Eastern Electric Corp. v. Shoemaker Construction Co.
657 F. Supp. 2d 545 | District Court, E.D. Pennsylvania | 2009
What This Case Means for Subcontractors
Eastern Electric, a subcontractor, sued Shoemaker Construction and project owners for failing to pay invoices over 100 days late on a Philadelphia condo conversion project. The court ruled that the owners' failure to pay when due was a material breach of the construction contract, excusing the contractor from further performance. The court awarded Eastern damages including unpaid balances, interest, and penalty interest, establishing that payment delays of this magnitude give contractors the right to stop work and recover damages.
Key Takeaways
- •Stop work is justified when payments are 100+ days overdue—you don't have to keep performing if the owner materially breaches by not paying
- •Document all invoices and payment dates carefully; courts will award unpaid balances plus interest and penalty interest under Pennsylvania law
- •Include clear payment terms in your subcontract and flow-down language from the general contractor's owner agreement to protect your payment rights
failure to make payments when due is material breach excusing contractor performance
Frequently Asked Question
Can I stop work if the general contractor or owner hasn't paid me in over 100 days?
Yes. This case confirms that failure to pay invoices when due is a material breach of the construction contract. Once payment is 100+ days overdue, you have the right to stop work and are excused from further performance. You can also recover damages including the unpaid balance, interest, and penalty interest under Pennsylvania law.
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