Evans, Mechwart, Hambleton & Tilton, Inc. v. Triad Architects, Ltd.
196 Ohio App. 3d 784
| Ohio Ct. App. | 2011Background
- EMH&T and Triad entered into two contracts in 2007 to provide civil-engineering and architectural services for Centurion development projects, with quoted fees of $128,550 and $60,200 respectively.
- Both contracts used the AIA Form C141-1997 and added sections 12.5 and 13.4.3 governing payment timing.
- EMH&T substantially completed services by December 11, 2007 and billed Triad $150,482.29, but Triad refused to pay.
- Triad asserted that Sections 12.5 and 13.4.3 created a pay-if-paid condition tied to Centurion’s payment; Centurion canceled projects and paid Triad nothing.
- EMH&T sued for account stated, professional services, breach of contract, and unjust enrichment; the trial court granted Triad summary judgment; EMH&T appeals.
- The appellate court reverses, holding the provisions are pay-when-paid, not pay-if-paid, and Triad had a reasonable time to pay after EMH&T’s completion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 12.5 and 13.4.3 create a pay-if-paid obligation | EMH&T argues these are pay-when-paid provisions. | Triad argues they create a condition precedent to payment. | Pay-when-paid; no explicit condition precedent. |
| Whether the evidence supports treating the clauses as pay-if-paid despite intrinsic language | Evidence does not show intent to shift risk; language is ambiguous. | Triad adduces negotiations and forms suggesting pay-if-paid. | Extrinsic negotiations do not establish pay-if-paid; court favors pay-when-paid interpretation. |
Key Cases Cited
- Power & Pollution Servs., Inc. v. Suburban Power Piping Corp., 74 Ohio App.3d 89 (Ohio App.3d 1990s) (pay-when-paid treated as timing, not condition precedent)
- MidAmerica Constr. Mgt., Inc. v. MasTec N. Am., Inc., 436 F.3d 1257 (10th Cir. 2006) (majority view that pay-when-paid delays payment to allow owner funding)
- Sloan & Co. v. Liberty Mut. Ins. Co., 653 F.3d 175 (3d Cir. 2011) (pay-when-paid generally interpreted to minimize risk of forfeiture)
- Wm. R. Clarke Corp. v. Safeco Ins. Co., 938 P.2d 372 (Cal. 1997) (majority view that pay-when-paid fixes time for payment)