• Willful Exaggeration of Mechanic’s Lien Claim Resolved During Arbitration: 5 Bros. Inc. v. D.C.M. of New York LLC, et al.
  • March 22, 2013 | Author: Aaron E. Zerykier
  • Law Firm: Farrell Fritz, P.C. - Uniondale Office
  • In a February 13, 2013 decision by Justice Demarest the court confirmed an arbitration award between a contractor and subcontractor relating to monies due for a construction project, finding that the arbitrator implicitly rejected the contractor’s counterclaim that the subcontractor willfully exaggerated its mechanics lien.

    The contractor, DCM, and subcontractor, Vintage, submitted their mechanics lien dispute to arbitration. Before hearings were held in the arbitration, a different subcontractor commenced a mechanics lien foreclosure action against DCM and named a number of other subcontractors from the project as defendants, including Vintage.  Vintage brought cross-claims against DCM in the litigation.  DCM cross-claimed against Vintage for willful exaggeration of its mechanics lien.

    After the arbitrator issued his decision, DCM moved to vacate the arbitration award, for summary judgment on Vintage’s affirmative claims and for summary judgment on its mechanics lien exaggeration claim.  Vintage brought a separate litigation to confirm the arbitration award that was transferred to the court overseeing the already pending litigation and decided in the same motion.

    The court denied DCM’s motion to vacate the arbitration award, and confirmed the award, finding that DCM failed to demonstrate that the award was irrational or contrary to the law.  The court also rejected DCM’s argument that the award was against public policy, finding that while the opinions on whether an arbitrator has the authority to determine a willful exaggeration claim are “ambiguous,” the parties agreed to submit this issue to the arbitrator.  The court further held that the arbitrator determined the matter before him, addressed the parties’ claims and validity of the debt, and found Vintage’s “claim meritorious . . . implicitly rejected [DCM’s] exaggeration claim.

    5 Bros. Inc. v. D.C.N. of New York LLC, et al., Sup Ct, Kings County, February 13, 2013, Demarest, J, Index No. 500824/2011.