P&N Invs. v. Frontier Mall Assocs., 2017 Wyo. LEXIS 62 (Wyo. 2017)

This payment dispute arose over conditional language in a lease agreement between a mall and a restaurant operator.  P&N Investments (“P&N”) leased space from Frontier Mall Associates, LP (“Mall”) to operate a restaurant.  The lease contained a “finish allowance” under which Mall agreed to cover some of P&N’s costs to renovate the space, up to $150,180.

The finish allowance was conditioned on the following provision:

[P&N] shall have furnished evidence satisfactory to Mall from its general contractor and any subcontractors that any and all liens that have been, or may be, filed have been satisfied of record or waived and an affidavit that all work has been paid for.

P&N hired CCI as its general contractor, and CCI in turn hired subcontractors, to renovate the space.  P&N paid CCI in full once CCI and its subcontractors completed the work.  The amount paid was $308,930.  CCI, however, failed to pay its subcontractors in full.  The unpaid amount was approximately $90,000.  Mall refused to pay P&N the finish allowance despite the fact that P&N paid CCI in full and submitted an affidavit stating that no liens were, or could be, filed because of time limitations for liens had expired.


Continue Reading Supreme Court of Wyoming Strictly Interprets a Conditional Payment Provision to Trigger Payment Only After GC and All of its Subs Have Been Paid in Full

Balfour Beatty Rail, Inc. v. The Kansas City Southern Railway Company, 2016 U.S. Dist. LEXIS 39086 (N.D. Tex., March 25, 2016)

The contractor contracted with owner to install 65 miles of railroad track, for a price of $12,206,666.  The owner had engaged another contractor to grade and prepare the substrate for the railroad track, and was to furnish and deliver aggregate for track ballast and track rail material to various locations along the rail route.  The contractor’s scope included all other work.  The contractor fell behind in its work, and the owner hired additional contractors to complete a portion of its scope.  The contractor blamed the delays on the owner’s late delivery of aggregate and rail, and improper subgrade preparation under a theory of differing site conditions. It sought $4.35 million in unpaid change orders, delay damages, and penalties under Texas’ prompt payment statutes.  The owner in turn sought $2.6 million in completion costs and costs of wasted aggregate.


Continue Reading Texas District Court Rejects Rail Contractor’s Delay and Prompt Payment Claims and Awards Owner More Than $3 Million

Zacherl, Inc. v. Flaherty Mechanical Contractors, LLC, 131 A.3d 1030, 2016 Pa. Commw. LEXIS 22 (Jan. 6, 2016)

The West Allegheny School Board (the “School Board”) voted to approve the School District’s (the “District’s”) plan to renovate its high school building (the “Project”).  The District contracted with Flaherty Mechanical Contractors, LLC (“Flaherty”) to act as the prime contractor.  Flaherty submitted the names of its subcontractors for the School Board’s review.  When the School Board raised no objections to Flaherty’s submission, Flaherty subcontracted with F. Zacherl, Inc. (“Zacherl”) to perform sheet metal work at the Project.

During the Project, the District made timely payments to Flaherty, but Flaherty failed to make timely payments to its subcontractors, including Zacherl.  The District terminated Flaherty’s contract in part as a result of Flaherty’s payment issues.  Flaherty, in turn, terminated Zacherl’s contract.


Continue Reading Pennsylvania Commonwealth Court Holds Enforceable School District’s Oral Promise to Pay Subcontractor for Returning to Job after Prime Contractor’s Termination

Butch-Kavitz, Inc. v. Mar-Paul Co., Inc., 2015 U.S. Dist. LEXIS 160652 (M.D. Pa. Dec. 1, 2015)

The United States Army Corps of Engineers (the “Owner”) entered into a contract (the “Contract”) with Mar-Paul Company, Inc. (“Mar-Paul”) for $3,381,000.00, under which Mar-Paul would serve as general contractor on a construction project for renovations to a building at the Tobyhanna Army Depot in Tobyhanna, Pennsylvania (the “Project”).  In turn, Mar-Paul entered into a subcontract (the “Subcontract”) with Butch-Kavitz, Inc. (“Butch-Kavitz”) for $452,000.00, under which Butch-Kavitz would perform the electrical and generator work in connection with the Project.


Continue Reading Federal Court in Pennsylvania Holds That Contractor’s Nominal Underpayment of Progress Payments Does Not Relieve Subcontractor’s Duty to Perform

DVBE Trucking and Construction Co., Inc. v. McCarthy Building Companies, Inc., 2015 U.S. Dist. LEXIS 90052 (N.D. Cal. July 10, 2015)

This payment dispute case arises out of a Veterans Affairs (“VA”) construction project located in Palo Alto, California.  McCarthy Building Companies, Inc. (“McCarthy”) was the prime contractor, Federal Insurance Company and Travelers Casualty and Surety provided the performance and payment bonds on behalf of McCarthy mandated by the Miller Act, and DVBE Trucking and Construction Company, Inc. (“DVBE”) was McCarthy’s subcontractor.  Section 11.1 of DVBE’s subcontract required that, for any dispute involving the VA, it would follow the dispute resolution procedures agreed to by McCarthy in its contract with the VA, and agreed to be bound by the result of any such dispute resolution procedures to the same degree as McCarthy.


