Baring Industries, Inc. v. 3 BP Property Owner LLC

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

BARING INDUSTRIES, INC.,

19-cv-2829 (JGK)

Plaintiff,

OPINION AND ORDER

- against -

3 BP PROPERTY OWNER LLC, ET AL.,

Defendants.

JOHN G. KOELTL, District Judge:

The plaintiff, Baring Industries, Inc. (“Baring”), brought

this action against 3 BP Property Owner LLC (“3 BP”), Dadong

Catering LLC (“DaDong”), Westchester Fire Insurance Company

(“Westchester”), Done Right Hood & Fire Safety Inc. (“Done

Right”), and AA Jedson Company LLC (“AA Jedson”), seeking to

foreclose on a mechanics lien (the “Lien”) against 3 Bryant Park

a/k/a 1095 Avenue of the Americas a/k/a 126-128 West 42nd Street

in Manhattan, New York (the “Property”). 3 BP brought

counterclaims for willful exaggeration of the Lien, wrongful

filing of the Lien, and injury to property.

Baring moves for summary judgment pursuant to Federal Rule

of Civil Procedure 56 seeking to foreclose on the Lien and for

judgment on the bond that discharged the Lien (the “Bond”).

Baring also moves for summary judgment dismissing 3 BP’s three

counterclaims. 3BP and Westchester (together, the “Moving

Defendants”) move for summary judgment dismissing Baring’s

claims seeking foreclosure on the Lien and judgment on the Bond.

The Moving Defendants also move for summary judgment granting 3

BP’s counterclaim for willful exaggeration of the Lien and seek

a declaration that the Lien is void and an award of damages to

3 BP.

For the following reasons, Baring’s motion for summary

judgment is denied and the Moving Defendants’ motion for summary

judgment is granted.

I.

The following facts are based on the parties’ Local Civil

Rule 56.1 statements and supporting papers and are undisputed

unless otherwise noted.

A.

3 BP owns the Property. Pl.’s Counterstatement of Disputed

Material Facts ¶ 1 (ECF No. 157, “P-CDMF”). In or around March

2016, 3 BP leased a portion of the Property to DaDong (the

“Leased Property”) pursuant to a retail lease agreement. See ECF

No. 141-1 (the “Lease”); P-CDMF ¶ 2. The Lease required DaDong

to construct a multi-floor restaurant in the Leased Property

(defined in the Lease as the “Tenant’s Initial Work”). P-CDMF ¶

3; Lease § 3.03. Section 3.03 of the Lease obligated 3 BP to

reimburse DaDong for up to $1.825 million of “actual

construction” costs incurred in connection with the Tenant’s

Initial Work (defined in the Lease as the “Allowance”), provided

that DaDong submitted paid invoices, architect’s certificates,

and partial or final lien waivers to 3 BP. Lease § 3.03. DaDong

was also entitled to reimbursement from the Allowance for

so-called “soft costs” incurred in connection with the Tenant’s

Initial Work, such as architectural and engineering fees. Id.

The Lease prohibited DaDong from applying any portion of the

Allowance towards costs associated with DaDong’s “portable

equipment, furniture, or other items of personal property.” Id.

The Lease provided that all “Leasehold Improvements” that

DaDong made to the Leased Property must remain on the Leased

Property at the end of lease term without compensation to

DaDong. Lease § 8.01. However, DaDong was required to remove all

“Tenant’s Property” from the Leased Property upon termination of

the Lease or DaDong’s right to possession. Id. Art. 24. The

Lease defined “Tenant’s Property” as all “business and trade

fixtures, equipment, movable partitions, furniture, merchandise,

and other personal property within the” Leased Property. Id.

Art. 14.

Baring is a commercial food service equipment contractor

that, among other things, purchases, delivers, and installs food

service equipment on behalf of its clients. Turner Tr. 8, 13. In

October 2016, Baring submitted a written proposal to be DaDong’s

“Foodservice Equipment Contractor” in connection with DaDong’s

renovations of the Leased Property. ECF No. 142-2 at PLAINTIFF

0476 (the “Proposal”). The Proposal was based on kitchen and

restaurant design specifications prepared by non-party Jacobs

Doland Beer (“JDB”). Id.; P-CDMF ¶ 10. The “Scope of Work” in

the Proposal provided that Baring would “supply, warehouse,

deliver to the jobsite when ready, uncrate, assemble, set in

place, level and secure to wall, where appliable, all items”

specified by JDB. Proposal at PLAINTIFF 0479. The Proposal

quoted a total project price of about $1.9 million, with over

$1.4 million attributable to “equipment” and the remainder

allocated to “freight, warehouse, delivery,” “installation,” and

sales tax. Id. at PLAINTIFF 0476.

Michael Fitzgibbon, Baring’s President, characterized the

Proposal as an offer by Baring to purchase the food service

equipment specified by JDB from third parties, arrange for

delivery of the equipment, and have the equipment installed in

the Leased Property. Fitzgibbon Tr. 11, 142-43. Fitzgibbon

further testified that the Proposal did not contemplate Baring’s

scope of work to include any services related to utility

connections, demolition, plumbing, or roof, wall, or floor

penetrations. Id. at 145-49.

In the Spring of 2017, DaDong and Baring entered into an

agreement entitled “AIA Document A151 – 2007 Standard Form of

Agreement Between Owner and Vendor for Furniture, Furnishings

and Equipment.” ECF No. 142-7 (the “Agreement”); P-CDMF ¶ 15. It

is undisputed that the Agreement was an “agreement for the sale

of goods” and is governed by the Uniform Commercial Code

(“UCC”). P-CDMF ¶ 16. The Agreement required Baring to execute

the work described in the “Contract Documents,” which was

defined to include, among other things, the Agreement, the

Proposal, and any modifications. Agreement Art. 1. The Agreement

could only be modified through a written modification signed by

both parties or through a written order for a minor change

issued by DaDong. P-CDMF ¶ 20. There is no evidence that the

parties ever agreed to modify the Agreement orally. Id. ¶ 21.

