FILED: NEW YORK COUNTY CLERK 11/09/2016 12:16 PM INDEX NO. 655053/2016 NYSCEF DOC. NO. 6 RECEIVED NYSCEF: 11/09/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK x BELLE LIGHTING LLC, Index No. 655053/2016 -against- Plaintiff, : USA LEGWEAR, INC., BASIC RESOURCES, LLC : and WESTCHESTER FIRE INSURANCE COMPANY, : VERIFIED ANSWER WITH AFFIRMATIVE DEFENSES AND COUNTERCLAIMS Defendants. : x Defendants, USA Legwear, LLC and Basic Resources, Inc., denominated in the caption as USA Legwear, Inc. ("USA Legwear") and Basic Resources, LLC ("Basic Resources"), and Westchester Fire Insurance Company ("WFIC") (collectively "Defendants"), respectively, by their attorneys, Sills Cummis & Gross P.C., as and for their Verified Answer to the Verified Complaint ("Complaint") of plaintiff, Belle Lighting LLC ("Plaintiff'), respectfully allege as follows: 1. Deny knowledge or information sufficient to form a belief as to the truth of the allegations contained in Paragraph 1 of the Complaint. 2. Deny the allegations contained in Paragraph 2 of the Complaint. 3. Deny the allegations contained in Paragraph 3 of the Complaint. 4. Admit the allegations contained in Paragraph 4 of the Complaint. 5. The allegations contained in Paragraph 5 of the Complaint state legal conclusions to which no response is required. To the extent a response might be required, deny the allegations contained in Paragraph 5 of the Complaint. 6. Deny knowledge or information sufficient to form a belief as to the truth of the allegations contained in Paragraph 6 of the Complaint, except admit that on or about September 1 of 15
6, 2016 WFIC issued Bond No. K095045025 (the "Bond") in the amount of $455,706.83 to discharge Plaintiffs alleged mechanic's lien by bond, and respectfully refers the Court to said Bond for its terms, conditions and the legal effect thereof. 7. Deny knowledge or information sufficient to form a belief as to the truth of the allegations contained in Paragraph 7 of the Complaint. 8. Deny knowledge or information sufficient to form a belief as to the truth of the allegations contained in Paragraph 8 of the Complaint. 9. Deny knowledge or information sufficient to form a belief as to the truth of the allegations contained in Paragraph 9 of the Complaint. 10. Deny knowledge or information sufficient to form a belief as to the truth of the allegations contained in Paragraph 10 of the Complaint. 11. Deny knowledge or information sufficient to form a belief as to the truth of the allegations contained in Paragraph 11 of the Complaint. 12. Deny knowledge or information sufficient to form a belief as to the truth of the allegations contained in Paragraph 12 of the Complaint. 13. Deny the allegations contained in Paragraph 13 of the Complaint. 14. Deny the allegations contained in Paragraph 14 of the Complaint. AS AND FOR A FIRST AFFIRMATIVE DEFENSE 15. Plaintiffs Complaint, and each of the causes of action contained therein, fails to state a cause of action upon which relief may be granted. AS AND FOR A SECOND AFFIRMATIVE DEFENSE 16. Defendants, and each of them, lack of privity with Plaintiff and therefore have no personal liability for ally alleged sums that may be due Plaintiff. 3153041 vl 2 2 of 15
AS AND FOR A TI I I RI) AFFIRMATIVE DEFENSE 17. Plaintiff has failed to join all necessary parties pursuant to New York State Lien Law 37 and/or 44. AND FOR A FOURTH AFFIRMATIVE DEFENSE 18. Plaintiffs notice of lien fails to comply with the requirements of the relevant provisions of the New York State Lien Law ("Lien Law"). AS AND FOR A FIFTH AFFIRMATIVE DEFENSE 19. Plaintiff's Complaint fails to allege compliance with the relevant provisions of the Lien Law, including but not limited to, the filing and service of a valid and proper notice of lien. AS AND FOR A SIXTH AFFIRMATIVE DEFENSE 20. Plaintiffs Complaint fails to allege any facts concerning the terms of a purported contract or agreement between Plaintiff and Artisan Construction Partners LLC ("General Contractor"), or between Plaintiff and General Contractor's sub-contractor, including but not limited to, the terms of said contract or agreement, how and why any amounts may be due and owing to Plaintiff from General Contractor or from General Contractor's sub-contractor to Plaintiff pursuant thereto, any billings and/or payments allegedly made in connection therewith, and Plaintiffs full performance thereunder. AS AND FOR A SEVENTH AFFIRMATIVE DEFENSE 21. Plaintiffs Complaint fails to allege any facts concerning any contract or agreement between General Contractor and USA Legwear and/or Basic Resources, including but not limited to, the terms and provisions thereof, whether and in what amount any monies were due and owing to General Contractor by USA Legwear and/or Basic Resources at the time Plaintiff allegedly filed its notice of lien or at any time thereafter, and whether and in what 3153041 vl 3 3 of 15
