Hello, I need your help. One of my suppliers forgot to bill me $60k for materials delivered on to my job 5 months ago. They said it was an oversight. They decided to add the old invoices now 5 months later. They had already provided me with Unconditional waivers month after month which means I dont owe them for anything, especially 5 month old materials. I would pay them but covid has really hurt us and we also dont have the money. The biggest issue I have now is that my contractor will not pay me until I provide them with the new unconditional waiver that the supplier does not want to provide because of the new invoices. If I dont get paid, I cant go on and pay for payroll. I am planning on walking off the job but now I am concerned the contractor wont pay me my retainer of $250k. The contract doesnt state anything about a right to stop work provision. I also know this may cause collateral damage. What do you recommend I do? I cant have employees work and not pay them.
You are in a tough spot, no question. First off, and I cannot stress this enough, I recommend against walking off the job. That will only make things worse. And from a legal standpoint, you would be in breach of your contract if you walked, which is never a good thing.
Instead, I recommend that you communicate with your contractor and explain the situation. You say you have $250k in retainage - that is more than enough to cover the $60k bill from your supplier. See if your contractor will agree to release $60k of your retainage early in order to pay that supplier bill and get the lien release you need. Your contractor does not want you to walk mid-project - that creates issues for him too. And your contractor will understand that, if you don't pay your employees, they will walk which creates the same problem.
So bottom line - try to work it out with your contractor.
In addition to Attorney Henderson's excellent response, you might investigate the possibility that the substantial amount of retainage might be used as "collateral" for interim finance. Your bank is the best choice, however, there are factoring entities that will lend on payables in less than favorable circumstances. 100% in agreement that walking off the job is likely the worst move to be made in this situation and will foreclose your options to work through this issue.