Pursuant to the Agreement and several subsequently executed

change orders, Baring sold to DaDong a suite of food service

equipment that included tables, counters, sinks, exhaust hoods,

refrigerators, freezers, stoves, fryers, dishwashing equipment,

fish tanks, woks, microwaves, and other items. See, e.g., Turner

Tr. 122-31, 170-74.

Also in 2017, DaDong engaged a general contractor to

perform the Tenant’s Initial Work. P-CDMF ¶ 7. DaDong later

applied for reimbursements for this work from the Allowance by

submitting paid invoices, architect’s certificates, and partial

or final lien waivers to 3 BP. Id. 3 BP reimbursed DaDong from

the Allowance for certain of these invoices. Id. Michael

McMahon, an authorized representative of 3 BP, declared that

DaDong never sought reimbursement from 3 BP for any labor,

services, or materials supplied by Baring. ECF No. 141 ¶ 5

(“McMahon Decl.”). Baring disputes this and points to an invoice

to DaDong from JDB and a food service equipment specification

prepared by JDB for DaDong. P-CDMF ¶ 8; ECF Nos. 158-6, 158-21.

In or around February 2019, Baring filed the Lien against

the Property because DaDong allegedly failed to pay what Baring

claimed was an outstanding balance of $320,356.94 under the

Agreement. Id. ¶ 27. Fitzgibbon authorized Baring’s Controller,

Jennifer Hendrick, to file the Lien. Id. ¶ 28. Hendrick then

provided the information contained in the Lien to NY Liens, a

third-party company, and instructed NY Liens to file the Lien on

behalf of Baring. Id. ¶ 30. Hendrick testified that $220,753.21

of the Lien amount was attributable to outstanding balances from

several change orders and that the remainder reflected the

retention balance under the Agreement. Id. ¶ 36. 3 BP argues

that the entire amount of the Lien is overstated because

Baring’s work for DaDong did not result in “permanent

improvements” to the Leased Property. 3 BP also contends that

Baring overstated the Lien amount by $165,373.76, which 3 BP

argues is attributable to three change orders that were never

approved in writing by DaDong.

Baring’s Notice Under Mechanic’s Lien Law explained that

Baring furnished materials to DaDong consisting of “foodservice

equipment, hoods, walk-in refrigeration, etc.,” and provided

DaDong with labor for the “installation of foodservice equipment

including but not limited to, ranges, hoods, walk-in

refrigeration, project management and coordination, etc.” ECF

No. 142-11 at PLAINTIFF 0369-70 (the “Lien Notice”); P-CDMF ¶

31. The Lien Notice further provided that “said labor and

materials were performed and furnished for and used to the

improvements of the” Leased Property. Id.

After 3 BP unsuccessfully attempted to discharge or bond

the Lien, 3 BP terminated the Lease and commenced a summary

holdover proceeding. P-CDMF ¶¶ 39-40. In September 2019, the New

York City Civil Court awarded 3 BP judgment of possession, along

with a money judgment and a warrant of eviction to recover

possession of the Leased Property. Id. ¶ 41. The Lien was then

bonded by Westchester and discharged as to 3 BP’s real property.

Pl.’s 56.1 Statement of Undisputed Material Facts ¶ 57 (ECF No.

151).

In November 2019, DaDong filed a petition for relief under

Chapter 11 of the Bankruptcy Code. P-CDMF ¶ 43. In December

2019, the Bankruptcy Court for the Southern District of New York

approved a stipulation that allowed DaDong to sell at auction

all its trade fixtures, equipment, and personalty, including the

food service equipment that Baring sold to DaDong. Id. ¶ 44. The

auction was held in January 2020 and a winning bid of $120,000

was accepted for the entire contents of the Leased Property.

Id.; see also ECF No. 142-25 at 3BP 001654-67 (asset purchase

agreement listing the items sold at the bankruptcy auction).

A professional photographer took pictures of the Leased

Property before and after the bankruptcy auction. See ECF No.

152 (“Morris Decl.”); ECF Nos. 152-1 through 152-5 (the “Pre-

Auction Photos”); ECF Nos. 152-6 through 152-10 (the “Post-

Auction Photos”). A wide array of food service equipment is

visible in the Pre-Auction Photos. The Post-Auction Photos

appear to show that substantially all the food service equipment

depicted in the Pre-Auction Photos was removed from the Leased

Property sometime after the auction.

B.

On October 30, 2019, the Moving Defendants moved to dismiss

all of Baring’s claims against them. In a bench opinion dated

July 13, 2020, the Court dismissed Baring’s claims against the

Moving Defendants for unjust enrichment and quantum meruit. See

ECF No. 108 (the “MTD Order”). However, the Court denied the

Moving Defendants’ motion to dismiss with respect to Baring’s

claims seeking foreclosure on the Lien and judgment on the Bond,

reasoning that whether Baring could maintain claims against the

Moving Defendants arising out of the Lien turned on fact issues

that could not be resolved on the motion to dismiss. In relevant

part, the Court explained:

The Lease establishes that [3 BP] consented to some kinds

of permanent improvements to the premises based on the

fact that the Lease contemplated that Dadong would

undertake initial work that would eventually inure to

the benefit of [3 BP] following termination of the Lease.

What is unclear from the second amended complaint and

the papers submitted on this motion to dismiss is what

is the precise nature of the unpaid labor, services, and

equipment costs that are the subject of the [Lien] and

whether all the improvements made that are subject to

the unpaid portion of the contract between [Baring] and

Dadong are rightly classified as “Leasehold

Improvements” under the term of the Lease. Whether the

unpaid money allegedly owed to [Baring] was for work

done for permanent improvements, within the meaning of

the Lien Law and the [Lease] or, instead, for property

that would be removable by Dadong at the end of the

Lease, could not be decided on the current papers.

