Q: Professional Services Contract: Contractor from MD refuses to pay sub-contractor's Invoice because submitted 12 mo. late
Contractor in MD Refuses to Pay Sub-Contractor's Invoice for an overseas Pharma already completed consulting services project on the Excuse It Was Submitted 12 Months After Completion of Professional Services Work. Parties have signed Contract. Total amt ~ $100K.
Q1. What is the legal basis for such Refusal to Pay, if any?
Q2. A cause of action for breach of contract typically accrues at the time of the breach. Kumar v. Dhanda, 426 Md. 185, 195 (2012), or date Invoice was submitted even though it was late, correct?
Q3. Can one reference an Unreported caselaw, for this matter, e.g. MORRIS & RITCHIE ASSOCIATES, INC. v. H&H ROCK, LLC, No. 1824, September Term, 2016. Unreported per Md. Rule 1-104?
A:
The general statute of limitations for commencing suit in Maryland on a breach of contract claim is 3 years, not one year, from the date of the breach/time money became due. The claim is not barred. Further, if this is a commercial project (not a home improvement contract or construction of a single family home) Maryland imposes upon general contractors a fiduciary duty toward their subcontractors to reserve and pay moneys they receive to satisfy their subcontractors if the money they received was to include the subcontractor's work. This is commonly known as the Maryland Construction Trust statute, and imposes personal liability on the officers of the GC:
Real Property Code 9-201(b): "(1) Any money paid under a contract by an owner to a contractor, or by the owner or contractor to a subcontractor for work done or materials furnished, or both, for or about a building by any subcontractor, shall be held in trust by the contractor or subcontractor, as trustee, for those subcontractors who did work or furnished materials, or both, for or about the building, for purposes of paying those subcontractors.
(2) An officer, director, or managing agent of a contractor or subcontractor who has direction over or control of money held in trust by a contractor or subcontractor under paragraph (1) of this subsection is a trustee for the purpose of paying the money to the subcontractors who are entitled to it."
Real Property Code 9-202: "Any officer, director, or managing agent of any contractor or subcontractor, who knowingly retains or uses the money held in trust under § 9-201 of this subtitle, or any part thereof, for any purpose other than to pay those subcontractors for whom the money is held in trust, shall be personally liable to any person damaged by the action."
The GC got paid the subcontractor's money. It's not the GC's money, no longer how much time passes, so long as the statute of limitations has not expired.
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