STR Constructors Ltd. and Arch Insurance Company v. Newman Tile, Inc.
Texas Court of Appeals, 8th District (El Paso) | 2013
What This Case Means for Subcontractors
STR Constructors hired Newman Tile as a subcontractor to install tile in a school kitchen renovation. When disputes arose over project delays and materials, STR terminated the contract without cause and refused to pay Newman Tile. The Texas Court of Appeals ruled that STR materially breached the contract first and ordered it to pay damages, quantum meruit (fair value of work performed), and attorney's fees. This case shows that subcontractors can recover payment even when a general contractor wrongfully terminates, and that 'pay when paid' clauses don't eliminate the contractor's obligation to pay.
Key Takeaways
- •Document everything: Keep detailed records of work performed, delays caused by others, and communications about project conditions. This evidence proved Newman Tile's case.
- •Wrongful termination has consequences: A general contractor cannot simply fire a subcontractor without cause to avoid paying. Termination must be justified and follow contract terms.
- •You can recover quantum meruit: Even with an express contract, if the contractor breaches first, you can sue for the fair market value of work completed, not just contract price.
STR breached the contract first by terminating it without cause.
Frequently Asked Question
Can a general contractor just fire me without paying for work I've already done?
No. If the general contractor terminates your contract without valid cause, they still owe you for completed work. You can sue for breach of contract and recover damages, quantum meruit (fair value of services), and attorney's fees. The court will examine who breached first and whether the termination was justified.
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