Background
All American Builders & Debris Removal, Inc. subcontracted to perform framing, drywall, insulation, and acoustical-ceiling work on a five-story hotel project. GSD Contracting, LLC became the replacement general contractor after the original general contractor was terminated. By that point, All American had completed about 93.9% of its work and was owed $71,582.98 in retainage.
Before completion, water intrusion created substantial mold issues. All American declined to finish until the mold was adequately remediated. GSD ultimately terminated All American and did not pay the retainage. All American sued for the $71,582.98 retainage; its owner testified that it was not seeking $45,300 for unperformed work. The circuit court nevertheless awarded both amounts.
The Court’s Holding
The Fourth District affirmed the finding that GSD breached the subcontract by withholding the $71,582.98 retainage. The subcontract required GSD to retain 10% of partial payments only until 90 days after final project completion. Because the project was completed in 2023, that period had expired. The termination-for-convenience clause also entitled All American to payment for work performed through termination, and no provision allowed GSD to keep retainage after terminating the subcontractor.
The court reversed the additional $45,300 award. All American’s complaint sought only the retainage, its owner disclaimed any claim for unperformed work, and the subcontract expressly barred payment for work not performed, including anticipated profit. Having affirmed on the nonpayment-of-retainage ground, the court did not address whether GSD also breached by insufficiently remediating mold.
Key Takeaways
- Retainage became payable under the subcontract 90 days after final project completion.
- A termination-for-convenience clause did not permit the contractor to withhold payment for work already performed.
- A court may not award unclaimed damages that the contract expressly prohibits.
Why It Matters
The decision underscores that construction-contract payment terms control: a contractor needs an applicable contractual provision if it intends to retain earned retainage after terminating a subcontractor. Alleged subcontractor default alone did not supply that authority here.
It also reinforces the limits of contract damages. Even where a trial court finds breach, the recovery must match the pleaded claim, the evidence, and the contract’s express limitations.