Point Contracting, LLC v. Urban Investment Research Corporation et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
POINT CONTRACTING, LLC,
Plaintiff,
v. No. 2:24-cv-00562-SMD-KRS
URBAN INVESTMENT RESEARCH
CORP. and WEST ROSWELL NM, LLC,
Defendants.
ORDER DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
THIS MATTER is before the Court on Plaintiff’s motion for summary judgment. Doc.
61 (“Pl.’s Mot. for SJ”). Defendants filed their response and Plaintiff replied. Doc. 63 (“Defs.’
Resp.”); Doc. 66 (“Pl.’s Reply”). Upon careful consideration of the record, relevant law, and the
parties’ briefing, the Court DENIES Plaintiff’s motion.
BACKGROUND
The present dispute arises from a construction project in Roswell, New Mexico. In the
spring of 2022, Defendants Urban Investment Research Corporation (“UIRC”) and West Roswell
NM LLC (collectively “Defendants”) hired Point Contracting (“Plaintiff”) to perform a variety of
improvements on a building the Bureau of Land Management (“BLM”) leases. Relations between
the parties began to deteriorate beginning in 2023; Defendants were dissatisfied with Plaintiff’s
work, Plaintiff was upset over Defendants’ failure to pay for the work it had performed, and so on.
This cycle of rebuked payment requests followed by punch lists of corrections never reached a
resolution. Instead, Defendants retained over $80,000, asserting that they were forced to spend
more than that to correct Plaintiff’s purported shoddy work, and Plaintiff sued, alleging that
Defendants breached their contract and New Mexico state law.
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Plaintiff filed suit on July 25, 2023, in the Fifth Judicial District Court, County of Chaves,
State of New Mexico. Doc. 1, Ex. 2 at 3. Plaintiff asserts four claims—breach of the New Mexico
Prompt Payment Act, breach of contract as to the tenant improvement (“TI”) Project, breach of
contract as to the shell project, and failure to uphold the implied covenant of good faith and fair
dealing. Id. at 7–8. Defendants removed the case to federal court and counterclaimed for breach
of contract, alleging that Plaintiff “walked off the project without completing all of the many
defective and incomplete construction work set forth in the GSA’s final punch list.” Doc. 1; Doc.
17 ¶ 7. The parties proceeded through discovery. Plaintiff now moves for summary judgment on
the New Mexico Prompt Payment Act Claim, Defendants’ counterclaim, and the breach of contract
claims. See Pl.’s Mot. for SJ at 16, 18, and 23.
STATEMENT OF MATERIAL FACTS
I. The Contract
Defendant West Roswell owns 2909 W. 2nd Street, Roswell, NM 88201 (the “Space”).
Pl.’s Mot. for SJ ¶¶ 1, 7. The United States General Services Administration (“GSA”) leases the
Space for the United States Bureau of Land Management’s (“BLM’s”) use. Id. ¶ 3. Defendants
hired Plaintiff to perform construction services on the Space. Id. ¶¶ 3–4. On April 7, 2022, the
parties executed two work agreements (the “Contracts”), memorializing their contractual
obligations and defining Plaintiff’s scope of work. Id. ¶ 7. One contract was for shell
improvements—installing door hardware, adding insulation, updating the plumbing space, and
performing electrical work—and one contract was for TI—adding security features, fire
suppression, and updating the lighting. Id. ¶ 5. Under the Contracts, the Owner must pay Plaintiff
the fixed amount specified in the attached “Description of Work.” Doc. 61, Ex. 2 at 92. The fixed
amount for the shell improvements was $1,666,566.46 and the fixed amount for the tenant
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improvements was $1,837,189.34. Id. at 14, 24. The terms and conditions section specify that
Defendants must pay Plaintiff undisputed amounts within 30 days of receiving an invoice, but may
“withhold amounts that Owner disputes are payable, pending resolution of the dispute.” Id. at 10.
The Contracts further provide that Plaintiff may continue performing corrections for up to
“one year after completion of the Work.” Pl.’s Mot. for SJ ¶ 14; Doc. 61, Ex. 2 at 4. The Contracts
do not define “completion.” However, the attached Schedule of Work lists the “final milestone”
as “Substantial Completion/Acceptance.” Pl.’s Mot. for SJ ¶ 11; Doc. 61, Ex. 2 at 9; Defs.’ Resp.
¶ D. Work that is performed after completion is called “warranty work.” Doc. 61, Ex. 1 (“Warden
Dep.”) 110:15–112:1. If the owner notifies the contractor of a defect and the contractor must repair
its work within five days of receiving notice. Doc. 61, Ex. 2 at 11. If the contractor fails to do so,
the Owner has the right to “arrange for another contractor to perform the repair, and the Contractor
shall pay amounts due to the separate contractor.” Id.
The parties also attached the lease agreement between GSA and Defendants. The lease
states that the Government “shall accept the space only if the building shell and TI conforming to
this lease and the approved [design intent drawings (“DIDs”)], if applicable, is substantially
complete.” Doc. 63, Ex. 1 at 29. The Space is substantially completed “only if the Space may be
used for its intended purpose, and completion of remaining work will not interfere with the
Government’s enjoyment of the Space.” Id. at 30. Once the Government accepts the Space, that
acceptance is “final and binding . . . with respect to conformance of the completed TIs to the
approved DIDs with the exception of items identified on a punch list generated as a result of the
inspection[.]” Id.
