[RPPTL-constructionlaw] Joint Check Overpayment Question

[Blaik Ross]

Hello Everyone,

 

I hope I am sending this to the right list-serve address as I know there
are two now.  

 

Factual Background:

 

I represent a General Contractor ("GC").  GC has hired a subcontractor
to perform a certain scope of work.  The subcontractor buys his
materials from a supplier.  Due to problems with the subcontractor's
line of credit with the supplier, GC must pay for subs materials via
joint check. GC receives an Invoice, purportedly from the supplier.  It
is on the supplier's letterhead.  GC pays it via joint check and the
check is deposited by the supplier and a release signed by both the sub
and supplier.  GC later finds out that the invoice it paid was "dummied
up" by the subcontractor, who added $30,000 to it fraudulently in order
to try and get ahead of GC on the subcontract and get more cash flow.
Subcontractor has already failed before GC discovers that it was a
"dummied up" invoice and sub has been terminated from the project.  

 

I wonder why the supplier, when they received a joint check for an
amount in excess of the true invoice amount, did not call the general
contractor or refund the general contractor back the $30,000?  GC calls
the supplier and asks what happened - i.e. why it is that GC paid them
$130,000 in a joint check, but that the real invoice was only for
$100,000, and why didn't GC get a refund.  Supplier says this is not
uncommon and they just credited the subcontractor's house account - so
in effect GC has paid for this failed subcontractor to have an
additional $30,000 of credit, or it went to other debts sub held with
the supplier.  GC asks the supplier to send it a refund and supplier
refuses saying GC's only recourse is to backcharge it against the
subcontractor's lump sum contract.  Supplier claims no knowledge of the
"dummied up" invoice and claims that there is nothing wrong with his
crediting the overpayment by the general contractor to the
subcontractor's house account.    

 

Question:

 

Does GC have a direct cause of action against the supplier who it
overpaid and who signed a release stating it was paid $130,000 for
materials delivered to Project XYZ, but the materials delivered were
only really worth $100,000 per the "true" invoice?  Is there not
something fundamentally wrong with the supplier taking the $30,000
overpayment and using it to satisfy the subcontractor's other debts with
him...regardless of supplier's intent or knowledge of the "dummied up"
invoice and subcontractor's fraudulent motives?        

 

Thank you,

Blaik P. Ross, Esq. 

bross at beauchampco.com

305-445-0819

          

 

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