Public Building Authority v. St. Paul Fire & Marine Insurance
80 So. 3d 171 | Supreme Court of Alabama | 2010
What This Case Means for Subcontractors
The Public Building Authority terminated a jail construction contract with Dawson Building Contractors using a 'termination for convenience' clause. The court ruled that once a termination for convenience is issued, it completely ends the contract and the contractor owes nothing more. The PBA could not later claim it was actually a 'termination for cause' to avoid paying what was owed. This matters to subcontractors because it protects your right to payment when a project is terminated for convenience—the owner cannot switch reasons mid-stream to deny you money.
Key Takeaways
- •A termination for convenience is final and complete—it cannot be converted to termination for cause after the fact without explicit contract language allowing it.
- •Once terminated for convenience, you stop work immediately and are entitled to payment for work completed, even if the owner later claims cause existed.
- •Review your contract to see if it allows the owner to change termination reasons; if not, you have strong protection against post-termination disputes.
A termination for convenience unequivocally terminates the contract and relieves Dawson from incurring any further obligation.
Frequently Asked Question
Can an owner switch from 'termination for convenience' to 'termination for cause' to avoid paying me?
No, not without explicit contract language allowing it. Once the owner issues a termination for convenience, that decision is final and the contract ends. The owner cannot later claim cause existed to reduce or deny your payment. This ruling protects subcontractors from owners changing their story after termination.
Related Cases
General Services Commission v. Little-Tex Insulation Co.
The State does not waive sovereign immunity from breach-of-contract suits by accepting contract benefits; Chapter 2260's administrative procedure is the exclusive remedy for such claims.
Green International, Inc. v. Solis
No-damages-for-delay clauses in construction contracts need not meet the conspicuousness requirement established in Dresser for exculpatory negligence clauses, and such clauses are enforceable to bar delay damages absent specific exceptions.
Rocor International, Inc. v. National Union Fire Insurance Co. of Pittsburgh
An insured may assert an article 21.21 claim against its excess liability carrier for unfair claim settlement practices, but liability requires proof of a proper settlement demand within policy limits that an ordinarily prudent insurer would accept.
EBC, Inc. v. Clark Building System, Inc.
A supplier cannot enforce a payment obligation against a project owner based on a letter offering optional direct payment arrangements, where the supplier's own deposition testimony demonstrates it never understood the letter as a binding contract.
Sage Street Associates v. Northdale Construction Co.
Texas Constitution's usury provision applies only to lending transactions, not to judicially-awarded prejudgment interest, which derives from court order rather than commercial agreement.
El Paso Field Services, L.P. and Gulfterra South Texas, L.P. F/K/A El Paso South Texas, L.P. v. Mastec North America, Inc. and Mastec, Inc.
Contract clearly allocated all risk of undiscovered foreign pipeline crossings to contractor despite owner's due diligence obligation, as contractor assumed full responsibility for site conditions notwithstanding any owner representations.