Contractor's Pay When Paid Clause Construed

b. mined by subsequent legislation and caselaw, we certainly likelihood that the general contractor and subcontractor will tractors relative to general contractors. 558 so. 2d at 405-06. that turner and the owner contemplated turner's paying uni- court opinion, w.o. grubb steel erection, inc. v. 515 granby, subcontract, render an otherwise unambiguous pay-when-paid clause in the subcontract. united states court of appeals longer finance it. by that point, universal had substantially judgment to turner. long v. dunlop sports group ams., inc., enforceability of a "pay-when-paid" clause agreed to by the corporation, therefore correct to find that this clause relates only to the i. the court in obs made clear that its decision was largely the district court agreed with turner that the provision, despite the contract's apparent clarity, universal points to lapse of the real estate market, the granby tower project ulti- is "patently ambiguous" as to when turner was required to ner had earlier contracted with the project's owner to provide § 1332 (2006), alleging breach of contract and several other its reading of the contract. we cannot do so, however, payments will be made. turner construction company, not find ambiguity or conflict where none exists simply versal before invoicing the owner. opinion, in which judge duncan and judge blake joined. or for extras or change orders or delays to the work, and catherine c. blake, united states district judge in october 2007, universal concrete products corporation the requirements of the subcontracts." the district court was invokes our diversity jurisdiction, we must apply virginia among the terms of the owner-general contractor contracts in obs, affirmed by published opinion. judge gregory wrote the that the aia provides that provisions in a121 should control argued: james t. lang, pender & coward, pc, vir- before the district court, universal alleged that the subcon- for the eastern district of virginia, at norfolk. defendant-appellee. guage to that which we consider here. w.o. grubb dealt with guishable. but because of how unambiguously the contractual evant where, as here, the two provisions can be comfortably subcontracting parties freedom to contract for when those really favored subcontractors' rights to the extent the state from turner unless and until turner is first paid by the owner. owner, out of the amount paid to the contractor on account 9universal concrete products v. turner construction the state's supreme court emphasized that its decision to rec- conflicts with a paternalistic desire to protect one contracting sizes the term "payments made," which it claims demonstrates 2 universal concrete products v. turner construction tract, when read in light of turner's contract with the owner, a dispute between turner and another subcontractor who, like even when viewed in light of the prime contract, is unambigu- gregory, circuit judge: finally, article ii of the subcontract states that the agreement language reflects the parties' intent that turner pay universal (2:08-cv-00298-raj-tem) 4 argued: january 26, 2010 subcontract is unambiguous and that other terms in the prime found that they did not. we affirm. 8 universal concrete products v. turner construction purpose underlying one state's precedent has been so under- tractor and subcontractor may create a valid pay-when-paid 9.3.1 requires turner to submit "requisitions from subcon- of the two purportedly conflicting provisions controls is irrel- court found the contract between turner and the subcontrac- counsel the parties do not dispute that the pay-when-paid clause in ambiguous when read as a whole. universal claims that the recognized in, wms constr., inc. v. palm springs mile the turner-universal contract is facially unambiguous. for the work it had performed, turner refused, citing a pay- payment bonds were at stake. see wms, 762 so. 2d at 977 724 (4th cir. 2000). for the fourth circuit claims not germane to this appeal. of contract claim. universal appeals. ginia courts will not enforce pay-when-paid clauses if there is citations to j.a. __ refer to the joint appendix filed by the parties universal concrete products (internal quotation marks omitted). on the other hand, vir- granby tower construction project in norfolk, virginia. tur- 78 (1938); st. paul fire & marine ins. co. v. jacobson, 48 incorporates turner's contract with the owner by reference, is paid by the owner. specifically, universal points to a121 sec- lar provisions. id. at 807. shares this policy preference. quite the contrary. in galloway, clauses are valid in virginia2 of such subcontractor's portion of the work," and section contract and general contract were ambiguous enough not to because we believe that under virginia law, the contract tower project. id. at 1. like the district court here, the trial j.a. 67.3 appellee. on brief: jack rephan, pender & coward, mel, seyfarth & shaw, llp, washington, d.c., for policy statements are directly contrary. based on what it felt to be florida's desire to protect subcon- ments made" are those payments made "in accordance with supreme court held that almost-identical provisions in a sub- two cases, one from florida and the other from missouri, when universal sought payment of $885,507 from turner clearly showing that to be the intention of the parties." id. first receiving payment from the owner. universal asks us to 1 universal contends on appeal that the contractual language with turner contained an unambiguous pay-when-paid clause, upon appeal. read together. see galloway, 464 s.e.2d at 354 (courts should tain provisions in a prime contract, which the general contrac- soning. appellee. of doubtful import, admits of being understood in more than owner, to be unambiguous and enforced the pay-when-paid tract in question is clear on its face." galloway corp. v. s.b. obs co. v. pace constr. corp., 558 so. 2d 404 (fla. 1990), as the district court noted, however, this interpretation raymond a. jackson, district judge. can institute of architects ("aia") provisions, reflects an supreme court thought in obs. following that decision, the (mo. ct. app. 2001), the missouri court of appeals followed 7universal concrete products v. turner construction ence for "freedom to contract" -- an interest which directly meco, the trial court simply opted not to follow their hold- affirmed policy concerns that the virginia supreme court likely does the trial court wrote, in part: "i have read obs . . . and meco . . . and reimbursement amount, not to when those amounts would be an ambiguity in the contract, which "`exists when language is reverse the district court's judgment in turner's favor and more things at the same time.'" id. at 355 (quoting allen v. for the district of maryland, sitting by designation. superseded by statute in part, fla. stat. § 713.245 (2009), as for the foregoing reasons, we affirm the district court's (explaining application of fla. stat. § 713.245). where the the obligation of turner to make a payment under clauses in the turner-owner contract contemplate that turner reasoning, we note that both decisions appear to be based on when-paid provision in the subcontract. universal then filed 3universal concrete products v. turner construction amount owed to universal. requirements of the subcontracts." j.a. 240. universal empha- universal, was not paid for work performed on the granby party over the other. 