If you’re a contractor in New York, few tools are more powerful than a mechanic’s lien. It gives you leverage, helps secure payment, and forces property owners to pay attention. But as the recent Appellate Division decision in Consumer Protection Restoration, LLC v. Hickory House Tenants Corp. reminds us, that tool can turn into a legal landmine if misused.
This case is a cautionary tale about what happens when contractors file liens that courts later find to be willfully exaggerated. In this situation, the contractor didn’t just lose its lien claim—it also faced financial penalties and attorneys’ fees. Here’s what happened, and why it matters for anyone involved in construction work or property ownership in New York.
The Background: A Fire, a Rebuild, and a Fallout
In March 2017, a fire broke out at a cooperative apartment complex owned by Hickory House Tenants Corp. in Rockland County. One building was destroyed, and another was damaged. The then-president of Hickory House’s board hired Consumer Protection Restoration, LLC (CPR) for demolition and mitigation services, and another entity, Prestige Realty Group, Inc., for construction work.
According to CPR and Prestige, they performed work from March 2017 until January 2018. But partway through, a newly elected board at Hickory House ordered them to stop work, citing a lack of meaningful progress. The contractors, claiming they had not been paid, filed two mechanic’s liens totaling more than $5.2 million.
They then filed a lawsuit to foreclose on the liens and recover damages for breach of contract and unjust enrichment. A mortgagee, National Billing and Funding, LLC (NBF), was named as a party but didn’t assert its own claims formally.
The Owner Fights Back—and Wins
Hickory House responded aggressively. They filed a counterclaim alleging that the mechanic’s liens were willfully exaggerated—a serious accusation under New York Lien Law. Sections 39 and 39-a of the Lien Law allow a court to declare a lien void if it was knowingly overstated, and even award damages and attorneys’ fees to the property owner.
The trial court agreed with Hickory House. It granted summary judgment in their favor on the counterclaim, finding that the liens were indeed willfully exaggerated. The court also ordered that the liens and all related documents be expunged from the public record. The contractors not only lost their lien rights—they were also liable for damages and attorneys’ fees.
The Mortgagee’s Claims Fall Flat
Meanwhile, NBF attempted to recover mortgage-related costs like default interest, late fees, and legal expenses. But they had never actually asserted those claims in their court filings. Nor had they preserved those rights in a prior settlement stipulation with the other parties.
The court rejected NBF’s request, emphasizing a basic but critical point: you can’t win on a claim you didn’t properly plead. The settlement agreement also didn’t mention any intent to preserve these claims, and the court declined to infer any such right after the fact.
Why This Case Matters
This case has real-world implications for contractors, subcontractors, property owners, and even lenders:
- Don’t Exaggerate Your Lien.
The biggest lesson is simple: be honest and accurate when filing a mechanic’s lien. Inflated or unsupported amounts can result in a complete loss of lien rights—and worse, monetary penalties. New York’s Lien Law provides powerful remedies for property owners when liens are deemed willfully exaggerated. - Follow the Rules of Pleading.
Even if two parties are aligned (as CPR and NBF were), each party must properly plead its own claims and relief. Courts won’t let you shortcut the process. Summary judgment cannot be granted on claims that were never pled or preserved in a stipulation. - Be Precise in Settlement Agreements.
Stipulations of settlement are binding legal contracts. If you’re entering into one, be absolutely clear about what claims are preserved or waived. The court in this case refused to allow NBF to resurrect claims that were not explicitly preserved in a written settlement. - Owners Have Strong Tools to Push Back.
Owners confronted with questionable or inflated mechanic’s liens aren’t powerless. This case demonstrates that a well-documented, fact-supported counterclaim under Lien Law § 39 can be an effective defense and even result in attorneys’ fees being recouped.
Final Thoughts
The Consumer Protection Restoration case is a textbook example of how a mechanic’s lien—when misused—can create serious legal and financial trouble for the lienor. For contractors, the message is clear: document your work carefully, ensure that your lien accurately reflects what you are owed, and work with qualified counsel to protect your rights. For property owners, it’s a reminder to scrutinize liens carefully and use the tools that New York law provides to challenge improper filings.
If you are involved in a construction dispute or need help enforcing or defending against a mechanic’s lien, contact Kushnick Pallaci PLLC today. Our experienced New York construction attorneys are here to help you navigate these complex issues with confidence.