Prompt Pay Victory for Sub
Kegler Brown Construction Newsletter April 1, 2013
In a case tried before Judge Hogan of the Franklin County Common Pleas Court, the contractor was ordered to pay what the subcontractor was owed, plus 18% interest and attorney’s fees under Ohio’s Prompt Pay Act for work performed on an OSU project. Harold J. Becker Company, Inc. v. The Altman Company, Case No. 11-CVH-03-3562.
The contractor had alleged that it had a basis to withhold payment because of alleged water damage, even though the amount of that “backcharge” was exceeded by the amount the contractor was paid by the owner for the sub’s work. The court ruled that the contractor could not withhold under these circumstances, particularly in view of an insurance payment and retainage withheld from the subcontractor.
This case reinforces the risk for contractors who hold money from subcontractors after it is received from the owner.