MTD Order at 31-32.

II.

The standard for granting summary judgment is well

established. The Court “shall grant summary judgment if the

movant shows that there is no genuine dispute as to any material

fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477

U.S. 317, 322–23 (1986); Gallo v. Prudential Residential Servs.,

L.P., 22 F.3d 1219, 1223 (2d Cir. 1994). “[T]he trial court’s

task at the summary judgment motion stage of the litigation is

carefully limited to discerning whether there are any genuine

issues of material fact to be tried, not to deciding them. Its

duty, in short, is confined at this point to issue-finding; it

does not extend to issue-resolution.” Gallo, 22 F.3d at 1224.

The moving party bears the initial burden of “informing the

district court of the basis for its motion” and identifying the

matter or matters that “it believes demonstrate the absence of a

genuine issue of material fact.” Celotex, 477 U.S. at 323. The

substantive law governing the case will identify those facts

which are material, and “[o]nly disputes over facts that might

affect the outcome of the suit under the governing law will

properly preclude the entry of summary judgment.” Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

In determining whether summary judgment is appropriate, a

court must resolve all ambiguities and draw all reasonable

inferences against the moving party. See Matsushita Elec. Indus.

Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Summary

judgment is improper if there is any evidence in the record from

any source from which a reasonable inference could be drawn in

favor of the nonmoving party. See Chambers v. TRM Copy Ctrs.

Corp., 43 F.3d 29, 37 (2d Cir. 1994). If the moving party meets

its burden, the nonmoving party must produce evidence in the

record and “may not rely simply on conclusory statements or on

contentions that the affidavits supporting the motion are not

credible.” Ying Jing Gan v. City of New York, 996 F.2d 522, 532

(2d Cir. 1993); see also Scotto v. Almenas, 143 F.3d 105, 114–15

(2d Cir. 1998).

III.

The Moving Defendants move for summary judgment granting

3 BP’s counterclaim for willful exaggeration of the Lien. Baring

cross-moves for summary judgment dismissing 3 BP’s counterclaim

for willful exaggeration of the Lien.

Under New York Lien Law § 39, if a court finds that a

lienor has willfully exaggerated the amount for which the lienor

claims a mechanic’s lien, the lien “shall be declared to be void

and no recovery shall be had thereon.” N.Y. Lien Law § 39.

Additionally, if a lien is voided under this provision, the

property owner is entitled to damages equal to the amount that

the lien was exaggerated, along with the costs and attorney’s

fees associated with bonding and discharging the lien. Id. §

39-a. To succeed on a claim of willful exaggeration of a lien,

the property owner must establish that: (1) a lien was filed;

(2) the amount of the lien was exaggerated relative to the

underlying claim; and (3) the exaggeration was willful and not

due to honest mistake. GPK 31-19 LLC v. L & L Constr. Dev. Inc.,

No. 650533/2017, 2020 WL 1972234, at *8 (N.Y. Sup. Ct. Apr. 23,

2020); see also Strongback Corp. v. N.E.D. Cambridge Ave. Dev.

Corp., 808 N.Y.S.2d 654, 656-57 (App. Div. 2006). A claim for

willful exaggeration of a lien may be resolved against the

lienor on a motion for summary judgment where “the evidence that

the amount the lien was willfully exaggerated is conclusive.”

Northe Grp. Inc. v. Spread NYC, LLC, 931 N.Y.S.2d 231, 231 (App.

Div. 2011); see also LMF-RS Contracting, Inc. v. Kaljic,

2 N.Y.S.3d 351, 352 (App. Div. 2015); Inter Metal Fabricators,

Inc. v. HRH Constr. LLC, 942 N.Y.S.2d 334, 335 (App. Div. 2012).

A.

3 BP argues that Baring exaggerated the entire amount of

the Lien because Baring did not make any permanent improvements

to the Leased Property. Under the New York Lien Law, a

contractor may have a mechanics lien against a property only if

the contractor’s work resulted in an “improvement” to the

property. N.Y. Lien Law § 3. In relevant part, the statute

defines “improvement” as “the demolition, erection, alteration

or repair of any structure upon, connected with, or beneath the

surface of, any real property and any work done upon such

property or materials furnished for its permanent improvement

. . .” Id. § 2 (emphasis added).

In determining whether a contractor’s work resulted in a

permanent improvement to a property, New York courts consider

factors such as the intent and understanding of the parties

regarding the alleged permanent improvement, the nature of the

alleged permanent improvement, and the ease with which the

alleged permanent improvement could be removed from the

property. See, e.g., Trystate Mech., Inc. v. Macy’s Retail

Holdings, Inc., 943 N.Y.S.2d 162, 164 (App. Div. 2012) (“Despite

the size, expense, and complexity of hoisting the [electricity

generating appliance] to the top of the roof of the [property],”

the contract between the parties “clearly established that the

parties did not intend to make the [appliance] a ‘permanent

improvement’ . . .”); Negvesky v. United Interior Res., Inc.,

821 N.Y.S.2d 107, 108 (App. Div. 2006) (the “installation of

modular workstations” did not result in a permanent improvement

because the contractor “did not demolish, erect, or alter any

structure, nor did it perform work or furnish materials for its

permanent improvement”); 230 FA, LLC v. Kajo Associates, No.

104964/10, 2010 WL 2897836, at *2-3 (N.Y. Sup. Ct. July 12,

2010) (custom-made window shades that contractor installed were

not permanent improvements because they were “affixed with

brackets” to the property and could “easily be removed with a

screwdriver.”); see also 270 Greenwich St. Assocs. LLC v. Patrol

and Guard Enters., Inc., No. 114163/09, 2010 WL 2754092, at *4

(N.Y. Sup. Ct. June 21, 2010) (explaining that a contractor’s

services constitute a “permanent improvement” when they “result

in a lasting and continuing beneficial change in the character

of the realty.” (citing Chase Lincoln First Bank N.A. v. New

York State Elec. & Gas Corp., 581 N.Y.S.2d 694, 696 (App. Div.

