As the project is winding down, it is crucial that you include all remaining claims in your final pay application. A recent Nebraska Court of Appeals decision drove this point home when it ruled that a contractor was not entitled to additional compensation it requested after submitting its final pay application.
In ARR Roofing, LLC v. Nebraska Furniture Mart, Inc., ARR Roofing was hired to replace the roof and decking material in one of NFM’s buildings. During the project, the parties discovered that additional work would be required, and the parties agreed to Change Directive No. 1, which specified the cost per hour for the additional work, but not the total number of hours necessary for the work. After the project was completed, NFM issued Change Order No. 1, to which ARR Roofing agreed. ARR Roofing then submitted a final pay application, which included the amount on Change Order No. 1 and showed that there were no additional funds due under the contract. Nearly five months later, ARR sent a letter requesting an adjustment to the final cost of the project. NFM apparently ignored the request and issued a check in accordance with the final pay application, which ARR cashed.
ARR was disappointed it didn’t get paid all that it wanted and sued NFM. The trial court ruled in favor of NFM and ARR appealed. The appellate court ruled in favor of NFM, finding that ARR accepted the totals in Change Order No. 1 by submitting the final pay application. Specifically, the court relied on language in the final pay application that provided “there was no other money owed under the contract.”
Take Away: When you submit your final pay application, make sure you include all amounts that are owed or you could find yourself out of luck.