Under Construction – June 2026

As we move further into 2026, the construction industry continues to navigate an evolving legal landscape shaped by procedural reform, shifting contract doctrines, and ongoing debates over risk allocation. This issue of Under Construction highlights developments that reinforce a common theme: clarity matters.

In Texas, sweeping amendments to Rule 166a introduce firm deadlines for briefing, hearings, and rulings – bringing much-needed predictability to summary judgment practice. Courts must now act within defined timeframes, allowing construction litigants to better plan strategy, manage resources, and evaluate settlement opportunities.

Utah courts continue to emphasize the importance of integration clauses. As explored in this issue, clear contract language can bar reliance on extrinsic statements and defeat a wide range of claims. Yet recent decisions suggest the doctrine may not apply uniformly in all contexts, underscoring the need for careful drafting.

In Colorado, the Supreme Court’s decision in Wadsworth v. Regional Rail Partners clarifies the scope of verified statements of claim on public projects. Subcontractors may include disputed delay-related amounts tied to project work, and even if a claim is deemed excessive, forfeiture is limited to statutory remedies — not all underlying claims. This restores balance and provides greater confidence in pursuing payment rights.

Finally, pay-if-paid provisions remain a source of uncertainty in Arizona. Their enforceability often turns on precise wording and statutory considerations, with significant implications for project cash flow and risk allocation.

Together, these developments highlight a simple but critical lesson: well-defined rules and clearly drafted agreements are essential to avoiding disputes and positioning projects for success.

We hope you find these articles informative and enlightening. As always, we welcome your feedback and topic suggestions for future newsletters. Have a safe and relaxing summer.

Best Regards,

Timothy E. Reilly, Editor

By Conor G. Bateman and Marsha Cotton

On March 1, 2026, sweeping amendments to Texas Rule of Civil Procedure 166a took effect, fundamentally changing how Texas courts handle summary judgment motions — from filing and briefing through disposition. Whether representing a plaintiff or defendant, Texas litigants and attorneys must understand these new rules and their impact on case strategy and timelines. These procedural changes carry particular significance for construction litigants.

Texas summary judgment practice has long diverged from the federal model. The Texas Rules of Civil Procedure recognize two types of summary judgment motions: (1) the traditional motion for summary judgment, and (2) the “no-evidence” motion for summary judgment. The no-evidence motion — unique to Texas — may be filed only after adequate time for discovery has passed. No bright-line rule governs that determination; it depends on the unique circumstances of each case.

Under the prior framework, Rule 166a required at least 21 days’ notice before a summary judgment hearing. The movant’s supporting evidence had to be filed with the motion or no later than 21 days before the hearing, and responses were due seven days before the hearing. These deadlines applied to both traditional and no-evidence motions. But the prior rule imposed no deadline for reply briefs, creating widespread inconsistency across Texas’s 254 counties. Some urban counties filled the gap with local rules — Dallas County, for instance, required replies at least three days before the hearing. Most counties, however, had no such rules, leaving practitioners without clear guidance on reply and sur-reply deadlines. Practice also varied on hearing format: some counties permitted submission on the briefs, while others — particularly in rural districts — required in-person hearings.

Nor did the prior rule require trial courts to rule within any specific timeframe. As a result, dispositive motions routinely languished for weeks or months without a ruling — a source of frustration for litigants and a drag on case resolution.

In 2025, the Supreme Court of Texas solicited public comments on proposed amendments to Rule 166a. Following the comment period, the Court adopted the following changes, effective March 1, 2026:

The court must set the motion for hearing or submission within 60 days of filing. That period extends to 90 days if:

Under new Rule 166a(i), the court must sign a written ruling, file it with the clerk, and serve it on the parties within 90 days after the hearing or submission.

Responses — along with all supporting evidence — are due 21 days after the motion is filed.

Replies are due seven days after the response is filed and may not include new evidence.

The amended rule does not address sur-replies.

If the court denies the motion, it may identify the material fact issues that remain in dispute, specify any facts established as a matter of law, and direct further proceedings.

