Litigation Team Defeats Pay-If-Paid Defense and Secures $127,000+ Arbitration Award

Hamburg, Rubin, Mullin, Maxwell & Lupin, P.C. is pleased to announce that attorney Mark Himsworth successfully represented a supplier in an arbitration against a general contractor involving unpaid invoices for doors, frames, and hardware furnished to a Pennsylvania construction project.

The supplier sought payment of $88,368.68 for materials that were delivered, accepted, and installed but remained unpaid. The general contractor argued that it did not have to pay the supplier unless and until the project owner first paid the general contractor under a contractual “pay-if-paid” provision.

Following a full arbitration hearing, the arbitrator rejected that defense and ruled that the pay-if-paid provision was not part of the parties’ enforceable agreement. The arbitrator found that the supplier had consistently rejected such provisions during a longstanding business relationship and that the supplier returned signed purchase orders in which the pay-if-paid provision had been deleted, the general contractor received those revised documents, did not object, and proceeded with performance. In other words, the general contractor could not shift the risk of the owner’s nonpayment to the supplier.

The arbitrator awarded the supplier:

• $88,368.68 in unpaid contract balances

• $15,625.61 in interest under Pennsylvania’s Contractor and Subcontractor Payment Act (CASPA)

• $18,750.10 in attorneys’ fees and costs

• $5,050.00 in reimbursement of arbitration expenses

The total recovery exceeded $127,000.

This result underscores the importance of carefully reviewing contract terms and demonstrates the powerful remedies available under Pennsylvania’s Contractor and Subcontractor Payment Act when payments are wrongfully withheld.

Construction payment disputes can have serious financial consequences. If your company is dealing with unpaid invoices, pay-if-paid provisions, or other contract disputes, contact the Litigation Team at Hamburg, Rubin, Mullin, Maxwell & Lupin, to discuss your options.