1992))).

The undisputed facts establish that Baring’s work on the

Leased Property did not result in any permanent improvements

within the meaning of the New York Lien Law. First, the parties

clearly did not understand or intend for the Agreement to be one

for the provision of permanent improvements. The Agreement is

entitled in relevant part “Agreement Between Owner and Vendor

for Furniture, Furnishings and Equipment” (emphasis added).

Baring concedes that the Agreement was a contract for the “sale

of goods” that was governed by the UCC, and not a contract for

the provision of services related to the “demolition, erection,

alteration or repair” of the Leased Property. See N.Y. Lien Law

§ 2; N.Y. U.C.C. § 2-105(1) (“‘Goods’ means all things

(including specifically manufactured goods) which are movable at

the time of identification to the contract for sale . . .”).

This understanding of the Agreement is corroborated by the plain

language of the scope of work described in the Proposal (which

was incorporated into the Agreement), along with Fitzgibbon’s

testimony that Baring understood its obligations under the

Agreement to include the sourcing and installation of kitchen

equipment for DaDong and to exclude services such as demolition

or plumbing.

Second, the undisputed evidence demonstrates that the work

that Baring in fact performed relating to the Leased Property

comprised the delivery and installation of removable,

non-permanent equipment. Baring’s Lien Law § 38 Response to

Itemized Statement identifies the items that Baring sold to

DaDong and lists non-permanent equipment that could simply be

picked up and removed from the Leased Property, such as fish

tanks, carts, heat lamps, ice bins, microwaves, rice cookers,

garbage cans, and other light, portable items. See ECF No.

142-29 (the “Section 38 Response”). At his deposition, James

Turner, the Baring witness most familiar with Baring’s work on

the Leased Property, confirmed that many of the heavier items

that Baring delivered and installed, such as ovens, fryers,

sinks, chef’s counters, and refrigerators, were freestanding and

could be collected and taken away from the Leased Property. See,

e.g., Turner Tr. 128-31, 170-72, 193-97. Turner further

testified that other items had built-in wheels. Id.; see also

id. at 153-56, 183-84. It is beyond reasonable dispute that

kitchen equipment that can simply be wheeled out of a property

are non-permanent additions.1 See, e.g., Negvesky, 821 N.Y.S.2d

at 108. Finally, Turner testified that although certain items

were affixed or screwed into the walls of the Leased Property,

those items could be unscrewed and removed and the resulting

1 The cases relied on by Baring, such as Sherwin v. Benevolent & Protective

Ord. of Elks, Brooklyn Lodge No. 22, 265 N.Y.S. 14 (N.Y. Sup. Ct. 1930), are

inapposite. In Sherwin, the Court found that custom-made kitchen equipment

constituted permanent improvements to a club house kitchen because “it was

the intention of the parties that these fixtures were to remain as permanent

equipment.” Id. at 16-17. Here, by contrast, the evidence demonstrates that

the parties did not intend for the equipment that Baring sold to DaDong, a

non-permanent commercial tenant of the Leased Property, to remain permanently

in the Leased Property.

damage to the Leased Property from the uninstallation would be

minimal. Id. at 167-70.2

Third, after the bankruptcy auction, nearly all the

equipment that Baring sold to DaDong and installed in the Leased

Property was removed from the Leased Property.3 This further

demonstrates that the services provided by Baring did not

“result in a lasting and continuing beneficial change in the

character of” the Leased Property, but rather were “auxiliary[]

and one step removed from the actual demolition or

2 In support of its motion for summary judgment, Baring submitted a

declaration from Turner in which Turner declared, among other things, that

Baring’s work resulted in permanent improvements to the Leased Property and

that “it was the intent and understanding between Defendant 3 BP and

Defendant Dadong, as stated in the lease, that [Baring’s work] would be a

permanent improvement.” ECF No. 147 ¶¶ 27, 31. Legal conclusions contained in

a declaration submitted in connection with a motion for summary judgment,

such as Turner’s contention that Baring’s work resulted in “permanent

improvements” to the Leased Property, are insufficient to create a genuine

dispute of material fact. See, e.g., Nadel v. Shinseki, 57 F. Supp. 3d 288,

293 n.6 (S.D.N.Y. 2014) (discrediting “legal conclusions [and] conclusory

allegations contained in” the plaintiff’s declaration (citing Brown v.

Henderson, 257 F.3d 246, 252 (2d Cir. 2001))). Moreover, this self-serving

allegation is contradicted by Turner’s own deposition testimony describing

the equipment that Baring delivered and installed. See Brown, 257 F.3d at 252

(allegations in an “affidavit that contradicts [a witness’s] own prior

deposition testimony” may be disregarded on a motion for summary judgment);

see also Turner Tr. 204. Additionally, Turner’s allegations as to the intent

and understanding of 3 BP and DaDong are conclusory, refuted by the record

evidence, lacking in foundation, and concern matters about which Turner has

no personal knowledge. See Mattera v. JPMorgan Chase Corp., 740 F. Supp. 2d

561, 570 (S.D.N.Y. 2010) (affidavits submitted in connection with a motion

for summary judgment “must be admissible themselves or must contain evidence

that will be presented in an admissible form at trial”).

3 The sole pieces of equipment that were left behind after the bankruptcy

auction were items relating to a fire suppression system that Baring had

installed in the Leased Property. However, these items appear to have been

sold in the bankruptcy auction, see infra n.5, and Turner testified that they

could be detached and removed from the Leased Property. Turner Tr. 176-78.

construction.” See 270 Greenwich St. Assocs. LLC, 2010 WL

2754092, at *4.