Under the amended rule, courts generally will not consider evidence filed fewer than 21 days before the hearing (for the movant) or fewer than seven days before the hearing (for the respondent). However, a court may consider late-filed evidence if it affirmatively indicates on the record that it has done so.

Similar to the prior rule, summary judgment evidence remains limited to these categories; live testimony is not permitted.

The amended Rule 166a applies to all summary judgment motions filed on or after March 1, 2026, including motions filed in cases that were already pending on that date. The amendments implement reporting procedures established by Section 23.303 of the Texas Government Code, which requires quarterly reports from business courts, district courts, and statutory county courts. The Office of Court Administration must also submit an annual report to the Texas Legislature and the public.

Complex factual disputes and voluminous discovery in construction cases often generate protracted summary judgment proceedings. Under the prior framework, parties faced considerable uncertainty about when their motions would be heard — and when rulings would follow. That uncertainty hampered trial preparation, stalled settlement negotiations, and complicated the management of ongoing project disputes. The new rule’s firm deadlines — hearings within 60 days of filing (or 90 days in limited circumstances) and rulings within 90 days of the hearing — bring welcome predictability to construction litigation.

With fixed deadlines for hearings and rulings, construction litigants can better anticipate case timelines and allocate resources accordingly. A subcontractor defending against a delay-damage claim, or a surety facing a bond claim, will now know with greater certainty when to expect a ruling on a dispositive motion — enabling more informed decisions about settlement posture, expert retention, and trial preparation. The structured briefing schedule should also promote more efficient resolution of the technical, fact-intensive issues that pervade construction disputes. Taken together, these amendments represent a meaningful step toward reducing uncertainty and improving case management in Texas construction litigation.

By Mark O. Morris

The Utah Court of Appeals recently reaffirmed, in the construction context, Utah’s strict approach to enforcing integration clauses to preclude parol evidence and other legal theories that would vary the written terms of a contract. In Reid v. All Surface LC, 2025 UT App 134, decided last September, the court affirmed in all respects the trial court’s grant of summary judgment based on the strength of an integration clause against a homeowner who sued a contractor for breach of contract, breach of the covenant of good faith and fair dealing, fraud, negligent misrepresentation, civil conspiracy, negligence, and breach of the implied warranty of habitability. More recently, however, the same court rejected those same arguments in Tidwell v. Jensen, 2026 UT App 13 as to tort claims arising from a used car sale.

The facts in Reid were sympathetic to the plaintiff. After being told she had a mold issue near a defective basement shower, the plaintiff solicited bids. A remediation contractor advised that while it could address the mold, the shower replacement should be handled by someone else. The plaintiff contacted All Surface LC, a shower replacement contractor. During an interview, the sales representative stated that All Surface could “do full mold remediation, tear everything out, and reframe the shower.” The plaintiff ultimately retained All Surface, expecting it would both resolve the mold issues and replace the shower.

All Surface’s contract contained what most in the industry would recognize as a typical integration clause, stating that all prior negotiations and writings are incorporated into and superseded by the signed agreement, which was the final expression of the parties’ deal. Words like “final” and “integration” did not appear in the contract. Instead, the pertinent language stated: “It is important that the customer is confident everything that has been promised to them is listed in writing on this customer agreement and the job specification forms.” The agreement also included a release provision: “Customer agrees to indemnify, hold harmless, release, and forever discharge (‘Release’) All Surface … from and against any and all claims, demands, suits, judgments, and cost incurred by reason of or resulting from mold or mildew found or not found, seen or unseen, discovered at the time of the job or in the future.” Yet the plaintiff did not sign the specification pages. 

Before work began — but after the contract was executed — an All Surface representative emailed the plaintiff, acknowledging that the sales representative had observed mold: “there was extensive mold in the furnace room on the wall on the back side of the shower stall in your basement bathroom. … The mold needs to be treated and the area cleaned of all mold. The framing of the shower stall needs to be replaced and the shower stall redone. The cost of this project is approximately $8,400.” The plaintiff testified she would not have proceeded without those assurances about mold remediation.