amount any lien fund existed at the time Plaintiff allegedly filed its notice of lien or at any time thereafter. AS AND FOR AN EIGHTH AFFIRMATIVE DEFENSE 22. Plaintiff's Complaint fails to allege any facts that USA Legwear and/or Basic Resources consented to any alleged work performed, services provided, and/or materials supplied by Plaintiff. AS AND FOR A NINTH AFFIRMATIVE DEFENSE 23. Plaintiff must share ratably in any lien fund with other potential lienors of the subject property, and accordingly, any recovery by Plaintiff on its alleged notice of lien must be so limited and reduced proportionately. AS AND FOR A TENTH AFFIRMATIVE DEFENSE 24. USA Legwear and/or Basic Resources paid all amounts due and owing to General Contractor under the written agreement at the time the General Contractor abandoned the project in June 2016, and therefore, no monies are due and owing to General Contractor thereunder. 25. In fact, USA Legwear and Basic Resources made a $75,000 advance payment that otherwise was not yet due and owing under the written agreement, so it has overpaid the General Contractor. 26. By reason of the foregoing, there is no lien fund upon which Plaintiff's alleged notice of lien may attach, and USA Legwear and Basic Resources are not liable for any amounts that may be due Plaintiff from General Contractor or its sub-contractor. AS AND FOR AN ELEVENTH AFFIRMATIVE DEFENSE 27. Alternatively, at the time General Contractor abandoned the project in June 2016, the total adjusted amount of the contract price was $10,559,394.14, of which USA Legwear and Basic Resources paid General Contractor $9,446,968.92. 3153041 vl 4 4 of 15
28. Assuming, arguendo, that USA Legwear and Basic Resources complete the work remaining to be done pursuant to the written agreement with General Contractor, their maximum liability to all potential lienors, including Plaintiff, would be $1,112,426.14 (the "Contract Balance Amount"), which is the difference between the contract price less the payments previously made, which sum would be reduced further dollar for dollar by any costs and expenses USA Legwear and/or Basic Resources incurred or paid to complete the work and otherwise perform General Contractor's obligations under the written agreement, including but not limited to, the costs for a new general contractor or contractors, bonding any liens against the subject property, completing punch list items, and correcting defective and/or shoddy workmanship and/or materials. AS AND FOR A TWELFTH AFFIRMATIVE DEFENSE 29. Plaintiff's Complaint fails to allege compliance with RPAPL 1301(2) (no prior action has been commenced). AS AND FOR A THIRTEENTH AFFIRMATIVE DEFENSE AND FIRST COUNTERCLAIM 1. Defendant USA Legwear is a limited liability company organized and existing under the laws of the State of New York, having an address at the Property (defined below). 2. Defendant Basic Resources is a corporation organized and existing under the laws of the State of New York, having an address at the Property. 3. Defendant WFIC is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania and authorized to do business in the State of New York, having an address c/o ACE, USA, 1133 Avenue of the Americas, 32nd Floor, New York, New York. 3153041 vl 5 5 of 15
4. Upon information and belief, plaintiff Belle Lighting LLC is a limited liability company organized and existing under the laws of the State of New York, having an address at 25 West 34th Street, Suite 1518, New York, New York 10122. 5. Basic Resources and USA Legwear (collectively "Owners") are each cosubtenants and the sublessees of the 2nd and 3rd floor (the "Subleased Premises") of certain real property located at 1411 Broadway, New York, New York, a/k/a Block 815, Lot 1 on the Tax Map of the City of New York, County of New York (the "Property") pursuant to a commercial sublease lease entered into on May 28, 2015 with Nine West Holdings, Inc. 6. On or about October 26, 2015, Owners' affiliate, AmeriCo Group, Inc., entered into an agreement and addendum with General Contractor, as amended by agreement between General Contractor and USA Legwear, dated October 30, 2015 (collectively, the "Initial Contract") pursuant to which General Contractor was to complete certain construction work at the Subleased Premises for the total sum of $9,988,845 (the "Project"). 7. During the course of the performance of the Initial Contract, certain change orders were approved in the total amount of $570,549.14 (the "Change Orders", together with the Initial Contract, the "Contract"). 8. The Change Orders increased the Initial Contract price by $570,549.14, for a total adjusted Contract price of $10,559,394.14. 9. Between October of 2015 and March of 2016, General Contractor submitted six applications for payment (each an "Application") pursuant to the Contract. 10. Pursuant to 5.1.3 of the Contract, certification of each of the General Contractor's Applications by the Project's architect is a condition precedent to Owners' payment to General Contractor. 3153041 vl 6 6 of 15
