U.S. Court of Appeals for 5th Circuit Holds Contractor’s Claims Barred By Waivers Submitted With Monthly Pay Requests

Addicks Services, Inc., Appellant v. GGP-Bridgeland, LP
2010 U.S. App. LEXIS 2623 (5th Cir. Feb. 8, 2010)

Plaintiff, Addicks Services, Inc. (“Addicks”) sought damages for extra work and delay costs incurred while performing land improvement work for a residential development in Texas. Addicks’ claims were denied by the district court because Addicks executed monthly waivers and releases to receive progress payments which waived their claims for extra work and delay costs.

Addicks performed execution and grading work on a 500-acre site in Texas in preparation for construction of a residential development. Addicks and GGP-Bridgeland (“Owner”) executed a Standard Form of Agreement Between Owner and Contractor (the “Contract”). The Contract governed payment to Addicks and provided that Addicks would perform the work for $4,582,721 (later increased to $6,110,774 through executed change orders), and also provided for monthly progress payments. To receive a progress payments, the Contract provided that Addicks was required to submit a written application detailing the work performed to date accompanied by an executed lien waiver that would release Addick’s mechanic’s and materialman’s lien on the project. The “Waiver and Release of Lien upon Progress Payment” (the “Interim Waiver”) provided, in relevant part:

“[Addicks] in consideration for the sum of …, hereby waives and releases its lien and right to claim a lien for labor, services, or materials furnished through (date of this waiver)… [t]his waiver and release does not cover any retention or labor, service or materials furnished after the date specified… [t]his Waiver constitutes a representation by [Addicks] that the payment referenced above, once received, constitutes full and complete payment for all work performed, and all costs or expenses incurred …except for the payment of retainage.”
Addicks also “specifically waive[d], quitclaim[ed] and release[d] any claim for damages due to delay, hindrance, interference, acceleration, inefficiencies or extra work, or any other claim of any kind it may have against [Owner]…”

Although each Interim Waiver contained a blank space in which Addicks could have excepted outstanding claims from the scope of the release, Addicks never excepted any claims. Further, Addicks attested, at the bottom of each Interim Waiver, that payment was received and was deemed paid in full as of the date of the Interim Waiver. The Court of Appeals held the executed Interim Waivers operated to release all of Addicks’ outstanding claims, except for retainage payments, with the progress payment serving as the consideration for the overall release.

In granting Owner’s motion for summary judgment, the Court found the language of the Interim Waivers unambiguous in releasing Addicks’ claims. The Court also found no merit with respect to Addicks’ additional theories, waiver and promissory estoppel, in support of its extra work and delay claims.

Click here to view full text of decision courtesy of LexisNexis.

This entry was posted in Payment dispute and tagged , , , , . Bookmark the permalink.