765]*765making the arbitration award binding against Aetna as well as Hillside. In support of this motion, the plaintiff alleged that Aetna had had the opportunity to participate in the arbitration, and that Aetna’s attorneys had been served with notice of the motion to confirm the arbitration award.

Hillside opposed the plaintiff’s motion and cross-moved to vacate the stay of the foreclosure action. In support of this cross motion, the attorneys who represented Hillside stated that neither Hillside nor Aetna had served an answer to the amended complaint in the foreclosure action because they had been prohibited from doing so by the stay contained in the order dated December 6,1985.

On April 21, 1989, Aetna made a cross motion to quash a certain subpoena and to stay enforcement of the judgment entered March 17, 1989. Aetna’s attorney stated that, on or about March 21, 1989, the plaintiff had purported to commence an entirely new action in Supreme Court, Nassau County, to enforce the March 17th judgment against Aetna. (Aetna has apparently moved to dismiss that action pursuant to CPLR 3211 [a] [4]; however, this motion is not part of the present record.) Aetna’s attorney also argued that the Nassau County action represented an attempt by the plaintiff to circumvent the requirement that it demonstrate the validity of its lien prior to seeking enforcement of the terms of Aetna’s bond.

The Supreme Court, in an order and resettled judgment (one paper) entered August 15, 1989, granted the plaintiff’s motion for resettlement and, upon resettlement, entered judgment in the principal sum of $80,967.75 against both Hillside and Aetna. The court denied Hillside’s and Aetna’s separate cross motions, and this appeal followed.

The court erred in holding that Aetna was obligated by the terms of its bond to pay the arbitration award, which was made in a proceeding (in which Aetna did not participate) against Aetna’s principal. A surety on a bond given to discharge a mechanic’s lien is not liable unless the lien is proved to have been valid, and the surety is free to litigate the validity of the lien whenever the lienor seeks to enforce it. In other words, a valid lien must be judicially established before a surety may be made to pay pursuant to its bond (see, Matter of Brescia Constr. Co. v Walart Constr. Co., 264 NY 260; Sexauer & Lemke v Burke & Sons Co., 228 NY 341; Berger Mfg. Co. v City of New York, 206 NY 24; Milliken Bros. v City of New York, 201 NY 65; Matter of Cooper v Emmanuele, 25 AD2d 809; A. L. Plumbing & Heating Co. v Kesdeit Realty [766]*766Corp., 15 AD2d 546; Simonelli v Guidone & Son, 201 App Div 44; Bernardo v Steelco, 115 Misc 2d 1020, 1022-1023; 76 NY Jur 2d, Mechanics’ Liens, § 124).

The court also erred in summarily granting judgment against Aetna in the context of an action to foreclose a mechanic’s lien in which Aetna had not yet appeared.

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Cite This Page — Counsel Stack

Bluebook (online)
160 A.D.2d 763, 553 N.Y.S.2d 481, 1990 N.Y. App. Div. LEXIS 4293, Counsel Stack Legal Research, https://law.counselstack.com/opinion/j-castronovo-inc-v-hillside-development-corp-nyappdiv-1990.