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What are the next steps for us to collect the remaining $44,574.25 owed on project 7417761?

Texas

We (Climatec, LLC) have two January invoices totaling $44,574.25 due from our customer, Powers MEP, though we have not been able to reach them. We received a letter from Sedalco (GC) stating that a bond claim was rejected (though we never filed one). Sedalco has offered to pay us $21,157.11 in exchange for a final waiver, though we do not want to settle. When considering the option of filing a bond claim, Jessica Harjo (Levelset) explained to us that the surety was not included as a recipient for any monthly notices, despite the bonding information being received in October, 2018. Jessica recommended that we submit this situation to the legal center. What can we do to collect that $44,574.25?

1 reply

Aug 7, 2019

I'm sorry to hear about that. In order to preserve the right to make a claim on a Texas prime contractor's payment bond, claimants hired by someone other than the prime contractor must send a 2nd-month notice to the prime contractor. 3rd-month notice must be sent to both the prime contractor and the surety - regardless of whether the claimant was hired directly by the prime contractor - and that 3rd-month notice actually serves as the claim itself. And, if the 3rd-month notice is not sent to both the prime contractor and the surety, as required, the ability to later make a claim against the payment bond will likely not be available.

When required notices and liens aren't timely sent, options for recovery become limited. However, there's always potential for recovery in some other way, outside of a bond claim. Namely, through legal action or the threat of legal action.

Any time work is performed but payment isn't made as agreed upon in the contract, a breach of contract claim might be appropriate. Further, Texas has strict requirements surrounding the prompt payment of subs and suppliers on public projects, which you can learn more about here. Specifically, prime contractors must make payment to their subs and suppliers within 10 days of that prime contractor receiving payment. And, when the Texas prompt payment rules aren't followed, interest penalties may come into play. For more on making prompt payment claims: How To Make A Claim Under Prompt Payment Laws.

Finally, as briefly mentioned above, threatening to take legal action can spur payment - or at least a better settlement offer. By sending a demand letter that threatens specific legal actions, such as the ones described above, claimants can often get payment talks moving in the right direction. And, when sent via attorney letter, payment demands tend to carry a little more "umph".

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