A New York contractor says a subcontractor diverted money meant for union workers - and wants the surety to pay.
Judlau Contracting filed suit in the Southern District of New York on May 14, 2026, against three principals of Southeast Bridge FL Corp. and surety Lexon Insurance Company. The complaint pulls a surety into a dispute that began with unpaid union wages, fringe benefits, and pension contributions on a Bronx public works project.
The job covered painting and structural repairs on the Dyre Avenue and White Plains Road subway lines for the Metropolitan Transportation Authority. According to the complaint, Judlau, the prime contractor, entered five subcontracts with Southeast Bridge in July 2022 worth roughly $41 million in total. The filing alleges that, by April 2024, Southeast Bridge had fallen behind on contributions to fringe benefit and pension funds tied to the painters' local.
That is where the surety enters. The complaint says Southeast Bridge obtained a labor and benefit bond from Lexon in August 2023 for $200,000, naming the painters' union benefit funds as the obligees. As quoted in the filing, the bond recites that the principal and surety "are held and firmly bound" to those funds "in the amount of $200,000.00 lawful money of the United States."
Judlau says it advanced money to Southeast Bridge and paid certain creditors directly to keep work moving. Those payments, the complaint alleges, "were not voluntary but were made under legal and economic compulsion." Judlau argues it stands in the shoes of the benefit funds and can pursue Lexon under the bond through equitable subrogation, a doctrine that lets a party who pays another's debt take over the original creditor's rights.
The complaint lays out a timeline. A judgment was entered against Southeast Bridge in October 2024 in a separate action by Local Union No. 806 and its benefit funds, the filing says. Judlau issued a default notice on January 14, 2025. Two days later, according to the complaint, Southeast Bridge wrote back, with the filing alleging it was "delinquent on its contributions to the relevant union pension fund to in the approximate amount of $700,000.00." Judlau says it terminated all five subcontracts on July 1, 2025.
The complaint also flags a separate bond claim. Judlau alleges the individual defendants supported a mechanic's lien and payment bond claim filed by a vendor, SIR LLC, for $5.5 million against money due to Judlau and against Judlau's own payment bond. According to the filing, SIR "did not perform lienable services on the Project and the lien is grossly overstated."
Against the three principals - Michael T. Tsalickis, Dimitri T. Tsalickis, and Evie K. Tsalickis - Judlau pleads fraud, common-law indemnification, trust fund diversion under Article 3-A of the New York Lien Law, and conversion. The Lien Law claim rests on the argument that money advanced for labor and materials on the project were trust funds that had to pay workers and suppliers before anything else.
Judlau is seeking judgment of not less than $10 million on the fraud count, plus damages on the other claims and reimbursement from Lexon for all sums Judlau paid that fall within the bond's coverage.
The allegations have not been tested in court. The defendants have not yet filed a response, and no court has ruled.