Finally, the parties’ performance under the Lease confirms

that Baring’s services were not intended to and in fact did not

result in permanent improvements to the Leased Property. Under

the Lease, DaDong was entitled to seek reimbursement from the

Allowance for any costs incurred in connection with the “actual

construction” of the Leased Property but was prohibited from

seeking reimbursement for costs relating to its “portable

equipment, furniture, or other items of personal property.”

Lease § 3.03. If DaDong understood the kitchen equipment

supplied and installed by Baring to constitute permanent

improvements to the Leased Property, then DaDong surely would

have applied to be reimbursed for these costs from the

Allowance, as it did for other construction and renovation

costs. However, the record evidence establishes that DaDong

never sought reimbursement from the Allowance for any labor,

services, or materials supplied by Baring.4 Moreover, the Lease

4 Michael McMahon, 3 BP’s authorized representative, declared that DaDong

never sought reimbursement for any costs related to Baring’s work. The Moving

Defendants represent that they “produced all back-up documentation concerning

DaDong’s reimbursement applications” and that “Baring did not question Mr.

McMahon on this issue when [Baring] deposed him.” ECF No. 162 at 9. For these

reasons, the speculation and legal arguments advanced by Turner is his

declaration suggesting that further discovery is needed on this issue (see

ECF No. 160 ¶¶ 9-11) are without merit. See Alphonse Hotel Corp. v. Tran, 828

F.3d 146, 151 (2d Cir. 2016); cf. Fed. R. Civ. P. 56(d).

After taking full discovery from 3 BP, Baring is unable to point to any

evidence that disputes McMahon’s declaration. Baring’s bald assertion that

DaDong did in fact seek reimbursement for services supplied by Baring is in

obligated DaDong to remove all its “business and trade fixtures,

equipment, movable partitions, furniture, merchandise, and other

personal property” from the Leased Property at the end of its

occupancy and to leave behind any “Leasehold Improvements.”

Lease Art. 14. Consistent with these provisions, DaDong obtained

approval from the bankruptcy court to sell all the equipment

delivered and installed by Baring.5 Additionally, there is no

evidence that 3 BP objected to the bankruptcy sale or ever

contended that the equipment sold by Baring belonged to 3 BP or

constituted Leasehold Improvements.

In sum, the undisputed evidence establishes that (1) DaDong

and Baring understood that Baring’s work would not result in

permanent improvements to the Leased Property; (2) the equipment

that Baring delivered to and installed in the Leased Property

was non-permanent; (3) nearly all the equipment was ultimately

removed from the Leased Property; and (4) DaDong and 3 BP

performed under the Lease in a manner consistent with the

conclusion that Baring’s work did not result in a permanent

improvement to the Leased Property. Because none of Baring’s

no way supported by the evidence cited by Baring and is therefore

insufficient to create a genuine dispute of material fact. See P-CDMF ¶ 8;

Hick v. Baines, 593 F.3d 159, 166 (2d Cir. 2010) (“[C]onclusory allegations

or denials” cannot create a genuine dispute of material fact).

5 Although it appears that the auction winner did not remove certain items

relating to a fire suppression system from the Leased Property, the auction

inventory list shows that these items were in fact sold to the action winner

in the bankruptcy auction. See, e.g., ECF No. 142-23 (listing five “Kitchen

Hood Fire Suppression System[s]”).

work resulted in permanent improvements to the Leased Property,

Baring was not entitled to a lien in any amount against the

Leased Property. Accordingly, Baring exaggerated the Lien by its

entire value.

B.

3 BP argues alternatively that irrespective of whether

Baring’s work resulted in any permanent improvements to the

Leased Property, Baring exaggerated the value of the Lien by

$165,373.76—the cost of three change orders that 3 BP contends

were never properly executed. It is undisputed that Baring only

produced unsigned versions of the three change orders during the

discovery period in this action, which closed in June 2021.

P-CDMF ¶ 37; ECF No. 123. It is further undisputed that to be

valid under the Agreement, the change orders needed to have been

signed by DaDong. However, on September 20, 2021, Baring

attached what it submits are fully signed versions of the three

change orders to its opposition to the Moving Defendants’ motion

for summary judgment. See ECF Nos. 158-8, 158-9, 158-10. Baring

argues that the allegedly signed versions of the three change

orders should be accepted in the summary judgment record, while

the Moving Defendants argue that Baring should be precluded from

relying on them.

If a party fails to meet its discovery obligations, a

“district court has wide discretion to impose sanctions,

including severe sanctions, under Federal Rule of Civil

Procedure 37.” Agence France Presse v. Morel, 293 F.R.D 682, 685

(S.D.N.Y. 2013) (quoting Design Strategy, Inc. v. Davis, 496

F.3d 284, 294 (2d Cir 2006)). Pursuant to Rule 37(c)(1), if a

party fails to produce Rule 26(a) or (e) information, the party

generally is not permitted to use that information unless the

failure was substantially justified or harmless. Id. In

considering whether to exclude evidence under this standard,

courts consider: (1) the party’s explanation for its failure to

disclose; (2) the importance of the evidence; (3) the prejudice

suffered by the opposing party; and (4) the possibility of a

continuance. Id. The party that violates Rule 26 bears the

burden of showing that its violation was either substantially

justified or harmless. Id. (citing Ritchie Risk–Linked

Strategies Trading (Ireland), Ltd. v. Coventry First LLC, 280

F.R.D. 147, 159 (S.D.N.Y. 2012)).

