A trade group representing construction companies says in a lawsuit that Gov. David Paterson acted illegally when he froze $1 billion worth of infrastructure projects because of the state's budget crisis.
A lawyer for the Associated General Contractors has asked a state court in Albany to declare that the state is breaching contracts with builders by withholding pay on work that has already begun.
The two sides were in court over the matter on Thursday.
Education groups have also sued the state for withholding aid to schools.
Paterson's spokesman laid blame for the freeze at the feet of the Legislature, saying it should act immediately to pass a fiscally responsible budget.