Snake Steel, Inc. v. Holladay Construction Group, LLC - Concurring
M2019-00322-SC-R11-CV
| Tenn. | Jun 30, 2021Background
- Snake Steel (subcontractor) sued Holladay (prime contractor) over withheld retainage tied to the 2200 Charlotte Avenue project.
- The owner paid retainage to Holladay on May 27, 2015; dispute arose whether Holladay was then required to deposit those funds into a separate, interest-bearing escrow account or merely to pay subcontractors within ten days.
- At the trial-court hearing Holladay effectively stipulated it had an obligation to place the funds in escrow after receipt; Holladay later acknowledged it “should have complied” with the Prompt Pay Act.
- The Tennessee Supreme Court did not resolve the statutory-interpretation question because Holladay failed to preserve the issue on appeal.
- Justice Cornelia A. Clark (joined by two justices) concurred separately to urge the General Assembly to clarify whether prime contractors must escrow owner-paid retainage or instead are only required to remit payments to subcontractors within ten days, given the substantial daily damages for noncompliance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a prime contractor must deposit retainage received from the owner into a separate interest-bearing escrow account | Snake Steel: Holladay was statutorily required to place the retainage into escrow upon receipt | Holladay: the Prompt Pay Act can be read to require only that prime contractors pay subcontractors within 10 days (no duty to escrow upon receipt); Holladay had also stipulated below that it failed to escrow | Court declined to decide (issue not preserved on appeal) |
| Whether Holladay preserved its alternative statutory-construction argument for appellate review | Snake Steel: Holladay’s stipulation and statements foreclose a new interpretation on appeal | Holladay: argued alternative readings of the Act but did not preserve them below | Held: argument not preserved/waived; Supreme Court refused to address it |
Key Cases Cited
- Hodge v. Craig, 382 S.W.3d 325 (Tenn. 2012) (explains preservation requirements for appellate review)
- State v. Marrow, 75 S.W.3d 919 (Tenn. 2002) (statutory segments must be construed together in light of general purpose)
- In re C.K.G., 173 S.W.3d 714 (Tenn. 2005) (adopt a reasonable construction to harmonize statutes)