2023 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.