MILLER INSULATION, Co., a North Dakota corporation, Plaintiff, v. BEATRICE BIODIESEL, LLC, a Nebraska limited liability company, and RYAN & ASSOCIATES, Inc., an Iowa corporation, Defendants., 2009 U.S. Dist. LEXIS 105085

Summary

The instant contract dispute was governed by Iowa law. The question presented was the enforceability of the pay-if-paid provision in the contract. The contractor contended that because it stopped receiving payments from the project owner, it had no obligation to pay the subcontractor the remaining sums the subcontractor was owed for its work on the project. The court granted the contractor's motion for summary judgment. There were no express constitutional or statutory prohibitions to enforcement of pay-if-paid provisions under Iowa law. The subcontractor argued, however, that Iowa statutes and case law indicated that Iowa had a public policy against the enforcement of such clauses. The court found no merit to the argument. In its Grady decision, the Iowa Supreme Court did not hold that a provision which expressed an unambiguous condition precedent to payment or explicitly shifted the risk of owner nonpayment to the subcontractor was contrary to Iowa public policy. Rather, it indicated...