Power & Pollution Services, Inc. v. Suburban Power Piping Corp.
Decision Date | 13 May 1991 |
Docket Number | No. 58371,58371 |
Citation | 74 Ohio App.3d 89,598 N.E.2d 69 |
Parties | POWER & POLLUTION SERVICES, INC., Appellee, v. SUBURBAN POWER PIPING CORPORATION, Appellant. * |
Court | Ohio Court of Appeals |
John V. Heutsche, Cleveland, for appellee.
James P. Cullen, Fairview Park, for appellant.
Defendant-appellant, Suburban Power Piping Corporation, timely appeals the trial court's granting of a motion for summary judgment filed by plaintiff-appellee, Power & Pollution Services, Inc., on appellee's action to recover monies owed it for services rendered under a subcontract. For the following reasons, we affirm the judgment of the trial court.
The essential facts in this case are undisputed. Appellee worked as a subcontractor on a construction project for which appellant was general contractor. Appellee did satisfactory work and is owed a balance of $31,082, together with interest thereon. The trial court granted appellee's motion for summary judgment. Appellant now timely appeals, raising one assignment of error for our review:
"The trial court erred in granting plaintiff's motion for summary judgment and in denying defendant's motion for summary judgment because the contract language in question bars recovery for the appellee subcontractor since the appellant is not obligated to pay appellee until the owner pays appellant."
In appellant's brief in opposition to the motion for summary judgment and on this appeal, appellant contends that a "pay-when-paid" clause in the parties' written contract establishes that appellant's receipt of payment from the owner, LTV Steel Corporation ("LTV"), is a condition precedent to appellant's obligation to pay appellee on the contract. Appellant has not been paid by the owner, LTV, because LTV filed for Chapter 11 Bankruptcy. Thus, appellant argues that the "pay-when-paid" clause excuses it from paying appellee. Appellee contends that these provisions should be construed as an unconditional promise to pay, with the time of payment being postponed until a certain event or for a reasonable period of time if the event does not take place. Appellee's interpretation is the majority view in this country, which we find applicable here.
The written contract between the parties provided, in pertinent part ("pay-when-paid" clause):
Ohio courts have not previously addressed the issue of how "pay-when- clauses should be interpreted and enforced. 1 However, the Sixth Circuit Court of Appeals dealt with this issue in depth in Thomas J. Dyer Co. v. Bishop Internatl. Eng. Co. (C.A.6, 1962), 303 F.2d 655. In Dyer, the contractor relied on a "pay-when-paid" clause 2 in refusing to pay a subcontractor where the owner filed for bankruptcy. The Sixth Circuit Court of Appeals held the clause delayed payment for a " * * * reasonable period of time after the work was completed, during which the general contractor would be afforded the opportunity of procuring from the owner the funds necessary to pay the subcontractor * * *." Id. at 661. The court reasoned as follows:
* * * "Id.
The Dyer decision has been adopted by a majority of courts in other jurisdictions. 3
Applying the reasoning of the court in Dyer to ...
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