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Matter of Glisenti v New York Kitchen & Bathroom Corp. 2007 NY Slip Op 32378(U) July 24, 2007 Supreme Court, New York County Docket Number: 0105845/2007 Judge: Eileen Bransten Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication.

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SUPREME COURT OF THE STATE OF NEW YORK
PRESENT:
Justice

- NEW YORK

COUNTY

PART

6

INDEX NO. MOTIONDATE

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.

-vMOTION SEQ. NO.

MOTION CAL. NO.

The following papers, numbered 1 to



were rend on thio muth5n to/for

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PAPERS NfMBEREI)

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Notice of Motion/ Order to Show Cause - Affidavits
Answering Affldavlta - Exhlblts
Replying Affidavlts

- Exhlblta ...
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Cross-Motion:

0 Yes

No

. l Upon the foregoing papers, it is ordered that thia motion

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MOllON IS DECIDED IN ACCORDANCE WITH THE ACCOMPANYING MEMORANDUM0ECfSK)N.

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Check one:
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FINAL DISPOSITION

0 NON-FINAL DISPOSITION
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Check if appropriate:

0 DO NOT POST

0 REFERENCE

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Upon

Index No. 105845/07 Motion Date: 5/8/07 Motion Seq. No: 01

NEW YORK KITCHEN & BATHROOM

In this special proceeding, petitioner Niccolo Carpani-Glisenti ("Mr. Glisenti") seeks
a Judgment pursuant to N.Y. Lien Law 8 76(5) directing respondent New York Kitchen & Bathroom Corporation ("N.Y. Kitchen") to "make available for examination and copying its books and records with respect to a statutory trust under Article 3-A of the New York Lien Law, established by petitioner's deposit with respondent of $225,298.98 under a home improvement contract." Order to Show Cause, at 1; see also, Affidavit in Support of Application for Examination of Books and Records Pursuant to N.Y. Lien Law Section 7 6 ("Glisenti Aff."), at 7 1. N.Y. Kitchen opposes the petition.

Backafiorrnd
On February 17,2006,Mr. Glisenti (along with Nil Erbil) entered into a contract with

N.Y. Kitchen "to undertake construction and renovations at the apartment" in which Mr.
Glisenti resides. Glisenti Aff., at 7 2. The agreement, which specified that work would be

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Glisenti v. New York Kitchen & Bathroom COT.

Index No.: 105845/07 Page 2

performed on areas including the first floor powder room, kitchen, closets, bedrooms and staircase, sets forth payment terms as follows: 30% of the $214,850 contract price was due

on February 17,2006 and was designated as a "Deposit Upon Signing Contract," 25% was
due "Upon Completion of Design (prior to job opening and kitchen design excluded)," 25%

"Upon Kitchen and Bathroom Demolition," 10% "Upon Ordering and Confirmation of
Cabinetry," and 10% "Upon Completion of Renovation and Prior to Punchlist." Glisenti
Aff., Ex. A.

The parties' contract provided that N.Y. Kitchen "is legally required to deposit all payments received prior to completion in accordance with subdivision 4 of section 7 1-a of the lien law. In lieu of such deposit, [it] may post a bond or contract of indemnity with the owner guaranteeing the return of proper applications of such payments to the purpose of the contract." Glisenti Aff., Ex.A. It was estimated that work would begin in mid April and end on August 30,2006. Id. Mr. Glisenti asserts that pursuant to the agreement he "deposited with [N.Y. Kitchen] a total of $225,298.89 for the costs of the construction and renovation work on the apartment." Glisenti Aff., at 7 3. The money was allegedly provided "before the work was done." Id. Mr. Glisenti maintains that N.Y. Kitchen did not "perform its obligations" and that he therefore "terminated the Agreement and demanded a return of [his] funds and an

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Glisenti v. New York Kitchen & Bathroom Corp.

Index No.: 105845107 Page 3

accounting" on November 17,2006. Id., at 77 4,5.Despite repeated demands, N.Y. Kitchen refused to return any funds or to provide an accounting. On March 19, 2007, Mr. Glisenti requested pursuant to Lien Law

6

76 that N.Y.

