Opinion ID: 329551
Heading Depth: 3
Heading Rank: 1

Heading: New York Lien Law

Text: Under New York Lien Law § 3 a subcontractor who performs labor and furnishes material for the improvement of real property has a lien for the value or agreed price of the labor and material. Notice of the lien must be filed in the clerk's office of the county where the property is situated. § 10. Upon the filing of notice the lien attaches and becomes effective. Manton v. Brooklyn, etc., Realty Co., 217 N.Y. 284, 111 N.E. 819 (1916). The notice must be served upon the owner of the property to be fully enforceable against him. § 11. Section 19 relating to Discharge of Lien for private improvement provides in § 19(4) that an owner or contractor may have a lien discharged by filing with the county clerk a surety bond, approved by the court or a judge or a justice thereof. 5 1 A subcontractor may forego or waive his right to a mechanic's lien. Under Section 34 of the New York Lien Law, however, he may not do so except by an express agreement in writing specifically to that effect, signed by him or his agent. It is undisputed that the waiver executed by Matco complied with this statutory provision. 2 Matco contends, however, that notwithstanding this waiver, once the lien was filed, Beacon's exclusive remedy for attacking the lien was to serve a notice requiring the lienor to commence an action to foreclose the lien, pursuant to New York Lien Law § 59. 6 Beacon argues that the waiver provision, authorized by Section 34, is an independently enforceable covenant, that the district court was correct in holding that Matco had breached its contract when the lien notice was filed, and that 28 U.S.C. § 2201 provides an appropriate remedy. 3 It is well settled that an express waiver in a contract signed by a subcontractor in compliance with Section 34 of the New York Lien Law is binding and enforceable. In Arr-Em Plastering Corp. v. 515 East 85th Street Corp., 25 A.D.2d 59, 266 N.Y.S.2d 944, 946 (1966) the Supreme Court of New York, Appellate Division, First Department, held that such a waiver extinguishes the right to file a notice of lien, and the relinquishment of the right to file a lien cannot be recalled or expunged. The court held further that the subcontractor's waiver was inconsistent with and excludes the statutory basis for a mechanic's lien, and (w)hen the lien has been once waived it cannot afterward be revived in the absence of an express agreement to that effect with the owner . . . . (citing 57 C.J.S. Mechanics' Liens § 222, pp. 792-793). In that case a plastering corporation sought foreclosure of its mechanic's lien, and the owner of the property had moved for summary judgment dismissing the cross-complaint of the carpentry subcontractor. Reversing the lower court, it was held that the motion for summary judgment dismissing the cross-complaint of the subcontractor should have been granted. The court did not consider the procedural question here presented, but it is clear from the court's decision that if this were an action to foreclose the lien or proceedings under Section 59 of the New York Lien Law, summary judgment would be proper. 4 Although it is apparent that Beacon should prevail on the underlying merits of this litigation, Matco contends that the federal courts are powerless to grant declaratory relief and that, The only way in which the validity of the lien can be determined is in an action to foreclose the lien, or upon the failure of the lienor to commence such an action after notice given pursuant to § 59. Matco bases its argument on the New York cases which have interpreted New York Lien Law §§ 19 and 59, which prescribe procedures for determining the validity of mechanic's liens. These cases are, at first glance, very persuasive. In Application of Jos. Blitz, Inc., 36 Misc.2d 1028, 234 N.Y.S.2d 671, 672-674 (1962), a case involving the validity of a mechanic's lien filed despite a waiver, the court articulated the general approach taken by the New York courts. It recognized that prior New York cases had held that (1) where a subcontractor files a lien in violation of a waiver, the lien may not be summarily discharged by motion, but the only remedy of the owner or contractor is to proceed under section 59; and (2) The courts have no inherent power to cancel or discharge mechanic's liens on grounds other than those specified in the Lien Law. 7 5 Did these decisions of the New York courts preclude the district court from exercising its discretion to grant declaratory relief? An answer to this question requires an analysis of the purpose and effect of the Declaratory Judgment Act.