Summary of JJ Shane, Inc. v. Aetna Cas. & Surety Co.
District Court of Appeal of Florida, Third District, 1998.
Statement of Case: Action of breach of contract involving a subcontractor against a general contractor and Insurer for the general contractor’s failure to make complete payment for the subcontractor’s work on general contractor’s project
Facts: General contractor contracted w/ Dade County to construction of the Omni extension of the “People Mover" in downtown Miami. The general contractor then subcontracted w/ PL to provide some of the construction materials and labor. There was a clause in that subcontract which stated that “subcontractor was to be paid from funds received by the DEF general contractor from Dade County."
Procedure: Judgment for DEF with attorney’s fees and costs. PL appeals.
Issue: Whether the provision in the contract was a condition precedent or a unconditional promise to pay the subcontractor?
Holding: Condition precedent: plainly and unambiguously, the county was to make payment to the general contractor, and that money was to be used to pay the subcontractor. This was a condition precedent rather than simply fixing a reasonable time for payment as contended by the subcontractor.
- Subcontract agreements may contain valid payment provisions which shift the risk of payment failure by the owner to the subcontractor
Reasoning: PL says: the payment provision is ambiguous and, as such, DEF is obligated to pay within a reasonable time.
DEF says: there was a condition precedent and that it wasn’t obligated to pay until it received payment from the county OR until its lawsuit was settled which was already going on w/ the county.
COURT: Where the owner’s non-payment to the general contractor is undisputed, this cause for payment by the subcontractor was prematurely filed.
Disposition: Dismissed w/out prejudice. DEF wins.
*maybe defend w/ unconscionability (the subcontractor could use this)