Kitchen allow his attorneys to examine the books and records "with respect to the monies

[he] deposited * * * to be held in trust for that construction and renovation work." Glisenti
Aff., at

7

8. Ten days later, N.Y. Kitchen responded that Mr. Glisenti was not a

"`beneficiary' under the trust fund law and does not have a trust fund claim." Glisenti Aff.,

Ex. B.
As a result of N.Y. Kitchen's refusal to permit an examination of its books and records related to the $225,298.89, Mr. Glisenti commenced this special proceeding seeking
a Judgment authorizing him to inspect books and records related to the $225,298.98 that was

paid.

N.Y. Kitchen opposes the petition, urging that Mr. Glisenti is not a "beneficiary" of
a trust, and therefore, cannot invoke the provisions of the Lien Law authorizing an

examination of books. Affirmation of C. Jaye Berger in Opposition ("Opp"), at 774,6, N.Y. Kitchen further asserts that it was wrongfully terminated and that the "project was underway" (not that it was completed or substantially completed). See, Affidavit of Perry Hiiman in Opposition, at 7 3. It maintains that "a substantial amount of work had been done." Id., at
76.

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Glisenti v. New York Kitchen & Bathroom COT.

Index No.: 105845/07 Page 4

Analysis Beneficiaries of an Article 3-A Lien-Law trust are defined as those "having claims fox payment of amounts for which the trustee is authorized to use trust assets." Lien Law

8 71(4).

Lien Law

5 71(2) provides that the "trust assets of which a contractor * * * is
* * home

trustee shall be held and applied for the following expenditures arising out of *

improvement" and includes "payment to which the owner is entitled pursuant to the provisions of section seventy-one-a of this chapter ["Further trust of funds received receivable by owner under executory contract for the sale and improvement of real property"] ." Lien Law

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71-a(4), in turn, mandates that under "a home improvement contract,

payments received from an owner by a home improvement contractorprior to the substantial completion ofwork under the contract shall be deposited within five business days thereafter
by the recipient in an escrow account * * *. * * * Such deposit or deposits

property of the owner until (i) the proper payment, transfer or application of such deposits by the contractor to the purposes of the home improvement contractor under the schedule of payments provided therein; or (ii) the default or breach of the owner excusing the recipient's performance of the terms of the home improvement contract, but only to the extent of any reasonable liquidated damage amount as defined in section 2-718 of the uniform commercial code and set forth in the contract, and only after seven days prior

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Glisenti v. New York Kitchen & Bathroom Corp.

Index No.: 105845/07
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written notice to the owner; or (iii) substantial performance of the contract" (emphasis added). Finally, Lien Law

6 76 authorizes any trust beneficiary "holding a trust claim" to

examine trust-related books or records. Mr. Glisenti made payments to N.Y. Kitchen before substantial completion of work. In the absence of substantial performance of the contract--of which there is no allegation here (a "substantial amount of work" is not enough)--Mr. Glisenti remains the owner of the monies he paid. Those monies constitute Article 3-A trust funds and Mr. Glisenti is a beneficiary thereto. See, People v. Lincoln, 272 A.D.2d 945, 945 (4th Dept. 2000) (contractors who receive money in advance for home improvements hold them in trust for owners who advance them); People v. Hollowell, 168 A.D.2d 970, 971 (4th Dept. 1990) (Article 3-A trust assets include monies advanced by owner for purposes of home improvement); c. Peters v. Grzfln, 11I B.R. 42,44 (W.D.N.Y. 1990) (provisions of Lien f,

Law require deposit of owner's funds into a "trust account").
As such, pursuant to Lien Law

8 76, Mr. Glisenti is entitled to examine books and

records related to the funds that technically remain his property. Accordingly, it is

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ENTER:

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Hon. Eileen Bransten

and nottoe of entry cannot be served based &n. To obMn entry, counsel or authodmd rmprsaenbtlve murt w a r In person ut t h Judgment Clerk's Ikrk (fjooA1 ~ 41E)



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