Hassell Const. Co., Inc. v. Stature Commercial Co.
162 S.W.3d 664 | Texas Court of Appeals, 14th District (Houston) | 2005
What This Case Means for Subcontractors
Hassell Construction sued Stature Commercial for unpaid work on a police facility project. Stature tried to use a "pay-if-paid" clause as a defense, claiming it didn't owe Hassell because the owner hadn't paid Stature. The Texas Court of Appeals ruled that Stature had to formally plead this defense in writing before trial—since it didn't, the court threw out Stature's excuse and ordered it to pay Hassell anyway. This protects subcontractors from contractors using owner non-payment as a surprise defense.
Key Takeaways
- •A contractor cannot use a pay-if-paid clause as a defense unless it formally pleads it in writing before trial. If they don't, you win by default.
- •Even if a pay-if-paid clause exists in your subcontract, the contractor must follow proper legal procedures to use it. Failing to do so means you get paid regardless.
- •Document everything in writing—your contract terms, work performed, and payment requests. This protects you if a contractor tries to dodge payment using owner non-payment as an excuse.
SCCI's reliance on nonpayment from the owner is an affirmative defense under Texas Rule of Civil Procedure 94.
Frequently Asked Question
Can a contractor refuse to pay me because the owner hasn't paid them yet?
Not automatically. If your contract has a pay-if-paid clause, the contractor must formally notify you in writing before trial that they're using it as a defense. If they don't follow proper legal procedures, you're entitled to payment regardless of whether the owner paid the contractor. Always insist on clear payment terms in your subcontract.
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