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II. The Project
Plaintiff began working on the project in spring of 2022. In January of 2023, GSA
performed an inspection and provided Plaintiff with a punch list of items that needed to be
completed. Pl.’s Mot. for SJ ¶ 17. GSA completed a second inspection on February 22, 2023, and
sent another punch list to Plaintiff. Id. ¶ 18. Plaintiff claims that it completed both punch lists.
Id. ¶¶ 17–18. Defendants assert that Plaintiff failed to complete work from either punch list and
that “Plaintiff was not even present in New Mexico” in February or March of 2023. Defs.’ Resp.
¶ 18.
On February 28, 2023, five days after receiving the second GSA punch list, Nicole Brown,
Plaintiff’s operations manager, sent Joe Vadenbrink, Defendant UIRC’s project manager, a final
invoice for $145,972.27 (“Draw 7”).1 Id. ¶ 19; Defs.’ Resp. ¶¶ 19, O. The invoice states that it is
for all services related to the Shell and TI Final, with $10,000 reserved for warranty work. Doc.
61, Ex. 2 at 101. Kevin Ellis, general manager at Point Contracting, confirmed that the February
28th invoice sought “full payout,” meaning a “hundred percent of the change orders and contract
amounts.” Doc 61, Ex. 4 (“Second Ellis Dep.”) 193:7–13.
On March 1, 2023, Vandenbrink emailed Plaintiff with a list of incomplete items from the
January inspection. Defs.’ Resp. ¶ 21. On March 3, 2023, Bryan Crot, senior project manager at
GSA, sent an updated version of the February punch list. Id. The email noted that for Phase 1
acceptance Plaintiff needed to address the sewer odor in the engine bay, the exhaust fans in the
shower areas not turning on, and missing electrical drops in the office area. Pl.’s Mot. for SJ ¶ 26;
1 The exhibits attached to Plaintiff’s motions include two invoices—one for the TI work ($64,226.39) and one for the
Shell Work ($145,972,27)—which total $210.198.66. Doc. 61, Ex, 2 at 101–02. Both are dated February 28, 2023.
Id. It appears that Brown sent both invoices to Vandenbrink, but is unclear why Plaintiff only refers to the shell final
in its UMF.
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Doc. 63, Ex. 6 at 2. The attached inspection report identified itself as a “progress inspection” and
noted that “additional inspections” were required. Id.
On April 7, 2023, Vandenbrink emailed a few individuals from GSA about the status of the
project. Vandenbrink attached a list of items that needed to be completed “to reach a level of
completion agreed to by all parties and to be inspected on 4/19/2023 and 04/20/2023 by BLM and
GSA representatives and accompanied by the Lessor Project Manager.” Doc. 63, Ex. 3 at 153. “It
is understood that during the 04/19 and 04/20 inspection that if any additional item(s) found during
that site review, within the scope of the Tenant Improvement, meet the level of criteria that would
preclude ‘Substantial Completion’ and subsequently ‘Base Acceptance’ they will be evaluated and
taken into final consideration for action and resolution.” Id.
On April 10, 2023, Brown followed up with Vandenbrink about Draw 7’s status. Pl.’s Mot.
for SJ ¶ 28; Doc. 61, Ex. 2 at 61. Vandenbrink told Plaintiff that Defendants were hesitant to pay
the invoice “given the size of the remaining punchlist.” Pl.’s Mot. for SJ ¶ 28. Plaintiff replied
that Defendants are “obligated to pay per the contract and New Mexico Statute regardless of the
completion of the final punch list.” Id. ¶ 29. VandenBrink shared that he spoke with Defendants
and the Draw 7 funds would be released “once the punch list items are squared away.” Id. ¶ 29.
That same day, Don Davidson, a GSA inspector, emailed Vandenbrink and said that he would be
completing an inspection “to determine if the space is substantially completed.” Doc. 63, Ex. 3 at
18.
Plaintiff made itself a punch list (unlike the previous ones which Defendants prepared) on
April 11, 2023. Defs.’ Resp. ¶ 31; Pl.’s Reply ¶ FF. Plaintiff purports to have finished that work
on April 16, 2023. Pl.’s Mot. for SJ ¶¶ 31–32; Doc. 61, Ex. 2 at 31. Defendants dispute that
Plaintiff “completed the referenced punch list on or before April 16, 2023.” Defs.’ Resp. ¶ 32.
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Ellis notified Defendants that Plaintiff completed this list on April 17, 2023. Doc. 61, Ex. 2 at 81;
Defs.’ Resp. ¶ 31. Brown then sent Vandenbrink an invoice for $13,586.06 related to the change
orders. Doc. 61, Ex. 2 at 40.
On April 19th and 20th, Davidson completed a final inspection of the Space on behalf of
GSA. Davidson Aff. ¶¶ 4–5, 16; Defs.’ Resp. ¶ P. No representatives from Point Contracting
attended the inspection. Defs.’ Resp. ¶ 14. Vandenbrink attended the second day of the inspection.
Doc 63, Ex. 3 at 34. Based on that inspection, Davidson created a final punch list of items (“Final
GSA Punch List”) that needed to be completed. Id. ¶ 17. Davidson identified 139 defective items.
