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Prompt Pay Act

August 13, 2020

Prompt Pay Act

Case:   Snake Steel, Inc. v. Holladay Construction Group, LLC

Facts:   A subcontractor sought statutory penalties against a prime contractor based on the contractor’s failure to comply with the Prompt Pay Act’s requirement that any retainage withheld be deposited into an interest-bearing escrow account as set forth in Tenn. Code Ann. § 66-34-104(a). The prime contractor moved to dismiss the complaint, asserting that the claim was barred by the one-year statute of limitations applicable to statutory penalties, Tenn. Code Ann. § 28-3-104(a)(1)(C). The trial court granted the prime contractor’s motion and dismissed the complaint

Appellate Decision:   The intermediate court reversed, holding that the discovery rule applies to this type of claim for statutory penalties under the Prompt Pay Act and remanding for further proceedings.

Review Granted:   June 4, 2020.

Prediction:   Ben thinks the Supreme Court will adopt the intermediate court’s reasoning and affirm the reversal of the trial court’s dismissal.