Opinion ID: 751538
Heading Depth: 2
Heading Rank: 3

Heading: New York Lien Law v. the Parties' Surety Agreement

Text: 36 Titan contends that the district court erred when it determined that the priority of claims was governed by New York Lien Law rather than by the parties' surety agreement. 37 New York Lien Law specifically establishes the priority of claims to funds received in connection with a public improvement contract. N.Y. Lien Law § 77(8). Nowhere in Article 3-A of the New York Lien Law does it provide that the priority of claims prescribed therein is to apply only when the parties have not otherwise agreed. The purpose of Article 3-A is to safeguard the rights of those working on construction projects by providing for the payment of obligations incurred in performing the contract. See Atlas Building Systems, Inc. v. Rende, 236 A.D.2d 494, 653 N.Y.S.2d 694 (2d Dep't 1997); Ingalls Iron Works Co. v. Fehlhaber Corp., 337 F.Supp. 1085 (S.D.N.Y.1972). The statute would be disemboweled if the parties to a construction contract could provide that one of them is to receive contract funds ahead of other workers and creditors protected by the legislature. 38 Titan concedes that the trust beneficiaries' claims are valid under New York Lien Law, but Titan claims it should have received the money first and then been allowed to settle the trust beneficiaries' claims itself. Such an arrangement would leave the trust beneficiaries at the mercy of Titan and therefore, obviously defeat the salutary purpose of Article 3-A.