See Doc. 63, Ex. 14 (“Davidson Inspection”) at 24–30. Among the major defects, he noted that as
many as 50% of the bolts were missing on some toilets, that thermostats were either missing or in
the wrong location throughout the space, and that the floor was unlevel. Accordingly, his
Conditional Survey Report stated that he made “No Recommendation,” meaning that he “did not
make a recommendation that the Project was substantially complete.” Id. ¶ 21; Doc. 63 Ex. 3 at
34. Plaintiff received the Final GSA Punch List on May 8, 2023. Pl.’s Reply ¶ RR.
The Government tenants signed a lease for the Space on April 20, 2023. Id. ¶ 34; Doc. 63,
Ex. 2 at 3. However, Eric Warden, the Chief Operations Officer of UIRC, testified that the
Government tenants did not begin to pay rent until June 27, 2023. Warden Dep. 157:12–22. At
the end of April, Brown sent four emails to Vandenbrink about Draw 7. Id. ¶ 37. On April 27,
2023, Ellis also sent an email to Vandenbrink and informed him that Point Contracting had
“completed the agreed punch list” and expected prompt payment. Pl.’s Mot. for SJ ¶ 39; Doc. 61,
Ex. 2 at 36. He went on to say that if Vandenbrink agreed with the remaining Point responsibilities
he would “begin reaching out to [their] subcontractors to make corrections as noted.” Doc. 61,
Ex. 2 at 36. VandenBrink replied he agreed that Plaintiff had “accomplished the punch list
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provided” and that payment was due.” Pl.’s Mot. for SJ ¶ 39. However, he would need to re-
confirm with Defendant UIRC “that nothing outstanding is significant enough to be perceived as
a reason for non-payment.” Doc. 63, Ex. 2 at 36.
Brown reached out to Warden on May 12, 2023, about the unpaid invoices. Doc. 63, Ex.
16 at 7. Ellis responded, “I could be wrong, but it looks like you are looking for 100% payment
for the project? The project is not finished yet.” Id. Brown emailed Ellis back and said that the
project was “complete according to the completed punchlist approved by your project manager.”
Id. at 6. Brown resent Draw 7. After reviewing the invoice, Warden told Brown that though he
acknowledged that Plaintiff sought $233,784.73, Defendants were “looking to keep retainage of
100,000.” Pl.’s Mot. for SJ ¶ 41; Doc. 63 Ex. 16 at 5. Ellis then stepped into the conversation.
He rebuffed Warden’s request for retainage, writing “we have completed a final punch list” and
insisting that Point should be paid in full. Doc. 63, Ex. 15 at 4. Warden vehemently disagreed.
He told Ellis that the project was “not close to complete” and that “62 items need to be addressed.”
Pl.’s Mot. for SJ ¶ 57. Defendants ultimately retained $75,000. Id. ¶ 42. Plaintiff anticipated that
these funds would be released once the Final GSA Punch List was complete. Id. ¶ 43.
Plaintiff believes they finished the Final GSA Punch List on May 25, 2023. Pl.’s Mot. for
SJ ¶ 44. Defendants counter that Plaintiff “was far from completion of the Final GSA Punch List
items on May 25, 2023.” Defs.’ Resp. ¶ 44. Indeed, Defendants put forth that Plaintiff was
“completely absent” from the Project “in February 2023, March 2023, 80% of April 2023 and 80%
of May 2023.” Id. ¶ H.
On June 15, 2023, Defendants’ property manager, Lisa Gutierrez, emailed Plaintiff
regarding a few pending items. Id. ¶ 46. Plaintiff responded and explained that all of the listed
issues had either already been addressed or were outside of Plaintiff’s assigned scope of work. Id.
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Gutierrez never responded. Id. ¶ 47; Pl.’s Mot. for SJ ¶ 47. In her affidavit, Gutierrez explains
that, in addition to the items listed in her email, “[t]here was still significant other work on that
GSA Final Punchlist that needed to be done on June 15, 2023, but UIRC had hired or decided to
hire other contractors to do that work instead of Point.” Doc. 63, Ex. 8 (“Gutierrez Aff.”) ¶ 18;
Defs.’ Resp. ¶ 46. Point Defendants allege that on June 27, 2023, “the Owner’s new repair and
replacement contractors completed much of the work on the GSA Final Punch List.” Defs.’ Resp.
¶ XX. For instance, Defendants state that “the floors that were within Point’s scope of work were
significantly unlevel” and that Point “failed to properly install the grounding tower at the Property
. . . Plaintiff’s electrical subcontractor even installed portions of it upside down.” Id. ¶¶ X–Y.
They estimate that they paid more than $100,000 to repair and completion contractors. Doc. 17 at
33; Doc. 61, Ex. 2 at 45; see, e.g., id. at 49 (invoice to Code Electric for $114,908.94). Plaintiff
rebukes this assertion. They state that “BLM changed the specifications for the tower grounding,
but Defendants never executed a change order for this work.” Pl.’s Reply ¶ Y.
Defendants contend the project was completed on July 19, 2023. Pl.’s Mot. for SJ ¶ 51.
Plaintiff counters that the project was complete on April 20, 2023, and the work it performed after
that date was warranty work. Id. ¶ 52. Plaintiff asserts that Defendants owe an outstanding balance
of $88,586.06—$75,000 worth of retainage and $13,586.06 from an unpaid change order. Id. ¶ 54;
Second Ellis Dep. 221:7–16.
Defendants admit that they did not pay Plaintiff but emphasize that they provided
accounting on the amount spent on repair and completion contracts and those expenses exceeded
$88,586.06. Defs.’ Resp. ¶¶ 53–54, YY. Defendants highlight that during the course of discovery,
Plaintiff offered “little to no evidence that any of its subcontractors were performing any
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substantive work on the various punch lists at any time in 2023” and provided “no documents or
information that it paid any of its subcontractors in 2023.” Id. ¶¶ 49, G.