11. Between October of 2015 and June of 2016, the Project's architect certified to Owners six Applications for payment submitted by General Contractor. 12. Based on these certifications and in reliance on same, Owners thereafter paid General Contractor the total amount of $9,446,968.92 for labor, services and materials under the Contract, as follows: DATE AMOUNT REFERENCE APPLICATION NO._ 10/29/15 $ 1,591,628.67 Check 2924 No. 1 12/4/15 $ 1,120,645.13 Check 2967 No. 2 1/19/16 $ 2,262,425.71 Check 3037 No. 3 2/18/16 $ 1,359,868.82 Check 3087 No. 4 3/7/16 $ 1,000,000.00 Check 3113 No. 5 3/18/16 $ 613,339.94 Check 3134 No. 5 4/1/16 $ 100,000.00 Wire Payment No. 6 4/8/16 $ 100,000.00 Check 3162 No. 6 4/14/16 $ 500,000.00 Check 3176 No. 6 4/21/16 $ 200,000.00 Wire Payment No. 6 5/9/16 $ 200,000.00 Check 3208 No. 6 5/20/16 $ 324,060.65 Wire Payment No. 6 6/7/16 $ 75,000.00 Wire Payment Payment on Account Total: $ 9,446,968.92 13. In or about June 2016, after the sixth Application was paid in full, General Contractor abandoned the Project and walked off the Project in violation and in breach of the Contract. 14. Owners had no direct contract or dealings with Plaintiff. 15. Upon information and belief, Plaintiff was hired, if at all, by General Contractor or its sub-contractor. 16. Upon information and belief, on or about August 19, 2016, Plaintiff purported to filed a notice of mechanic's lien against the Property in the amount of $414,278.94 (the "Lien"). 3153041 vl 7 7 of 15
17. On or about September 6, 2016, at Owners' request WFIC issued Bond No. K095045025 in the amount of $455,706.83 (the "Bond") in order to bond and discharge the Lien. 18. On or about September 7, 2016, Owners duly filed the Bond with the New York County Clerk, under Index No. 101440/2016, as a result of which the Lien was marked as discharged by bond. 19. Subsequent to General Contractor's abandonment of the Project, Owners learned that certain lien waivers executed by Plaintiff and submitted to Owners by the General Contractor and that were the basis for the payments set forth above were allegedly forged by the General Contractor. 20. Although Owners paid General Contractor all amounts due and owing under the Contract, upon information and belief, General Contractor or its sub-contractor failed to pay Plaintiff monies that allegedly may have been due to Plaintiff. 21. Upon information and belief, General Contractor instead converted to its own uses millions of dollars that Owners paid to General Contractor. 22. Plaintiff's rights to payment for its labor and work or materials supplied to the Property are limited to, among other things, any unpaid funds that may be due and owing by Owners to General Contractor under the Contract. 23. As of June 21, 2016, there were no amounts due and owing by Owners to General Contractor under the Contract. 24. As of the date of the filing of Plaintiff's Lien, there were no amounts due and owing by Owners to General Contractor under the Contract. 3153041 vl 8 8 of 15
25. By reason of the foregoing, there is no lien fund to which Plaintiff's Lien can attach, and Defendants are not liable for any unpaid amounts that may be due from General Contractor to Plaintiff, or from General Contractor's sub-contractor to Plaintiff. 26. By reason of the foregoing, a justiciable controversy exists whether Defendants are liable for all or any part of the amounts sought to be recovered as set forth in Plaintiff's Lien. 27. By reason of the forgoing, Defendants are entitled to a declaratory judgment declaring and adjudging that, since Owners paid all amounts due and owing under the Contract prior to the General Contractor's abandonment of the Project and resulting breach of the Contract, (i) Defendants are not liable for all or any part of the amounts sought to be recovered in Plaintiffs Lien, and there is no lien fund upon which Plaintiff's Lien can attach; (ii) Plaintiff's Lien is a nullity and all claims based thereon against Defendants fail to state a claim upon which relief may be granted; (iii) Plaintiff's Lien, and the Bond securing same, should be cancelled and discharged, together with the surety on the Bond; and (iv) Plaintiff's Complaint, and each of the causes of action therein against Defendants, should be dismissed with prejudice. 28. Defendants have no adequate remedy at law. AS AND FOR A FOURTEENTH AFFIRMATIVE DEFENSE AND SECOND COUNTERCLAIM 29. Defendants repeat and reallege each of the allegations set forth in paragraphs 1 through 28 hereinabove as if set forth in full herein. 30. Subsequent to the General Contractor's abandonment of the Project and breach of Contract, the amount of the Contract price remaining to be paid pursuant to the literal terms thereof is the Contract Balance Amount. 31. As a result of General Contractor's abandonment of the Project and breach of the Contract in June 2016, Owners' performance under the Contract was and has been suspended. 3153041 vl 9 9 of 15
