A contractor’s “preferred contractor” relationship with an insurance company does not necessarily mean the insurance company can recover under a breach of contract theory when it seeks relief in subrogation from the contractor for faulty work. Such a claim has to be clearly specified as a breach of contract in the insurance company’s complaint. Recently in Tennessee Farmers Mutual Insurance … Read More
“Pay that man his money,” or don’t. Contingent Payment in Tennessee for Subcontractors
The payment term is the most important provision of any subcontract. Subcontractors are not typically advanced money at the start of their work, requiring them to front the cost of construction based on the contractor’s contractual obligation to pay. But, a subcontractor must insure the contractor’s payment obligation is not illusory. Pay-if-paid and pay-when-paid provisions are frequently misunderstood. A pay-if-paid … Read More
Tennessee Court of Appeals: Specific mention of “fees” required to enforce attorney’s fee provision
It has long been understood in Tennessee that in order to recover attorney’s fees in an action for breach of contract that the contract to be enforced must specifically provide for the recovery of motorcycle accident attorney’s fees in the event of an action to enforce the contract (absent some applicable statute providing for attorney’s fees in certain instances). However, … Read More
The Business of Construction: Payment Disputes
The construction industry includes not only completing the project, or fulfilling an order, but also handling the “business” side of the industry. Oftentimes, this “business” side involves payment disputes, including disputes over invoices or payments. One common payment dispute situation involves a party disputing an invoice attempting to satisfy the obligation with a payment for less than the amount shown … Read More
Prevailing Parties Get the Fees
Tennessee follows the “American Rule” concerning attorney fees. Accordingly, even if a party wins his case, he is not entitled to attorney fees unless there is a contract or statute providing a recovery. There are a few other narrow situations that provide attorney fees based on a recognized exception, but generally speaking, there will be no recovery of attorney fees … Read More
The Contractor’s Burden in Cost-Plus Contracts
Unlike many other civil claims, when a contractor seeks to recover amounts allegedly due from the owner under a cost-plus contract, the contractor has a heightened burden to prove the amounts owed by itemizing each and every expenditure made by the contractor on the project. And according to a Johnson County Criminal Lawyer, if the contractor fails to do so, … Read More
Be Careful What You Wish For
Attorney’s fees are only recoverable if they are provided for by statute or in a contract. This rule is generally applicable regardless of whether a matter is pursued in litigation through a court or in arbitration. However, the Tennessee Court of Appeals found that under the rules of the American Arbitration Association, attorney fees may be awarded if sought by … Read More
False Claims Act liability doesn’t stop on the whistle
Failing to ensure certified payrolls are correct lead to a contractor owing three times the amount paid by the government under a construction contract. The False Claims Act imposes liability on persons and companies that defraud the government. Under the FCA, a “whistleblower,” frequently a current or former employee, may file a lawsuit on behalf of the government when someone … Read More
Failure to Serve Notice of Nonpayment Renders Lien Invalid
The Tennessee Court of Appeals affirmed Tennessee’s requirement that remote contractors (subcontractors, sub-subcontrators, material suppliers to a subcontractor, etc.) must serve notices of nonpayment on both the owner and prime contractor (the General Contractor). In Diaz Construction v. Ind. Dev. Board of Metro. Gov’t of Nashville and Davidson County, a remote contractor appealed the trial court’s dismissal of its lien … Read More