LEGAL STANDARD
Summary judgment is appropriate if “there is no genuine issue as to any material fact and
. . . the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). The
moving party bears the burden of “informing the district court of the basis for its motion, and
identifying those portions of [the record] which it believes demonstrate the absence of a material
fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once this requirement is met, the non-
movant can defeat summary judgment by showing that there is a genuine dispute of material facts.
Id. The non-movant’s response must “set forth specific facts by reference to affidavits, deposition
transcripts, or other exhibits to support the claim.” Serna v. Colo. Dep’t of Corr., 455 F.3d 1146,
1151 (10th Cir. 2006). The Court views the evidence and draws any inferences in the light most
favorable to the party opposing summary judgment. “The dispute about a material fact is genuine
if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
Walkingstick Dixon v. Okla. ex rel Regional Univ. Sys., 125 F.4th 1321, 1333 (10th Cir. 2025).
DISCUSSION
I. Plaintiff’s Prompt Payment Act Claim
New Mexico’s Prompt Payment Act (“PPA”) obligates contractors to promptly pay their
subcontractors and imposes penalties if they fail to do so. N.M. Stat. Ann. §§ 57-28-5(C), 57-28-
11 (2025). The PPA instructs that “all construction contracts shall provide that payment for
amounts due shall be paid within twenty-one days after the owner receives an undisputed request
for payment.” Unified Contractor, Inc. v. Albuquerque Hous. Auth., 400 P.3d 290, 304 (N.M. Ct.
App. 2017). To dispute an application for payment in good faith, the owner must “notify the
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[contractor] of the invoice within seven days of receipt in what way the invoice is improper[ ].”
Id. A dispute occurs when the owner “affirmatively raise[s] questions or challenges to the
application for payment.” White Sands Constr., Inc. v. City of Las Cruces, 534 P.3d 1015, 1023
(N.M. Ct. App. 2023). If a contractor or owner fails to pay the amount due within 21 days of
receiving an invoice, they must pay interest computed at one and one-half percent of the amount
due, per month, until payment is issued, and the court may award court costs and reasonable
attorney’s fees. N.M. Stat. Ann. § 57-28-5(C); UNS Energy Corp. v. Shiver Constr. Co., No. 1:22-
CV-00087-KG-LF, 2022 WL 17581450, at *4 (D.N.M. Dec. 12, 2022).
Plaintiff alleges that Defendants failed to properly dispute Draw 7 within the prescribed
seven-day window. Pl.’s Mot. for SJ at 16. “Defendants did not acknowledge Draw 7 until April
10, 2023—41 days after they received it” and “never sent any communication labeled as ‘Notice
of Dispute’ to Draw 7.” Id. Plaintiff views these facts as undisputed. Id. Defendants articulate
two primary defenses. First, Defendants argue that Draw 7 was improper because, as of February
28, 2023, “Plaintiff had not obtained substantial completion which would warrant its entitlement
to full payment.” Defs.’ Resp. at 21. Second, Defendants maintain that the punch lists sent on
March 1 (from Vandenbrink to Plaintiff) and March 3 inspection (from GSA to Plaintiff) effectively
disputed Draw 7. Id. at 24. They urge that Plaintiff received “two separate communications that
expressly disputed Plaintiff’s entitlement to final payment and detailed what work still needed to
be done at that time.” Id. at 25. Plaintiff dismisses the first contention as distracting from the core
issue—that it was incumbent upon Defendants to explicitly communicate that disagreement.
Plaintiff similarly argues that the inspection reports are inconsequential to its PPA claim because
they did not “affirmatively raise questions or challenges to the application for payment.” Pl.’s
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Mot. for SJ at 17. Plaintiff maintains that they are entitled to statutory interest under § 57-28-5 of
the PPA. Id.
A. Draw 7 Sought Final Payment and is Therefore Governed by Section 57-28-8 of the Prompt
Payment Act.
The Court begins with the question of whether Draw 7 was premature. Plaintiff,
Defendants, and the record are unequivocal that Plaintiff intended Draw 7 as the final invoice for
the project. Plaintiff admits that Draw 7 “sought final payment” and that “there is no dispute that
Draw 7 properly reflected the final amount due to Plaintiff.” Pl.’s Mot. for SJ at 18, 24 n.9.
Brown’s email to Vandenbrink stated that the invoice was for “final billing” and at his deposition,
Ellis confirmed that Draw 7 sought “full payout,” meaning a “hundred percent of the change orders
and contract amounts.” Defs.’ Resp. at 21; Second Ellis Dep. 193:7–13.2
Defendants’ primary argument is that “Plaintiff was not entitled to final payment until the
GSA approved Plaintiff’s work on the Final GSA Punch List.” Defs.’ Resp. at 22. The parties
then quarrel over whether the Government tenant’s acceptance of the Space was a necessary
condition for substantial completion and, in turn, for Draw 7 to be valid. The Court does not wade
into that dispute.
Instead, the Court finds that both parties overlook a key provision of the PPA governing
applications for final payment. Section 57-28-8 (entitled “Final Payment”) states that:
Ten days after certification of completion, any amounts remaining due the
contractor or subcontractor under the terms of the contract shall be paid upon
presentation of the following: (A) a properly executed release and duly certified
voucher for payment; (B) a release, if required, of all claims and claims of lien
against the owner arising under and by virtue of the contract other than such claims
2 The Court notes that in a later email exchange between Brown and Warden, Brown states that Plaintiff “didn’t request
100% payment.” Doc. 63, Ex. 16 at 6. However, Plaintiff does not at any point rely on this email to argue that Draw
7 was not a “final invoice.” To the contrary, Plaintiff repeatedly and consistently refers to Draw 7 as a request for
final payment. Pl.’s Reply at 5 (“In short, final GSA approval was not a prerequisite to final invoicing under the
Contracts.”); id. at 3 (“Plaintiff did complete a punch list prepared and generated by the GSA before it submitted its
final invoice.”); Doc. 14 (Second Am. Compl.) ¶ 78 (alleging Defendants failed to pay the final invoice (Draw 7) in
full).
