Select Building Systems, Inc. and Tri-Bar Ranch Company, Ltd. v. Robertson Electric, Inc.
Texas Court of Appeals, 4th District (San Antonio) | 2015
What This Case Means for Subcontractors
Robertson Electric sued Select Building Systems and Tri-Bar Ranch over payment for electrical work. The subcontract contained a 'pay-when-paid' clause stating the subcontractor cannot be paid unless the contractor receives payment from the owner first. This case involves disputes over change orders, payment applications, and alleged delays. The key issue is whether the pay-when-paid clause is enforceable and what obligations the contractor has to the subcontractor.
Key Takeaways
- •Pay-when-paid clauses can limit your right to payment—review your subcontract carefully before signing and understand when you're actually entitled to get paid
- •Document all change orders in writing with dates and signatures; the case shows multiple change orders (Dec 2012, Jan 2013) that became evidence in the dispute
- •Submit payment applications and invoices promptly and keep copies; Robertson Electric's invoices and payment requests dated 1/23/2013 were key exhibits in proving the payment dispute
THE SUBCONTRACTOR IS NOT ENTITLED TO ANY PAYMENT UNLESS AND UNTIL THE CONTRACTOR RECEIVES PAYMENT FROM THE OWNER
Frequently Asked Question
Can my contractor refuse to pay me until they get paid by the owner?
It depends on your subcontract. If you signed a 'pay-when-paid' clause like in this case, the contractor may not owe you until the owner pays them. However, these clauses are not always enforceable in Texas. Always negotiate this clause before signing and consider requiring payment within a set number of days regardless of owner payment status.
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