464 s.e.2d at 354. i do not find them at all persuasive. . . . there are some minor differences llc, cl 08-3278 (va. cir. ct. oct. 16, 2009) (letter opinion), state law, just as the forum would have done had the suit been turner-universal subcontract and the turner-owner general fore, that both cases should control the result. we agree that is intended to supplement the agreement between turner and florida legislature passed a law making it easier for general enforce the pay-when-paid provision. id. at 406. likewise, in suit in the eastern district of virginia pursuant to 28 u.s.c. ginia beach, virginia, for appellant. jeffrey mitchell hum- ings after questioning their reasoning. id. at 3.4 owner. aia document a201 section 9.6.2 directs turner to clause contained in the turner-universal subcontract is ginia supreme court would not follow obs or meco's rea- the owner and that any conflict between the two agreements virginia law. see moore bros. co. v. brown & root, inc., 207 f.3d 717, the agreement further states that the amount paid to f.3d 778, 783 (4th cir. 1995). before gregory and duncan, circuit judges, stood in more than one way," galloway, 464 s.e.2d at 355 order granting summary judgment to turner. meco sys., inc. v. dancing bear entm't, 42 s.w.3d 794 there is no indication that virginia or its supreme court cation that the virginia supreme court would disagree with is subject to the express condition precedent of pay- published which support its reading of the contract. in the first case, ii. decided: february 19, 2010 meco, and here upon which i could attempt to distinguish them, but the by the owner. consequently, we hold that the pay-when-paid "where the language of the con- a. ment therefor by the owner. in obs and meco is identical to that at issue here and, there- which involves almost identical facts and contractual lan- we review de novo the district court's granting summary its holding. and though we do not question obs or meco's 6 universal concrete products v. turner construction contract against the backdrop of virginia law. pay-when-paid pc, virginia beach, virginia, for appellant. daniel p. tion manager to subcontractors in accordance with the 3 2 executed by turner and universal incorporated that prime green, 331 s.e.2d 472, 475 (va. 1985)). no. 09-1569v. could pay its subcontractors after first being paid by the versal would only be paid for its work after turner was paid likewise, it is not even clear that the florida legislature tion 6.1.3, which states that the costs for which the owner will sion "of doubtful import" or make it capable "of being under- because we are bound to follow virginia law, we must fol- indeed, it is hard to see how they could. article iv of the ous and granted summary judgment to turner on the breach enter into a pay-when-paid contract. though universal argues likewise, the district court correctly found that other over provisions in a201 where the two conflict, whether one 506 f.3d 299, 301 (4th cir. 2007). because this appeal c. iii. like countless other construction ventures since the col- contract are consistent with or support the pay-when-paid general construction work on the project. the subcontract ("universal"), a pennsylvania corporation, entered into a writ- reimburse turner include "[p]ayments made by the construc- pay its subcontractors "upon receipt of payment from the not share. the sole issue raised by universal's appeal is whether or because one party so claims). ignores the remainder of the clause, which indicates that "pay- ballard constr. co., 464 s.e.2d 349, 354 (va. 1995). a con- 4 universal concrete products v. turner construction clause within that subcontract ambiguous. the district court this agreement, whether a progress or final payment, not the district court correctly found that universal's contract a new york corporation, to install precast concrete on the paid. this language does not render the pay-when-paid provi- this appeal requires us to consider the applicability and universal will be "out of funds received from the owner." id. (internal quotation marks omitted); rather, it clearly allows the wierzba, seyfarth & shaw, llp, washington, d.c., for clause by including in their contract "an express condition will be read to impose the greater obligation on the subcon- tractors" with its invoices. both provisions contemplate the we begin by analyzing the contractual language in both the brought in state court. see erie r.r. v. tompkins, 304 u.s. 64, this conclusion is reinforced by a recent virginia-trial- parties in this case. specifically, we must decide whether cer- turner had not yet been paid by the owner.1 meco simply adopted obs' reasoning. 42 s.w. at 807. agreement states in relevant part: turner-owner contract, which consists of the standard ameri- enforceable and prevents universal from demanding payment tractor. j.a. 66. unambiguously reflects both parties' understanding that uni- low the virginia trial court's lead in the absence of any indi- on the record before us these precedents are not easily distin- obs' reasoning to interpret another contract containing simi- which conditioned any payments to universal on turner's universal argues, however, that the subcontract, which provision. id. at 5. rather than attempt to distinguish obs and not paid universal for any of the work performed, because ognize pay-when-paid clauses was based on its policy prefer- only after being paid by the owner, we believe that the vir- differences would not justify a reasoned distinction." id. understanding that turner would pay universal before being contractors to enforce pay-when-paid clauses, at least where plaintiff-appellant, opinion tor and a subcontractor incorporated by reference into their the owner seeking payment totaling $13,648,845.00, which includes the appeal from the united states district court contract by reference. tor, when viewed in light of turner's same contract with the asks us to follow two, out-of-jurisdiction cases, which support mately fell through in march 2008 when the owner could no we are informed that turner is currently involved in litigation against 5universal concrete products v. turner construction completed all of its work on the project. turner, however, had cannot impute that purpose to another state whose cases and ten agreement with turner construction company ("turner"), we have previously recognized pay-when-paid clauses' validity under pay universal. turner, in turn, argued that the language in the one way, admits of two or more meanings, or refers to two or assocs., ltd., 762 so. 2d 973 (fla. ct. app. 2000), the florida