Cahn Elec. Co., Inc. v. Robert E. McKee, Inc.

490 So. 2d 647, 1986 La. App. LEXIS 7192
CourtLouisiana Court of Appeal
DecidedJune 11, 1986
Docket17870-CA
StatusPublished
Cited by12 cases

This text of 490 So. 2d 647 (Cahn Elec. Co., Inc. v. Robert E. McKee, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cahn Elec. Co., Inc. v. Robert E. McKee, Inc., 490 So. 2d 647, 1986 La. App. LEXIS 7192 (La. Ct. App. 1986).

Opinion

490 So.2d 647 (1986)

CAHN ELECTRIC COMPANY, INC., Plaintiff-Appellant,
v.
ROBERT E. McKEE, INC., Defendant-Appellee.

No. 17870-CA.

Court of Appeal of Louisiana, Second Circuit.

June 11, 1986.

*648 Wiener, Weiss, Madison & Howell by James R. Madison, Shreveport, for plaintiff-appellant.

Franklin, Moore & Walsh by Ray C. Dawson, Baton Rouge, for defendant-appellee.

Before FRED W. JONES, SEXTON and LINDSAY, JJ.

SEXTON, Judge.

Plaintiff appeals a judgment sustaining an exception of prematurity and dismissing its cause without prejudice. Concluding that the exception was improvidently sustained, we reverse and remand for a trial on the merits.

Plaintiff, Cahn Electric, contracted with Robert E. McKee, Inc., a general contractor, to furnish and erect all necessary electrical work for the teaching hospital addition at the LSU-Medical Center in Shreveport, Louisiana. The subcontract provided that McKee would retain five percent of all progress payments due to Cahn. The work was completed by Cahn in May 1984 and accepted by the owner.

Following the completion of the electrical work on the project, Cahn invoiced McKee for $119,462.95, representing the amount withheld by McKee under the terms of the subcontract agreement. McKee failed to pay the retainage invoice, and Cahn filed the instant action on April 24, 1985.

McKee opposed the suit with a dilatory exception of prematurity arguing that under the terms of the subcontract, payment of the retainage was not due until ten days after the general contractor had received final payment from the Division of Administration. McKee also filed a third party demand against the State of Louisiana, Division of Administration, alleging that it had completed the project but the Division of Administration had arbitrarily and capriciously failed to pay the balance due under the general contract. Therefore, McKee alleged that because of the failure to pay by the owner due to a dispute which arose over the adequacy of performance of another subcontractor's work, it had been unable to pay the other subcontractors their retainages.

The trial court sustained the dilatory exception of prematurity, finding that final payment was not due under the terms of the contract until the general contractor received final payment from the State of Louisiana as the receipt of payment from the owner was made a suspensive condition to the obligation of the general contractor to pay the subcontractor. Plaintiff has appealed, assailing the trial court's finding that the obligation to pay was subject to a suspensive condition.

Thus framed, the narrow issue presented for our consideration is whether, within the confines of the contract document, the subcontractor's claim for payment of retainages withheld by the general contractor is premature because of the owner's refusal to pay the general contractor.

The pertinent contractual provisions read as follows:

ARTICLE IV.

The Contractor agrees to pay the Subcontractor for the performance of its work the sum of Two Million Three Hundred Twenty Five Thousand Four Hundred Thirty Dollars ($2,325,430.00) in current funds, subject to additions and deductions for changes as may be agreed upon in writing, and to make monthly payments on account thereof in accordance with Article X, Sections 20-23, inclusive.
*649 Payments shall be made ten (10) days after payment by the Owner in installments of ninety-five (95%) percent of the value of the work provided and performed by the Subcontractor.
Applications for monthly progress payments shall be submitted (sic) to the General Contractor on or before the twenty-fifth (25th) day of each month and will show percent complete to date, amount earned to date, retainage involved, previous payments, and net amount due. Each increase or decrease order written to Subcontractor after the basic contract must be listed separetly to show percent complete for each of these on each month's pay request.
ARTICLE V.
Final payment shall be due when the work described in this contract is fully completed and performed in accordance with the Contract Documents, and payment to be consistent with Article IV and Article X, Sections 18.20-23 inclusive of this contract.
Before issuance of the final payment of the Subcontractor if required shall submit evidence satisfactory to the Contractor that all payrolls, material bills, and all known indebtedness connected with the Subcontractor's work have been satisfied notwithstanding any provisions of this Subcontract to the contrary. Final payment shall be due within ten (10) days after the Contractor receives final payment from the Owner.
ARTICLE X.
In addition to the following provisions, the parties also agree:
That the Subcontractor shall—
* * * * * *
18. And does hereby agree that all work shall be done subject to the final approval of the Architect or Owner's authorized agent, and his decision in matters relating to artistic effect shall be final, if within the terms of the Contract Documents.
That the Contractor shall—
* * * * * *
20. Pay the Subcontractor in seven (7) days, unless otherwise provided in the Contract Documents, upon the payment of certificates issued under the Contractor's schedule of values, or as described in Article IV herein. The amount of the payment shall be equal to the percentage of completion certified by the Owner or as authorized agent for the work of this Subcontractor applied to the amount set forth under Article IV and allowed to the Contractor on account of the Subcontractor's work to the extent of the Subcontractor's interest therein.
21. Permit the Subcontractor to obtain direct from the Architect or Owner's authorized agent, evidence of percentages of completion certified on his account.
22. Pay the Subcontractor on demand for his work and/or materials as far as executed and fixed in place, less the retained percentage, at the time payment should be made to the Subcontractor if the Architect or Owner's authorized agent fails to issue the certificate for any fault of the Contractor and not the fault of the Subcontractor or as otherwise provided herein.
23. And does hereby agree that the failure to make payment to the Subcontractor as herein provided for any cause not the fault of the Subcontractor, within seven (7) days from the Contractor's receipt of payment or from time payment should be made and provided in Article X, Section 22, or maturity, then the Subcontractor may upon seven (7) days written notice to the Contractor stop work without prejudice to any other remedy he may have."

[Emphasis supplied.]

The trial court relied upon Miller v. Housing Authority of New Orleans, 175 So.2d 326 (La.App. 4th Cir.1965), modified on other grounds, 249 La. 623, 190 So.2d 75 *650 (1966), which construed a contractual provision similar to the one quoted above. In that case, plaintiff, a subcontractor, instituted suit against defendant, a general contractor, for the ten percent retainage due under a subcontract agreement for lathing and plastering work.

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Bluebook (online)
490 So. 2d 647, 1986 La. App. LEXIS 7192, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cahn-elec-co-inc-v-robert-e-mckee-inc-lactapp-1986.