Summary

Sul Lee Law Firm secured an arbitration award exceeding $2 million for a subcontractor working on the Samsung Taylor construction project in Texas.

The award included approximately $1.54 million in unpaid invoices and related claims, nearly $372,000 in attorney fees, and additional costs and fee reimbursements, bringing the total recovery to approximately $2.09 million.

The Firm also defeated every claim the general contractor asserted against the subcontractor.

The matter was resolved through construction arbitration conducted under the American Arbitration Association rules. This case demonstrates how a subcontractor may protect its contractual rights after stopping work because of nonpayment.

Attorney Highlight

Sul Lee Law Firm represented the subcontractor after a payment dispute on the project escalated into a high-stakes construction arbitration.

The subcontractor had completed substantial work under two agreements. The general contractor paid the initial invoices but later fell behind and eventually stopped paying altogether, leaving the subcontractor unpaid for work it had already completed.

The general contractor challenged whether the subcontractor was entitled to recover and asserted claims of its own.

Sul Lee Law Firm centered the case on the legal effect of nonpayment under the agreements.

By establishing that the subcontractor was justified in terminating the agreements after repeated payment failures, the Firm recovered the unpaid amounts, obtained substantial attorney fees, and defeated every claim asserted against the client.

Introduction

Nonpayment is one of the most common and difficult problems on large construction projects.

When invoices go unpaid, a subcontractor faces a difficult choice: continue working without payment or stop working and risk a breach-of-contract claim.

The appropriate response depends on the contract because the right to stop work and still recover what is owed rests largely on how the payment and termination provisions are written.

These disputes are often resolved through construction arbitration before organizations such as the American Arbitration Association or JAMS.

Background of the Case

The dispute arose from work the subcontractor performed under two related purchase agreements with the general contractor. One agreement covered orbital welding and process-gas piping, while the other covered drip-pan installation. Together, the agreements had a combined value of approximately $4.56 million.

The subcontractor completed a substantial portion of the originally contracted work, along with additional change-order work, and submitted its invoices.

The general contractor later stopped paying, leaving approximately $1.54 million outstanding. After the subcontractor provided notice of the overdue balances and the general contractor failed to cure the nonpayment, the subcontractor stopped work and terminated the agreements.

The matter proceeded to construction arbitration. The subcontractor sought the unpaid amounts and attorney fees and asked the arbitrator to determine the parties’ respective rights. The general contractor denied liability and alleged that the subcontractor’s work was defective and incomplete.

Challenges

The subcontractor had to overcome several significant obstacles before it could recover, including:

• Recovering Payment After Stopping Work

Because the subcontractor had already stopped work and terminated the agreements, it had to prove that the termination was justified before it could recover the approximately $1.54 million owed. The general contractor argued that the subcontractor had breached first.

• Allegations of Defective and Incomplete Work

The general contractor challenged the quality of the welding work and alleged overbilling. The subcontractor therefore had to defend both the quality of its work and the accuracy of its invoices.

• No Agreed Method for Measuring Completion

The agreements did not establish a method for calculating the percentage of work completed. The subcontractor therefore had to prove how much of the contracted work it had actually performed.

• Significant Counterclaims and Financial Exposure

The general contractor asserted claims and counterclaims exceeding $1 million. As a result, the subcontractor faced substantial financial exposure if those claims succeeded.

• A Demanding Evidentiary Record

The outcome depended on a close interpretation of the agreements and the review of a substantial volume of project records, invoices, testing materials, and other evidence.

• Contract Interpretation Issues

The underlying agreements required careful legal and textual interpretation to establish the subcontractor’s contractual rights regarding progress measurement, payment, notice, cure, and termination.

Sul Lee Law Firm’s Strategy

The general contractor raised defenses involving allegedly defective welds, worker qualifications, incomplete performance, and overbilling.

Sul Lee Law Firm focused the case on the payment provisions in the agreements and the clauses permitting the subcontractor to terminate for nonpayment.

• Focusing on the Core Issue

The Firm framed the dispute around a central question: Did the general contractor’s repeated failure to pay justify the subcontractor’s termination of the agreements?

• Relying on the Termination Provisions

The agreements gave the subcontractor an express right to terminate, and the Firm placed that right at the center of the case.

Under the agreements:

• The subcontractor was entitled to notice of alleged performance defects and an opportunity to cure identified issues.
• Payment was due within a fixed period after each invoice.
• The subcontractor could terminate the agreements and avoid liability for delay if the invoices remained unpaid.
• The subcontractor retained the right to recover payment for completed work despite terminating the agreements.

• Proving the Amounts Owed

The Firm relied on project records, invoices, payment documents, and other evidence to establish the amount owed to the subcontractor.

The Firm also presented expert testimony concerning the welding work, while the general contractor did not offer competing expert testimony.

• Managing the Construction Arbitration

Through thorough preparation, detailed evidentiary support, and focused legal argument, the Firm established the subcontractor’s right to recover the unpaid amounts.

Outcome

The award was entered almost entirely in favor of the subcontractor. The subcontractor recovered the unpaid amounts, attorney fees, and costs, while every claim asserted against it was denied.

• Total Award

The arbitrator ruled in favor of the subcontractor and awarded a total recovery exceeding $2 million.

• Unpaid Work Recovered

The subcontractor recovered approximately $1.54 million for completed work and approved change orders.

• Attorney Fees and Costs

The arbitrator awarded nearly $372,000 in attorney fees, approximately $129,000 in costs, and approximately $51,000 as reimbursement for administrative and arbitrator fees previously paid by the client.

Every Counterclaim Denied

The arbitrator rejected every claim brought by the general contractor, including allegations of defective work, overbilling, and delay.

The award compensated the subcontractor for its completed work and reimbursed its fees and costs. It also rejected every counterclaim asserted by the general contractor, leaving the general contractor with no recovery.

Impact

The award provided the subcontractor with a full recovery for its completed work, together with attorney fees and costs, while leaving it owing the general contractor nothing.

The result addresses a question that often pressures subcontractors to continue working without payment. A subcontractor does not necessarily forfeit the right to recover amounts already earned by stopping work, provided that the contract permits termination for nonpayment and the evidence supports the claim.

Key Takeaways

The award provides practical lessons for both subcontractors and the contractors that hire them.

• For Subcontractors

Express contract provisions may allow a subcontractor to terminate the agreement and avoid liability for delay when invoices remain unpaid for a specified period. The language of the agreement may therefore establish a clear right to leave the project.

A termination may be defensible when the subcontractor provides written notice of the unpaid balance and gives the contractor an opportunity to cure before stopping work.

When a subcontractor supports its completion calculations with reliable documentation and other tangible evidence, an arbitrator may credit that evidence over unsupported estimates or speculation from the contractor.

• For Contractors

Failure to meet agreed payment deadlines may release a subcontractor from liability for delay and expose the contractor to the full amount of the subcontractor’s claim.

Defective-work and overbilling defenses are common, but weak or incomplete evidence, such as lay opinions or selective coupon-testing results, may be overcome by qualified expert testimony addressing the relevant work and industry standards.

A contractor’s credibility may also be damaged by failing to provide reliable evidence, such as authenticated video, or by selectively presenting incomplete testing results to the arbitrator.

Conclusion

The subcontractor recovered the full approximately $1.54 million owed for its completed work through arbitration, together with attorney fees and costs.

Through careful contract interpretation and disciplined preparation, a subcontractor can protect its rights and recover amounts owed even after stopping work because of nonpayment.

Sul Lee Law Firm represents businesses across Texas and abroad in construction arbitration and contract disputes, including matters before the American Arbitration Association and other forums such as JAMS.