An unpaid subcontractor can seek payment directly from the project’s owner.
Unpaid subcontractors on construction projects may have good reason to want to seek their payment directly from the project’s owner. One reason would be when a financially distressed general contractor is either unwilling or unable to pay the subcontractor even though the subcontractor already provided its labor and materials.
Ohio law recognizes that under certain circumstances an unpaid subcontractor can in fact recover the money it is owed directly from the project’s owner. For example, in Moosehead Harvesting, Inc. v. Eureka Midstream, LLC, 2019-Ohio-3961 (7th Dist. 2019), an Ohio appellate court held that an unpaid subcontractor could recover part of the payment it was owed from the project’s owner if the subcontractor could demonstrate that: (1) the subcontractor conferred a benefit on the owner; (2) knowledge by the owner of the benefit; and (3) retention of the benefit by the owner under circumstances where it would be unjust to do so without payment to the subcontractor. However, in Moosehead Harvesting the court also held that “when the owner has paid the general contractor in full for all performance rendered at the construction site, the owner has not received a benefit for which it has not paid.” Id. In that event, then the owner would not be required to pay the subcontractor under an unjust enrichment claim.
A subcontractor who is owed payment may be able to obtain the payment from the project’s owner. It’s important to recognize though that the owner might have defenses to avoid payment, such as having already paid the general contractor. Nonetheless, an unjust enrichment claim against the construction project’s owner can be a tool for subcontractors who have performed their work yet have not been paid.
A construction attorney is normally required in order to pursue claims directly against a project’s owner. Schwandner Law Firm LLC is a construction law firm in Cincinnati, Ohio with extensive experience helping contractors get paid for their work.