28 N.Y.3d 45 (2016)

A dispute over the reasonableness of claimed expenses in a facially valid notice of lien must be resolved in a foreclosure trial, not through summary discharge.

Summary

This case concerns the New York City Department of Housing Preservation and Development (HPD) placing liens on properties to recover relocation expenses. The central issue is whether a court can summarily discharge a lien, under Lien Law § 19(6), if the notice of lien seeks an unreasonable amount of expenses. The court held that summary discharge is inappropriate if the notice of lien is facially valid. Disputes about the reasonableness of claimed expenses must be resolved at a foreclosure trial. The court emphasized that facial invalidity exists only under specific circumstances not present in this case, such as the lien not including the information required by Lien Law § 9.

Facts

In the case of Rivera, the Fire Department issued a vacate order for a building in Brooklyn owned by Rivera. HPD provided temporary shelter to tenants. HPD filed a notice of lien to recover its relocation expenses. Rivera sought to summarily vacate the lien, arguing that the expenses were unreasonable. The Supreme Court held HPD’s shelter service expenses were lienable and that a foreclosure trial was the appropriate venue to dispute the validity of the lien. The Appellate Division affirmed. In the Enriquez case, the Department of Buildings issued a vacate order for a building owned by Enriquez. HPD provided relocation services. HPD filed a notice of lien. Enriquez argued the lien was facially invalid, but Supreme Court disagreed. The Appellate Division reversed, finding the notice of lien facially invalid. The New York Court of Appeals consolidated the cases.

Procedural History

In Rivera, the Supreme Court granted HPD’s motion to dismiss Rivera’s complaint to summarily vacate the lien and denied Rivera’s cross-motion for summary judgment. The Appellate Division, Second Department affirmed. In Enriquez, Supreme Court granted HPD’s motion to dismiss the petition to summarily vacate the lien. The Appellate Division, First Department reversed, holding the notice of lien facially invalid. The Court of Appeals granted leave to appeal in both cases, consolidating them to resolve conflicting approaches to facial validity.

Issue(s)

1. Whether a court may summarily discharge a lien for relocation expenses under Lien Law § 19(6) based on a claim that the expenses are unreasonable.

2. Whether the notices of lien in either Rivera or Enriquez were facially invalid.

Holding

1. No, because a dispute over the reasonableness of expenses does not make the lien facially invalid, which must be decided at a foreclosure trial.

2. No, because the notices of lien in both cases were facially valid, as they contained all the required information and were properly filed under Lien Law § 9 and Administrative Code § 26-305(4)(a).

Court’s Reasoning

The court found the notices of lien were facially valid because they contained all the required elements under Lien Law § 9 and the Administrative Code. The court held that summary discharge is only appropriate when a notice of lien is facially invalid, such as when it includes non-lienable expenses. The court distinguished between challenges to the facial validity of a lien and challenges to the amount or reasonableness of the expenses claimed. It emphasized that the extent to which services may be recovered through a mechanic’s lien, and therefore the resolution of disputes regarding the expenses claimed in a lien, “should be decided after a trial, and not in a summary proceeding.” The court found no basis to conclude that the notices of lien were facially invalid. The court noted that the Administrative Code gives HPD broad discretion to determine what services must be provided to displaced tenants.

Practical Implications

This case reinforces the distinction between challenges to the facial validity of a lien and challenges to the reasonableness of expenses. Attorneys representing property owners should understand that claims of unreasonable expenses alone will not be enough to discharge a lien summarily; instead, they must be raised during a foreclosure trial. It clarifies that, in New York, the determination of whether expenses claimed in a lien are reasonable is a matter for trial if the notice of lien is facially valid. This decision also provides guidance on what constitutes a valid notice of lien, emphasizing the importance of including all required information. Later courts will likely rely on this case when distinguishing between grounds for summary discharge and those requiring a foreclosure trial. This ruling supports the HPD’s authority to recover temporary shelter expenses from building owners and protects HPD’s ability to recoup relocation expenditures.