It’s commonplace in the construction industry for a property owner to withhold final payment from the general contractor disputing the quality of completeness of construction work. This happens between general and subcontractors as well.
All to often, however, the withholding party does this as a tactic, and in fact withholds much more than is actually in dispute.
A small decision out of the Louisiana Fourth Circuit this month addresses this circumstance. There, the court ruled that the property owner must pay the contractor for the portion of work that is completed and not in dispute – despite the existence of disputes on the other portions of the work.
In Hi Construction & Demolition v. Louise Thomas, the Fourth Circuit held that where the property owner acknowledged the completion of certain work, the property owner must tender payment to the contractor for that work.
A rather simple proposition, of course, but in a world where possession is 9/10ths of the law, it’s a principal often abused in the construction industry. This case may be useful for contractors in a dispute where a payment is withheld not proportional to the amount actually in dispute.