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of the contractor, if any, as may be specifically excepted by the contractor or
subcontractor from the operation of the release in stated amounts to be set forth in
the release; and (C) proof of completion.
N.M. Stat. Ann. § 57-28-8 (2025). Section 57-28-8 places responsibility upon the contractor or
subcontractor who is seeking final payment to offer the requisite documents to the payor. The
statute specifies that final payment will be made “upon presentation” of the three enumerated
items. Black’s Law Dictionary defines presentation as “[t] he delivery of a document to an issuer
or named person for the purpose of initiating action under a letter of credit.” Presentation, Black’s
Law Dictionary (12th ed. 2024). The Oxford English Dictionary defines presentation as “the action
of delivering, giving, etc.” and “the action of offering something for acceptance.” Presentation,
Oxford Eng. Dictionary (2007). Plainly read, section 8 makes clear that the contractor must
“deliver” or “offer” the requisite documentation to receive final payment.
No court has interpreted or cited § 57-28-8. But its plain text appears to encompass all
requests for final payment, including Draw 7. Plaintiff, as the party seeking final payment, bore
the burden of providing Defendants with a properly executed release, a release of all claims and
liens, and proof of completion. Plaintiff presents no evidence that it complied with, or was even
aware of, § 57-28-8. In fact, it would have been impossible for Plaintiff to do so since final
payment is only appropriate after certification of completion, Draw 7 was sent on February 28, 2-
23, and Plaintiff concedes that the undisputed evidence “shows that Plaintiff substantially
completed the Project no later than April 2023.” Pl.’s Mot. For SJ at 24; Pl.’s Reply ¶ AA; § 57-
28-8. The Court therefore concludes that Draw 7 was a premature and invalid request for final
payment.
B. Plaintiff’s Failure to Comply with Section 57-28-8 Precludes Recovery of Statutory
Penalties Under Section 57-25-5.
Still, the statute’s text does not settle how a contractor’s failure to comply with § 57-28-8
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interacts with an owner’s duty to dispute invoices under § 57-28-5. Put differently, the present
case asks whether a contractor can shirk its duties under the final payment provision, send a final
invoice, and saddle the owner with disputing the request, or else incur statutory interest? Likely
not.
When analyzing multiple provisions within a statutory scheme, the Court must consider
the scheme holistically, “construing each section or part in connection with every other part or
section so as to produce a harmonious whole.” State v. Baca, 104 P.3d 533, 536 (N.M. Ct. App.
2004). The Court should “strive to ensure that no part of the statute is rendered surplusage or
superfluous.” State v. Adams, 503 P.3d 1130, 1133 (N.M. 2021). Section 57-28-5 makes it
incumbent upon the owner to dispute an “improperly completed invoice” within seven days of
receipt. N.M. Stat. Ann. § 57-28-5 (2025). The section does not distinguish between invoices for
final payment and all other invoices. A broad reading would suggest that a premature final
payment invoice is an “improperly completed” invoice to which the owner’s duty to dispute
attaches. That is Plaintiff’s view; that “[i]f Defendants thought the invoice was premature, it was
incumbent upon them to ‘affirmatively raise questions or challenges’ within seven days.” Pl.’s
Mot. for SJ at 18. However, that interpretation would erase the contractor’s duty of presentation
under § 57-28-8 and enable contractors to demand final payment at any time without taking the
requisite statutory steps. The Court finds that position untenable. At minimum, the contractor
must attempt to meet § 57-28-8’s requirements to trigger the owner’s duty to dispute.3 Plaintiff
thus cannot recover penalties without first executing its statutory duties.
3 Theoretically, the statute could allow for statutory penalties if a contractor makes a good faith effort to meet § 57-
28-8’s specifications yet errs to some degree and the payor fails to inform the contractor that the invoice is improperly
completed. However, that is not the scenario presented here. Plaintiff has not included any evidence that it presented
the requisite documentation for final payment.
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Cases applying other states’ prompt payment acts affirm this result. In MTR Builders, Inc.
v. Jahan Realty Mgmt. Corp., No. 1 CA-CV 14-0650, 2016 WL 1425797, at *3 (Ariz. Ct. App.
Apr. 12, 2016),4 a contractor sought statutory interest for an unpaid invoice and alleged that the
“Owner never issued a written statement within the terms of the act to notify Contractor it would
not approve the billing.” Id. There, as here, the contested invoice was for final payment. Arizona’s
PPA mandates that a contractor submit its final billing “[o]n final completion of the work.” A.R.S.
§ 32–1129.01(K). Final completion means either (1) when the work “has been completed in
accordance with the terms and conditions of the construction contract,” or (2) the “date of final
inspection and final written acceptance by the governmental body that issues the building
permit.” Id. The Arizona Court of Appeals found that the contractor “could not submit a billing
for Draw 5 before obtaining final approval of the third-party inspector.” MTR Builders, 2016 WL
1425797, at *3. Statutory penalties were therefore unavailable because “under the Prompt Pay
Act, Contractor’s request for payment was premature.” Id.
