Levco Constr., Inc. v. Whole Foods Mkt. Rocky Mountain/Sw. L.P.
549 S.W.3d 618 | Court of Appeals of Texas | 2017
What This Case Means for Subcontractors
Levco, a subcontractor, sued the building owner (Whole Foods) directly for fraud after the general contractor (CCI) failed to pay. The court ruled that Levco could not recover from the owner, even though fraud was proven, because the subcontract's pay-if-paid clause and flow-down provisions limited Levco's claims to its direct contractor only. This means subcontractors cannot bypass their general contractor to sue the owner directly, regardless of fraud.
Key Takeaways
- •Pay-if-paid clauses block subcontractor claims against owners—you can only sue your direct contractor, not the owner, even if the owner committed fraud
- •Flow-down provisions in subcontracts tie your rights to the general contractor's contract terms; review these carefully before signing
- •Fraud findings alone do not override contractual payment limitations—you must pursue claims through your direct contractor first
Levco's right to recover is limited to its direct contractor, CCI.
Frequently Asked Question
Can I sue the building owner directly for fraud if my general contractor doesn't pay me?
No, not if your subcontract contains a pay-if-paid clause and flow-down provisions. Even if you prove the owner committed fraud, Texas courts will enforce the contractual limitation and require you to pursue claims only against your direct contractor. Always review these clauses before signing.
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