Reviewed September 7, 2026.
A mechanic’s lien and an Article 3-A trust claim protect different interests. Providing security for a lien does not necessarily pay or eliminate a trust claim.
The Rivergate decision
In New York Professional Drywall of OC, Inc. v. Rivergate Development, LLC, 100 A.D.3d 216 (2012), money had been deposited to discharge a lien under Lien Law § 20. The Third Department held that the deposit was security, not payment of the alleged trust obligation. The contractor could pursue its lien foreclosure and trust diversion theories together, subject to the rule against double recovery.
The court explained that a technical defect might defeat a lien without disposing of the separate trust claim. It denied the defendants’ request to dismiss the trust claim and sent the class-certification issue back for the trial court to consider. The appeal did not finally establish the debt, diversion liability or entitlement to class certification.
Case disclosure: Kushnick Pallaci PLLC, with Vincent T. Pallaci as counsel, represented the appellant in the reported 2012 appeal.
Evaluate each remedy on its own requirements
Lien validity, security, service and preservation require separate review from the existence of trust assets, beneficiary status, diversion, accounting and the representative-action requirements of Lien Law § 77. Payment recovered under one theory must be accounted for under the other.
The firm handles both mechanic’s lien foreclosure and Article 3-A disputes.
Kushnick Pallaci PLLC assists clients throughout New York with construction trust fund diversion litigation. Contact 631-752-7100 or vtp@kushnicklaw.com.
Attorney Advertising. General information, not legal advice.
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