NY Drywall of OC v. Rivergate Development
Justice Leslie Stein
NY Professional Drywall of OC subcontracted with Rivergate Development for construction work at a senior housing project owned by a third party. Rivergate deposited $142,787 with the county clerk to discharge Drywall's $137,531 mechanic's lien. In its contract breach suit, Drywall sought relief under Lien Law articles 2, 3, and 3-A. The Third Department reversed a lower court order granting Rivergate Development dismissal of Drywall's Lien Law 3-A causes of action seeking accounting of trust assets and repayment of diverted trust funds. Under the circumstances Drywall could simultaneously maintain an action to foreclose its mechanic's lien and suit under Lien Law 3-A. The panel was not persuaded that discharge of a Lien Law article 2 lien by the deposit of money with the county clerk is the equivalent to a payment or discharge of Drywall's Lien Law 3-A trust claim. Moreover, to construe the Lien Law as automatically terminating a beneficiary's interest in a 3-A trust upon perfection and/or discharge of a mechanic's lien before unpaid subcontractors' claims are determined on the merits and satisfied would be contrary to the explicit language of the Lien Law and the legislative purposes behind its enactment.