Southern States Masonry, Inc. v. J.A. Jones Construction Company

Louisiana World Exposition, Inc. (LWE), was the owner of the 1984 Louisiana World’s Fair. LWE filed bankruptcy and did not pay many of its general contractors in full. J.A. Jones Construction Company (Jones) (defendant) and Landis Construction Company, Inc. (Landis), were two of those general contractors. Jones contracted with Southern States Masonry, Inc. (Southern) (plaintiff), for concrete masonry work. The contract between Jones and Southern contained a clause requiring Jones to pay Southern upon Jones’s receipt of payment from LWE. This type of clause was commonly referred to as a pay-when-paid clause. Jones did not pay Southern for any of the work for which Jones did not receive payment from LWE, relying on the pay-when-paid clause in the contract. Southern subsequently sued Jones. The trial court dismissed Southern’s suit, holding that the pay-when-paid clause conditioned payment by Jones on Jones being paid by LWE. The court of appeals affirmed. Similarly, Landis contracted with Strahan Painting Company (Strahan) for painting on a Landis project at the World’s Fair. Landis’s contract with Strahan provided that Strahan would be paid 90 percent of the value of the work Strahan performed in each month that Landis received payment from LWE. Again, Landis refused to pay Strahan for the work that LWE failed to pay for after LWE’s bankruptcy. Strahan thus sued Landis. The trial court found in favor of Strahan, but the court of appeals reversed. The state supreme court granted certiorari.