We're a subcontractor who had done work on 3 jobs for a specific GC. We have never been paid and the GC has since gone out of business. Another sticky issue is we haven't sent out our monthly notices. What would be our next course of action?
2 replies
Feb 13, 2020
That is a sticky situation. Monthly notices are required in Texas for all project participants who do not have a contract with the property owner. And, failure to send the required preliminary notices can be fatal to a Texas lien claim.
First tier subcontractors (subs who contract directly with the GC) must send a monthly notice by the 15th day of the 3rd month after each month in which they furnished labor or materials for which they are unpaid. Since this is a reoccurring 90-day deadline, labor or material furnished within 90 days may still be able to be protected by lien rights. Lien rights can be critical to recovery when the party with whom the claimant contracted has gone out of business, since the lien opens up recovery from the property itself (or the property owner).
Absent the ability to recover from a lien, it gets more difficult to recover money unpaid by an out-of-business contractor. There is always a lawsuit, and a judgment lien on any property of the contractor, if successful in obtaining a judgment. Although, if the contractor declared bankruptcy or liquidated assets there may not be anything to which a judgment lien could attach.
There are numerous potential actions against a non-paying GC (prompt pay violations, construction trust-fund violations, and more). However, recovery from other parties is much more difficult and tenuous. Claims in Texas can be made for "unjust enrichment" or pursuant to "quantum meruit" as quasi-contractual claims against third parties with whom there is no explicit contract, but these are difficult, and potential remedies only of last resort.
In a circumstance where a GC went out of business, it is possible that the property owner hadn't paid for all of the work performed. If the property owner has money left for the project, there may be an opportunity for a project participant to reach out to the property owner directly for payment for the work performed. And Texas law at least contemplates direct payment from the owner to a derivative claimant in some circumstances.
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Feb 13, 2020
Indeed this is a sticky situation and since time is not on your side, you may want the assistance of a commercial collection agency licensed and bonded in Texas who has private investigators on staff to uncover any and all possible avenues of collection recovery from the GM or any other entity. If you would like a quote feel free to call or email srauch@rauchmilliken.com. Best regards and success in getting paid, Steve