NY Lien L § 77 (2021)
2021 New York Laws LIE - Lien Article 3-A - Definition and Enforcement of Trusts 77 - Action to Enforce Trust.

§  77.  Action to enforce trust. 1. A trust arising under this article may be enforced by the holder of any trust claim, including  any  person subrogated  to  the  right of a beneficiary of the trust holding a trust claim, in a  representative  action  brought  for  the  benefit  of  all beneficiaries  of  the trust. An action to enforce the trust may also be maintained by the trustee. In  any  such  action,  except  as  otherwise provided  in  this article, the practice, pleadings, forms and procedure shall conform as nearly as may be to the practice, pleadings, forms  and procedure  in  a  class  action as provided in article nine of the civil practice law and rules; provided, however, that in  determining  whether the  prerequisites of a class action have been satisfied, the provisions of paragraph one of subdivision (a) of section nine hundred one of  such law and rules may be waived at the discretion of the court.   2. Such action may be maintained at any time during the improvement of real property, or home improvement, or public improvement and successive actions  may  be  maintained  from  time  to time during the improvement provided no other such action is pending at the time of the commencement thereof. No such action shall be maintainable if commenced more than one year after the completion  of  such  improvement  or,  in  the  case  of subcontractors or materialmen, after the expiration of one year from the date  on  which  final payment under the claimant's contract became due, whichever is later, except an action by the trustee for final settlement of his accounts and for his discharge.   3. (a) The relief granted in any such action may include any or all of the following:  (i) Relief to compel an interim or final accounting by the trustee; to identify and recover trust assets in the hands of  any  person  together with  interest  accrued thereon from the time of the diversion. Interest shall be computed at the rate equal to the underpayment rate set by  the commissioner  of  taxation  and  finance  pursuant  to subsection (e) of section one thousand ninety-six of the tax law,  minus  four  percentage points; to set aside as a diversion any unauthorized payment, assignment or  other  transfer,  whether  voluntary  or  involuntary;  to  enjoin a diversion; to recover damages  for  breach  of  trust  or  participation therein;  (ii)  Enforcement  on  behalf  of  the  trust  of  any right of action constituting a trust asset;  (iii) Determination of the existence and amount of any trust asset  or of any trust claim;  (iv)  An order terminating or limiting the authority of the trustee in the application of trust assets or of any trust asset, or directing  the time and manner of application of a trust asset or part thereof;  (v)  An  order  requiring  the  trustee to give security to ensure the proper distribution of the trust assets, either during the  pendency  of the  action or thereafter, or to furnish assurance therefor in any other manner, if it appears that there is danger that  such  assets  or  asset will be dissipated before judgment or diverted from trust purposes;  (vi)  An  order  for  distribution  of  any trust assets available for distribution, either with respect to the entire trust or with respect to particular assets of the trust, or for retention  of  particular  assets for  future  distribution.  Where  the  holder  of any trust assets is a trustee or a transferee who received the assets with the knowledge  that they  were  trust  funds,  an  order  for distribution and retention for future distribution of any trust assets  shall  include  the  amount  of diverted  funds plus interest from the time of the diversion to the date of such order;  (vii) Settlement of the interim or final account of the trustee;  (viii) Final discharge of the trustee at the termination of the trust, or discharge of the trustee with respect to the application of  specific trust assets;  (ix)  Such other and further relief as to the court may seem necessary and proper;  (x) Any provisional or  ancillary  relief  incident  to  any  of  such relief.  (b)  Any relief pursuant to subparagraphs (i), (ii), (iii), (iv), (v), (ix), or (x) of paragraph (a) shall be deemed to be for the  benefit  of the  entire  class  of  trust  beneficiaries,  including persons who may become trust beneficiaries at any time before  the  termination  of  the trust.  Except  as  provided in subdivision four of this section, relief pursuant to subparagraph (vi) shall also be deemed to be for the benefit of such entire class, but unless the court shall otherwise direct,  only those  persons  shall  be  entitled  to share in any distribution of the trust assets who are trust beneficiaries at the time  of  entry  of  the judgment under which distribution is to be made and who have appeared in the  action or filed their claims in such manner and within such time as the court shall direct, and whose claims are due and payable at the date for distribution as set by  the  order  of  the  court  and  either  are undisputed by the trustee or have been determined in the action.   4.  If  an  action to enforce a trust of which the owner is trustee is commenced before the completion or abandonment  of  the  improvement  of real  property,  or home improvement, or if an action to enforce a trust of which a contractor or subcontractor is trustee  is  commenced  before the  completion  or  abandonment of the performance by the trustee under the contract or  subcontract,  the  judgment  therein  may  provide  for distribution  of  the assets then available for distribution among trust beneficiaries whose claims are then payable, and who  have  appeared  in the  action or who file their claims within such time as the court shall direct, and the  judgment  shall  so  provide  unless  the  court  shall determine that in the circumstances equity requires that distribution be deferred to await maturity of other trust claims.   5.  If  the  action  to  enforce  a  trust  of  which  a contractor or subcontractor is trustee is brought after the completion or  abandonment of  the  performance  of  the  contract  or  subcontract  but before the completion of the improvement the court may direct that  the  action  be continued to await events by reason of which additional trust assets may become available.   6. For the purposes of any distribution of trust assets, the court may direct that trust claims shown upon a schedule or schedules filed by the trustee shall be deemed to have been filed in the action.   7.  An  action  brought under this article shall not be compromised or discontinued nor dismissed by consent, by  default  or  for  failure  to prosecute, except with the approval of the court. On any application for such  approval  notice  shall be given in such manner as the court shall direct.   8. Subject to subdivisions three and four  of  this  section,  in  any distribution  of trust assets pursuant to order or judgment in an action to enforce a trust, the following classes of  trust  claims  shall  have preference,  in  the  order  named:  (a)  trust claims for taxes and for unemployment  insurance  and  other  contributions,  due  by  reason  of employments,  and  for  amounts  of  taxes  withheld  or  required to be withheld; (b) trust claims of laborers for daily or  weekly  wages;  (c) trust  claims  for  benefits  and  wage  supplements; (d) claims for any amounts of wages of laborers for  daily  or  weekly  wages  (other  than claims  for  amounts  of taxes deducted and withheld, constituting trust claims for  such  amounts)  actually  deducted  from  payments  thereof,  pursuant  to law or agreement, for remittance to any person on behalf of the laborer or in satisfaction of his obligation,  to  the  extent  that such  person  is  entitled  to  assert,  as a trust claim, the claim the laborer would otherwise have for such amount.   Except as provided in this subdivision, trust claims entitled to share in any distribution of trust assets pursuant to order of the court shall share pro rata.