Johnson Contractors Inc v. Starbelt LLC et al

On December 9, 2025, Johnson Contractors Inc., a general contractor, filed suit in U.S. federal court against Starbelt LLC (project owner) and Nova Property Holdings (developer) for breach of a $42 million commercial construction contract in Texas. The project involved a mixed-use tower halted mid-construction. Johnson alleged non-payment of certified progress billings and improper termination for default. The contractor also sued Atlas Surety Corp. under a payment bond, seeking enforcement of mechanic's lien rights. The case raised issues of force majeure extension claims, defective design allegations, and termination for convenience vs. default. The litigation consolidated claims for acceleration costs, demobilization expenses, and unpaid subcontractor pass-through charges.

The court denied the defendants' motion to dismiss, finding that Johnson Contractors adequately pleaded a claim for wrongful termination and that the payment bond covered disputed amounts. The case is proceeding to discovery, with a trial date expected in late 2026. Preliminary injunction was granted to stay enforcement of the termination default notice, preserving lien rights pending final judgment.

The central dispute concerns whether Starbelt LLC wrongfully terminated the contract for default or validly exercised a termination for convenience; whether Johnson Contractors is entitled to payment for work performed and delay costs arising from design changes; and the extent of the surety's liability under the payment bond in light of the owner's defenses.

The case has drawn attention from the U.S. construction industry, as it examines the boundaries between termination for default and convenience in post-pandemic contracting. It may influence how force majeure and design-shift claims are treated under standard AIA contract forms, and highlights surety exposure when owners prematurely declare default. Contractor associations have flagged the outcome as critical to subcontractor payment protections and lien rights in large-scale stalled projects.