All Surface moved for summary judgment on all counts, arguing that the agreement’s “final expression” language operated as a complete integration clause that barred parol evidence of the sales representative’s statements and the post-contract email. It further argued that given the contract’s integration language, there could be no reasonable reliance on oral statements about mold remediation, thereby foreclosing the fraud and misrepresentation claims.

The trial court held that “because the contract is integrated and unambiguously rules out mold remediation being performed by All Surface, [Plaintiff’s] contradictory parol evidence is irrelevant,” rejecting the plaintiff’s arguments, including claims of ambiguity in the contract. On appeal, the Court of Appeals addressed whether the contract’s language constituted an integration clause. Relying on Utah Supreme Court precedent, the court explained that a writing qualifies as an integration if it is “the final and complete expression” of “one or more terms” of the parties’ bargain and must “explicitly and clearly convey that the writing at issue is the final and complete expression of one or more terms of the parties’ bargain.” The appeals court affirmed the trial court in all respects, concluding that the contract’s integration language was fatal to the plaintiff’s claims for breach, fraud, promissory estoppel, negligent misrepresentation, civil conspiracy, negligence, and breach of the implied warranty of habitability — a total win for the contractor.

The practical takeaway from Reid is straightforward. In Utah, owners should ensure that their contracts capture everything the parties have discussed and everything the owner expects the contractor to perform. For contractors, clear integration language can operate as an inoculation against breach-of-contract, quasi-contract, and even tort claims – preventing costly disputes over alleged oral promises and post-contract communications.

More recently, however, the Utah Court of Appeals muddied the waters. In Tidwell, a trial court granted a motion to dismiss at the close of the plaintiff’s case. The plaintiff alleged she bought the car in reliance on statements that it was in good condition. The defendant pointed to contract language making it clear that the car was sold “as is,” with no warranties, and the agreement contained an integration clause. Presumably, that would and should have ended the matter. The trial court agreed, ruling that the contract language precluded reasonable reliance on any prior or contemporaneous oral statements about the car’s condition. The Utah Court of Appeals disagreed and ordered a new trial, leaving it to the fact finder to determine whether the buyer’s reliance on oral statements about the car’s condition was reasonable in light of the contract language. This regrettably muddied the waters on Utah’s jurisprudence of integration clauses, unless of course the court understandably is carving out an exception for used car salesmen.

By Amanda E. McKinlay

On April 6, 2026, the Colorado Supreme Court issued a unanimous opinion in Ralph L. Wadsworth Construction Company, LLC v. Regional Rail Partners, 2026 CO 19, reversing the Colorado Court of Appeals and providing much-needed clarity regarding verified statements of claim (VSOCs) under the Colorado Public Works Act, C.R.S. §§ 38-26-101 et seq. The decision resolves two issues that have generated significant concern among construction industry professionals since the Court of Appeals issued its opinion on August 1, 2024.

Under C.R.S. § 38-26-107(1), a subcontractor on a public works project may file a VSOC with the contracting public entity for amounts due and unpaid for “…furnished labor, materials, sustenance, or other supplies used or consumed by a contractor or his or her subcontractor in or about the performance of the work contracted to be done or that supplies laborers, rental machinery, tools, or equipment to the extent used in the prosecution of the work….” If a claimant files a VSOC for “an amount greater than the amount due” without a reasonable possibility that the amount is due and with knowledge that the claim is excessive, the claimant “shall forfeit all rights to the amount claimed” and becomes liable for the opposing party’s costs and attorneys’ fees. C.R.S. § 38-26-110.

In the underlying dispute, Wadsworth, a subcontractor on a public project, asserted non-payment claims against prime contractor Regional Rail through VSOCs. Delays plagued the project, and the parties disputed who bore responsibility. Wadsworth’s expert concluded that Regional Rail owed approximately $12.4 million in delay-related damages. Wadsworth filed a VSOC with the project owner, the Regional Transportation District, and ultimately amended it to approximately $12.8 million. Regional Rail substituted a surety bond for the VSOC and raised the excessive-claim defense. After a bench trial, the trial court found the VSOC was not excessive and awarded Wadsworth over $5.6 million in damages. Regional Rail appealed, and Wadsworth cross-appealed.

