Universal Concrete Products Corporation ("Universal"), a subcontractor, entered into a written agreement with Turner Construction Company ("Turner") to install pre-cast concrete on the Granby Tower construction project in Norfolk, Virginia. In the wake of the real estate market collapse, the project folded when the Owner could not finance it. By that time, however, Universal had substantially completed all of its work on the project and sought payment. Turner refused to pay, because it had not been paid by the owner and pointed to the "pay-when-paid" provision.

The court applied Virginia law to the matter, based on diversity jurisdiction. In Virginia, a contractor and sub-contractor are free to create pay-when-paid provisions, but these will only be enforced in the absence of ambiguity. Universal claims that the pay-when-paid provision contained in the subcontract at issue here is ambiguous when considered in light of the contract between Turner and the Owner.

The subcontract’s pay-when-paid provision provided that:

the obligation of Turner to make a payment under this Agreement, whether a progress or final payment, or for extras or change orders or delays to the Work, is subject to the express condition precedent of payment therefore by the Owner.

Universal points to the provision in Turner’s contract with the Owner, which provided that the Owner will reimburse Turner for "payments made by the Construction Manager to Subcontractors in accordance with the requirements of subcontractors" and argues that when both contracts are read together, the pay-when-paid provisions became ambiguous.

The Fourth Circuit held, however, that the provision in the Turner-Owner contract did not specify the timing at which payment must be made; rather, it clarifies the amount. Accordingly, the contracts can be read together without creating ambiguity regarding the pay-when-paid provisions. The provision was enforceable.