Baring plainly failed to meet its Rule 26 discovery

obligations. On September 21, 2020, the Moving Defendants served

on Baring a request for production seeking, among other things,

“all documents and communications concerning any agreements

between DaDong and Baring for Baring’s performance of work,

labor or services, or provision of materials, to the Subject

Premises, including but not limited to, [the Agreement]” and all

“change orders and all modifications thereof.” ECF No. 161 ¶ 3

(“Haddad Decl.”). On multiple occasions thereafter, counsel for

the Moving Defendants made renewed requests that Baring produce

all documents responsive to that request for production, along

with other documents relating to any change orders. Id. ¶¶ 4-10.

Although the allegedly signed change orders were clearly

responsive to the Moving Defendants’ requests, Baring failed to

produce them until months after discovery closed when it filed

its opposition to the Moving Defendants’ motion.

Moreover, Baring’s failure to comply with its discovery

obligations was neither justified nor harmless. First, Baring

offers no explanation for its failure to produce the allegedly

signed change orders in a timely fashion. It describes its

failure as an “oversight.” ECF No. 156 at 21. However, Baring’s

“oversight” is inexcusable in view of the obvious relevance and

responsiveness of these documents to the Moving Defendants’

discovery requests, and counsel’s repeated and specific requests

that Baring comply with its discovery obligations. See Agence,

293 F.R.D. at 688 (“Rule 26 calls for voluntary disclosure, and

while a party’s failure to disclose information of its own

accord might be excused as a mere oversight, Plaintiff’s failure

to do so in response to Defendant’s specific requests suggest

both greater prejudice to Defendants and greater culpability on

Plaintiff’s part.”).

Second, the Moving Defendants would be prejudiced if the

allegedly signed change orders were not excluded. Baring’s

counsel and witnesses represented to the Moving Defendants that

all documents responsive to the Moving Defendants’ discovery

requests were produced. See Haddad Decl. ¶¶ 11-13; Fitzgibbons

Tr. 185 (“Q: Do you know whether the documents that Baring

produced in this litigation are all of the documents in its

possession, custody and control that are responsive to

defendants’ document request? A: To my knowledge we produced all

the documents that were requested.”). The Moving Defendants

reasonably relied on these representations in formulating their

litigation strategy and moving for summary judgment in part on

the basis that, as far as they knew, the three change orders at

issue were never properly executed. See Haddad Decl. ¶ 13.

Additionally, there are apparent unexplained

inconsistencies between the unsigned change orders and the

allegedly signed change orders.6 Accordingly, if the documents

were not excluded, discovery would need to be reopened months

after it closed to afford the Moving Defendants an opportunity

to investigate the authenticity of the untimely produced

6 For example, the allegedly signed version of change order 13 is dated August

21, 2017 and shows a revised contract amount of $1,941,269.48. The unsigned

version of change order 13 (which Baring appended to its Section 38 Response)

is dated October 4, 2017 and shows a revised contract amount of

$1,940,125.07. Compare ECF No. 158-7 at PLAINTIFF 0023 (unsigned change

order), with ECF No. 158-8 (allegedly signed change order).

documents. The additional costs associated with a supplemental

discovery period after discovery has closed and cross-motions

for summary judgment have been fully briefed would prejudice the

Moving Defendants. See, e.g., Atlantis Info. Techs., GmbH v. CA,

Inc., No. 06-cv-3921, 2011 WL 4543252, at *13 (E.D.N.Y. Sept.

28, 2011) (the plaintiff “would be prejudiced by having to meet

[the untimely] evidence at this late stage”); Pal v. N.Y. Univ.,

No. 06-cv-5892, 2008 WL 2627614, at *5 (S.D.N.Y. June 30, 2008)

(party would suffer prejudice if untimely discovery were not

excluded because “discovery would have to be reopened,” which

“would not only further delay this almost-two-year-old-case, but

would impose further litigation costs on [the party]”).

Third, although a continuance is theoretically possible,

the fact that discovery closed months ago “weighs strongly

against the possibility of a continuance.” See Spotnana, Inc. v.

Am. Talent Agency, Inc., 09-cv-3698, 2010 WL 3341837, at *2

(S.D.N.Y. Aug. 17, 2010).

In view of these considerations, the allegedly signed

change orders should be excluded despite their importance to

Baring’s claims. See, e.g., Spotnana, 2010 WL 3341837, at *2

(the other “factors outweigh the importance of [the party’s]

damages evidence, even though [the party] may be denied any

recovery as a result, because [the party] has disregarded its

discovery obligation without any explanation at all”); Rienzi &

Sons, Inc. v. N. Puglisi & F. Industria Paste Alientari S.P.A.,

No. 08-cv-2540, 2011 WL 1239867, at *5 (E.D.N.Y. Mar. 30, 2011)

(excluding untimely produced evidence despite the importance of

the evidence; collecting cases imposing similar sanctions).

For these reasons, the allegedly signed change orders are

excluded from the summary judgment record. On the record

properly before the Court, it is undisputed that change orders

valued at $165,373.76 were never executed in accordance with the

Agreement. Despite this, Baring included this sum in the value

of the Lien. Accordingly, in addition to the fact that the

Moving Defendants have shown that Baring exaggerated the Lien by

seeking recovery for goods and services that were not permanent

improvements, the Moving Defendants have also shown that Baring

exaggerated the Lien by $165,373.76, more than half the total

value of the Lien.

C.

3 BP contends that because there is also conclusive

evidence Baring exaggerated the Lien willfully, 3 BP is entitled

to summary judgment granting its willful exaggeration

counterclaim.

To demonstrate that Baring’s exaggeration of the Lien was

willful, 3 BP must show that there was a “deliberate and

intentional exaggeration of the lien amount” by Baring, “rather

than merely a genuine mistake or disagreement concerning the

terms of the contract.” See Pelc v. Berg, 893 N.Y.S.2d 404, 405

(App. Div. 2009); see also LMF-RS, 2 N.Y.S.3d at 352 (affirming

finding of willful exaggeration on summary judgment where the

“Plaintiff included in its lien amount items that [were] not for

labor or materials . . . and [the] plaintiff has failed to even

attempt to explain the discrepancies”); Northe, 931 N.Y.S.2d at

231 (affirming finding of willful exaggeration on summary

judgment where the “plaintiff’s invoices” and the “parties

written agreement[] demonstrates conclusively that [the]

plaintiff” was not authorized to impose markups that were

included in the lien).

