TBA Law Blog

TBA Law Blog

Court: Contractor Potentially Liable for Prompt Pay Act Penalties

Posted by: Stacey Shrader Joslin on Jun 30, 2021

The Tennessee Supreme Court today held that a general contractor may be required to pay penalties under state law for failure to pay a subcontractor, but remanded the case to the lower court for reconsideration. The trial court had earlier found that a one-year statute of limitations applied to the subcontractor’s suit and that it was filed too late to be considered. The Supreme Court said subcontractor Snake Steel could potentially recover penalties for the one-year period before the suit was filed. Snake Steel had sued general contractor Holladay alleging that its failure to return a “retainage” of $18,000 once the project was completed violated the state’s Prompt Pay Act and should be subject to the act’s $300-per-day penalty.

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