It’s common for construction payment disputes to interfere with restaurant openings. Whether it be one of the most anticipated restaurants in the country or just another Panda Express or Chik-fil-A, when construction payment issues arise, delays will occur. Luckily for unpaid parties, mechanics liens bring both the sizzle and the steak: the threat of a lien is enough to ensure payment in most instances. When it isn’t enough, the perfection and foreclosure of a lien claim will do the trick. Speaking of sizzling and steak, construction payment disputes are delaying a Chipotle opening in Ohio. The project has also been peppered with other issues.
While we’re talking beef, we should mention Iowa Notice requirements and C.O.W.s.
Ashland Chipotle and Construction Payment Disputes
The dispute in question comes from Ashland, Ohio and it includes the entire payment chain. The developer, prime contractor, subs, construction lender, and even the local government are all involved. As a result, it appears that a Chipotle will not be opening on time. The Ashland Source has been reporting on the story, which has some interesting turns.
Developer and Subs, Lender
The project in question is for the construction of commercial space featuring a Chipotle and a Kay Jewelers. It is headed up by Cincinnati developer Meridian Realty Capital (“Meridian”). Two liens were filed against the property when Meridian denied payments to its prime contractor and a demolition subcontractor. The prime contractor and sub claim they have not received payment for their work, while Meridian argues that the sub provided incomplete work and the GC’s work was never done.
Due to the presence of mechanics liens on the project, the construction lender halted payments until the issues were resolved. In order to get payments rolling again, Meridian bonded off the liens. Since then, funds have been released by the construction lender.
Though a private project, the construction payment disputes have spilled over to local government. Meridian stated that the “bureaucratic nightmare repeatedly added two months onto opening schedules.” They also claim the county has been the reason for many delays, while the county argues that they have been trying to work with the developer for months. According to the county, Meridian has been instrumental in the miscommunications resulting in delays.
In any event, a new problem arose when the subcontractors stopped getting paid.
Generally speaking, the methods of recovery on a private project are usually limited to claims on the contract, liens, and bonds (when present). On this project, the Ashland City Council nearly employed another tool. Although it has little to do with the payment disputes at hand, the city council was contemplating withholding the property’s (really, Chipotle’s) liquor license to try and encourage payment. Ultimately the council decided against it, but this was certainly a creative solution.
This story is a great example of how many disputes can arise up and down the payment chain. It’s rare to push a local government so far that they try a new medium to enforce payment, especially when it’s not a public project at steak. But it is also understandable for Meridian to withhold payments if the job was not well done- or not done at all. Since the disagreement has largely remained out of court to this point, we don’t have the full story. At the very least, though, this serves as a great illustration of how conflicts arise throughout the payment chain. For everyone involved, especially the burrito lovers of Ashland, let’s hope that the disputes are settled soon and construction is wrapped up.