Court Orders $40.3M Payment on Stalled Phoenix Tower

Phoenix contractors and subcontractors should review payment terms and interest rights in their own project contracts.

Updated on Nov. 5, 2026 in Construction

Bold flat-color editorial illustration of an unfinished concrete building frame beside an idle yellow crane under a pale desert sky. — A Maricopa County judge ordered XSC Phoenix Investment 2.0 LLC to pay Clayco Inc. and its subcontractors $40.3 million plus $16.3 million in interest over a stalled Phoenix apartment project. AI Illustration. Upload story photo >

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A Maricopa County Superior Court judge ruled that XSC Phoenix Investment 2.0 LLC materially breached its contract with general contractor Clayco Inc. over the stalled second phase of the X Phoenix apartment complex at West Monroe and 3rd Avenue in downtown Phoenix. Clayco and its subcontractors are owed $40.3 million in principal, plus $16.3 million in accrued interest through June 30, for construction work that stopped mid-build in September 2023.

Why it matters

The ruling puts a dollar figure on a payment dispute that left a general contractor and its subcontractors carrying unpaid work on a stalled downtown project for more than three years. For Phoenix contractors and subcontractors, it is a concrete test of how the Arizona Prompt Payment Act is enforced when an owner stops paying mid-project.

The final judgment totals $40.3 million in unpaid principal and $16.3 million in accrued interest through June 30 owed to Clayco Inc. and subcontractors. The judgment adds interest at 1.5% per month after June 30 until the debt is paid.

The players

Clayco Inc.

Chicago-based construction and development firm that served as general contractor on the X Phoenix second phase and is owed the judgment amount.

The X Co.

Chicago-headquartered developer associated with the X Phoenix apartment complex in downtown Phoenix.

XSC Phoenix Investment 2.0 LLC

Project owner entity found in breach of its contract with Clayco Inc. and ordered to pay the judgment.

The details

The court found that XSC Phoenix Investment 2.0 LLC violated the Arizona Prompt Payment Act and materially breached its contract with Clayco Inc. The contract covered building the second phase of the X Phoenix apartment complex, and work halted mid-construction in September 2023. Because the judgment accrues interest monthly, the amount owed to Clayco and its subcontractors will keep growing until the principal is paid.

September 2023: Construction on the second phase of the X Phoenix apartment complex stopped mid-construction.
November 2, 2026: Judge John L. Blanchard issued the ruling and final judgment.
June 30: Date through which accrued interest of $16.3 million was calculated.

Market Landscape

The judgment applies the Arizona Prompt Payment Act to a stalled downtown Phoenix tower, showing how state payment rules play out when an owner halts a project mid-build. Contractors and subcontractors on large Phoenix projects are watching how the statute and the interest accrual in this case are applied.

Phoenix contractors and subcontractors should review how payment terms, notice rights, and interest provisions are written into their own contracts. Firms with unpaid balances on private projects should consult qualified counsel about remedies available under the Arizona Prompt Payment Act.

The takeaway

Monitor whether the owner pays the judgment and whether the interest accrual at 1.5% per month grows the balance over time. Contractors with similar exposure should have qualified counsel review their payment and lien rights.