Similarly, a Missouri court found that a contractor was not entitled to statutory penalties
where the contractor “never presented evidence of a certificate of completion” despite Missouri’s
PPA making final payment dependent upon completion or certification of completion from the
contracting authority. Env’t Prot., Inspection, & Consulting, Inc. v. City of Kansas City, 37 S.W.3d
360, 371–72 (Mo. Ct. App. 2000); Mo. Rev. Stat. § 8.960(8) (2022). Without that documentation,
the contractor “destroyed the submissibility of its case.” Env’t Prot., Inspection, & Consulting, 27
S.W.3d at 371. The court explained that “[b]ecause the late payment interest remedy is a statutory
creation, compliance with the statutory prerequisites is mandatory.” Id.
In line with these cases and the statute’s text, the Court concludes that Plaintiff did not
4 As the only court to consider, or even cite § 57-28-8, the Court looks to other states’ interpretations of their PPA for
guidance.
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adhere to § 57-28-8’s requirements and Defendants were not obligated to dispute Draw 7. Plaintiff
therefore cannot recover statutory penalties for Defendants’ non-payment.
C. Defendants Violated the PPA to the Extent They Withheld Retainage for Work Already
Performed.
The Court now considers whether Defendants violated the PPA when they withheld
retainage in May of 2023. “Retention amounts are a form of security generally retained by the
owner from prior payments due for work previously performed. Authorities have noted that a
retention occurs when the owner retains a percentage from each progress payment as a form of
security against potential mechanics’ liens and as security that the contractor will complete the
work properly and repair defects.” Salsbury Eng’g, Inc. v. Consol. Contracting Servs., Inc., No.
G057832, 2021 WL 791624, at *4 (Cal. Ct. App. Mar. 2, 2021). New Mexico’s PPA previously
permitted an owner to withhold payment in an escrow account if they believed the contracted work
had not been substantially completed. J.R. Hale Contracting Co. v. Union Pac. R.R., 179 P.3d 579,
600 (N.M. Ct. App. 2007) (“Retainage may be held under certain circumstances, and therefore not
paid, until substantial completion of the applicable work, but only ‘if the escrow arrangement
described in Section [57–28–6] of the Retainage Act is used.’” (citing N.M. Stat. Ann. § 57–28–
5(F) (2001)). The New Mexico legislature repealed that provision in 2007. The PPA now prohibits
owners, contractors, and subcontractors from “retain[ing], withhold[ing], or hold[ing] back or in
any other manner not pay[ing] amounts owed for work performed.” § 57-28-5(E).
It is undisputed that Defendants withheld $75,000 from Draw 7 on May 15, 2023. See Pl.’s
Mot. for SJ at 25; Doc. 63, Ex. 16 at 5. However, the PPA’s retainage bar only applies if the owner
withholds funds for “work performed.” It is unclear whether Defendants withheld payment for
work already performed since Draw 7 was a final payment invoice, rather than a progress invoice.
Both the shell and TI invoice simply state that they are for final payment. They do not enumerate
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the cost of work performed, amounts paid to subcontractors, or provide any other details that would
permit the Court to decipher how much Plaintiff expended. Defendants also aver that Plaintiff did
not include any invoices from before Plaintiff offered “little to no evidence that any of its
subcontractors were performing any substantive work on the various punch lists at any time in
2023” and provided “no documents or information that it paid any of its subcontractors in 2023.”
Defs.’ Resp. ¶¶ 49, G. Plaintiff did not submit documentation to rebut these assertions. Pl.’s Reply
¶ 49 (arguing that Defendants failed to properly request this information during discovery).
The circumstantial information in the record is likewise inconclusive. Defendants
represented that the retainage would cover “the scope of work needed to be done to complete the
final GSA Punch List.” Defs.’ Resp. ¶ 20. Warden told Ellis that retainage of $100,000 was “more
than fair right now since most of the work outstanding or rework required may be more than that
in the event Point walks away,” but that he was offering “to pay Point for the work complete.”
Doc. 61, Ex. 2 at 50. Ellis replied that there was “no way” that there was $100,000 worth of work
left for Point. Id. at 51. The emails do not distinguish between TI and shell work, though
Defendants appear to have retained funds solely from the shell contract.
To whatever extent the amount Defendants retained cut into the amount owed for work
already performed, Defendants violated the PPA. See 3 No. 1 Journal of the American College of
Construction Lawyers 5, Survey of Prompt Pay Statutes (“New Mexico does not allow for
retainage to be withheld.”); accord Miller v. N.M. Dep’t of Transp., 741 P.2d 1374, 1376 (N.M.
1987) (“Statutes are to be read in a way that facilitates their operation and the achievement of their
goals.”). However, because the record does not establish whether Plaintiff had performed the
whole of Draw 7 as of May 15, 2023, there is a question of fact as to how much, if any, of the
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retainage was improperly withheld. The Court therefore denies summary judgment on the PPA
claim.
II. Breach of Contract Claims
Plaintiff next seeks summary judgment on its breach of contract claims. A party claiming
breach of contract has the burden of proving the existence of the contract, breach of the contract,
causation, and damages. Cent. Mkt., Ltd. v. Multi-Concept Hosp., LLC, 508 P.3d 924, 935 (N.M.
Ct. App. 2022). A breach occurs when a party fails to perform a duty imposed by an agreement.
Sanders v. FedEx Ground Package Sys., Inc., 18 P.3d 1200, 1208 (N.M. 2008); Kreischer v.
Armijo, 884 P.2d 827, 829 (N.M. Ct. App. 1994).
