Lakeridge Development Corp. v. Skyline Developers , 607 N.Y.S.2d 826 ( 1994 )

Order unanimously reversed on the law without costs and matter remitted to Erie County Court for further proceedings in accordance with the following Memorandum: This special proceeding under RPAPL 1361 was commenced to determine the validity and priority of certain claims to surplus moneys generated from the sale of property in a mortgage foreclosure action. Pursuant to RPAPL 1361 (2), County Court made an order of reference, appointing a Referee "to hear, recommend and report respecting all relevant facts pertaining to the claims upon said surplus and based upon the determination thereof to ascertain priorities of the several claimants with all convenient speed to the end that upon the coming in and confirmation of such Report, such further Order may be made for the distribution out of said surplus monies as may be just”. The order of reference was entered May 16, 1991. The Referee failed to conduct a hearing on the matters referred to him. Nearly eight months after the order of reference, County Court, without giving the parties either notice or an opportunity to be heard, concluded that the mechanic’s lien of Thruway Builders of Orchard Park, Inc., was invalid due to its failure to comply with the filing requirement of Lien Law § 11.

We conclude that County Court failed to comply with RPAPL 1361 (3) when it did not give the parties "notice * * * to attend any hearing on disposition of surplus money” (RPAPL 1361 [3]). Moreover, the record reveals that the order of reference was never rescinded or revoked. We, therefore, remit the matter to County Court to determine entitlement to the mortgage surplus moneys pursuant to RPAPL article 13. (Appeal from Order of Erie County Court, LaMendola, J.— RPAPL 1361.) Present — Callahan, J. P., Pine, Fallon, Doerr and Davis, JJ.