Twin K Construction, Inc. v. UMA, Geotechnical Construction, Inc., 3:21-cv-00074

Twin K was prime contractor on TDOT emergency slope-stabilization project with initial completion date Nov. 15, 2019; substantial completion alleged Oct. 21, 2020. TDOT assessed $314,000 in liquidated damages.
Twin K subcontracted designing/building two retaining walls to UMA; subcontract incorporated the prime contract and required UMA to prosecute work diligently and bear obligations that could expose it to liquidated damages assessed against Twin K.
Twin K alleges UMA caused 272 days of delay and other breaches, incurring redesign and extended-cost damages totaling about $610,030; Twin K withheld 10% retainage ($189,080.92) plus an additional $167,912.86 (total withheld $356,993.78).
UMA moved for partial judgment on the pleadings seeking immediate release of the retainage under the Tennessee Prompt Pay Act (PPA), arguing retainage is UMA’s property and must be paid within statutorily prescribed timeframes.
Twin K opposed, invoking PPA provisions that permit reasonable withholdings and retainage per contract and asserting statutory conditions precedent and setoffs for subcontractor defaults; Twin K contends withholding was justified by UMA’s alleged breaches.
The court denied UMA’s Rule 12(c) motion, holding that whether withholding was reasonable under the PPA and subcontract is a factual question for the jury.

Issue	Plaintiff's Argument (UMA)	Defendant's Argument (Twin K)	Held
Whether Twin K violated the Tennessee Prompt Pay Act by withholding the 10% retainage and failing to release it promptly	PPA requires prime to pay subcontractor retainage within 10 days after the prime receives retainage from owner; retainage is subcontractor's property and must be released	PPA and subcontract allow reasonable withholding and setoffs for subcontractor-caused damages; conditions precedent and disputes permit withholding	Denied UMA’s motion; court held PPA permits reasonable withholding where a legitimate dispute exists and reasonableness is a factual issue for the jury
Whether substantial completion (or owner acceptance) required immediate payment of retainage notwithstanding contract defenses	Substantial completion occurred, so PPA timelines (90 days or prime’s receipt and 10-day passthrough) required payment (relying on Beacon4)	Substantial completion is disputed here and Beacon4 is distinguishable; contract and PPA allow withholding when subcontractor hasn’t performed	Court found Beacon4 inapplicable at pleading stage; substantial completion and entitlement are factual questions not resolvable on the pleadings

Snake Steel, Inc. v. Holladay Constr. Grp., LLC, 625 S.W.3d 830 (Tenn. 2021) (interpreting Prompt Pay Act retainage and payment timelines)
Beacon4, LLC v. I & L Invs., LLC, 514 S.W.3d 153 (Tenn. Ct. App. 2016) (owner’s failure to pay retainage within statutory time held to violate PPA)
In re Mattie L., 618 S.W.3d 335 (Tenn. 2021) (identified as overruling aspects of prior authority on other grounds)
Sensations, Inc. v. City of Grand Rapids, 526 F.3d 291 (6th Cir. 2008) (Rule 12(c) standard equals Rule 12(b)(6) standard)
J.P. Morgan Chase Bank v. Winget, 510 F.3d 577 (6th Cir. 2007) (standards for judgment on the pleadings and treating well-pleaded allegations as true)
In re James, 78 B.R. 159 (Bankr. E.D. Tenn. 1987) (discussing ownership implications of escrowed retainage in bankruptcy)