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Pennsylvania Commonwealth Court Holds Enforceable School District's Oral Promise to Pay Subcontractor for Returning to Job after Prime Contractor's Termination

Zacherl, Inc. v. Flaherty Mechanical Contractors, LLC, 131 A.3d 1030, 2016 Pa. Commw. LEXIS 22 (Jan. 6, 2016)

Author: Jane Fox Lehman

4/28/2016

Read the full post at Constructlaw

Pennsylvania Commonwealth Court Holds Enforceable School District's Oral Promise to Pay Subcontractor for Returning to Job after Prime Contractor's Termination

The West Allegheny School Board (the School Board) voted to approve the School District’s (the District’s) plan to renovate its high school building (the Project). The District contracted with Flaherty Mechanical Contractors, LLC (Flaherty) to act as the prime contractor. Flaherty submitted the names of its subcontractors for the School Board’s review. When the School Board raised no objections to Flaherty’s submission, Flaherty subcontracted with F. Zacherl, Inc. (Zacherl) to perform sheet metal work at the Project.

During the Project, the District made timely payments to Flaherty, but Flaherty failed to make timely payments to its subcontractors, including Zacherl. The District terminated Flaherty’s contract in part as a result of Flaherty’s payment issues. Flaherty, in turn, terminated Zacherl’s contract.

The District approached Zacherl and asked it to complete the sheet metal work it had agreed to perform under its contract with Flaherty. Zacherl responded with an affidavit stating that Zacherl was owed for four months’ work and setting forth how much work was yet to be billed. Zacherl orally agreed to return to the Project provided the District paid at least two of its four outstanding invoices.

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