Justice Alan Scheinkman

A dispute arose out of non-payment for plaintiffs’ performance of asphalt paving and bonding services on behalf of general contractor Qualcon Construction in connection with its contract with defendant Consolidated Edison to make improvements to certain public streets in Yonkers and the Bronx. Plaintiffs contended ConEd wrongfully paid to Qualcon the money that was the subject of mechanic’s liens filed by plaintiffs concerning the services they provided on the projects. Plaintiffs further claimed ConEd owed them a duty to investigate the validity of the lien discharge bonds before releasing the funds to Qualcon. ConEd argued that its release of the funds was not the proximate cause of plaintiffs’ injury since their liens were fatally defective. The court determined that ConEd’s arguments concerning the defects in plaintiffs’ liens were irrelevant to whether plaintiffs stated claims for trust fund diversion, conversion, breach of fiduciary duty, negligence and breach of a constructive trust. The court held, among other things, that plaintiffs adequately alleged a claim of trust fund diversion against ConEd, noting the fact that ConEd released the funds being retained to Qualcon based on fraudulently issued lien discharge bonds.