Continue Reading Federal District Court in California Holds that Subcontract Provision Binding Subcontractor to Result of Dispute Resolution under Prime Contract Was Not an Effective Waiver of Miller Act Rights

Clipper Pipe & Service, Inc. v. The Ohio Cas. Ins. Co., 2015 Pa. LEXIS 1275 (PA  June 15, 2015)

The Supreme Court of Pennsylvania held that CASPA, 73 P.S. §§501-516, “does not apply to a construction project where the owner is a governmental entity.”  The decision once and for all resolved the issue of whether the Contractor and Subcontractor Payment Act (“CASPA”) applies to payment disputes between prime contractors and subcontractors on public works projects,  either instead of, or in addition to, the prompt payment provisions of the Commonwealth Procurement Code, 62 Pa.C.S. §§ 3931-3939 (commonly referred to as “the Prompt Payment Act”).


Continue Reading Supreme Court of Pennsylvania Holds Contractor and Subcontractor Payment Act (“CASPA”) Inapplicable to Public Works Projects

Marenalley Constr., LLC v. Zurich American Ins. Co. and Nason Constr. Inc., 2015 U.S. Dist. LEXIS 30968 (E.D. Pa. March 13, 2015)

This payment dispute case arises out of a Veterans Affairs (“VA”) construction project located in Philadelphia. Nason was the general contractor, Zurich was Nason’s surety, and Marenalley was Nason’s subcontractor. Marenalley’s subcontract required it to pursue any claim related to the project through the administrative disputes resolution process provided by Nason’s prime contract with the VA before bringing suit against the project’s bond.  The prime contract’s administrative dispute resolution process clause incorporated the terms of the Contract Disputes Act (the “CDA”).


Continue Reading U.S. District Court in Pennsylvania Holds Subcontractor’s Miller Act Suit Not Subject to Stay Pending Prime Contractor’s Prosecution of Claim Against Government

KBW Assocs. v. Jaynes Corp., 2015 U.S. Dist. LEXIS 18220 (D. Nev. Feb. 13, 2015)

This action arose out of the construction of additions to existing buildings at Creech Air Force Base in Indian Springs, Nevada (the “Project”).  The United States Army Corps of Engineers (the “COE”) contracted with Defendant Jaynes Corporation, Inc. (“Jaynes”) to perform the work.  Jaynes then subcontracted with Plaintiff, KBW Associates, Inc. (“KBW”), to construct the metal framing and outer shell of the buildings.

Following construction delays, Jaynes found itself involved in two separate actions.  In the first action (the “Prime Contract Litigation”), Jaynes was defending against liquidated damages assessed by the COE under the prime contract.  In the instant action (the “Subcontract Litigation”), Jaynes was defending a Miller Act suit for contract balances brought by KBW.  KBW alleged Jaynes was responsible for the construction delay, through a “pattern of mismanagement”, involving failure to timely approve work, unilateral imposition of work beyond the scope of the subcontract and improper scheduling.  Jaynes asserted several affirmative defenses and filed counterclaims against KBW, on grounds that KBW failed to perform in accordance with the subcontract and failed to meet construction schedules.


Continue Reading Federal District Court in Nevada Denies Contractor’s Motion to Stay Subcontractor’s Miller Act Suit Pending Resolution of Contractor’s Suit Against the Government

U.W. Marx, Inc. v. Koko Contracting, Inc., No. 518611, 2015 N.Y. App. Div. LEXIS 600 (N.Y. App. Div. Jan. 22, 2015)

The Appellate Division of the Supreme Court of New York affirmed judgment in favor of a subcontractor holding that although the subcontractor failed to comply with a contractual provision requiring it to give timely notice of its intent to stop work due to contractor’s failure to make payment, the contractor’s prior failure to make three consecutive progress payments to subcontractor constituted an uncured, material breach that relieved the subcontractor from performing its remaining obligations under the parties’ contract.


Continue Reading New York Appellate Division Holds That Subcontractor’s Failure to Give Cure Notice Before Stopping Work Did Not Bar Recovery Because Contractor’s Prior Unjustified Failure to Make Three Successive Progress Payments Constituted Uncured, Material Breach

Scungio Borst & Assocs. v. 410 Shurs Lane Developers, LLC et al., 2014 Pa. Super. LEXIS 4527 (Pa. Super. Ct. 2014)

On reconsideration of an earlier panel decision of the Pennsylvania Superior Court, the Court en banc rejected a contractor’s contention that Pennsylvania’s Contractor and Subcontractor Payment Act (“CASPA”) extends liability for non-payment beyond the actual contracting parties.

This action arose out of the construction of a condominium project in Philadelphia’s Manayunk neighborhood (the “Project”).  The owner, 410 Shurs Lane Developers, LLC (the “Owner”), entered into a written contract with Scungio Borst & Associates (the “Contractor”) for the construction of the Project.  The Contractor performed the contracted-for construction services, as well as $2.6 million in additional work at the direction of the Owner and the Owner’s President and fifty percent shareholder, Robert DeBolt.  When the Contractor was not paid approximately $1.5 million incurred due to the additional work, it filed suit against the Owner and Mr. DeBolt individually, alleging, inter alia, breach of contract and violation of CASPA.


Continue Reading En Banc Pennsylvania Superior Court Rejects Extending CASPA Liability Beyond Contracting Parties