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September 22, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

Cappelli company wins ruling for $250K mechanic’s lien

LRC Construction filed a valid mechanic’s lien for pre-construction management services, a judge has ruled, though it provided no physical improvements for a proposed construction project in Rye.

Mechanic’s liens give contractors a process for protecting themselves financially for work such as demolition, erection, repairs and providing materials to improve property.

LRC’s services were “nothing more than updating a conceptual budget for the project and attending a few meetings,” Old Post Road Associates argued in a petition filed in the Westchester Supreme Court.

But Justice Terry Jane Ruderman denied Old Post’s demand to discharge LRC’s $250,000 lien, ruling on May 9 that pre-construction work is comparable to engineering tasks that courts have held to be covered by the lien law.

Old Post is affiliated with Alfred Weissman Real Estate, a real estate investment, management and development firm in Harrison. LRC is managed by Louis R. Cappelli and is an affiliate of the Cappelli Organization in White Plains.

The pre-construction work was done for a proposed project at 120 Old Post Road in Rye, where Weissman owned a three-story office building on a seven-acre site.

The lawsuit does not describe the project, but on May 17 Weissman broke ground for the $100 million St. Regis Residence Rye, a condominium project for people age 55 or older. The office building had been mostly vacant for years and was torn down for the condo project.

In early 2016, Old Post discussed the possibility of retaining LRC for construction management services, and for 11 months the Cappelli company worked on the project.

Old Post claimed that it never formally hired LRC. It offered to pay for services, but LRC declined and did the work “in an effort to earn the position of construction management” for the project.

After the arrangement ended in March 2017, LRC claimed, the companies discussed compensation but could not reach agreement. Cappelli filed the lien last August, for unpaid services.

The issue, Judge Ruderman wrote, is which types of services are covered by the lien law, specifically, for improvement of real property.

Pre-construction services, Old Post argued, are by definition completed before improvements are made.

LRC “did not perform any physical construction work,” Old Post said, “supervise any construction work, or provide materials for the improvement of the property.”

The lien law also defines improvements to include drawings, plans, specifications and surveys done by architects, engineers and surveyors.

Peter Palazzo, LRC’s president, said in an affidavit that the work included recommending finishes, facades, and mechanical-electrical-plumbing designs; consulting with a land use attorney to prepare for municipal planning board meetings; preparing site logistics; assisting in the approval process; and preparing construction budgets.

Ruderman found no case law that specifically addressed pre-construction management services. One court has ruled that supervision of construction may not be the basis of a lien where the property has not been improved. Another court has ruled that broad tasks performed prior to construction, including professional engineering services, can be a valid basis for a lien.

Some of LRC’s work, Ruderman said, may not be covered by the lien law. But some tasks are comparable to engineering services that are covered.

She concluded that Cappelli’s lien “is not entirely invalid on its face,” in denying Old Post’s petition to discharge the lien.