On August 1, 2024, the Court of Appeals reversed the trial court’s decision, concluding that: (1) unliquidated delay damages could not be included in a VSOC because such amounts were not “due” at the time of filing; (2) Wadsworth’s VSOC was excessive as a matter of law; and (3) the “unambiguous” language of C.R.S. § 38-26-110 required forfeiture of Wadsworth’s “entire claim.” The opinion raised serious concerns about the permissible scope of VSOCs and mechanics’ lien claims alike, prompting Wadsworth to petition for certiorari.

In a unanimous opinion, the Supreme Court reversed on both issues. On the first, the Court held that disputed or unliquidated amounts, including delay and disruption damages, may be included in a VSOC so long as they fall within the statutory constraints — that is, they must constitute claims for labor, materials, sustenance, rental machinery, tools, equipment, or other supplies used in the prosecution of the work. The Court found nothing in the plain language of the statute prohibiting disputed amounts and observed that excluding them would “conflict with the very purpose of the statute,” which was enacted to protect those who supply labor and materials to public works projects. The Court drew an important distinction, however: purely consequential damages, such as lost profits or idle time, may not be included. Turning to the forfeiture question, the Court addressed the scope of C.R.S. § 38-26-110, finding the language ambiguous and turning to legislative history. The Court concluded that the legislature intended the forfeiture provision to mirror the Mechanics’ Lien Act, C.R.S. § 38-22-101 et seq., under which an excessive claimant forfeits only lien rights. Interpreting the statute otherwise, the Court reasoned, would deter subcontractors from exercising their statutory rights altogether, producing “illogical and absurd results.” Accordingly, the Court held that a claimant who files an excessive VSOC forfeits only the statutory rights and remedies under the Public Works Act, not common law or other legal remedies.

The Supreme Court’s decision represents a significant reversal from the Court of Appeals. Where the Appellate Court concluded that “due” necessarily excluded disputed or unliquidated claims and that the forfeiture penalty was absolute, the Supreme Court took a fundamentally different view on both points. The Court of Appeals had relied on mechanics’ lien precedent to conclude that disputed delay damages could never be “due” for purposes of a VSOC. The Supreme Court rejected this reasoning, explaining that a dispute over the amount owed is not the same as the failure of a condition precedent and that a disputed amount may still be “due” even if undetermined. Similarly, the Court of Appeals had characterized the forfeiture language as “unambiguous” and mandating total forfeiture, while the Supreme Court found the language ambiguous and limited forfeiture to the Act’s statutory remedies.

Construction professionals should take note of several key developments. Subcontractors may now include disputed delay and disruption damages in their VSOCs, so long as the claimed amounts represent costs for labor, materials, equipment, or other supplies used in the prosecution of the work. Purely consequential damages, e.g., lost profits or idle time, remain outside the scope of a permissible VSOC. And even if a VSOC is found to be excessive, the penalty is limited to the loss of statutory remedies under the Act. This decision, along with the Court’s denial of rehearing on April 27, 2026, should give construction professionals greater confidence in utilizing the VSOC process on public projects.

By Christian Fernandez and Matthew Racioppo

Buried deep in the fine print of a subcontract, a pay-if-paid clause may be looming. If you are a subcontractor or supplier, misreading these clauses can put your cash flow at risk. If you are an owner or general contractor, drafting them incorrectly can leave you with obligations you never intended — or unenforceable protections you were counting on.

It is more important than ever to understand when pay-if-paid clauses hold up and when they do not, as well as recent litigation and drafting trends. Whether you are negotiating a new agreement, reviewing your standard form contracts, or staring down a payment dispute, understanding how Arizona law treats pay-if-paid clauses is essential. In this article, we break down key considerations, walk through the legal standards Arizona courts apply, and offer practical tips to consider to help you protect your payment rights on the next project.