The undisputed evidence conclusively establishes that

Baring willfully overstated the value of the Lien. Notably, the

Baring witnesses involved with the preparation and filing of the

Lien disclaimed knowledge of the work that Baring did yet caused

the Lien to be filed anyway. Fitzgibbon testified that he was

not familiar with the “details of the project” and that he

lacked knowledge about the equipment that Baring sold to DaDong.

Fitzgibbon Tr. 90-91, 187-88.7 Despite Fitzgibbon’s admitted lack

7 See also id. at 25(“Q: Do you have knowledge regarding Baring’s performance

of and details concerning the work that is the subject matter of the lien? A:

No, I’m not detailed – I don’t have detailed information on that.”), 188 (Q:

“[S]o you can’t testify about any particular item that was installed in

DaDong’s former leased premises, correct? A: That would be Jim Turner. Q:

Okay. But not you? A: That’s correct. I wasn’t there.”). Baring now submits a

declaration from Fitzgibbon in which he directly contradicts his deposition

testimony. ECF No. 149 ¶ 19 (“I am thoroughly knowledgeable about Plaintiff’s

performances in the [Agreement], the details concerning the Project . . .

Plaintiff’s itemized statements detailing the work that Plaintiff performed

of knowledge, he authorized Henrick to cause the Lien to be

filed. Id. at 69-70. Fitzgibbon also signed and verified

Baring’s Section 38 Response, which listed the equipment that

Baring sold to DaDong. ECF No. 142-29 at 4-5 (Fitzgibbon

affirming that he read the document and “knows the contents

thereof”). Although the three unsigned change orders were

appended to the Section 38 Response, id. at 169, 173, 179,

Fitzgibbon testified that he did not recall ever having seen any

of the change orders and that he did not personally do anything

to verify the amounts that Baring contended it was due under the

Lien. Fitzgibbon Tr. 40-46.

Hendrick likewise lacked knowledge about Baring’s work.

Hendrick testified that she had never set foot in the Leased

Property and that she lacked personal knowledge regarding the

labor, equipment, and services that Baring provided to DaDong.

Hendrick Tr. 38-39, 86-87, 90. Hendrick did know that that a

mechanic’s lien can only be filed in connection with a permanent

improvement to property and that the Agreement could only be

modified through a written, signed modification. Id. at 99-100,

for Defendant Dadong . . . as well as the amounts outstanding and unpaid by

Defendant Dadong and the [Lien].”). Baring has not provided any explanation

as to how this conflicting testimony can be reconciled. Accordingly, the

allegation in paragraph 19 of Fitzgibbon’s declaration cannot create a

genuine dispute of fact. See In re Fosomax Products Liab. Litig., 707 F.3d

189, 193 (2d Cir. 2013) (a party may not defeat “summary judgment simply by

submitting an affidavit that contradicts the party’s previous sworn

statements.”)

115-16. Despite her knowledge of these requirements and her

unfamiliarity with Baring’s work, she caused NY Liens to file

the Lien.

Had either Fitzgibbon or Hendrick attempted to verify

whether the Lien was well founded before they caused it to be

filed, they would have discovered that the equipment that Baring

delivered and installed could not reasonably have been

considered permanent improvements to the Leased Property.8 See

supra Section III.A. Indeed, the record evidence demonstrates

that Baring, through at least Turner, must have known that its

work did not result in permanent improvements to the Leased

Property at the time that Baring entered into the Agreement and

when it filed the Lien. Id.; see also Turner Tr. 131-32. Despite

this, Baring filed the Lien and overstated it by its entire

amount. On this record, such a dramatic overstatement cannot

reasonably have been the result of a genuine mistake or

misunderstanding. To the contrary, given what Baring knew at the

time it filed the Lien, the evidence conclusively establishes

that Baring’s exaggeration of the Lien was intentional and

deliberate.

8 Additionally, had the Baring personnel responsible for the Lien reviewed the

materials filed in connection with the Lien, including the Section 38

Response, they would have discovered that the Lien was based in part on three

unsigned change orders.

Accordingly, Baring’s motion for summary judgment

dismissing 3 BP’s counterclaim for willful exaggeration of the

Lien is denied and the Moving Defendants’ motion for summary

judgment granting 3 BP’s counterclaim for willful exaggeration

of the Lien is granted.

D.

Because Baring willfully exaggerated the Lien, 3 BP is

entitled to a declaration that the Lien is void. N.Y. Lien Law §

39. Moreover, because Baring overstated the Lien by its entire

amount, 3 BP is entitled to damages equal to the value of the

Lien, $320,356.94. Id. § 39-a. Additionally, Baring should be

awarded “the amount of any premium for a bond given to obtain

the discharge of the lien or the interest on any money deposited

for the purpose of discharging the lien” and “reasonable

attorney’s fees for services in securing the discharge of the

lien.” Id.; see also Pelc, 893 N.Y.S.2d at 406. The amount of

these damages cannot be determined on this summary judgment

record. Accordingly, 3 BP may submit a supplemental motion for

summary judgment for a sum of damages in excess of $320,356.94,

along with a Rule 56.1 Statement and any necessary declarations

and supporting evidence.

IV.

The Moving Defendants also move for summary judgment

dismissing Baring’s claims seeking foreclosure on the Lien and

judgment on the Bond. Baring cross-moves for summary judgment

seeking foreclosure of the Lien and judgment on the Bond.

