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Dive brief:
- Makers Line, the construction arm of Q Factor, a Salt Lake City-based development company, is facing at least 15 lawsuits alleging the contractor failed to pay its subcontractors on several different construction projects in Utah , according to several court documents.
- In total, the lawsuits seek about $2.8 million in damages, according to The Salt Lake Tribune.
- Makers Line did not respond to requests for comment. The as reported by the contractor muted in recent weeks, with employees facing furloughs or job cuts, although yes the owner told Building Salt Lake in October that the company had not officially closed at that time.
Diving knowledge:
Q Factor has been a promising developer during Utah’s commercial construction boom, which fell as interest rates rose, according to Building Salt Lake. The developer’s downfall illustrates the pitfalls facing private construction projects in today’s environment, even as publicly supported infrastructure and manufacturing builds continue to thrive.
Many of the lawsuits against Makers Line include construction lien claims on associated properties, according to court documents.
For example, H&E Equipment Services filed liens against several properties in which Makers Line has a stake. H&E, an equipment rental company based in Baton Rouge, Louisiana, says so never received full payment for rental equipment provided during construction.
In a separate lawsuit, LG Concrete, an Ogden, Utah-based subcontractor, alleges that Titus, a concrete company and Makers Line’s sister company, failed to pay in full for labor, materials and construction equipment that LG provided for the project. Similarly, Bingham Plumbing & Mechanical, another Utah-based subcontractor, alleges in another lawsuit that Makers Line failed to pay in full for the plumbing and mechanical work and materials Bingham provided for the project.
Utah law entitles subcontractors to have each of their liens and property sold at a sheriff’s sale attached to recover from the proceeds the reasonable value of unpaid work. But that rarely happens, with the property owners themselves ultimately resolving disputes directly with subs. Encumbrances, in this sense, give subordinates leverage to bring owners to the table.
Several other lawsuits filed in Utah contain similar allegations about Makers Line’s failure to pay its subcontractors, and the company has at least eight total projects underway in Salt Lake City, according to city records.
one The lawsuit also alleges Makers Line decided to substitute untreated wood on a project in Ogden instead of fire-treated wood as originally prescribed in the contract, according to the Standard Examiner. The use of this wood led the city to order a halt to construction on March 29 due to the fire hazard of the structure.
Payment if paid clauses
According to the Salt Lake Tribune, Makers Line has claimed it cannot pay its subcontractors until the project owners pay it. the so-called ““pay if paid” provisions are common in construction and ultimately mean that if a The general contractor does not get paid by the project owner, he does not have to pay his subscribers.
In this sense, payment if paid clauses change the risk of collecting from the general contractor to the subcontractors. Only seven states (California, Delaware, New York, North Carolina, South Carolina, Wisconsin, and Virginia) have laws that explicitly pay-if-paid clauses unenforceable by statute, according to a survey by law firm Woods Aitken.
However, nine other states, including Utah, have language on the books or statutory precedents that make pay-if-paid clauses unenforceable under certain conditions, according to the Woods Aitken survey.
