Sloan & Co. v. Liberty Mutual Ins. Co.
633 F. 3d 175 (3d Cir. 2011)

IOC developed a waterfront condominium project in Philadelphia. Shoemaker was the prime contractor for the Project. Shoemaker retained multiple contractors, including Sloan, who was to perform drywall and carpentry work. Liberty Mutual was Shoemaker’s payment bond surety. At completion, IOC refused to pay Shoemaker nearly $6.5 million. Of that amount, $5 million was due to subcontractors. IOC claimed, among other things, that some of the subcontractors’ work was untimely and deficient. Because of this, Shoemaker refused to pay Sloan of the remaining balance due under its subcontract, $1,074,260.Continue Reading Third Circuit, Reversing District Court, Holds Subcontract Payment Clause Shifted Risk of Nonpayment by Owner to Subcontractor

Urban Masonry Corporation, Appellant, N&N Contractors, Inc., Appellee,
676 A.2d 26 (D.C. App. 1996)
In November 1990, Urban Masonry Corporation (Urban) subcontracted with N&N Contractors, Inc., (N&N) to install concrete panels on a major construction project in the District of Columbia. Urban was the subcontractor of the general contractor, Blake Construction Company, and N&N was a subcontractor of Urban. The panels were to be supplied by Blake.
Upon installation of the concrete panels it became obvious that the panels were smaller than anticipated, therefore, additional pieces would be needed to complete the project. Because this was beyond the scope of the original agreement, it was agreed between Urban and N&N, that Urban would pay additional compensation for installing extra panels. In fact, Urban’s Project Manager sent a “speed memo” affirming the compensation, and Urban’s President sent a letter acknowledging the request for compensation and promised to pass on the claim to the general contractor (Blake). Subsequently, Urban made a settlement with Blake which did not include compensation for N&N’s claims in November 1991.
Continue Reading District of Columbia Court of Appeals Holds Prime Contractor Cannot Rely on "Pay-if-paid" Clause If it Fails to Protect Subcontractor’s Interest in Settlement with General Contractor