Plaintiff alleges that “the undisputed evidence shows that Plaintiff substantially completed
the work required of it under the Contract and Defendant never released Plaintiff’s final payment.”
Pl.’s Mot. for SJ at 23. “Defendants’ failure to pay Plaintiff in full, even after (1) the Government
Tenants agreed to retake possession of the Property, (2) Plaintiff completed what Defendants
acknowledged was the final punch list, and (3) Defendants’ project manager stated in writing that
he agreed that Plaintiff’s payment was due,” constituted a breach. Id. at 25–26. They point to the
following contractual provision as the basis for their claim: “Owner shall pay Contractor the fixed
amount . . . as compensation in full for the Work and Contractor’s obligations under the Contracts.”
Id. at 23–24; Doc. 61, Ex. 2 at 18.
Defendants do not effectively respond to this claim. They begin with the note that
“Plaintiff’s Motion contains no prayer relief, so it is unclear what aspect of the pleadings in this
case that it is seeking summary judgment.” Defs.’ Resp. at 32. Defendants then interpret
Plaintiff’s motion as asking for summary judgment on its second claim for foreclosure of its lien
claims and raise an affirmative defense. Id.
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Defendants misapprehend Plaintiff’s motion. Although the Court agrees that Plaintiff
imprecisely requests summary judgment “on its breach of contract claims” without distinguishing
between the three contract counts articulated in its complaint, it disagrees that Plaintiff seeks
summary judgment on its lien claim. Rather, the Court reads Plaintiff’s motion as asking for
summary judgment on all three breach of contract claims and not the lien claim.
Defendants’ misunderstanding does not, however, entitle Plaintiff to summary judgment.
Pl.’s Reply at 10 (arguing that Defendants do not respond to the breach of contracts claim and that
they “have waived any arguments they might have asserted”). The Tenth Circuit has held that a
district court cannot grant summary judgment without making the determinations required by Rule
56. Reed v. Bennett, 312 F.3d 1190, 1193 (10th Cir. 2002). Accordingly, the Court will
independently evaluate whether a genuine dispute of material fact exists over the breach of contract
claims.
A. There is a genuine dispute of material facts regarding whether Plaintiff substantially
completed its work under the contract.
Plaintiff’s breach of contract claims fail because Plaintiff fails to show a violation of the
parties’ contracts. The Contract between the parties includes the Work Agreement and the attached
exhibits, labeled A through C. Doc. 61, Ex. 2 at 8. Plaintiff relies on Section 4 of the Work
Agreement to assert a breach. Plaintiff correctly observes that Section 4 demands that the owner
“pay the fixed amount specified in Exhibit B.” Id. But Plaintiff omits that the Owner “may
withhold amounts that Owner disputes are payable, pending resolution of the dispute, and as
Owner deems necessary to protect itself due to breach of this Agreement or loss or damage arising
out of the Work that is incurred by or sought from Owner.” Doc. 61, Ex. 2 at 10. Moreover, if the
Contractor fails to correct its work after completion, the Owner “may arrange for another
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contractor to perform the repair or replace and Contractor shall pay amounts due to the separate
contractor.” Id. at 11.
It is a basic tenet of contract law that “a writing is interpreted as a whole, and all writings
that are part of the same transaction are interpreted together.” Crow v. Capitol Bankers Life Ins.
Co., 891 P.2d 1206, 1211 (N.M. 1995). “Each word, phrase, and section of a contract should be
analyzed in its context within the contract as a whole so as to realize the intentions of the parties.”
Id. Applying this principle to the present case, the Contracts make plain that Plaintiff is not
unconditionally entitled to final payment even once the project is substantially completed. The
Contracts grant Defendants the right to pass the cost of hiring third-party subcontractors onto the
Plaintiff. Here, Defendants claim they retained various repair and completion contractors to
complete certain scopes of work required to be completed by Plaintiff under the Contracts. Defs.’
Resp. ¶ YY; Doc. 63, Ex. 4 ¶ 44. For instance, Plaintiff was assigned plumbing, electrical and
flooring work. Defendants allege that Plaintiff “failed to properly install the grounding tower,”
never leveled the floors, and performed defective plumbing work. Id. ¶¶ X–Y; see Davidson
Inspection at 8 (noting that grounding is incomplete). This disagreement was explicitly
communicated between the parties. Ellis believed that the final punch list was completed on April
17, 2023, and that “any additional items were and are warranty work.” Doc. 61, Ex. 2 at 81.
Warden countered that, as of mid-May, the work was “not close to complete” and that that the
remaining work was “quite extensive.” Defs.’ Resp. ¶ 41. Defendants had extensive conversations
with the plumbing subcontractor about ongoing issues in the men’s urinals. See Doc. 63, Ex. 13;
see also Warden Dep. 184:6–185:4 (testifying that UIRC hired outside contractors to fix the height
of the sinks and mirrors). It also appears they paid a third-party electrical subcontractor to wrap
up the electrical work and Vandenbrink’s affidavit attests that “the floors that were within Point’s
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scope of work were egregiously unlevel.” Doc. 63, Ex. 4 ¶ 20. As of June 2023, Vandenbrink
stated that “a couple of major items, including but not limited to the unlevel floors and installation
of the grounding tower, were still not done.” Id. ¶ 44. Plaintiff of course offers a different account
of events. They allege that Defendants changed the specifications for the tower grounding without
executing a change order. Pl.’s Reply ¶ Y.
