Case Conclusion Date: November 1, 2012
Practice Area: Construction / Development
Outcome: Trial court reversed and Lien Law Article 3A trust diversion claim reinstated
Description: Lienor brought claim against developer and general contractor to simultaneously foreclose upon mechanic's lien and pursue claim for diversion of trust funds under Lien Law Article 3A. The defendants moved for summary judgment dismissing the Article 3A trust diversion claims arguing that the payment of money into court to secure the mechanic's lien extinguished the Article 3A trust. The trial court agreed with the defendants and dismissed the trust diversion claim. On appeal, the Appellate Division reversed holding that simultaneous pursuit of the lien foreclosure action and the trust diversion action under Article 3A was permissible and the fact that the lien was secured by a payment of money into court did not change the outcome.