January 2026
Article by: Lamb McErlane attorneys James Merkins and Ashley Blackburn.

Over the past year, James and Ashley represented numerous contractors confronting a recurring pattern of issues: work performed and costs incurred, followed by delayed or denied payment and often escalating into threats of termination or inflated back charges.

The anonymized matters summarized below highlight strategies that have successfully moved construction disputes toward resolution, with an emphasis on practical outcomes. In each matter, the turning point was not brute-force litigation, but early positioning, contractual leverage, and demonstrating readiness to act.

1.Electrical Contractor: Enforcing Change Order Payment Through Contractual Leverage (New Jersey)

In a New Jersey matter, an electrical contractor faced pressure to accelerate work to meet an owner-preferred deadline. The general contractor initially agreed to a change order for the accelerated work, but delayed payment and later tried to renegotiate the terms.

We advised the contractor to stand firm and threaten demobilization if the change order was not paid as agreed. Faced with that leverage, the general contractor became more reasonable and paid the vast majority of the change order without the need for litigation.

Key takeaway: Contractual leverage, particularly demobilization rights, often resolves payment disputes without litigation when used decisively.

2. Excavation Contractor: Nonpayment and Alleged Back Charges After Leaving the Job (Pennsylvania)

In a Pennsylvania matter, an excavation contractor stopped work after extended nonpayment. The general contractor claimed it had not yet been paid by the owner and later asserted the replacement excavator’s costs exceeded the amount owed.

A suit was filed in the Montgomery County Court of Common Pleas. The case involved prolonged discovery and aggressive litigation tactics aimed at delay and cost escalation.

After sustained pressure and development of the factual record, the general contractor and owner ultimately reassessed their exposure and agreed to a settlement.

Key takeaway: “Pay-when-paid” arguments and inflated completion cost claims often lose force once subjected to discovery and scrutiny.

3.Excavation Contractor: Termination Used to Avoid Paying Change Orders (Pennsylvania)

Another Pennsylvania dispute arose after an excavation contractor encountered significant rock removal that was not contemplated in the base scope. The contractor submitted change order requests, which the general contractor refused to pay.

Rather than negotiating, the general contractor terminated the contractor for alleged schedule issues without providing a meaningful notice of breach or opportunity to cure. The general contractor then advanced an aggressive interpretation of the contract to justify the termination and shift responsibility for subsurface conditions.

Suit was filed in the Lancaster County Court of Common Pleas. After defeating early motion practice and proceeding into document discovery, the matter resolved shortly before depositions were to be taken.

Key takeaway: Termination without proper notice and opportunity to cure, particularly when used to avoid paying legitimate change work, creates significant risk for general contractors.

4. Waste Hauler: Payment Disputes on Construction Projects (New Jersey)

A waste hauler providing dumpsters and hauling services on multiple construction projects was not paid in a timely manner. New Jersey lien rights were preserved, and repeated written demands were sent to the responsible parties.

Despite those efforts, payment was still delayed. When a draft complaint, prepared and ready for filing, was circulated, the owner’s posture changed and meaningful negotiations followed. The matter ultimately resolved on favorable terms without full litigation.

Key takeaway: For site services like hauling and dumpsters, preserving lien rights and demonstrating real litigation readiness can resolve stalled negotiations.

5. HVACR Contractor: Service, Maintenance, and Licensing Issues
(New Jersey)

A large HVACR contractor faced repeated nonpayment on maintenance and service work. Rather than immediately filing suit, we sent targeted demand letters, asserted lien rights where applicable, and followed up with additional correspondence and calls. All four disputed accounts were paid in full without litigation.

In addition, we assisted the same contractor with New Jersey plumbing and HVACR licensing and compliance issues to ensure ongoing eligibility to perform work in the state.

Key takeaway: For service and maintenance contractors, early, persistent enforcement of payment rights, combined with regulatory compliance, can resolve disputes quickly and avoid unnecessary litigation.

6. Excavation Contractor: Defense Against Aggressive Supplier Claims and Coordinated Settlement (Pennsylvania)

We defended an excavation contractor against aggressive supplier disputes, including personal guaranty claims brought against the contractor’s owner. The supplier pursued these claims in court.

While vigorously defending against the supplier, we concurrently sued the general contractor for payment. By keeping the supplier litigation active and progressing, we timed the settlement with the general contractor to provide funds that ultimately enabled the excavation contractor to settle with the supplier on favorable terms.

Key takeaway: Coordinating multiple disputes and leveraging settlements from one party can be an effective strategy to resolve complex, interrelated claims.

7. Residential HVAC Contractor: Mechanics Lien Enforcement and Defense (Pennsylvania)

A residential HVAC contractor received half payment upfront for an installation but was not paid the balance after the general contractor disappeared. We assisted with filing a mechanics lien on the owner’s property.

The owner hired counsel to file a petition to strike the lien, claiming the general contractor had been paid in full. We contested the petition and successfully defended the lien. Subsequently, the owner retained experienced construction counsel, and we negotiated a settlement that satisfied our client.

Key takeaway: Vigorous enforcement and defense of mechanics liens, even against aggressive challenges, can protect contractor rights and help secure favorable settlements.

8. Residential General Contractor: Contract Drafting and Risk Management (Pennsylvania)

We assisted a residential general contractor by drafting new general contracts with homeowners that comply with the Pennsylvania Home Improvement Consumer Protection Act. Additionally, we drafted subcontract agreements with subcontractors tailored to the company’s operational needs.

We also provided advice on terminating a concrete subcontractor in a manner designed to minimize the risk of future liability and claims.

Key takeaway: Proactive contract drafting and risk management advice can prevent disputes before they arise and protect contractors in difficult situations.

Key Takeaways for Contractors:

Construction disputes often turn on timing, documentation, and leverage, not just who is technically “right.” Early, strategic advice can frequently make the difference between resolution and years of unnecessary litigation. In many cases, the contractor’s greatest risk was not the dispute itself, but waiting too long to assert rights or document leverage as positions hardened.

If you are dealing with nonpayment, disputed change orders, or a threatened termination, obtaining counsel early can preserve options and improve outcomes.

Our Practice:

Our practice focuses on representing contractors, subcontractors, suppliers, design professionals, and owners in payment and dispute-related matters, including:

• Mechanics’ liens and bond claims (PA/NJ/DE);
• Nonpayment and delayed payment disputes;
• Change order and extra work claims;
• Termination for default and wrongful termination;
• Notice of breach and opportunity to cure;
• Project exit strategy and demobilization; and
• Construction-related employment, regulatory, and licensing issues.

Our work delivers the same high-level, large-firm construction litigation and counseling typically provided by national firms, but in a more efficient and cost-effective manner, with direct partner involvement and practical, business-focused decision-making throughout.

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 James J. Merkins is a partner at Lamb McErlane who has advised subcontractors and contractors for over 20 years. Jim focuses his practice in commercial litigation, construction law, and general business matters. Jim can be contacted at jmerkins@lambmcerlane.com or by phone at 610-701-4413.

 Ashley N. Blackburn is an associate at Lamb McErlane who focuses her practice on commercial litigation with a special focus in construction law. Ashley can be contacted at ablackburn@lambmcerlane.com or by phone at 610-549-4670.

*This article is for educational purposes only and is not intended to be legal advice. If you require legal advice on this topic or have questions, please contact James Merkins or Ashley Blackburn.