However, because the Lien is void on account of Baring’s willful

exaggeration, Baring cannot maintain any claims arising out of

the Lien.

In any event, Baring’s claims arising out of the Lien are

without merit. To assert a mechanic’s lien against a property,

the lienor must establish that the contractor made a permanent

improvement to a property and did so “with the consent or at the

request of the owner thereof . . .” N.Y. Lien Law §§ 2, 3.

Baring’s claims fail because its work did not result in any

permanent improvements to the Leased Property. See supra Section

III.A. For this same reason, the undisputed evidence

demonstrates that 3 BP did not consent to Baring’s work. To

establish consent, Baring must show that 3 BP was either an

“affirmative factor in procuring the improvement to be made, or

having possession and control of the premises[,] assent[ed] to

the improvement in the expectation that” Baring would reap the

benefit of it. See Ferrara v. Peaches Café LLC, 115 N.E.3d 621,

624 (N.Y. 2018). In the MTD Order, the Court explained that

Baring alleged adequately that 3 BP had consented to Baring’s

work on the Leased Property, but only to the extent that

Baring’s work resulted in permanent improvements to the Leased

Property and fell under the ambit of the Allowance provisions of

Section 3.03 of the Lease. See MTD Order at 28-32. Now that

discovery has closed and the fully developed record is before

the Court, it is clear that none of Baring’s work resulted in

permanent improvements and that DaDong was never reimbursed for

Baring’s work under Section 3.03 of the Lease. See supra Section

III.A. Accordingly, 3 BP did not consent to Baring’s work on the

Leased Property and Baring’s claims arising out of the Lien

against 3 BP and its surety, Westchester, fail.

For these reasons, the Moving Defendants’ motion for

summary judgment dismissing Baring’s claims seeking foreclosure

on the Lien and judgment on the Bond is granted. Baring’s motion

for summary judgment seeking foreclosure on the Lien and

judgment on the Bond is denied.

V.

Baring moves for summary judgment dismissing 3 BP’s

counterclaims for wrongful filing of the Lien and injury to

property. Baring’s sole argument as to why these claims should

be dismissed is that Baring “rightfully filed the Lien in

accordance with the New York Lien Law.” ECF No. 146 at 18. This

argument fails in view of the conclusions reached above.

Accordingly, Baring’s motion for summary judgment dismissing 3

BP’s counterclaims for wrongful filing of the Lien and injury to

property is denied.

VI.

In its second amended complaint (“SAC,” ECF No. 64), Baring

alleged that it named AA Jedson and Done Right as defendants

because each entity had “filed a notice of mechanic’s lien in

the office of New York County Clerk against the” Property. Id.

¶¶ 16-17. The SAC did not specifically assert any claims against

AA Jedson or Done Right.

Baring filed an affidavit of service as to AA Jedson on

October 28, 2019. AA Jedson has not yet filed an answer or

appeared in this action. Although the Clerk issued a certificate

of default as to AA Jedson on November 13, 2019, Baring has not

sought a default judgment against AA Jedson. In any event, the

Lien is void and neither Baring nor any other party has advanced

any claims against AA Jedson. Accordingly, there is no case or

controversy between AA Jedson and any party to this action, and

any claims by any party against AA Jedson are dismissed.

On July 27, 2020, 3 BP filed a crossclaim against Done

Right. 3 BP alleged that Done Right had filed a mechanics lien

against the Property and that 3 BP had the lien bonded by

Westchester. ECF No. 92 ¶¶ 189-92. 3 BP sought a declaration

that because Done Right had not yet appeared in the action, Done

Right had waived its right to enforce the lien against 3 BP and

Westchester. Id. ¶ 199. Done Right subsequently appeared,

answered, and filed a crossclaim against 3 BP on November 4,

2020, seeking to foreclose on Done Right’s lien against the

Property. See ECF No. 118 ¶¶ 170-76. On July 8, 2021, the Court

so-ordered stipulations filed by Done Right and 3 BP that

dismissed the parties’ crossclaims with prejudice and released

Done Right’s lien against the Property. ECF Nos. 131, 132. In a

letter to the Court dated July 7, 2021, Baring indicated that it

did not oppose dismissing Done Right from this action. ECF No.

130. Accordingly, all claims against Done Right are dismissed.

On November 27, 2019, Baring filed a Suggestion of

Bankruptcy as to DaDong and acknowledged that this action was

automatically stayed with respect to DaDong pursuant to 11

U.S.C. § 362(a)(1). ECF No. 83. The stay has not yet been

lifted. Baring is directed to file a status report updating the

Court as to the state of DaDong’s bankruptcy proceedings by

February 4, 2022.

CONCLUSION

The Court has considered all of the arguments of the

parties. To the extent not discussed above, the arguments are

either moot or without merit.

For the foregoing reasons, the Moving Defendants’ motion

for summary judgment granted. Baring’s motion for summary

judgment is denied. The Lien is declared void as willfully

exaggerated. All claims against AA Jedson and Done Right are

dismissed.

3 BP may submit a submit a supplemental motion for summary

judgment for a sum of damages in excess of $320,356.94, along

with a Rule 56.1 Statement and any necessary declarations and

supporting evidence, by February 4, 2022. Baring’s opposition,

if any, is due by February 28, 2022. Any opposition should be

accompanied by a response to 3 BP’s Rule 56.1 Statement and any

necessary declarations and supporting evidence. 3 BP’s reply is

due by March 11, 2022.

Baring is directed to file a status report updating the

Court as to the state of DaDong’s bankruptcy proceedings by

February 4, 2022.

The Clerk is directed to terminate AA Jedson and Done Right

as parties in this action. The Clerk is further directed to

close Docket Nos. 138, 145, and 163.

SO ORDERED . :

Dated: New York, New York

January /*%, 2022 _ .

AGG

tee John G. Koeltl

United States District Judge

33