New York Trust Fund Claim Barred By Statute of Limitations?

In Precast Restoration Services v. Global Precast Inc. the plaintiff, a subcontractor, sued a general contractor that hired it, along with the corporation principals of the general contractor, for diversion of trust funds under New York Lien Law Article 3A.  The principals and the corporation moved to dismiss the trust claims against them arguing, among other things, that the statute of limitations for bringing a trust violation claim against them had expired.

Lien Law Section 77(2) provides:

Such action may be maintained at any time during the improvement of real property...No such action shall be maintainable if commenced more than one year after the completion of such improvement or...after the expiration of one year from the date on which final payment under the claimant's contract became due, whichever is later...

While the general contractor and its corporate principals in this case did establish that more than one year had lapsed since the subcontractor's payment became due, they did not establish that the claim was brought more than one year after the improvement was completed.  As such, their motion to dismiss the trust violation claims against them, at least on these grounds, was denied.

When bringing a claim for violations of New York trust fund laws be sure to do so promptly to avoid expiration of the statute of limitations.  Keep in mind that the statute may be extended past one year after the completion of your own work.

Vincent T. Pallaci is a partner at the law firm of Kushnick Pallaci PLLC.  He practices construction law throughout the state of New York including prosecuting and defending trust diversion claims.  He can be reached at vtp@nyconstructionlaw.com or (631) 752-7100.