Stanley A. Martin – November 20, 2013
A lien claimant has learned the hard way that proof of the amount due must be established at trial, and one cannot simply rely on the existence of the lien claim to prove what is due. Absent the necessary proof, the lien will be dismissed.
Mechanic’s liens are security interests in real property. In order to invoke the right of a secured party, the lien claimant must establish the amount due, particularly if there is a dispute. Once the amount due is established or proven, the lien is available to secure that amount, assuming equity in the property. Woe to the party who skips an essential step! But that is exactly what happened in a case leading to a New York Appellate Division decision.
Peri Formwork claimed to be owed almost $500,000 on a commercial construction project. Through a series of court decisions and at least one prior appeal, Peri had established its rights against lien bonds posted as substitute security for its lien claim. At trial on the merits, Peri insisted that it did not need to prove the amount of its lien, and argued that the amount had been established in a prior decision. But the prior decision had only confirmed the validity of the lien claim against the bond, with the amount to be determined later. So Peri’s failure to establish the amount it was owed, at the later trial, either via evidence of a contract or evidence of the value furnished, was fatal to its claim. The decision, in Peri Formwork Systems v. Lumbermens Mutual Casualty Company, 2013 NY Slip Op 7461, is available here.
A mechanic’s lien, as with any security interest, requires proof of the underlying debt or obligation. The security interest may be critical to getting paid, but proving the amount due is equally critical.
via Lien equals security interest, but lien does not equal proof of amount due – Lexology.