32. By reason of the foregoing, Owners are not liable to make any further payments under the Contract and/or to General Contractor, including the cost to complete the Project and any retainage, and there are no lien funds to which Plaintiff's Lien can therefore attach. 33. By reason of the foregoing, a justiciable controversy exists whether Defendants are liable for all or any part of the amounts sought to be recovered set forth in Plaintiff's Lien. 34. By reason of the forgoing, Defendants are entitled to a declaratory judgment declaring and adjudging that (i) Defendants are not liable for all or any part of the amounts sought to be recovered in Plaintiffs Lien, and there is no lien fund upon which Plaintiffs Lien can attach; (ii) Plaintiff's Lien is a nullity and all claims based thereon against Defendants fail to state a claim upon which relief may be granted; (iii) Plaintiff's Lien, and the Bond securing same, should be cancelled and discharged, together with the surety on the Bond; and (iv) Plaintiff's Complaint, and each of the causes of action therein against Defendants, should be dismissed with prejudice. 35. Defendants have no adequate remedy at law. AS AND FOR A FIFTEENTH AFFIRMATIVE DEFENSE AND THIRD COUNTERCLAIM 36. Defendants repeat and reallege each of the allegations set forth in paragraphs 1 through 35 hereinabove as if set forth in full herein. 37. Assuming, arguendo, that Owners complete the work remaining to be done pursuant to the Contract notwithstanding General Contractor's abandonment of the Project and resulting breach of the Contract, Owners' maximum liability to all potential lienors, including Plaintiff, would be limited to the Contract Balance Amount. 38. Owners liability, if any, to pay the Contract Balance Amount, is and would be reduced dollar for dollar by any costs and expenses they, or each of them, incurred or paid to 3153041 vl 10 10 of 15
complete said work and otherwise to perform General Contractor's obligations under the Contract, including but not limited to, the costs for a new general contractor or contractor, bonding any liens against the Property, completion of punch list items, and correction of defective and/or shoddy workmanship and/or materials. 39. Upon information and belief, the cost required to complete said work and otherwise to perform General Contractor's obligations under the Contract, including but not limited to, the costs for a new general contractor and/or contractor, bonding any liens against the Property, completion of punch list items, and correction of defective and/or shoddy workmanship and/or materials, will exceed Contract Balance Amount. 40. By reason of the foregoing, there is no lien fund to which Plaintiff's Lien can attach, and Defendants are not liable for any unpaid amounts that may be due from General Contractor to Plaintiff, or from General Contractor's sub-contractor to Plaintiff, including but not limited to, the Contract Balance Amount. 41. By reason of the foregoing, a justiciable controversy exists whether Defendants are liable for all or any part of the amounts sought to be recovered set forth in Plaintiff's Lien. 42. By reason of the forgoing, Defendants are entitled to a declaratory judgment declaring and adjudging that (i) Owners' maximum liability to all potential lienors, including Plaintiff, would be limited to the Contract Balance Amount, less the costs incurred or paid to complete said work and otherwise to perform General Contractor's obligations under the Contract, including but not limited to, the costs for a new general contractor and/or contractor, bonding any liens against the Property, completion of punch list items, and correction of defective and/or shoddy workmanship and/or materials; (ii) if Owners' costs to complete the work exceeds the Contract Balance Amount, Defendants are not liable for all or any part of the 3153041 vl 11 11 of 15