In sum, the record is rife with conflicting evidence as to whether Plaintiff completed its
obligations under the contract and, if not, whether the cost of third-party contractors exceeded the
amount Defendants owed Plaintiff. This discord likewise creates a genuine dispute over whether
Defendants violated the implied covenant of good faith and fair dealing. New Mexico imbues an
implied duty of good faith and fair dealing into every contract. Jaynes v. Strong-Thorne Mortuary,
Inc., 954 P.2d 45, 49 (N.M. 1997). “The breach of this covenant requires a showing of bad faith
or that one party wrongfully and intentionally used the contract to the detriment of the other party.”
Continental Potash, Inc. v. Freeport-McMoran, Inc., 858 P.2d 66, 82 (N.M. 1993). “Bad faith
exists where a party’s conduct ‘constitutes a wanton disregard’ for the nonbreaching party’s
rights.” Paiz v. State Farm Fire & Cas. Co., 880 P.2d 300, 310 (N.M. 1994). The record
establishes that Defendants’ decision to withhold payment was not “wanton” and was premised on
a well-founded belief that Plaintiff shirked its contractual duties. The Court therefore denies
Plaintiff’s motion for summary judgment as to the breach of contract claims.
III. Defendants’ Counterclaim
Lastly, Plaintiff asks for summary judgment on Defendants’ counterclaim for breach of
contract. Defendants allege that Plaintiff “walked off the project without completing all of the
many defective and incomplete construction work set forth in the GSA’s Final Punch List.” Doc.
17 ¶ 7. Plaintiff argues that this claim “fails as a matter of law because Defendants never provided
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contractually mandated notice and opportunity to cure before hiring replacement contractors.”
Pl.’s Mot. for SJ at 19–20.
The Court finds that, at minimum, Warden’s May 15th email to Ellis provided sufficient
notice of Defendants’ dissatisfaction with Plaintiff’s work. Plaintiff disregards this communication
as inadequate; they remonstrate that the email is not “clear and unambiguous,” is indicative of an
ongoing negotiation, and fails to apprise Plaintiff of the concern that its inadequate performance
was serious enough to justify invocation of another contractual remedy. Id. To the contrary, the
Court reads Warden’s email as providing unequivocal notice of the Plaintiff’s inadequate
performance. Warden explained that the project is “not close to complete” and that “62 items need
to be addressed” from the Final GSA Punch List. Doc. 63, Ex. 16 at 4. “This does not include the
bathrooms on the give back space that need to be completed as well.” Id. Warden expresses that
he hopes the parties can reach a compromise, but to let him know if that would not be possible “so
that we can make other arrangements to finish this project up.” Id.
These statements fall squarely within Plaintiff’s own proposed standard—that the owner’s
notice “must fairly advise the contractor that the owner considers the inadequate performance
serious enough to justify termination or invocation of another contractual remedy.” Deffenbaugh
Indus., Inc. v. Unified Gov’t of Wyandotte Cnty., No. 22-3147, 2023 WL 4363439, at *19 (10th Cir.
July 6, 2023) (“Common sense tells us that to provide the defaulting party a meaningful
opportunity to cure, a notice of default under § 11.02 must adequately describe the nature of the
alleged default.”). Plaintiff was in possession of the Final GSA Punch List that contained the 62
unfinished items and, adhering to its proposed completion date of April 20, 2023, should have
completed those items within five days of receiving Warden’s email. Doc. 61, Ex. 2 at 11
(“Contractor shall at its own expense within five days after Owner’s notice repair or replace, as
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directed by Owner, any portion of the Work that is defective in workmanship or material . . .”).
Yet on Plaintiff’s own account, there were nine outstanding items as of May 26, 2023. Pl.’s Mot.
for SJ ¶ 45; Warden Dep. 171:1–17. Plaintiff’s contention that Defendants did not notify them of
their intent to use third-party subcontractors offers no refuge. The Contracts only mandate that the
Owner provide notice of the defect itself; they do not require the Owner to notify the contractor of
their decision to hire outside workers. Doc. 61, Ex. 2 at 11.5 To the contrary, once that notice is
provided, the Owner is entitled to hire another contractor if the Contractor neglects its
responsibilities. Id. (“If the contractor fails to [repair or replace defective work] then the Owner
may arrange for another contractor to perform the repair, and the Contractor shall pay amounts due
to the separate contractor.”).
At this stage, the Court finds that Defendants provided notice and an opportunity to cure.
It does not reach the issue of whether Plaintiff did, in fact, cure the defective work. The Court
therefore denies summary judgment on Defendants’ counterclaim for breach of contract.
CONCLUSION
IT IS THEREFORE ORDERED that Plaintiff’s motion for summary judgment (Doc. 61)
is DENIED.
____________________________________
SARAH M. DAVENPORT
UNITED STATES DISTRICT JUDGE
5 Defendants cut-off communications with Plaintiff on June 16, 2023, after hearing that Plaintiff had retained counsel.
Pl.’s Mot. for SJ at 23. Plaintiff argues that Defendants decision to do so is the reason they were denied notice and an
opportunity to cure. The record does not support this chronology of events. Plaintiff knew that, as of May 15th,
Defendants were dissatisfied with Plaintiff’s work. It is likewise obvious that Plaintiff knew of these problems because
it continued to work on the Space and purports to have finished the Final GSA Punch List on May 25, 2023. Pl.’s
Reply ¶ AA. Defendants did not agree with that assessment. The Contracts do not grant Plaintiff infinite attempts at
repair. If they failed to correct their defects, the Owner can proceed with outside contractors. No additional notice is
required.
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