A pay-if-paid clause conditions a general contractor’s obligation to pay a subcontractor on whether the general contractor first receives payment from the project owner. In other words, if the owner does not pay the general contractor, the general contractor has no obligation to pay the subcontractor. If the owner defaults or goes bankrupt, the subcontractor risks receiving nothing, or at the very least faces a payment dispute. For general contractors, these clauses help manage the financial risk of owner non-payment. For subcontractors, they can create serious cash-flow problems.

The difference between a “pay-if-paid” clause and a “pay-when-paid” clause often comes down to just a few words. A pay-when-paid clause concerns the timing of payment: the general contractor remains obligated to pay the subcontractor for completed work. If the owner never pays, the general contractor’s duty to pay the subcontractor is not extinguished; it is merely delayed. After a reasonable time passes, the subcontractor can pursue payment from the general contractor regardless of whether the owner has come through.

A pay-if-paid clause, by contrast, operates as a condition precedent. If the condition is not satisfied — meaning the owner does not pay the general contractor — the subcontractor’s right to payment may never ripen.

Pay close attention to the specific language when determining which category a clause falls into. Words like “conditioned upon,” “only if,” and “condition precedent” tend to signal a pay-if-paid provision. Phrases like “within thirty days of receipt” or “payable upon receipt from the owner” are more commonly associated with pay-when-paid clauses. But these are guidelines, not bright-line rules — courts will look at the contract as a whole when drawing the distinction.

While Arizona courts have not definitively ruled on this question, significant arguments cast doubt on the enforceability of pay-if-paid provisions. These provisions remain hotly contested and frequently trigger payment disputes.

Whether a pay-if-paid clause creates a valid “condition precedent” — a requirement that must be satisfied before any payment obligation arises — is frequently the central disputed issue. For example, in L. Harvey Concrete Inc. v. Argo Construction & Supply Co., 189 Ariz. 178 (Ct. App. 1997), the court explained that conditions precedent are “not favored in the law.” The court reasoned that for a pay-if-paid provision to be enforceable, the contract’s language must demonstrate the parties’ “unequivocal intent that the obligation be paid” in a particular manner.

The takeaway: the critical question is whether the contract language is sufficiently clear and unambiguous to establish that the owner’s payment is an express condition precedent to the general contractor’s payment obligation — not merely a guideline for timing.

Because the contract’s exact language is critical, many commonly used pay-if-paid clauses may not be enforceable under existing Arizona standards, even if they are not categorically prohibited. Enforceability can also depend on the broader context surrounding the contract and the parties’ course of dealing. Arizona courts may consider factors such as the relative bargaining positions of the parties, whether the clause was negotiated or buried in boilerplate, and whether enforcing the clause would produce an unconscionable result under the circumstances. The bottom line: whether a particular pay-if-paid clause will be enforced in a given dispute is a fact-specific inquiry, and parties on both sides should approach these provisions with eyes wide open.

After the L. Harvey decision, Arizona’s Prompt Pay Act (A.R.S. § 32-1183(A)) was enacted, providing that a contractor or subcontractor who performs work under a construction contract is entitled to prompt payment. Some argue this statute leaves no room for pay-if-paid clauses because it contains no exception permitting waiver of the right to prompt payment. Others counter that freedom of contract is a core principle in Arizona, and that commercial parties should be free to allocate risk by agreement.

This legal question could be resolved in several ways. Arizona courts could follow California, which prohibited pay-if-paid clauses as against public policy, while still allowing pay-when-paid clauses. Alternatively, courts could hold that pay-if-paid clauses are enforceable only when they meet the strict condition-precedent requirements under L. Harvey — a standard many standard-form clauses would likely fail. Regardless of how this issue is resolved, enforceability today depends on the specifics of the case. Parties entering into or enforcing these provisions should consult an attorney.

For everyone in the payment chain, the practical takeaway is straightforward: know which type of clause is in your contract before you sign it, and understand the consequences. Subcontractors and suppliers should carefully evaluate pay-if-paid language and consider negotiating for pay-when-paid provisions — or other contractual protections — wherever possible. General contractors and owners should ensure their contracts clearly reflect their intended risk allocation. A few words of ambiguity can turn a provision you were relying on into one that works against you.