amounts sought to be recovered in Plaintiff's Lien, and there is no lien fund upon which Plaintiffs Lien can attach; (iii) Plaintiffs Lien is a nullity and all claims based thereon against Defendants fail to state a claim upon which relief may be granted; (iv) Plaintiff's Lien, and the Bond securing same, should be cancelled and discharged, together with the surety on the Bond; and (v) Plaintiffs Complaint, and each of the causes of action therein against Defendants, should be dismissed with prejudice. 43. Defendants have no adequate remedy at law. WHEREFORE, Defendants demand a judgment, as follows: (I) ON PLAINTIFF'S COMPLAINT: (i) dismissing Plaintiff's Complaint, and each of the causes of action asserted therein against Defendants, with prejudice; and (ii) cancelling and discharging Plaintiff's Lien, and the Bond securing same, together with the surety on the Bond; (II) ON THE FIRST COUNTERCLAIM: a declaratory judgment declaring and adjudging that, since Owners paid all amounts due and owing under the Contract prior to the General Contractor's abandonment of the Project and resulting breach of the Contract, (i) Defendants are not liable for all or any part of the amounts sought to be recovered in Plaintiff's Lien, and there is no lien fund upon which Plaintiffs Lien can attach; (ii) Plaintiff's Lien is a nullity and all claims based thereon against Defendants fail to state a claim upon which relief may be granted; (iii) Plaintiff's Lien, and the Bond securing same, should be cancelled and discharged, together with the surety on the Bond; and (iv) Plaintiffs Complaint, and each of the causes of action therein against Defendants, should be dismissed with prejudice; (III) ON THE SECOND COUNTERCLAIM: a declaratory judgment declaring and adjudging that (i) Defendants are not liable for all or any part of the amounts sought to be recovered in Plaintiff's Lien, and there is no lien fund upon which Plaintiff's Lien can attach; (ii) 3153041 vl 12 12 of 15
Plaintiff's Lien is a nullity and all claims based thereon against Defendants fail to state a claim upon which relief may be granted; (iii) Plaintiff's Lien, and the Bond securing same, should be cancelled and discharged, together with the surety on the Bond; and (iv) Plaintiff's Complaint, and each of the causes of action therein against Defendants, should be dismissed with prejudice; (IV) ON THE THIRD COUNTERCLAIM: a declaratory judgment declaring and adjudging that (i) Owners' maximum liability to all potential lienors, including Plaintiff, would be limited to the Contract Balance Amount, less the costs incurred or paid to complete said work and otherwise to perform General Contractor's obligations under the Contract, including but not limited to, the costs for a new general contractor and/or contractor, bonding any liens against the Property, completion of punch list items, and correction of defective and/or shoddy workmanship and/or materials; (ii) if Owners' costs to complete the work exceeds the Contract Balance Amount, Defendants are not liable for all or any part of the amounts sought to be recovered in Plaintiff's Lien, and there is no lien fund upon which Plaintiff's Lien can attach; (iii) Plaintiff's Lien is a nullity and all claims based thereon against Defendants fail to state a claim upon which relief may be granted; (iv) Plaintiff's Lien, and the Bond securing same, should be cancelled and discharged, together with the surety on the Bond; and (v) Plaintiff's Complaint, and each of the causes of action therein against Defendants, should be dismissed with prejudice; and (V) ON PLAINTIFF'S COMPLAINT AND ALL COUNTERCLAIMS: granting Defendants such other and further relief as the Court deems just and proper, together with their attorneys' fees, costs and disbursements. 3153041 vl 13 13 of 15
Dated: New York, New York November 8, 2016 SILLS CU MIS & GROSS P.C. Mitchell D. Haddad, Esq. 101 Park Avenue, 28th Floor New York, New York 10178 (212) 643-7000 Attorneys for Defendants USA Le ear, LLC, Basic Resources, Inc., and Westchester Fire Insurance Company TO: LAW OFFICES OF EDWARD WEISSMAN Attorneys for Plaintiff 60 East 42nd Street, Suite 557 New York New York 10165 (212) 937-1520 3153041 vl 14 14 of 15
VERIFICATION STATE OF NEW YORK ) COUNTY OF NEW YORK ) )ss.: AARON HARARI, being duly sworn, deposes and says:: 1. I am the President of defendant USA Legwear LLC 2. I have read the foregoing Verified Answer and know the contents thereof to be true based on my own knowledge, except as to matters alleged on information and belief, and that as to those matters, I believe them to be true. 3. The sources of my knowledge includes the book and records provided by defendants, documents of public record, and documents contained in defendants' files. 4. This verification is being made by me because defendant USA Legwear, LLC is a New York Limited Liability Company. Sworn to before me this of o November, 2016 Ou H-tkA, rit Notary ublie AMBER V. JUDD NOTARY PUBLIC OF NEW JERSEY ID # 50012619 My Commission Expires 3/25/2020 3153041 vl 15 of 15